'To see the fraud that I’m seeing out there in this industry right now and the lack of education with a lot of agents in there… it's very disheartening'
A flurry of charges and convictions related to mortgage fraud across the industry in Ontario in recent times has raised the question of how often some agents act without their clients’ best interests in mind.
Last year, the Financial Services Regulatory Authority of Ontario (FSRA) – the province’s financial watchdog – released new guidance outlining examples of conduct that would make an agent or broker unsuitable to be licensed.
And the agent and brokering professions have come under scrutiny this year amid a spate of controversies including a brokerage being stripped of its licence for targeting seniors and breaching regulatory obligations, a former agent facing penalties for arranging fraudulent mortgage transactions, and an Ontario couple allegedly originating dozens of deals outside their licensed brokerages and funneling funds into shell corporations.
Meanwhile, an influx of new mortgage investment corporations (MICs) into the market mean an ever-rising number of entities – and growing challenges for even discerning brokers to spot the bad actors lurking among reputable companies.
‘To see the fraud and lack of education… it’s very disheartening’
Recent educational changes by FSRA include the introduction of a Mortgage Agent Level 2 tier, requiring agents to complete an additional course to transact in private mortgages.
But while new regulation and additional compliance measures are often criticized within the industry as excessive, well-known industry executive Tracy Valko (pictured, top left), founder of the Valko Financial mortgage brokerage, spoke out last week in favour of better agent education and higher standards in the industry at a Canadian Alternative Mortgage Lenders Association (CAMLA) event in Brampton.
Valko told an audience at the association’s annual expo at the Pearson Convention Centre that established mortgage professionals were frustrated at the reputation of the industry being lowered by incompetent or unscrupulous agents.
The FSRA has permanently revoked the license of Mortgage Smart Inc. following an extensive investigation that revealed systemic misconduct involving elderly homeowners and repeated breaches of regulatory obligations.https://t.co/QbAIxuHo01
— Canadian Mortgage Professional Magazine (@CMPmagazine) April 10, 2025
“I came into this industry based on the stance of being able to have fair homeownership practices and to make sure that Canadians have the right to homeownership – but also to do it [with integrity],” she said.
“To see the fraud that I’m seeing out there in this industry right now and the lack of education with a lot of agents in there right now, it’s very disheartening. And I stand on my morals on that, because I think that we have to do a better job when we’re seeing it.
“And I really do appreciate what FSRA has been doing as well, increasing the education bar. We have to continue that. If I hear agents complaining about it, you know what? Then maybe you shouldn’t be in this industry.”
Valko pointed to other professions with lengthier and more rigorous paths to qualification – for instance, real estate agents, who take around 18 months to qualify in Ontario. “Why haven’t we implemented that? It’s amazing to me how quick someone can get a mortgage agent licence,” she said.
“We’re able to get a licence in two weeks. We have continuing education, which is great, and I know it’s increasing, but it’s still not enough for what we’re seeing and the amount of fraud that’s out there.”
Principal brokers bear ultimate responsibility in enforcing compliance
FSRA has also repeatedly underlined that the buck stops with principal brokers when it comes to keeping their agents compliant and making sure they’re treating consumers fairly.
Ron Butler (pictured, top right), of Butler Mortgage, speaking on the same panel, highlighted that point. “I want this to be really clear: the correct training, supervision, and management of mortgage agents and brokers under this regulatory regime is expressly at the feet of principal brokers,” he said.
“The principal brokers have got to do a good job. They’ve got to have ongoing training. They’ve got to monitor their agency, supervise their agency, look at the actual files in an intelligent way and say: ‘This is bullshit. We’re not doing this deal,’ or ‘We’re gonna give the money back,’ or, ‘I’m gonna fire you, and I’m gonna make sure that if I can possibly do it, nobody else will hire you.’”
That also means principal brokers taking the right approach to hiring, according to Butler, instead of seeing the dollar signs in their eyes.
“This business was not designed to give you a ticket to make overrides and splits,” he said. “That’s not what the concept here is. The concept here is that you’re going to do a great job, a careful job, a meticulous job, an ongoing job, and not just say, ‘Hey, I could give you the best split. So come over here and I don’t even care what kind of business you do, just get at it and make me some money.’”
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