Ontario regulator alleges false documents, unsuitability and unlicensed lending in London case
Regulators in Ontario have moved to sanction an agent, a broker and an unlicensed corporation over an alleged scheme that pushed a London family from a bank mortgage at 2.5% into layered, high‑cost loans and ultimately the sale of their home.
What FSRA alleged in the Chehade case
In a notice of proposal dated December 4, 2025, the Financial Services Regulatory Authority of Ontario (FSRA) proposed to refuse renewing the mortgage agent level 2 licence of John (Johnny) Chehade and to downgrade broker Rhett Richard (Richard Rhett) McClenaghan to a mortgage agent level 2 for two years.
It also proposed penalties of $25,000 against Chehade, $6,000 against McClenaghan and $30,000 against 2078637 Ontario Inc., operating as Forest City Living.
FSRA alleged that Chehade and McClenaghan gave “false or deceptive information and documents when dealing in mortgages” and allowed themselves to be used “to facilitate dishonesty, fraud, crime or illegal conduct.”
It further alleged that Forest City Living carried on business “as a mortgage lender while not being licensed or exempted from the requirement of being licensed.”
According to the notice, the borrowers, a married couple and a grandmother, started with a major bank mortgage at 2.5% and payments of roughly $2,700 a month.
FSRA said Chehade recommended breaking that mortgage, paying a $20,000 penalty and refinancing with a B lender, financed in part by a $40,000 loan routed through Forest City Living and disguised via a “false ‘gift letter’.”
“The Director is satisfied that Chehade’s past conduct with respect to the Borrowers affords reasonable grounds for belief that he will not deal or trade in mortgages in accordance with the law and with integrity and honesty,” the notice said.
It added that both Chehade and McClenaghan “were aware of their obligations under the Act and the regulations” yet took “numerous intentional steps in contravening the Act.”
FSRA also alleged that Chehade failed to conduct suitability analysis on key transactions, arranged a second mortgage outside his brokerage and received $2,400 directly from the borrowers, and later answered “No” on a licence renewal application when asked if he was the subject of an investigation.
Chehade, McClenaghan and Forest City Living requested a hearing before the Financial Services Tribunal.
Broader crackdown on suitability, fraud and unlicensed business
The proposed action against Chehade and McClenaghan lands amid a wider FSRA push on suitability, vulnerable borrowers and mortgage fraud. The regulator’s supervision plan for 2023‑24 said it would focus on whether brokers and agents “make suitable product recommendations” and maintain adequate know‑your‑client processes in a higher‑rate, higher‑risk market.
FSRA’s fraud guidance reminded licensees that they are prohibited from doing anything they knew, or should have known, would “facilitate fraud, dishonesty, crime or illegal conduct” and that they must ensure the “accuracy and truthfulness of documents” in mortgage transactions.
In one decision, FSRA revoked a brokerage licence and imposed $430,000 in penalties over widespread compliance failures and unlicensed activity, with vulnerable clients steered into complex, high‑fee mortgages.
Another case saw nine penalties totalling $75,000 and a compliance order against a former broker accused of operating an unlicensed brokerage and misrepresenting her regulatory status. FSRA also restricted a Mississauga broker after he arranged a “high‑cost private mortgage” through an unlicensed referrer and failed to assess suitability.
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