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Harold the Mortgage Closer accused of charging ‘vulnerable’ people interest rates up to 76 per cent
Gerstel ‘is not suitable to be licensed as a mortgage broker,’ says the province’s financial services regulator in a proposal that outlines five new cases against the GTA businessman.
Ontario is moving — again — to shut down Harold the Mortgage Closer, alleging he has for years carried out a scheme that charged “vulnerable” people up to 76 per cent interest on mortgages.
Enforcement action by the Financial Services Regulatory Authority of Ontario comes on the heels of a Toronto Star investigation into a mortgage deal that Harold Gerstel and his companies had with the late Judy Allen, a senior who eventually lost her North York bungalow to Gerstel.
The regulator says it has now looked more deeply into Gerstel’s activities and found five other cases. Among them, situations in which, the regulator alleges, Gerstel’s effective interest rate was as high as 76 per cent. Canada’s Criminal Code has set 60 per cent as the highest legal interest rate allowed.
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The regulator alleges “Harold Gerstel has orchestrated a scheme under which he leveraged the credibility afforded to him” by being licensed as a mortgage broker and then advertised “to vulnerable consumers.”
“Gerstel is not suitable to be licensed as a mortgage broker,” says Elissa Sinha, director of litigation and enforcement with the provincial financial services regulator in an enforcement proposal made public on Thursday. “Gerstel has intentionally circumvented the protections provided to the borrowers” by provincial legislation.
The regulator is seeking to close down Gerstel’s company and private lender Esther Gerstel Inc. (the sole director is his wife, Esther) and levy fines totalling $210,000. The regulator states that Gerstel’s company arranges the deals, and his wife’s company advances the funds. The regulator says Gerstel controls his wife’s company; Gerstel says he has no interest in his wife’s company, “directly or indirectly.”
Gerstel, who also operates Harold the Jewellery Buyer, is well known in the Greater Toronto Area through televised ads, promising “fast, no hassle mortgages.” He has previously told the Star the allegation from the regulator that he charges “exorbitant” rates are incorrect and that “these are fabricated allegations by people with an agenda.”
In response to these new allegations, Gerstel referred the Star yesterday to a formal response to the new allegations that he has filed with the regulator in advance of a hearing later this year. He said in the response that he has done nothing wrong, and in fact provides an important service to borrowers in “significant difficulty, who cannot get financing from any large financial institutions.”
ARTICLE CONTINUES BELOW
The FSRA is a provincial body set up to protect Ontario consumers in several areas, including insurance, financial planning, credit unions and mortgage brokerages.
The Star began looking into Gerstel in 2022, related to allegations from Allen, a retired nurse, that she had been taken advantage of by Gerstel and a home renovator named Tony Sinopoli. Toronto police ultimately charged Sinopoli with fraud, but he died before his trial. Allen alleged that Sinopoli and Gerstel, working together, and with the help of a lawyer, caused $1.5 million of mortgages to be placed on her North York bungalow. Gerstel and the lawyer involved have denied they did anything wrong.
The regulator issued its first set of allegations against Gerstel last September. Gerstel went to court to have this quashed, and was unsuccessful. Now, the regulator’s investigative team has looked into five other sets of allegations against Gerstel. These, along with the Allen allegations, now form part of the investigative brief that the regulator hopes to present at a hearing later this year.
In one of the new allegations, the regulator alleges that “MW” was a renovator who was in the business of fixing up and selling condos. According to the regulator, one of Gerstel’s companies registered eight mortgages on two of MW’s properties. While the total amount registered was $3.6 million, only $2.5 million was advanced. The regulator states that the “effective annual interest rate” for the mortgages was between 50 per cent and 64 per cent.
In the Star’s investigation of the case related to the late Judy Allen, the Star found that while the face value of the interest rate on four mortgages was about 22 per cent, the interest rate became much higher due to a series of “lending fees” that were tacked onto the mortgage and paid out up front by Allen (along with all of the interest payments) at the moment funds were to be advanced to her. The regulator states that $1,120,000 was the total face value of four mortgages on Allen’s property, but that she only received $573,760 and that the effective annual interest rate was 56 per cent. The Star’s investigation showed that the money advanced to Allen went to the renovator and members of his family, and that the work (Allen wanted her bungalow made open-concept so it was easier for her to get around) was poorly done and unfinished.
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In a second new case, the regulator alleges that “DG” learned of Gerstel through his television advertisements. DG was “struggling with significant health issues and not working.” The regulator alleges that five mortgages registered on DG’s home had a principal amount of $230,000, but DG was only advanced $137,000. The regulator alleges the effective interest rate was between 56 per cent and 76 per cent.
Another case set out in the regulator’s series of allegations, relates to “MD,” who reached out to Gerstel to discuss a mortgage renewal. The regulator alleges that a Gerstel company (he has two that are in the mortgage business) registered four mortgages with a total principal of $1,539,000, but allegedly only advanced $1,220,500. The effective annual interest rate was, the regulator states, between 30 per cent and 75 per cent. The regulator provides only bare-bones details in the allegations. In the case of “MD,” the regulator said that eventually “MD” was able to repay the Gerstel mortgages at “significantly more favourable terms” through a different mortgage broker.
Not all of the allegations relate to big dollar figures. In one, “MA” was laid off by her employer and needed to mortgage her home to meet short-term needs. The regulator alleges that Gerstel arranged to put two, one-year mortgages on her home with a total principal of $61,000, but only advanced her $42,000. The regulator said the effective annual interest rate was between 55 per cent and 71 per cent.
The final of the five new allegations relates to “WJ,” who also called Gerstel after seeing an ad on a local television station. The regulator alleges the registered mortgage was $150,000, but only $100,000 was advanced. The effective annual interest rate was 52 per cent.
When these new allegations came out Thursday, the Star reached out to Gerstel, who provided his written response. In it, he denied any wrongdoing involving any of the cases the regulator has brought forward. And he slammed the provincial agency for “abuse of process,” saying that it has unlimited public funding and is using its resources against him to “cause financial distress and intimidation.” He said he will be seeking personal costs and sanctions against the three senior officials at the regulator who are working on his case.
A pre-hearing conference is scheduled for May 29. At that date, the regulator will attempt to set a date for a full hearing.
Source: Thestar
Gerstel ‘is not suitable to be licensed as a mortgage broker,’ says the province’s financial services regulator in a proposal that outlines five new cases against the GTA businessman.
Ontario is moving — again — to shut down Harold the Mortgage Closer, alleging he has for years carried out a scheme that charged “vulnerable” people up to 76 per cent interest on mortgages.
Enforcement action by the Financial Services Regulatory Authority of Ontario comes on the heels of a Toronto Star investigation into a mortgage deal that Harold Gerstel and his companies had with the late Judy Allen, a senior who eventually lost her North York bungalow to Gerstel.
The regulator says it has now looked more deeply into Gerstel’s activities and found five other cases. Among them, situations in which, the regulator alleges, Gerstel’s effective interest rate was as high as 76 per cent. Canada’s Criminal Code has set 60 per cent as the highest legal interest rate allowed.
ARTICLE CONTINUES BELOW
The regulator alleges “Harold Gerstel has orchestrated a scheme under which he leveraged the credibility afforded to him” by being licensed as a mortgage broker and then advertised “to vulnerable consumers.”
“Gerstel is not suitable to be licensed as a mortgage broker,” says Elissa Sinha, director of litigation and enforcement with the provincial financial services regulator in an enforcement proposal made public on Thursday. “Gerstel has intentionally circumvented the protections provided to the borrowers” by provincial legislation.
The regulator is seeking to close down Gerstel’s company and private lender Esther Gerstel Inc. (the sole director is his wife, Esther) and levy fines totalling $210,000. The regulator states that Gerstel’s company arranges the deals, and his wife’s company advances the funds. The regulator says Gerstel controls his wife’s company; Gerstel says he has no interest in his wife’s company, “directly or indirectly.”
Gerstel, who also operates Harold the Jewellery Buyer, is well known in the Greater Toronto Area through televised ads, promising “fast, no hassle mortgages.” He has previously told the Star the allegation from the regulator that he charges “exorbitant” rates are incorrect and that “these are fabricated allegations by people with an agenda.”
In response to these new allegations, Gerstel referred the Star yesterday to a formal response to the new allegations that he has filed with the regulator in advance of a hearing later this year. He said in the response that he has done nothing wrong, and in fact provides an important service to borrowers in “significant difficulty, who cannot get financing from any large financial institutions.”
ARTICLE CONTINUES BELOW
The FSRA is a provincial body set up to protect Ontario consumers in several areas, including insurance, financial planning, credit unions and mortgage brokerages.
The Star began looking into Gerstel in 2022, related to allegations from Allen, a retired nurse, that she had been taken advantage of by Gerstel and a home renovator named Tony Sinopoli. Toronto police ultimately charged Sinopoli with fraud, but he died before his trial. Allen alleged that Sinopoli and Gerstel, working together, and with the help of a lawyer, caused $1.5 million of mortgages to be placed on her North York bungalow. Gerstel and the lawyer involved have denied they did anything wrong.
The regulator issued its first set of allegations against Gerstel last September. Gerstel went to court to have this quashed, and was unsuccessful. Now, the regulator’s investigative team has looked into five other sets of allegations against Gerstel. These, along with the Allen allegations, now form part of the investigative brief that the regulator hopes to present at a hearing later this year.
In one of the new allegations, the regulator alleges that “MW” was a renovator who was in the business of fixing up and selling condos. According to the regulator, one of Gerstel’s companies registered eight mortgages on two of MW’s properties. While the total amount registered was $3.6 million, only $2.5 million was advanced. The regulator states that the “effective annual interest rate” for the mortgages was between 50 per cent and 64 per cent.
In the Star’s investigation of the case related to the late Judy Allen, the Star found that while the face value of the interest rate on four mortgages was about 22 per cent, the interest rate became much higher due to a series of “lending fees” that were tacked onto the mortgage and paid out up front by Allen (along with all of the interest payments) at the moment funds were to be advanced to her. The regulator states that $1,120,000 was the total face value of four mortgages on Allen’s property, but that she only received $573,760 and that the effective annual interest rate was 56 per cent. The Star’s investigation showed that the money advanced to Allen went to the renovator and members of his family, and that the work (Allen wanted her bungalow made open-concept so it was easier for her to get around) was poorly done and unfinished.
ARTICLE CONTINUES BELOW
In a second new case, the regulator alleges that “DG” learned of Gerstel through his television advertisements. DG was “struggling with significant health issues and not working.” The regulator alleges that five mortgages registered on DG’s home had a principal amount of $230,000, but DG was only advanced $137,000. The regulator alleges the effective interest rate was between 56 per cent and 76 per cent.
Another case set out in the regulator’s series of allegations, relates to “MD,” who reached out to Gerstel to discuss a mortgage renewal. The regulator alleges that a Gerstel company (he has two that are in the mortgage business) registered four mortgages with a total principal of $1,539,000, but allegedly only advanced $1,220,500. The effective annual interest rate was, the regulator states, between 30 per cent and 75 per cent. The regulator provides only bare-bones details in the allegations. In the case of “MD,” the regulator said that eventually “MD” was able to repay the Gerstel mortgages at “significantly more favourable terms” through a different mortgage broker.
Not all of the allegations relate to big dollar figures. In one, “MA” was laid off by her employer and needed to mortgage her home to meet short-term needs. The regulator alleges that Gerstel arranged to put two, one-year mortgages on her home with a total principal of $61,000, but only advanced her $42,000. The regulator said the effective annual interest rate was between 55 per cent and 71 per cent.
The final of the five new allegations relates to “WJ,” who also called Gerstel after seeing an ad on a local television station. The regulator alleges the registered mortgage was $150,000, but only $100,000 was advanced. The effective annual interest rate was 52 per cent.
When these new allegations came out Thursday, the Star reached out to Gerstel, who provided his written response. In it, he denied any wrongdoing involving any of the cases the regulator has brought forward. And he slammed the provincial agency for “abuse of process,” saying that it has unlimited public funding and is using its resources against him to “cause financial distress and intimidation.” He said he will be seeking personal costs and sanctions against the three senior officials at the regulator who are working on his case.
A pre-hearing conference is scheduled for May 29. At that date, the regulator will attempt to set a date for a full hearing.
Source: Thestar
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