IN THE MATTER OF the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c.29, as amended (the “Act”), in particular sections 15, 16, 21, 38 and 39;

AND IN THE MATTER OF Rhett McClenaghan and 2078637 Ontario Inc.

MINUTES OF SETTLEMENT AND UNDERTAKING

PART I – INTRODUCTION

1. Rhett Richard (Richard Rhett) McClenaghan (“McClenaghan”) is licensed as a mortgage broker under the Act (licence #M08003293). McClenaghan’s license is scheduled to expire on March 31, 2026.
2. McClenaghan is authorized to deal or trade in mortgages as a mortgage broker on behalf of Forest City Funding Inc., operating as Dominion Lending Centres FC Funding (“FCF”).
3. 2078637 Ontario Inc., operating as Forest City Living (“FCL”), is a corporate entity through which McClenaghan conducted lending activities. FCL has never been licensed under the Act. McClenaghan has, at all material times, operated FCL with the express permission of FCF, intending to utilize the licensing exemptions provided for under the Act.
4. On December 4, 2025, the Director, Litigation and Enforcement (the “Director”), by delegated authority from the Chief Executive Officer (“CEO”) of the Financial Services Regulatory Authority of Ontario (“FSRA”), issued a Notice of Proposal in respect of McClenaghan and FCL (the “NOP”).
5. McClenaghan and FCL disputed the allegations and, on or about December 17, 2025, requested a hearing before the Financial Services Tribunal (the “Tribunal”) in respect of the NOP.
6. McClenaghan, FCL, and the Director, by delegated authority from the CEO, (collectively the “Parties”) wish to resolve this matter on consent and without a hearing before the Tribunal.

PART II – AGREED FACTS

7. John (Johnny) Chehade (“Chehade”) is licensed as a mortgage agent level 2 under the Act (licence #M21002519). During the relevant time, McClenaghan was Chehade’s supervisor at FCF.

(i) The First Mortgage

8. “AT” and “MA” are a married couple. “RT” is AT’s grandmother (collectively, AT, MA and RT are referred to as the “Borrowers”).
9. The Borrowers owned a property in London, Ontario (the “Property”). In March 2022, the Borrowers had a mortgage on the Property with a major bank (the “Bank.
10. The Borrowers wanted a $60,000 loan via their line of credit with the Bank. However, the Bank refused to extend this loan.
11. Chehade met with the Borrowers and suggested that they break their mortgage with the Bank, pay the approximately $11,000 penalty for doing so, and refinance with a “B” lender (the “B Lender”) while consolidating all liabilities.
12. However, the B Lender required that the Borrowers repay approximately $40,000 in unsecured debt prior to advancing funds. Chehade informed the Borrowers that a $40,000 dollar gift was required to complete the transaction.
13. The B Lender did not allow second mortgages without its approval and required that if the $40,000 came from a gift, it be non-repayable. The Borrowers advised Chehade that the $40,000 would come from proceeds of a tractor sale and a potential gift from AT’s father. In supporting the process based on the information provided, Chehade worked with the Borrowers and AT’s father in preparing a gift letter indicating that the $40,000 was a non-repayable gift from AT’s father (the “Gift Letter”).
14. Chehade submitted this Gift Letter to the B Lender, knowing that the $40,000 was in reality a loan but believing that the loan would be repaid from the eventual sale of the Borrowers’ home.
15. FCL then provided $40,000 to AT’s father, who provided the funds to AT. The $40,000 loan from FCL was secured by a promissory note dated April 19, 2022, that charged 14% interest. FCL understood that this note was to be paid back from the sale proceeds of a tractor sale.
16. The $1,000,000 one-year mortgage on the Property from the B Lender was registered on May 2, 2022 (the “First Mortgage”). The interest rate for the First Mortgage was 3.04% per year.
17. FCF received a brokerage fee of $4,250 for arranging the First Mortgage, of which Chehade received $2,721.37 and McClenaghan received $425. Chehade also received a “finder’s fee” of $5,000 and a “volume bonus” of $1,500.

(ii) The FCL Second Mortgage

18. Rather than requiring the father to repay the initial $40,000 promissory note, FCL was requested by AT and AT’s father to capitalize that debt into a new arrangement. Consequently, FCL extended an additional $40,000 loan to the Borrowers for a new-build deposit, along with further advances. This consolidated debt — comprising the initial $40,000, the new $40,000, and additional funds — was secured via a one-year interest-only $165,000 second mortgage on the Property, registered on September 9, 2022 (the “FCL Second Mortgage”).
19. The FCL Second Mortgage charged an interest rate of 14% (a total of $23,100 for one year). FCL also received a “lender fee” of $5,500.
20. FCF has no records of the FCL Second Mortgage. At the time of the transaction, FCF did not require direct reporting from the lender (FCL); rather, the established practice relied upon the agent to report the transaction. Because Chehade did not report the FCL Second Mortgage to FCF, FCL breached the Act in respect of this transaction.

(iii) The Renewal of the First Mortgage

21. After one year, the First Mortgage came due. The Borrowers’ new-build property was not completed. The B Lender agreed to renew its mortgage but increased the interest rate to 7.19% due to the Bank of Canada increasing its rates and current market conditions. Chehade arranged this renewal.
22. FCF received a brokerage fee of $1,962.25 for renewing the First Mortgage, of which Chehade received $1,409.88 and McClenaghan received $196.22.

(iv) The New Second Mortgage

23. Around the same time, the FCL Second Mortgage came due. To repay it, Chehade arranged a new one-year second mortgage on the Property of $280,000 from a different B lender that charged interest of 12.75% per year (the “New Second Mortgage”). The New Second Mortgage was registered on August 4, 2023, and was to be used to finance the Borrowers’ new-build construction.
24. FCF received a brokerage fee of $5,600 for arranging the New Second Mortgage, of which Chehade received $4,023.60 and McClenaghan received $560.00.

PART III – NON-COMPLIANCE WITH THE ACT

25. By engaging in the conduct described above in Part II, McClenaghan admits and acknowledges that he breached the Act as follows:
    1. Subsection 43(2) of the Act; and
    2. Section 3.1 of Ontario Regulation 187/08.
26. By engaging in the conduct described above in Part II, FCL admits and acknowledges that it breached subsection 4(2) of the Act.

PART IV – TERMS OF SETTLEMENT

27. McClenaghan and FCL admit the facts contained in Part II of these Minutes of Settlement and Undertaking (“Minutes”).
28. McClenaghan and FCL acknowledges and agrees that they have been given the opportunity to seek independent legal advice and have done so (or have waived the right to do so) and are entering into these Minutes voluntarily, understanding the consequences of doing so.
29. McClenaghan and FCL acknowledges that these Minutes are an undertaking within the meaning of the Act, and that failure to comply may result in immediate regulatory action including, but not limited to, the issuance of a Notice of Proposal to revoke the licence, a Notice of Proposal to impose an administrative penalty, or a prosecution under the Provincial Offences Act.

(a) Issuance of Order

30. McClenaghan and FCL acknowledges that, upon execution of these Minutes by both Parties, the order attached as Schedule “A” to these Minutes (the “Order”) will be issued, pursuant to which:
    1. McClenaghan shall pay an administrative penalty of $4,000;
    2. McClenaghan shall be restricted to a Mortgage Agent Level 2 for a period of two years; however, this shall not preclude him from training or providing office infrastructure to other agents under the oversight of the Principal Broker; and
    3. FCL shall pay an administrative penalty of $17,500.

(b) Process for Execution of Settlement

31. McClenaghan and FCL acknowledges that these Minutes are not binding on the Director until signed by the Director.
32. These Minutes may be executed in counterparts, and may be executed and delivered by facsimile or e-mail, and all such counterparts and facsimiles or e-mails, as applicable, shall together constitute one and the same agreement.
33. Upon receiving an executed copy of these Minutes from FSRA, McClenaghan and FCL will withdraw their Request for Hearing (Form 1) in respect of the NOP before the Tribunal by completing a Withdrawal/Discontinuance (Form 5) and filing it with the Registrar at the Tribunal within two business days.
34. Upon confirmation from the Tribunal that the Request for Hearing has been withdrawn and the hearing has been cancelled, the Parties agree that the Director will issue an Order in the form attached as Schedule “A” to these Minutes.
35. The Parties accept and understand that these Minutes and any rights within the Minutes shall enure to the Parties and to any successors or assigns of the Parties.

(c) Disclosure of Minutes and Order

36. The Parties will keep the terms of these Minutes and the Order confidential until the Order is issued, except that:
    1. The Director shall be permitted to disclose the Minutes and the Order within FSRA;
    2. McClenaghan and FCL shall be permitted to disclosure the Minutes and the Order to their legal representative, financial professionals and/or spouse; and
    3. The Parties shall be permitted to inform the Financial Services Tribunal.
37. If either of the Parties do not sign these Minutes or the Director does not issue the Order:
    1. These Minutes, the Order, and all related discussions and negotiations will be without prejudice to FSRA, McClenaghan, and FCL; and
    2. FSRA, McClenaghan, and FCL will each be entitled to all available proceedings, remedies and challenges, including proceeding to a hearing of the allegations contained in the NOP. Any proceedings, remedies and challenges will not be affected by these Minutes, the Order, or any related discussions or negotiations.
38. Upon issuance of the Order:
    1. McClenaghan and FCL acknowledges that these Minutes and the Order are public and will be published by FSRA on its public website (or that of its successor) along with a press release that summarizes these Minutes and the Order; and
    2. The Parties agree not to make representations to any member of the public or media or in a public forum that are inconsistent with these Minutes or the Order.

(d) Further Proceedings

39. Whether or not the Order is issued, McClenaghan and FCL will not use, in any proceeding, these Minutes or the negotiation or process of approval of these Minutes as the basis for any attack on FSRA’s jurisdiction, alleged bias, alleged unfairness, or any other remedies or challenges that may be available.
40. Upon issuance of the Order:
    1. McClenaghan and FCL waive all rights to a hearing before the Tribunal regarding the NOP;
    2. McClenaghan and FCL waive all rights to a judicial review or appeal of the Order;
    3. McClenaghan and FCL acknowledge that, subject to subparagraph (iv), FSRA may consider the conduct and admissions described in these Minutes in any future licensing decision, administrative penalty, or prosecution as an aggravating factor;
    4. The Director agrees that FSRA will not initiate further proceedings against McClenaghan or FCL based solely on the conduct and admissions described in these Minutes, unless:
       1. New facts come to FSRA’s attention that are materially different from described in these Minutes;
       2. McClenaghan or FCL fail to comply with these Minutes or the Order;
       3. McClenaghan or FCL or a related entity applies for a licence under the Act or any other Act administered by FSRA.
    5. McClenaghan and FCL agree that should they fail to comply with any term in these Minutes or the Order, FSRA is entitled to bring any proceedings available to it.

DATED at London, Ontario, February 26, 2026

Original signed by

Rhett Richard (Richard Rhett) McClenaghan

DATED at London, Ontario, February 26, 2026

Original signed by

David da Camara
Name of Witness

DATED at London, Ontario, February 26, 2026

Original signed by

2078637 Ontario Inc., operating as Forest City Living

DATED at London, Ontario, February 26, 2026

Original signed by

David da Camara
Name of Witness

DATED at Toronto, Ontario March 2, 2026.

Original signed by

Elissa Sinha
Director, Litigation and Enforcement
Financial Services Regulatory Authority of Ontario

By delegated authority from the Chief Executive Officer

APPENDIX A

IN THE MATTER OF the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c.29, as amended (the “Act”), in particular sections 15, 16, 21, 38 and 39;

AND IN THE MATTER OF Rhett McClenaghan

ORDER TO IMPOSE ADMINISTRATIVE PENALTIES
AND TO IMPOSE CONDITIONS ON LICENCE

Rhett Richard (Richard Rhett) McClenaghan (“McClenaghan”) is licensed as a mortgage broker under the Act (licence # M08003293).

On December 4, 2025, the Director, Litigation & Enforcement (the “Director”), by delegated authority from the Chief Executive Officer (“CEO”) of the Financial Services Regulatory Authority of Ontario (“FSRA”), issued a Notice of Proposal to impose conditions on the mortgage broker licence issued to McClenaghan and to impose Administrative Penalties in respect of McClenaghan (the “NOP”).

A Request for Hearing (Form 1), dated December 17, 2025, was delivered to the Financial Services Tribunal (the “Tribunal”) in accordance with sections 21(3) and 39(5) of the Act respecting the NOP.

On [date], McClenaghan withdrew the Request for Hearing, and, on [date], the Tribunal closed its file in respect of this matter. Therefore, pursuant to sections 21(7) and 39(7) of the Act, the Director makes the following Orders.

ORDER

Administrative penalties in the total amount of $4,000 are hereby imposed on Rhett McClenaghan, for the reason set out in the Minutes of Settlement.

TAKE NOTICE THAT the Financial Services Regulatory Authority of Ontario will deliver an invoice to Rhett McClenaghan with information as to where and how to pay the administrative penalties. Rhett McClenaghan must pay the administrative penalties no later than thirty (30) days after the Order is issued unless otherwise agreed with the Financial Services Regulatory Authority of Ontario.

If Rhett McClenaghan fails to pay the administrative penalty in accordance with the terms of this Order, the Chief Executive Officer may file the Order with the Superior Court of Justice and the Order may be enforced as if it were an order of the court. An administrative penalty that is not paid in accordance with the terms of the Order imposing the penalty is a debt due to the Crown and is enforceable as such.

DATED at Toronto, Ontario.

Elissa Sinha
Director, Litigation and Enforcement

By delegated authority from the Chief Executive Officer

ORDER

For the reasons set out in the Minutes of Settlement, Rhett McClenaghan shall be limited to a Mortgage Agent Level 2 for a period of two years:

DATED at Toronto, Ontario,

Original signed by

Elissa Sinha
Director, Litigation and Enforcement

By delegated authority from the Chief Executive Officer

IN THE MATTER OF the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c.29, as amended (the “Act”), in particular sections 21, 38 and 39;

AND IN THE MATTER OF 2078637 Ontario Inc., operating as Forest City Living

ORDER TO IMPOSE ADMINISTRATIVE PENALTIES

2078637 Ontario Inc., operating as Forest City Living (“FCL”) is unlicensed.

On December 4, 2025, the Director, Litigation & Enforcement (the “Director”), by delegated authority from the Chief Executive Officer (“CEO”) of the Financial Services Regulatory Authority of Ontario (“FSRA”), issued a Notice of Proposal to impose Administrative Penalties in respect of FCL (the “NOP”).

A Request for Hearing (Form 1), dated December 17, 2025, was delivered to the Financial Services Tribunal (the “Tribunal”) in accordance with sections 21(3) and 39(5) of the Act respecting the NOP.

On [date], FCL withdrew the Request for Hearing, and, on [date], the Tribunal closed its file in respect of this matter. Therefore, pursuant to sections 21(7) and 39(7) of the Act, the Director makes the following Orders.

ORDER

An administrative penalties in the amount of $17,500 is hereby imposed on 2078637 Ontario Inc., for the reason set out in the Minutes of Settlement.

TAKE NOTICE THAT the Financial Services Regulatory Authority of Ontario will deliver an invoice to 2078637 Ontario Inc. with information as to where and how to pay the administrative penalties. 2078637 Ontario Inc. must pay the administrative penalties no later than thirty (30) days after the Order is issued unless otherwise agreed with the Financial Services Regulatory Authority of Ontario.

If 2078637 Ontario Inc. fails to pay the administrative penalty in accordance with the terms of this Order, the Chief Executive Officer may file the Order with the Superior Court of Justice and the Order may be enforced as if it were an order of the court. An administrative penalty that is not paid in accordance with the terms of the Order imposing the penalty is a debt due to the Crown and is enforceable as such.

DATED at Toronto, Ontario,

Original signed by

Elissa Sinha
Director, Litigation and Enforcement

By delegated authority from the Chief Executive Officer

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