which had its licence stripped last year in connection with the allegations<\/a> — to advertise to \u201cvulnerable\u201d consumers who agreed to mortgages with \u201cextremely\u201d high interest rates and fees.<\/p>\nFSRA said of the six customers involved in the case, five were influenced by Gerstel\u2019s ads, which made promises of quick mortgages for those with bad credit. FSRA alleges those borrowers were then diverted to Gertsel\u2019s wife\u2019s company, Esther Gerstel Inc. (EGI), which was not licensed and \u201cplaced in high-cost\u201d mortgages which were processed by a lawyer.<\/p>\n
The ruling states that in some cases, the customers did not know that Gerstel\u2019s wife would be the lender. In others, customers lost their homes under the weight of a 22 per cent interest rate, lender\u2019s fees and the short-term nature of the mortgages. In one case, the tribunal alleges, the effective annual interest rates on one of the customer\u2019s mortgage were between 51 and 56 per cent.<\/p>\n
\u201cAlthough a 22 per cent interest rate may be justified for high-risk loans, the aforementioned lender\u2019s and renewal fees in addition to punitive charges for late payments raise serious concerns about EGI\u2019s business model and client transparency and due diligence obligations, even if they are not, per se, contrary to the Act,\u201d FSRA said in its ruling.<\/p>\n
The tribunal said that because EGI was issuing the loans as an unlicensed lender, the customers did not have the protections of regulatory safeguards offered under provincial law, which would have included full conflict disclosure and formal mortgage suitability assessments.<\/p>\n
\u201cThe Applicants\u2019 submission that the Borrowers did not suffer any harm is appalling and reflects a total disregard for their professional obligations and the implications of their behaviour for their clients.\u201d<\/p>\n
\u2018Everything was done according to the law\u2019<\/p>\n
In a phone interview with CTV News Toronto, Gerstel said he plans to appeal the ruling and said that each of his clients had the \u201cfull protection of the law\u201d in their business dealings with him.<\/p>\n
\u201cWe did not cause them harm,\u201d Gerstel said of his clients, underscoring that the deals were fully consensual and made by \u201csophisticated\u201d and \u201cknowledgeable\u201d individuals. \u201cThey wanted to borrow money. Now they could not borrow money from other people because they had very bad credit.\u201d <\/p>\n
All five of the customers referenced in the ruling were not identified. The first customer, which spurred the FSRA investigation, died on Jan. 23, 2023.<\/p>\n
\u201cThey were very high risk, so we took a chance and lent them the money. These people were all very happy. I mean they weren\u2019t happy sometimes at the end when they lose their houses, but most of them had big financial problems when they came to us, so we did not cause them to get into financial problems,\u201d Gerstel said.<\/p>\n","protected":false},"excerpt":{"rendered":"The Financial Services Regulatory Authority of Ontario (FSRA) has fined a well-known former mortgage broker from Toronto and…\n","protected":false},"author":2,"featured_media":627779,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[712,49,48,44],"class_list":{"0":"post-627778","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-canada","8":"tag-apple-news","9":"tag-ca","10":"tag-canada","11":"tag-news"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/627778","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=627778"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/627778\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/627779"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=627778"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=627778"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=627778"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}