canada mortgage volumes down

Latest in Mortgage News: Economic Slowdown Hitting Alternative Lenders Hard

The COVID pandemic has taken a toll on many aspects of Canada’s mortgage industry, but none more so than private lenders, which have seen a 26% decline in Ontario mortgage registrations.

According to Teranet, the province’s electronic land registry system, that decline follows a 45% drop in May and a 29% decline in April.

“The tide is going out right now” Dustin Van Der Hout, investment adviser with Richardson GMP Ltd., told the Globe and Mail. “We’ll see very quickly who was naked this whole time in the private mortgage world.”

Less severe declines were reported for other sectors, such as banks, credit unions, trusts and insurance companies.

For the country’s banks, mortgage registrations were down 3% in June compared to a year earlier.

Alternative lenders include mortgage investment corporations (MICs), which pool investor funds to fund mortgages. When home prices were soaring years ago and the government began introducing stricter mortgage qualifying rules, alternative lenders saw unprecedented growth as those who could no longer apply turned to alternative sources.

Other findings from the Teranet-National Bank Home Price Index (which tracks movement in resale homes) include:

  • The index reported its smallest decline in 17 years (and was negative when seasonally adjusted)
  • Toronto recorded an increase of 9.1% (year-over-year)
  • Vancouver saw an increase of 1.1%
  • Montreal saw an increase of 10.3%
  • Winnipeg saw a rise of 5.1%

AMF New Regulatory Body for Quebec Brokers

Court decisionQuebec’s mortgage brokers are now officially regulated by the province’s Autorité des marchés financiers (AMF), which took over the role in May.

The province’s mortgage brokers were previously under the jurisdiction of the Organisme d’autoréglementation du courtage immobilier du Québec (OACIQ), which also regulates real estate agents.

“The AMF welcomes this new mandate from the government,” AMF president and CEO Louis Morisset said in a statement. “…we have been in constant contact with the various stakeholders in the mortgage brokerage sector and have developed a robust and effective framework aligned with the one previously established for other sectors involved in the distribution of financial products and services.”

The Quebec chapter of Mortgage Professionals Canada made a proposal to the provincial Finance Minister requesting separate laws and a separate regulator for mortgage brokers back in 2015.

“MPC was supportive of the transition to the AMF for several reasons,” noted Mortgage Professionals Canada President and CEO Paul Taylor. “The transition followed the implementation of Bill 141, and the changes provide a clear delineation between the regulation of mortgage brokers and realtors. This delineation provides a much easier structure to ensure consumer protections are enforced, enabling better consumer outcomes and financing practices in the province.”

As Claude Girard, Quebec Director for MPC told CMT, the association expects to see benefits from the change.

“We expect regulation to be different and stronger than with the OACIQ, and this, of course, is for the well-being of mortgage consumers and our profession,” he said.

More Cases of Mortgage Fraud

Two Ontario mortgage brokers are now facing fraud charges, with one being accused of collecting more than $8 million in investments.

In the first case, a Guelph, ON, broker was arrested and charged with four counts of fraud over $5,000, four counts of using forged documents, 22 counts of uttering a forged document and one count of mischief to data.

The accused allegedly ran mortgage brokerages under various names and collected the $8 million in investments between 1995 and 2014. He is said to have repaid just $1 million in interest to the investors over that time.

In another case, a Brampton mortgage broker was arrested defrauding clients of $35,000 in investments between 2017 and 2019. It is alleged the broker promised to process mortgage applications for the victims, who were encouraged to pay in cash.