Syndicated Mortgages Update

The Mortgage Brokers Advisory Committee has been involved in providing Council with direction regarding the issue of syndicated mortgages.  In brief, a syndicated mortgage is a mortgage in which two or more people participate, directly or indirectly, as lenders in a debt obligation that is secured by a mortgage. The Real Estate Act of Alberta defines “mortgage” and “mortgage broker” in broad terms and captures syndicated mortgage. The Alberta Securities Commission (ASC) considers a syndicated mortgage to be a type of security.

Currently, the Alberta Securities Commission (ASC) has an exemption from its registration and prospectus requirements for those persons that are licensed with RECA as mortgage brokers and deal in syndicated mortgages. The ASC is considering a proposal to remove that exemption. In addition, RECA has identified concerns with the regulation of syndicated mortgages and consumer protection levels for some types of syndicated mortgages.

RECA issued a discussion paper on this topic and consulted with mortgage industry members and stakeholders regarding the regulation of syndicated mortgages.  The meetings were very well attended and resulted in several submissions from the industry.  Thank you to all who participated and provided valuable feedback.

The Mortgage Brokers Advisory Committee participated in RECA’s consultation process and held several meetings in Calgary and Edmonton with industry members. The committee reviewed all the information that was available related to the regulation of syndicated mortgages, considered the feedback received from mortgage brokers and identified a number of issues that need to be addressed.  Consultation with the Alberta Mortgage Brokers Association has been paramount in helping to determine what type of activities or types of investments should be captured as a syndicated mortgage with the ASC.

• At its August meeting, Council directed administration and the Committee to:

• further explore RECA being the regulator of syndicated mortgages in Alberta
• undertake a comprehensive study of all aspects of regulating syndicated mortgages and other issues associated with the regulation of syndicated mortgages and report back to Council at a future date on the findings involved if RECA were to regulate all syndicated mortgages;
• update the Alberta Securities Commission (ASC) on the consultation process, RECA’s current position on the regulation of syndicated mortgages and its future undertakings and request from the ASC that the current exemptions remain in place until such time as RECA has completed its deliberations; 
• inform the respective government ministries that are responsible for RECA and the ASC of RECA’s direction and request that no changes occur to legislation until that study is complete and RECA has determined its role. 

RECA administration will be working with the Committee to move this project forward in the coming months. Additional consultation will be required.

 

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