Regulatory body has some crucial advice for professionals in the current climate
As a whirlwind year for the mortgage industry in Ontario inches toward a close, the Financial Services Regulatory Authority of Ontario (FSRA) has highlighted the growing use of licensed mortgage brokerages for new home purchases and the increasing prominence of private lenders as significant recent trends.
Delivering updates on the regulatory body’s recent work to an audience of Canadian Mortgage Brokers Association (CMBA) members last week, Jennie Hodgson (pictured), senior manager, mortgage broker conduct, said that the number of new entrants to the market choosing to use mortgage brokers was a strong indication of the value brokers can provide.
“The number of first-time homebuyers who are using mortgage broker agent services is quickly on the rise,” she said. “That’s really a testament to the advice that you’re providing, and it’s more than just the numbers and the statistics and the access you can provide – it’s about that extra step you provide by offering suitable, affordable and considered options for these customers.”
Hodgson noted that the Canadian Mortgage and Housing Corporation (CMHC) had reported sizeable increases in the value of mortgage originations across a variety of lending types from 2019 to 2020, with chartered banks seeing a 33% rise in new mortgages, credit unions recording a 44% spike and mortgage investment entities (MIEs) registering an 18% increase.
The number of licensed agents in Ontario has also increased substantially over the past year, rising by 17% since June 2020, with the province now home to over 13,000 agents and 2,700 brokers licensed with FSRA.
The growing prevalence of technological solutions during the COVID-19 pandemic is a trend that’s been noted by FSRA, with Hodgson saying that private lenders and brokerages have increasingly embraced the digital revolution in the mortgage industry.
“We see an increase in availability of private lenders in general, and more specifically access to private lenders through digital platforms,” she said, “[and an] increase in new reverse mortgage products and adaptation to the use of day-to-day technology in business.
“I think that’s probably a fair comment for almost any business that’s survived and thrived throughout the pandemic period: we all had to jump five years ahead in our digital transformations, and I think [in] the mortgage brokering sector, all of you were ahead of the curve in a much more adaptive way than many others, so that is kudos to you for being able to pivot so quickly and have a relatively seamless option for your clients.”
Among the internal measures taken by FSRA in recent months has been a significant document streamlining, with the body having reviewed hundreds of web pages, filings, bulletins and everything that its predecessor FSCO (the Financial Services Commission of Ontario) produced to determine which documents were irrelevant or repetitive and make guidance more easily accessible for the industry.
“We have reduced the clutter so that you can more easily find what you’re looking for as an industry – looking for resources and looking to FSRA for those resources,” Hodgson said.
“We are working on both sides of our new website to have a focus for industry on the one side, because you need certain specific targeted information, and a consumer-facing focus on the other side which can tell a little bit more about what it is that our licensees do, and what we can expect from a regulated environment.”
A significant development in recent months has seen regulation of non-qualified syndicate mortgage investment (NQSMI) transactions come under the joint authority of FSRA and the Ontario Securities Commission (OSC).
Hodgson reminded attendees that every brokerage (not individual brokers and administrators) is required to complete quarterly reporting about NQSMIs – even those who do not conduct those types of transactions.
She also advised administrators to make sure they were on top of the regulations, something that’s particularly relevant with FSRA increasing its focus on mortgage administrators’ practices regarding complex mortgage investments.
“I do encourage you to take a look at our website if you are an administrator to see the guidance that was posted a little bit earlier in the pandemic to make sure that you are communicating as required to the investors for whom you administer mortgages,” she said, “to ensure that they’re understanding the changing risks of the investments that they’re in as it relates specifically to duties.”