Mortgage Brokering
Public comment closed
Comment Due Date

The Financial Services Regulatory Authority of Ontario (FSRA) is consulting on proposed guidance that outlines its approach for supervising mortgage brokerages and administrators that are engaged in syndicated mortgage investments (SMIs).

FSRA currently regulates all SMIs in Ontario. FSRA is preparing to transfer regulatory oversight of non-qualified SMIs being sold to less sophisticated investors to the Ontario Securities Commission (OSC). The transfer will provide SMI investors with protections that are consistent with other securities sold to the public. 

FSRA’s proposed guidance will apply to mortgage brokerages and administrators that are engaged in SMIs remaining under FSRA oversight after the transfer. FSRA’s supervision approach will focus regulatory resources on the highest risk activities.

We invite you to submit feedback until September 21, 2020.

FSRA, the OSC and the Ministry of Finance continue to work collaboratively to facilitate the transfer of regulatory oversight of certain SMIs from FSRA to the OSC. For more information, please visit the websites of the Ministry of Finance, FSRA and the OSC.

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Sector Comment Date posted Sort ascending
Mortgage Brokering
[2020-007] Mitchell Oelbaum - Vector Financial Services Limited

[2020-007] Eli Dadouch - Firm Capital Corporation

[2020-007] Kevin Cohen - AUM Law
Comments on Proposed Regime for Non-Qualified Syndicated Mortgages (NQSMs) attached
[2020-007] Foremost Financial - Foremost Financial
Re: Comments requested by FSRA, OSC and Ministry of Finance on changes to the supervisory approach for Non-Qualified Syndicated Mortgages (“NQSMI”) attached.
[2020-007] Canadian Advocacy Council of CFA Societies Canada - Canadian Advocacy Council of CFA Societies Canada
Re: Draft Supervision Approach for Non-Qualified Syndicated Investments with Permitted Clients and Legacy Non-Qualified Syndicated Mortgage Investments (the "Draft Guidance") attached.
Mortgage Brokering
[2020-007] J.P. Boutros - Mortgage Professionals Canada
The submission of Mortgage Professionals Canada (MPC) to the Ministry of Finance is attached. On behalf of Paul Taylor and MPC, our thanks to FSRA, the OSC and to the Ministry of Finance for this consultation.
Mortgage Brokering
[2020-007] JOSEPH CARRIGAN - Batcher, Wasserman
Please find attached our comments and recommendations regarding syndicated mortgages in Ontario.
[2020-007] Neil Gross - OSC Investor Advisory Panel

[2020-007] Gary Waddington - Ernst and Young
Consider referencing or adding definitions of market value and "as is" value (see Table 3: row labelled Property).

In addition to "as is" market value, when an SMI relates to a proposed development or redevelopment, it is important that an investor be able to assess the profitability of the proposal since profitability lies at the root of the investor understanding probability of recovering the original investment plus any return on investment. An independent third party report underwriting the revenues, expenses and profitability should be considered as a disclosure requirement to investors, especially non-Permitted clients.
Loan and Trust
[2020-007] Gordon Sommerville - Home Value Inc.
I am understanding that current requirements written indicate that Non Syndicated mortgages must have an appraisal completed by an AACI member of the Appraisal Institute of Canada (AIC). This presents an inconsistency and potential problem when the subject property of a Non Syndicated mortgage is a single family residential property (or residential up to 4 units maximum) in that most AACI designated members do not typically appraise such properties and are not accustomed to completing such assignments. Further there are relatively few AACI members to CRA (Canadian Residential Appraisers) in the AIC membership roster so finding an AACI member motivated to appraise a residential property (single family or 4 units or fewer) can be difficult, if not impossible and far more expensive than it need be. The fact that a mortgage is Syndicated or Non Syndicated should not determine the designation of the appraisal professional that is required, rather the property type should; Single family residential (or residential 4 units or fewer) according to the Appraisal Institute of Canada can be appraised by a CRA or an AACI member providing they have the self determined competence to properly complete the assignment.
Please reconsider the specification of the appraiser designation for Non Syndicated mortgages to be in line with the property, the competence and the scope set out by the Appraisal Institute of Canada.
Mortgage Brokering
[2020-007] Murray Snedden - MarshallZehr Group Inc.
Please find attached our comments regarding the proposed regulatory changes to Non-Qualifying Syndicated Mortgage Investments (NQSMIs). Let me know if you have any questions about the comments provided.

Thank you.
Mortgage Brokering
[2020-007] Arjun Saraf
Thank you for the opportunity in allowing us to provide our feedback.

In order for you to provide effective oversight the ability for firms to would it make more sense to perhaps have the OSC or FSRA take over all NQSMI? I'm curious about the rationale in splitting oversight as some entities will have to report to both FSRA and the OSC depending on the project and the investments it is attracting. This also creates a barrier to entry which although is helpful to avoid a rush in creating these types of projects - but also takes from the ability for one to start one - as some projects involve a combination of permitted and other investors. The addition of the oversight of administrators (who at times can be the same party) makes the separation potentially confusing.

Another concern is on behalf of investment side for the prospectus exemption - if there is no offering document that outlines significant timelines/costs/zoning and construction requirements - would that not make it harder for investors (permitted or otherwise) to track their investments? In large scale projects - every detail counts including other parties who are partnering in the project etc.

Additionally if projects could be categorized by size in dollar amount/Number of investors as another differentiating factor it would allow for more flexibility and less cost/regulatory burden on smaller projects that do not have the margins to support the administrative costs with heavier compliance.

The concepts of data driven judgement - proactive assessments - target based risk approach is an excellent way to keep track of the industry and where it is going. The quarterly reporting will help provide clearer direction especially during these uncertain times. The risk based approach through reporting will also help firms who do not really involve themselves in these projects the ability to carry on with their regular Business activities.

Finally coordinating with Auditors/Accountants to provide potential assurance on these transactions in line with FRSA/OSC mandate would also alleviate some of the burden from the regulator. This could be a way to reduce duplicate work being performed by the auditors as well as the regulator. As it is Mortgage Brokerages are required to be audited - if the regulator can provide a clearer guideline for the work required around these transactions it would benefit all parties.


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