Tag: fsco

Changes to the Mortgage Syndication Rules

As of July 1, 2018, the Financial Services Commission of Ontario (FSCO) will begin enforcing the changes to the O. Regulation 188/08 Mortgage Brokerages Standards of Practice under the Mortgage Brokerages, Lenders and Administrators Act, 2006 (MBLAA) that affect non-qualified syndicated mortgages.To recap a qualified syndicated mortgage is a syndicated mortgage (a mortgage where there is more than one lender) that meets ALL of the following requirements:A licensed mortgage brokerage was involved in negotiating or arranging it.The mortgaged property secured was:Primarily used for residential purposes;Did not contain more than four (4) dwelling units (remember sometimes lenders will classify multiplexes as commercial or entirely residential depending on the number of dwelling units disregarding actual zoning and use);Did not contain more than one non-residential (commercial) unit, if within a mixed use building with other residential units (again up to four (4) in total).

A MIC does not simply allow you to raise money from the public!

Mortgage Investment Corporations (“MICs”) are on the rise in Canada. With many of these MICs the founders and managers are confused over what regulators may or may not govern certain aspects of running their business as a mortgage lender, a mortgage dealer or arranger such as mortgage broker or agent, a mortgage administrator and being in the business of raising money for the MIC.Depending on how one operates and manages their MIC, the following is a very brief and generalized overview of which regulators may govern how you operate in Ontario.First, and foremost a MIC’s primary purpose should be to qualify as a Mortgage Investment Corporation defined under section 130.1 of the Income Tax Act (Canada), which is further explained here. This would therefore mean that every MIC would first be regulated and governed by the Canada Revenue Agency (“CRA”) in determining if at all the operations and capital structure of the corporation qualifies the MIC as one.