FSRA Consultation on

Supervision Approach for High-risk Syndicated Mortgages and Options for Burden Reduction re: Non-qualified Syndicated Mortgage Forms 3.0, 3.1 and 3.2 

Purpose of consultation

In its first-year priorities, FSRA has identified enhanced consumer protection of investors in high risk mortgages. To support this priority, FSRA consulted on a proposed Supervision Approach for High-risk Syndicated Mortgages. The approach included a new supplemental disclosure Form 3.2.1. The proposed supervision approach and supplemental disclosure Form 3.2.1 are in line with FSRA’s priority to provide effective supervision of syndicated mortgages investments.

We sought feedback on the proposed supervision approach and the supplemental disclosure Form 3.2.1:

  1. Does the supervision approach address the appropriate risks relating to syndicated mortgages for retail investors?
  2. Does the new supplemental disclosure form clearly highlight that these are risky investments? Is the language in the new disclosure form easy to understand?

We received 32 submissions on the supervision approach and supplemental disclosure Form 3.2.1, during the time period of August 7, 2019 to September 6, 2019. The submissions and comments are available on FSRA’s website.

This approach will be reconsidered if it is made redundant by the transfer of the regulation of high-risk syndicated mortgage transactions to the Ontario Securities Commission.

We will continue to focus on burden reduction, including other syndicated mortgage disclosure forms (link to forms 3.0, 3.1 and 3.2), to find opportunities to reduce regulatory burden on lower-risk syndicated mortgage transactions – this feedback is being reviewed as part of our burden reduction work. While not every stakeholder recommendation can be integrated into our approach at this time, we certainly value the commitment to reducing burden in this industry. It informs our decisions on an ongoing basis.

What we heard

FSRA is appreciative of the significant effort that went into the comments it received on its approach to high-risk non-qualified syndicated mortgage investments (SMIs) and options for burden reduction for non-qualified SMI Forms 3.0, 3.1 and 3.2 (released July 2018).

FSRA would like to thank all commenters for the views expressed. FSRA has carefully considered all comments received.

Based on the feedback, FSRA is adopting the proposed supervision approach as proposed in August 2019.  The following non-material changes have been made to Form 3.2.1:

  1. The disclosure will state “A syndicated mortgage is a risky investment” versus “could be a risky investment”; and
  2. Clarifications on when subordination introduces additional risk to a non-qualified SMI transaction

Many comments went beyond the scope of the consultation. FSRA will consider these comments in all its future policy work, and has shared relevant feedback with officials at the Ministry of Finance (MOF). Below is a synthesis of all the comments received, grouped by themes, and FSRA’s responses to those comments.

Feedback highlights include:

  • “This is absolutely necessary and as a Mortgage Agent I personally welcome these changes”. Patricia Porretta, Rush Mortgages Inc.
  • “This is certainly a step in the right direction”, Grant Fournier
  • “I am somewhat concerned that investors will ultimately get numb to the mountain of papers that they are required to sign before each investment.   So, not that this isn't a good idea, but some investors will be signing a book and this may get lost in the stack.” - Evan Cooperman, Foremost Financial
  • "You can have the best disclosure forms in the world but the problem is that the investors do not read them. So, the forms do not in most cases have any value to the investing public. The investors rely on their agents in making the investment.” – David Franklin,  Real Estate Lawyer
  • “The form is straightforward, written clearly in plain language”, Pierre Pequegnat, DLC Sherlock Mortgages
  • “The recent releases by FSRA seem quite appropriate to deal with clarity to the consumer/investor” Malcolm Eccles, CIR Mortgage Corp
  • “MPC believes the approaches you propose are long overdue”. Paul Taylor, President, Mortgage Professional Canada
  • “This is great to make sure agents are getting more verification for investors”, Laura Thompson, RMA
  • “Thank you for your dedication and efforts in protecting our industry”, Reginald Robert Barnes, Barnes Mortgage SolutionsInc.
  • “I reviewed the supervision report and the new Form 3.2.1 today.   Fully support the actions and disclosures that have been undertaken”, Andrew Furino, Capital Mortgages Inc.

Our response

Effective Nov 12, FSRA announces it is now issuing new guidance requiring all mortgage broker to advise consumers of the potential risk in this investment based upon clear factors as outlined in 3.2.1. Based upon industry and consumer consultation there was strong support for this approach.  FRSA will continue to monitor SMI to ensure compliance while working with industry to reduce burdens.

List of Contributors

The following stakeholders took the time to share their perspectives with FSRA.




2043919 Ontario Ltd O/A Best Choice Mortgage Services (Tom Jarvis)


Barnes Mortgage Solutions Inc. (Reginald Robert Barnes)


Broker (Alex)


Canadian Mortgages Inc. (Bryan Jaskolka)


Capital Mortgages Inc. (Andrew Furino)


CIR Mortgage Corp (Malcolm Eccles)


David Franklin


David Franklin


DLC Eagle Group (Derik Rehou)


DLC Sherlock Mortgages (Pierre Pequegnat)


Empirical Capital Corp. (David Strahl)


Firm Capital Corporation (Eli Dadouch / Victoria Granovski)


Fischer Group Inc. (Bruce Fischer)


Foremost Financial Corporation (Evan Cooperman)


Grant Fournier


H Redlick Consulting (Harlan Redlick)


Hillmount Capital Inc. (Diane Falcione)


MarshallZehr Group Inc. (Murray Snedden)


Mortgage Diligent Ltd. (Viiaykumar Rana)


Mortgage Intelligence (Michele HALL)


Mortgage Professionals Canada (J.P. Boutros on behalf of Paul Taylor)


MOS MortgageOne Solutions Ltd (Paul Mangion)


(Mike Marshall)


Newhaven Mortgage Corporation (Jason Vyner)




PMC Funding  (Stephen Lidsky)


Privcomm Mortgages (Sergio Bogani)


RMA (Laura Thompson)

29 Rock Capital Investments Inc. (Dwight Trafford)
30 Rush Mortgages Inc (Patricia Porretta)
31 Vector Financial Services Limited (Mitchell Oelbaum)
32 Sharon VanderDuim