IN THE MATTER OF the Mortgage Brokerages, Lenders and Administrators Act, 2006,
S.O. 2006, c.29, as amended (the “Act”), in particular sections 19 and 21;

AND IN THE MATTER OF Ian Vilafana and Valor Financial Corp.

NOTICE OF PROPOSAL TO REVOKE LICENCE

TO: Ian Vilafana

AND TO:  
Valor Financial Corp.
184 King Street West Oshawa, Ontario L1J 2J2

TAKE NOTICE THAT pursuant to sections 19 and 21 of the Act, by delegated authority from the Chief Executive Officer of the Financial Services Regulatory Authority of Ontario (the “Chief Executive Officer”), Director, Litigation and Enforcement, (the “Director”), is proposing to revoke the mortgage broker licence issued to Ian Vilafana (licence # M15000549). The reasons for this proposal are described below.

AND TAKE NOTICE THAT pursuant to sections 19 and 21 of the Act, by delegated authority from the Chief Executive Officer, the Director is proposing to revoke the mortgage brokerage licence issued to Valor Financial Corp. (licence # 13114). The reasons for this proposal are described below.

Details of these contraventions and reasons for this proposal are described below. This Notice of Proposal includes allegations that may be considered at a hearing.

SI VOUS DÉSIREZ RECEVOIR CET AVIS EN FRANÇAIS, veuillez nous envoyer votre demande par courriel immédiatement à: contactcentre@fsrao.ca.

YOU ARE ENTITLED TO A HEARING BY THE FINANCIAL SERVICES TRIBUNAL (THE “TRIBUNAL”) PURSUANT TO SECTIONS 21(2) AND 21(3) OF THE ACT. A hearing by the Tribunal about this Notice of Proposal may be requested by completing the enclosed Request for Hearing Form (Form 1) and delivering it to the Tribunal within fifteen (15) days after this Notice of Proposal is received by you. The Request for Hearing Form (Form 1) must be mailed, delivered, faxed or emailed to:

Address:       
Financial Services Tribunal
25 Sheppard Avenue West, 7^th Floor Toronto, Ontario
M2N 6S6

Attention: Registrar

Fax: 416-226-7750

Email: contact@fstontario.ca

TAKE NOTICE THAT if you do not deliver a written request for a hearing to the Tribunal within fifteen (15) days after this Notice of Proposal is received by you, orders will be issued as described in this Notice of Proposal.

For additional copies of the Request for Hearing Form (Form 1), visit the Tribunal’s website at www.fstontario.ca

The hearing before the Tribunal will proceed in accordance with the Rules of Practice and Procedure for Proceedings before the Financial Services Tribunal (“Rules”) made under the authority of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, as amended. The Rules are available at the website of the Tribunal: www.fstontario.ca. Alternatively, a copy can be obtained by telephoning the Registrar of the Tribunal at 416-590-7294, or toll free at 1-800-668-0128 extension 7294.

At a hearing, your character, conduct and/or competence may be in issue. You may be furnished with further and or other particulars, including further or other grounds, to support this proposal.

REASONS FOR PROPOSAL

I. INTRODUCTION

1. These are the reasons for the proposal by the Director to:
   
   
   1. Revoke the mortgage broker licence issued to Ian Vilafana (“Vilafana”); and
   
   
   2. Revoke the mortgage brokerage licence issued to Valor Financial Corp. (“Valor”).
   
   



II. BACKGROUND

A. Parties

2. Vilafana is licensed as a mortgage broker (licence # M15000549) under the Act. Vilafana was first licensed as a mortgage broker under the Act on July 18, 2017 and has been licensed for most of the period since that date.


3. Vilafana was previously licensed as a mortgage agent under the Act from March 19, 2015 until July 17, 2017.


4. Vilafana is the sole director, chief officer/manager, and principal broker of Valor, a mortgage brokerage licensed under the Act (licence # 13114), which has been operating under the licence since January 2019.



B. Submission of False or Deceptive Information and Documents

5. Between October 2020 and January 2022 Vilafana repeatedly submitted false and deceptive information and documents to his clients, clients’ lawyer, and a lender in respect of three mortgage transactions. None of the three mortgage transactions were ultimately closed.



Community Trust – Deceptive Client Documents

6. Vilafana submitted false and deceptive documents and information relating to his clients CHS, CHS’ sister CES, and CHS’ mother GS to Community Trust Company (“Community Trust”), a lender. The information was provided to Community Trust in order to secure mortgage refinancing for a property from Community Trust.


7. In October 2020, Vilafana was approached by CHS’ father DS to broker the refinancing of the mortgage on their family’s residential property (the “DS Residential Property”).


8. To facilitate the refinancing transaction DS, among other things, provided the following documents relating to CHS to Vilafana:
   
   
   1. T4 and T4A statements for 2018 and 2019 relating to CHS’ previous employment; and
   
   
   2. Letter of Employment from CHS’ current employer (“CHS Employment Letter”).
   
   


9. Vilafana submitted an altered version of the CHS Employment Letter to Community Trust on January 25, 2021. The letter submitted by Vilafana contained the following alterations. Vilafana received the letter from DS without these alterations.
   
   
   1. The date of the letter was changed from October 20, 2020 to January 22, 2021;
   
   
   2. The starting date of CHS’ employment was changed from June 2020 to June 2018;
   
   
   3. The total hours worked was increased from 565 to 3,340; and
   
   
   4. A false signature purporting to belong to the author of the letter was applied.
   
   


10. Vilafana also submitted altered versions of CHS’ 2018 and 2019 T4 documents, purportedly issued by her former employer, to Community Trust on January 7, 2021. The altered T4s misrepresented CHS’ employer, period of employment, and income.


11. Vilafana used his Valor email account to send the above documents and signed the email as the Principal Broker of Valor.


12. Furthermore, on October 26, 2020, Vilafana submitted mortgage related documents including a “Consent Form”, a “Disclosure to Borrower” and, a “Letter of Direction”, to Community Trust containing forged signatures of CHS, CES, and GS.


13. On February 2, 2021, CHS became aware of Vilafana’s misconduct when her employer informed her that they received altered documents relating to her employment from Community Trust. As a result of Vilafana’s misconduct relating to the CHS Employment Letter, CHS was temporarily placed on administrative leave for a period of one week without pay. CHS was eventually cleared of misconduct by her employer.


14. Furthermore, on account of the delay caused by Vilafana’s conduct, DS and his family paid an additional $5400 to the mortgagor on the DS Residential Property in order to extend the mortgage renewal deadline by three months.


15. If the mortgage refinancing for the DS Residential Property had closed, Valor would have received commissions amounting to $6000 from Community Trust.



RBC – False Commitment Letter

16. Vilafana provided a false mortgage commitment letter, purportedly issued by Royal Bank of Canada (“RBC”), to his client HP.


17. In October 2021, HP engaged Vilafana to act as his mortgage broker and arrange a mortgage loan for the purchase of a property located in Niagara Falls, Ontario (the “Niagara Falls Property”). Vilafana informed HP that he would get him a mortgage loan at a low rate of interest and that he was working on arranging a mortgage loan from RBC.


18. On October 19, 2021, Vilafana, using his Valor email account, provided HP with a .PDF document containing a false mortgage commitment letter dated October 18, 2021 (“False RBC Commitment”) purportedly issued by RBC.


19. The abovementioned .PDF document also contained a mortgage application made out to 460 Mortgage Investment Corp., a different lender. The relevant terms in the mortgage application, including the loan amount and the rate of interest, were the same as the False RBC Commitment. Vilafana, in the email containing the .PDF document, asked HP to “initial all pages and sign where needed”.


20. HP pursued the purchase of the Niagara Falls Property under the assumption that he had a genuine mortgage commitment from RBC. However, when HP attempted to confirm the mortgage commitment, RBC informed HP that no such commitment existed.


21. On November 8, 2022 and November 29, 2022 RBC advised the Financial Services Regulatory Authority of Ontario (“FSRA”) that,
    
    
    1. the False RBC Commitment was not issued by RBC;
    
    
    2. the RBC employee who purportedly issued the False RBC Commitment had no recollection of interacting with Vilafana or Valor;
    
    
    3. the RBC employee who purportedly issued the False RBC Commitment stated that no mortgage application for HP existed in RBC’s records; and
    
    
    4. the application number mentioned in the False RBC Commitment did not relate to HP.
    
    


22. As a result of Vilafana’s deceptive conduct, HP was left with no mortgage financing to close the purchase of the Niagara Falls Property. HP stated to FSRA that he eventually obtained a mortgage loan from another lender with a higher rate of interest as compared to the interest rate of 1.99% per annum stated in the False RBC Commitment. HP further stated that he was required to pay $2000 to the seller of the property to extend the closing date for the transaction.



LUP and LIP – Deceptive Letter of Direction and Disclosure Form

23. Vilafana submitted a “Disclosure to Borrower Form” and “Letter of Direction” containing forged signatures of his clients LIP and LUP to their lawyer RR. The documents were created in connection to the refinancing of a mortgage on a property owned by LIP and LUP which was located in Parry Sound, Ontario (the “Parry Sound Property”).


24. In August 2021, LIP and LUP approached SM, a mortgage agent, to arrange for mortgages on 6 of their properties, including the Parry Sound Property, to be transferred from private lenders to Series B Lenders. SM eventually transferred the business relating to the refinancing of the mortgage on the Parry Sound Property to Vilafana.


25. On January 6, 2022, LIP and LUP paid $2000 to Vilafana to facilitate the closing of the Parry Sound Property’s mortgage refinancing transaction.


26. On January 6, 2022, AG, who was Vilafana’s administrative assistant and also an employee of Valor, on Vilafana’s direction and using her Valor email account, emailed a .PDF document containing a “Disclosure to Borrower Form” and “Letter of Direction”, both purportedly signed by LIP and LUP, to RR, LIP and LUP’s lawyer.


27. The signatures of LIP and LUP on both the documents were forged. LIP and LUP provided statements to FSRA asserting that the signatures were not theirs.


28. The forged signatures on “Disclosure to Borrower Form” and “Letter of Direction” were significantly different from the actual signatures of LIP and LUP provided by LIP and LUP to FSRA.


29. Ultimately, Vilafana did not arrange for the refinancing of the mortgage on the Parry Sound Property, despite receiving $3650 from LIP and LUP as payments and fees.



III. CONTRAVENTIONS OR FAILURES TO COMPLY WITH THE ACT

A. Giving False or Deceptive Information and Documents

30. Subsection 43(2) of the Act provides that no mortgage broker shall give, assist in giving or induce or counsel another person or entity to give or assist in giving any false or deceptive information or document when dealing in mortgages in Ontario or trading in mortgages in Ontario.


31. As described above, Vilafana provided false and deceptive information and documents when dealing in mortgages on multiple occasions. Such false and deceptive information and documents were supplied to his client HP, his clients LIP and LUP’s lawyer RR, and to Community Trust, a lender.


32. Vilafana provided false and deceptive information in order to arrange mortgages based on false pretenses and earn commissions and other fees from such transactions.


33. In view of the above, the Director is satisfied that Vilafana gave false or deceptive information to HP, RR, and Community Trust when dealing in mortgages in Ontario and thereby contravened subsection 43(2) of the Act, repeatedly, and in relation to each of the mortgage transactions described above.



IV. GROUNDS FOR REVOCATION OF LICENCE

34. Section 19(1) of the Act provides that the Chief Executive Officer may, by order, revoke a licence issued under the Act in any of the circumstances in which he or she is authorized to suspend a licence.


35. According to Section 18(1) of the Act, such circumstances include:
    
    
    1. if the Chief Executive Officer believes, on reasonable grounds, that the licensee is no longer suitable to be licensed having regard to the circumstances, if any, prescribed for the purposes of subsection 14(1) or 16(4), as the case may be, and such other matters as the Chief Executive Officer considers appropriate;
    
    
    2. if the licensee contravenes or fails to comply with a requirement established under this Act; or
    
    


36. Section 10 of Ontario Regulation 409/07 prescribes the criteria for determining whether an individual is suitable to be licensed as a mortgage broker which include:
    
    
    1. Whether the individual’s past conduct affords reasonable grounds for belief that he or she will not deal or trade in mortgages in accordance with the law and with integrity and honesty;
    
    
    2. Whether the individual is carrying on activities that contravene or will contravene the Act or the regulations if he or she is licensed; and
    
    


37. Section 1(2) of Ontario Regulation 408/07 provides that a corporation is not suitable to be licensed as a mortgage brokerage if the past conduct of any director or officer of the corporation affords reasonable grounds for belief that the business of the corporation will not be carried on in accordance with the law and with integrity and honesty.



A. Revocation of Vilafana’s mortgage broker licence

38. The Director has determined that Vilafana is no longer suitable to be licensed as a mortgage broker under the Act and that his licence should be revoked.



Failure to Comply with a Requirement Under the Act

39. As per Section 19(1) of the Act, FSRA may revoke the licence of a mortgage broker if such broker contravenes or fails to comply with a requirement established under the Act.


40. As described above, Vilafana intentionally and repeatedly contravened Section 43(2) of the Act by providing false and deceptive information and documents on various occasions to his client HP, his clients LIP and LUP’s lawyer RR, and to Community Trust, a lender.


41. The Director has determined that Vilafana’s mortgage broker licence should be revoked in view of his failure to comply with a requirement established under this Act.



Past Dishonest Conduct and Likelihood of Future Contraventions

42. As per Section 19(1) of the Act, FSRA may revoke the licence of a mortgage broker if the broker’s past conduct affords reasonable grounds for belief that he or she will not deal or trade in mortgages in accordance with the law and with integrity and honesty.


43. As described above, Vilafana, while acting as a mortgage broker licensed under the Act, has exhibited a pattern of intentional dishonest conduct when dealing with clients and other industry participants.


44. Vilafana’s intentional and patently dishonest acts were wholly linked to his mortgage brokering activities and committed in order to either deceive lenders into providing mortgage loans or leading clients into transactions that they did not agree to.


45. Furthermore, Vilafana’s dishonest conduct occurred between October 2020 and January 2022 and is relatively recent. Therefore, the Director has reasonable grounds to believe that Vilafana will continue to conduct his mortgage broker activities in a dishonest manner and to the detriment of his clients and other industry participants.


46. Finally, the seriousness of Vilafana’s misconduct is compounded by the fact Vilafana was the principal broker of Valor and had a heightened responsibility regarding the regulatory requirement of the Act and its regulations. In particular, Section 2(1) of Ontario Regulation 410/07 requires Vilafana to take reasonable steps to ensure that Valor, and each broker and agent authorized to deal or trade in mortgages on its behalf, complies with every requirement established under the Act.


47. Rather than monitoring and ensuring compliance on the part of Valor and the agents authorized to deal or trade on its behalf, Vilafana intentionally and repeatedly engaged in misconduct and non-compliance.


48. Moreover, as Vilafana is himself the principal broker of Valor and the only licensed mortgage broker at Valor, it is unlikely that he would be effectively supervised by Valor. As of the date of this proposal, Valor has not raised any concerns or made any complaints to FSRA with respect to Vilafana’s conduct as a mortgage broker.


49. In view of the above, the Director is of the view that Vilafana’s past conduct affords reasonable grounds for belief that he will not deal or trade in mortgages in accordance with the law and with integrity and honesty. The Director has therefore determined that Vilafana’s mortgage broker licence should be revoked.



B. Revocation of Valor’s mortgage brokerage licence

50. The Director has determined that Valor is no longer suitable to be licensed as a mortgage brokerage under the Act and that its licence should be revoked.


51. As per Section 19(1) of the Act, FSRA may revoke the licence of a mortgage brokerage if the past conduct of any director or officer of the brokerage affords reasonable grounds for belief that the business of the corporation will not be carried on in accordance with the law and with integrity and honesty.


52. Vilafana is the sole director, chief officer/manager, and principal broker of Valor. As stated above, Vilafana has intentionally and repeatedly exhibited dishonest conduct and contravened the Act, and the Director has determined that there are reasonable grounds for belief that he will not deal or trade in mortgage in accordance with the law and with integrity and honesty.


53. There is no reason to believe that Valor has actively supervised Vilafana’s conduct as a mortgage broker. Specifically,
    
    
    1. Valor did not take any steps to address Vilafana’s aforementioned misconduct, as required under Section 14.2 of Ontario Regulation 188/08; and
    
    
    2. Valor did not report Vilafana’s misconduct to FSRA, as required under Section 43(3) of Ontario Regulation 188/08.
    
    


54. In view of the above, the Director reasonably believes that Valor’s business will not be carried on in accordance with the law and with integrity and honesty. The Director has therefore determined that Valor’s mortgage brokerage licence should be revoked.


55. Such further and other reasons as may come to my attention.

DATED at Toronto, Ontario, March 20, 2023

Original signed by

Elissa Sinha
Director, Litigation and Enforcement

By delegated authority from the Chief Executive Officer

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