Mortgage brokerages, brokers and agents in Ontario can face regulatory investigations, enforcement actions, and litigation under the Mortgage Brokerages, Lenders and Administrators Act, 2006 (“MBLAA”). The Financial Services Regulatory Authority of Ontario (“FSRA”) actively enforces compliance, and allegations of non-compliance can lead to legal disputes, financial penalties, and even criminal charges.

At Chand & Co., we specialize in defending mortgage professionals in both regulatory and civil litigation matters, including:

• Defending against FSRA investigations and compliance actions
• Litigating disputes over regulatory penalties, licensing, and disciplinary actions
• Representing mortgage professionals before the Financial Services Tribunal
• Appealing enforcement decisions and seeking judicial review in Divisional Court
• Defending against allegations of fraud, misrepresentation, and regulatory breaches
• Challenging administrative penalties and enforcement measures
• Providing legal representation in mortgage-related civil and criminal litigation

With extensive experience in financial regulatory litigation, Chand & Co. is committed to safeguarding your career, reputation, and business.

1. FSRA Compliance Audits and Investigations

FSRA regularly conducts audits and investigations of mortgage professionals based on complaints, lender reports, or internal red flags. These investigations can lead to formal enforcement actions, tribunal hearings, and court proceedings.

FSRA investigators have broad authority to:

• Inspect business records and financial transactions
• Issue compliance orders and compel document production
• Conduct sworn examinations and interview witnesses

Findings from these investigations can result in severe administrative and financial penalties, making early legal intervention essential. At Chand & Co., we assist mortgage professionals in responding to FSRA inquiries, ensuring compliance, and challenging improper findings.

2. The Notice of Proposal Process

If FSRA determines that a mortgage professional has violated the MBLAA, it may issue a Notice of Proposal (“NOP”), outlining the proposed enforcement action. This could include:

• Suspension, revocation, or refusal to renew a licence
• Imposition of administrative penalties
• Restrictive conditions on the professional’s licence

Upon receiving an NOP, the mortgage professional has the right to request a hearing before the Financial Services Tribunal (“FST”). Failure to request a hearing within the prescribed time results in automatic enforcement of the proposed action.

3. Defending Against Enforcement Actions and Penalties

When FSRA determines that a regulatory violation has occurred, it can impose significant enforcement measures, including:

• Administrative fines of up to $25,000 per contravention
• Compliance orders requiring corrective action
• Licence suspensions, revocations, or conditions
• Proposals to refuse or deny licence renewals

These penalties can be financially devastating and threaten a mortgage professional’s ability to work. Chand & Co. aggressively defends against such enforcement actions by challenging penalties through tribunal hearings, court appeals, and judicial reviews.

4. Financial Services Tribunal Hearings and Appeals

Mortgage professionals have the right to challenge FSRA enforcement decisions before the Financial Services Tribunal (FST). These proceedings involve:

• Presentation of legal arguments and documentary evidence
• Witness testimony and cross-examination
• Expert analysis of financial and regulatory issues

Our legal team is well-versed in navigating FST hearings, building compelling defences, and advocating for our clients. If an adverse decision is issued, we are experienced in pursuing judicial reviews in Divisional Court, seeking to overturn unfair rulings based on procedural errors, misinterpretations of law, or lack of evidence.

Beyond regulatory enforcement, mortgage professionals often face civil litigation and, in some cases, criminal liability. FSRA investigations can escalate into formal regulatory prosecutions or criminal charges, particularly in cases involving:

• Allegations of fraud, misrepresentation, or mortgage fraud
• Accusations of operating without a valid licence
• Claims of falsified mortgage documents or misleading financial information
• Lawsuits from lenders, investors, or clients alleging financial misconduct

1. Civil Litigation: Defending Mortgage Agents Professionals in Court

Mortgage brokers and agents can be named as defendants in lawsuits brought by clients, lenders, or investors. Common claims include:

• Breach of fiduciary duty – Alleging failure to act in a client’s best interest
• Negligence – Failing to conduct due diligence in mortgage transactions
• Misrepresentation – Providing misleading or false information about loan terms
• Breach of contract – Disputes arising from mortgage agreements or brokerage services

We provide strategic litigation defence, ensuring that mortgage professionals are protected from unfair claims and financial liability. Our team is skilled in settlement negotiations, mediation, and trial advocacy when necessary.

2. Criminal Defence for Mortgage Brokers and Agents Professionals

Under the MBLAA, regulatory breaches can result in:

• Fines up to $100,000 for individuals and $200,000 for corporations
• Imprisonment of up to one year for serious offenses
• Personal liability for directors and officers of mortgage firms

Mortgage fraud allegations, in particular, can lead to criminal charges under the Criminal Code of Canada, carrying severe penalties including potential jail time. Our firm provides robust legal defence against both regulatory and criminal charges, ensuring that mortgage professionals receive strong representation in court proceedings and disciplinary actions.