syndicatedmortgages
18 | winter 2017 cmba-achc.ca CMB MAGAZINE
As the Ontario government
moves to overhaul financial services
regulation, some industry experts
say the solution to regulating
syndicated mortgages is as simple
as properly defining them
BY LISA GORDON
O
ntario lawyer David Franklin pinpoints 2008.
at, he says, is when things changed for his
home province's mortgage industry, due to the
introduction of syndicated equity development
mortgages.
While readers are no doubt familiar with the simple definition of
a syndicated mortgage as a mortgage that is funded by more than one
investor, there are a number of variations within the category.
Since many media reports have discussed "syndicated mortgages"
recently, it's worthwhile to point out the distinction that syndicated
equity development mortgages are deals involving multiple investors
who pool their money to finance the construction of new real estate
developments. In some cases, these are also called syndicated equity
mezzanine loans.
Syndicated mortgages first captured the attention of the Canadian
public in the 1990s, during the Eron Mortgage scandal in British
Columbia, which saw thousands of investors lose more than $170
million. e capital – much of it raised from hard-earned retirement
savings contributed by naive investors – was supposed to fund real
estate investments in Western Canada and the U.S. However, much
of it went toward paying interest on previous investments, with some
properties carrying up to four mortgages.
REGULATING
Risk
