Ontario is considering a registry for private mortgage lenders that could shed light on the growing sector.
A report released Monday by the province’s Ministry of Finance recommended “incentivizing registration for private lenders,” as borrowers increasingly turn to private funding sources such as mortgage investment corporations.
“Because these lenders are unregulated, governments have no clear line of sight on their activities and may not know the extent of their market participation,” said the report, which is part of a review of the province’s Mortgage Brokerages, Lenders and Administrators Act. “This has resulted in a lack of understanding of the level of financial risk in the private lending sector.”
Citing British Columbia’s findings that private lending could be liable for money laundering, the report said that the Ontario government and the Financial Services Regulatory Authority (FSRA) of Ontario ought to gain additional insight into the sector to help impede fraud.
“During the review, many stakeholders noted that private/unregulated lending should not be restricted, but could be better understood or quantified,” the report said. “As such, it is our recommendation that the Ministry of Finance work with FSRA to create a registration regime for private/unregulated lenders that meet certain monetary or activity thresholds.”
The report also said that FSRA should work with the Law Society of Ontario to exchange data around private lending facilitated by lawyers, and registered lawyers should be required to report periodically to the regulator on their activities.
“This would make Ontario the only jurisdiction in Canada to directly collect data from unregulated mortgage lenders, facilitating a better understanding of these lenders’ participation in Ontario’s housing markets and their broader role in the provincial economy.”
The Ontario government eyes 2020 for any registry, according to Stan Cho, the parliamentary assistant to the province’s minister of Finance and the review’s co-leader.
“We spoke to non-private and private lenders,” Cho said. “And really it’s something that the industry overall wants, because it is a growing sector of the market and it’s something that is here to stay.”
Ontario’s Progressive Conservative government said that it is now considering the report’s recommendations, according to Financial Post.
Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate