FSRA crackdown on brokerage conduct continues
Ontario’s financial services watchdog has suspended the licence of former Forest City Funding Inc. (FCF) president William Handsaeme and issued a hefty fine after the brokerage was accused of giving false or deceptive information and documents in its mortgage dealings.
The Financial Services Regulatory Authority of Ontario (FSRA) fined FCF $75,000, while Handsaeme faces a $7,500 penalty and a one-year licence suspension over their alleged involvement in arranging second mortgages that violated the terms of the first mortgages.
FSRA said that from 2022 to 2023, FCF facilitated the issuance of second mortgages through Solidity Group Management Corporation, despite first mortgages prohibiting secondary financing. In several instances, these second mortgages were used to repay down payments that were falsely represented as "gifts," contravening the first mortgage terms.
According to the minutes of settlement, FCF and Solidity Group misled borrowers by labelling these second mortgages as default-insured under the "Premium Plus" name. In reality, the supposed insurance premiums were said to be additional lender fees.
In response to FSRA's findings, FCF has made a major overhaul, including a complete leadership change and the implementation of new compliance measures including monthly audits and revised policies. Dominion Lending Centres Inc. has acquired a majority interest in FCF.
As part of the settlement, Handsaeme has been removed from FCF’s board of directors. He no longer holds a majority interest in FCF.
Handsaeme is also barred from serving as a principal broker or signing key documents for three years after his suspension ends. He also cannot act in a supervisory capacity without the appropriate designation.
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“By engaging in the conduct described above, Handsaeme admits and acknowledges that he did or omitted to do acts that might reasonably be expected to result in the brokerage on whose behalf he is authorized to deal or trade in mortgages to contravene or fail to comply with a requirement established under the Act, contrary to section 3 of Ontario Regulation 187/08,” FSRA wrote.
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