Ontario mortgage agent fined $30k for risky loans, undisclosed conflict

Former agent arranged five short-term private mortgages tied to his brother's company

Ontario mortgage agent fined $30k for risky loans, undisclosed conflict

Ontario’s financial services regulator has imposed $30,000 in penalties on former mortgage agent Ismail Ayyoub after finding he arranged five high-risk private mortgages for vulnerable borrowers in 2021 without ensuring the loans were suitable, and without disclosing material risks or a conflict of interest involving a family member.

According to the Financial Services Regulatory Authority of Ontario (FSRA), Ayyoub violated multiple regulatory provisions while working under Mortgage Smart Inc., a brokerage whose licence was later revoked in February 2025. FSRA found that Ayyoub’s conduct not only failed to meet professional standards, but also caused Mortgage Smart to contravene several sections of Ontario’s mortgage regulations.

All five mortgages were funded by Canada’s Choice Investments Inc. (CCI), a private lender whose sole director and president is Ayyoub’s brother. Despite this connection, Ayyoub did not disclose the relationship in writing to any of the borrowers, nor did he identify it as a conflict of interest—contravening section 27(1) of Ontario Regulation 188/08.

FSRA’s investigation found that Ayyoub failed to take reasonable steps to determine whether the mortgages were suitable, particularly given the borrowers’ financial circumstances. All five loans were secured on the borrowers’ residential properties, many of which served as their primary and most valuable assets.

Three of the borrowers were senior citizens, and all reported annual incomes between $30,000 and $46,000, with mortgage application forms listing them as retired. Despite this, Ayyoub arranged loans with one-year terms, 25% interest rates, and interest-only payments, with the full principal due at the end of the term. The effective Annual Percentage Rates (APRs) ranged from 34.26% to 39%—often exceeding the borrowers’ annual income.

In one case, a borrower received a $100,000 mortgage, while another received $475,000. FSRA found that Ayyoub did not meet or communicate with the borrowers and did not provide transaction-specific risk disclosures, despite the “onerous” loan terms.

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The generic written disclosure used by Ayyoub stated only: “The brokerage has reviewed with the borrower the general risks associated with a mortgage commitment. These risks include: risk of falling into arrears, default and foreclosure, prepayment penalties etc.”

FSRA found this insufficient, given the loans' complexity and the borrowers’ financial vulnerability.

The regulator noted that Ayyoub did not request a hearing before the Financial Services Tribunal or contest the proposal, which led to the imposition of five separate administrative penalties totalling $30,000.

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