In our August bulletin, we reported that the Financial Services Regulatory Authority (FSRA) had proposed additional requirements for high-risk, syndicated mortgage investments (High-Risk SMIs). On November 8, FSRA announced that it had finalized this supervisory approach, effective November 12. For High-Risk SMIs, mortgage brokers now must provide FSRA and investors, other than “designated investors”, with a supplementary disclosure form. Among other things, the form outlines specific risks relating to high-leverage mortgage securities, specifies whether there any related parties involved in the syndicated mortgage transaction, and summarizes the fees payable to the mortgage brokerage, broker and/or agent and any related parties for the High-Risk SMI.
Still Waiting for the CSA’s Syndicated Mortgages Reforms: We also reported earlier this year that the Canadian Securities Administrators (CSA) had re-proposed changes to the securities regulatory framework for syndicated mortgages that, among other things, would subject non-qualified, syndicated mortgage market to CSA oversight. These changes were supposed to come into effect by December 31, 2019, but final rules haven’t been published yet. We’ll continue monitor developments in this area and let you know when there’s an update on this initiative.