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FAIR Canada Comments on CSA Proposed Amendments for Syndicated Mortgages

FAIR Canada welcomes the Proposed Amendments as a step in the right direction. The removal of prospectus and registration exemptions for securities that are syndicated mortgages is necessary given the lack of effective oversight and enforcement. These investments should be regulated like any other securities investment. We also call for risks to investors from real estate investments more broadly to be a focus of securities regulators. We are concerned about the regulatory framework for mortgage investment corporations (“MICs”) and the investor losses and risks associated with MICs that have been highlighted in media and independent reports and call for the mortgage investment regulatory framework to be examined and strengthened.

FAIR Canada’s recommendations to securities regulators with respect to the regulation of syndicated mortgage investments include requesting securities regulators to:

  • Review a certain percentage of OMs to improve the woeful compliance rate and to deter fraud
  • Review the efficacy of the risk acknowledgement form
  • Prohibit disclosure of projected future market values in the sale of syndicated mortgage investments
  • Restrict the volume of business any one appraiser’s firm can provide to a given issuer group and/or mortgage broker so as to maintain independence
  • Provide a statutory right of action against issuers, promoters, and mortgage brokers for misrepresentations in an OM (including marketing, promotional or advertising material which is incorporated by reference therein) and
  • Require registration of mortgage brokers as securities registrants if in the business of distributing syndicated mortgages.

Click here to read our full submission.

June 21, 2018