Mortgage Broker is the magazine of the Canadian Mortgage Brokers Association and showcases the multi-billion dollar mortgage-broking industry to all levels of government, associated organizations and other interested individuals.
Issue link: http://digital.canadawide.com/i/354755
F I N A N C I A L L P MORTGAGEBROKER mbabc.ca summer 2014 | 33 oscproposal advisor model or a transaction based model containing a multitude of requirements and restrictions on investor transactions. e OSC should not attempt to implement a system containing mixed regulatory models with conflicting goals. Impact on investment in B.C. MICs contribute billions of dollars' worth of mortgage principal to borrowers in B.C. Without MICs it would not be possible for many B.C. residents to afford to own their own homes, and many industries could not acquire the necessary capital for growth and development. We recently canvassed some of the top MICs in B.C., who reported that 54 per cent of the funds they raised last year exceeded the $30,000 per investor per year limit. A $30,000 investment cap for B.C. MICs, at best, would result in the loss of over half of their principal, and a worst-case and quite possible scenario is that B.C. MICs would be quickly eradicated due to a lack of financial viability. e impact on the mortgage borrowing public if the OSC proposal was adopted in B.C. would include: • preventing some borrowers from completing mortgage transactions without the support of an added second or third private MIC mortgage; • loss of employment from mortgage industry members and support staff who would no longer be arranging and administrating mortgages – also the loss of construction related employment from developers and builders who would not be able to finance developments; • loss of safe and reliable investment opportunities for investors; • higher borrowing costs and less access to mortgage capital will lead to an increase in foreclosure rates and borrower defaults; • removing private mortgage lenders from the marketplace, which will make it more challenging for borrowers to find available mortgage capital but also push private lending underground where there is no regulation. For all of these reasons, the MBABC urged the OSC not to implement any caps on the amount eligible investors can invest under an offering memorandum exemption. In fact, more than 1,000 people spoke out against this proposal. Letters of protest were received from MICs, investors, exempt market dealers and other organizations, including the B.C. MIC Managers Association and the National Exempt Market Association. Most notably, Alberta's opposition leader, Danielle Smith, expressed a need for stronger, more potent anti-fraud rules and enforcement instead of preventing investors from being able to invest their own funds in the exempt market. • e MBABC heard from its MIC members and some of the investors on this subject. See Letters to the Editor on page 14.