Reminds consumers about the risks of syndicated mortgage investments
February 2, 2018
The Superintendent of Financial Services has issued orders (linked below) following a complex and detailed investigation by the Financial Services Commission of Ontario (FSCO). The orders were issued, pursuant to a settlement, against eight parties that were involved with syndicated mortgage investments for real estate development projects in Ontario and elsewhere in Canada for which Fortress Real Developments Inc. was a developer or development consultant. (Fortress Real Developments Inc. is not a mortgage brokerage or administrator and is not a party to the settlement or the subject of any of the orders.)
The orders provide that the following four brokerages will pay a combined total of $1.1 million in administrative monetary penalties on consent:
The orders also provide that the mortgage brokerage or broker licences of the following, as applicable, are revoked on consent, requiring them to stop all mortgage brokering business immediately:
Ildina Galati-Ferrante, Principal Broker of Building Development and Mortgages Canada Inc. (BDMC), has surrendered her broker licence, requiring her to cease all mortgage brokering activities.
In addition, the mortgage administrator for these syndicated mortgage investments, BDMC, has voluntarily agreed that its mortgage administration functions for existing syndicated mortgage investments in real estate development projects for which Fortress Real Development Inc. is a developer or development consultant will be managed by a new arms-length administrator, FAAN Mortgage Administrators Inc., which will conduct business in BDMC’s name. The new administrator will be in contact with all syndicated mortgage lenders/investors in the coming weeks.
FSCO is committed to protecting consumers in the sectors it regulates, including mortgage brokering. FSCO considers syndicated mortgages investments to be high risk, and notes they may not be suitable for the average lender or investor. Potential lenders or investors, including consumers and retail investors, are strongly encouraged to seek independent financial and legal advice before lending money through, or investing in, a syndicated mortgage. FSCO does not have the authority to offer restitution for any financial losses related to investments or its enforcement actions.
For media enquiries only, please contact:
Financial Services Commission of Ontario
Toll free: 1-800-668-0128, ext. 7795