Investigation finds it failed to assess suitability, altered documents, and misled FSRA about its operations
The Financial Services Regulatory Authority of Ontario (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.
Mortgage Smart and its brokers failed to ensure that six mortgages were suitable for borrowers, most of whom were vulnerable pensioners. In addition, the brokerage failed to disclose material risks and conflicts of interest, submitted misleading documents, and ignored written complaints from affected clients.
The regulator also imposed $40,000 in penalties on broker Ranjit Dhillon and $10,000 on principal broker Kamal Dhillon, who is also the firm’s owner and sole director. FSRA determined the brokerage is no longer suitable to be licensed under Ontario’s Mortgage Brokerages, Lenders and Administrators Act.
FSRA’s investigation found that between June 2021 and February 2022, Mortgage Smart arranged at least 50 mortgages—mostly through referrals from Canada’s Choice Capital (CCC), a company that sold home services through door-to-door sales. CCC’s sister company, Canada’s Choice Investments Inc. (CCI), acted as lender on at least 43 of those mortgages. FSRA noted that most borrowers were senior citizens on fixed incomes, some suffering from health conditions and cognitive limitations.
In six detailed cases, investigators found that Mortgage Smart brokers failed to verify the borrowers’ ability to repay, neglected to disclose high interest rates and balloon payment terms, and provided false information in mortgage applications. For example, one borrower, identified as BB, was a 72-year-old retiree with no email account, yet a Gmail address was listed on her application. Her $400,000 mortgage came with a 25% interest rate, and the total cost of borrowing exceeded $121,000.
Another borrower, JC, was 69 and dealing with serious health issues when she signed a $550,000 loan that also carried a 25% interest rate. JC told FSRA she did not remember meeting broker Ranjit Dhillon and denied signing key documents.
In multiple cases, mortgage terms significantly exceeded borrowers’ monthly pension income. One borrower, JG, 79 years old and legally blind, received a loan with a $4,166 monthly payment, despite having an annual income of just $45,000. FSRA also noted the use of misleading disclosures. Written notices to borrowers simply stated “risk of falling into arrears, default and foreclosure,” failing to address the high interest rates and the borrowers' financial vulnerability.
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The regulator also found evidence of altered mortgage applications. Forms for BB, JC, and JG were modified after the clients had signed them, including changes to lawyers' names and lender details. There was no record that the borrowers consented to those changes.
FSRA determined that Ranjit Dhillon and former agent Almusri, both of whom worked on behalf of Mortgage Smart, “failed to take sufficient steps to ensure that the mortgages they arranged were suitable” for the elderly borrowers. “A significant portion of the mortgage proceeds were deducted at closing as prepayment of interest or ‘interest reserve,’” the regulator noted.
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