The body representing originators of more than a third of Canada’s mortgages has responded to proposed changes to the rules on syndicated mortgages.
In March, the Canadian Securities Administrators opened a consultation on proposals to change the way these loans are regulated. This would include removing exemptions for registration with securities regulators or filing a prospectus.
There would also be a requirement for an independent appraisal for properties covered by syndicated mortgages.
In response, Mortgage Professionals Canada has expressed concern about the additional costs of the complying with the proposed changes. It says that it may force some businesses out of the industry.
“Without making adjustments to the proposed regulations, we are concerned that many businesses that arrange smaller syndicated mortgages will be faced with such high regulatory costs that they will no longer be able to offer these products and will be forced to exit the industry,” wrote MPC president and CEO Paul Taylor in a letter to the CSA.
Among the recommendations MPC has made to the regulators is an extension of the proposed transition period for implementing the new rules. Mr Taylor says 12 months is not long enough for mortgage brokers to make the necessary changes and that it should be doubled.
MPC also proposes simplification of a proposed complex and costly change to the 45-106F1 Report of Exempt Market Distributions filing including a monthly $500 fee rather than that cost for each filing made.
There is also concern over the impact on husband and wife (and legally recognized spousal relationship) syndications, with MPC calling for an exemption for these transactions.
“We believe that it is not the intention of the regulations to prelude these types of syndications and we want to avoid any unintentional consequences by explicitly stating that these types of activities will be exempt from the new regulations,” wrote Mr Taylor.
In conclusion, the MPC leader says the organization is supportive of the CSA’s proposals to protect consumers and increase regulatory oversight for syndicated mortgages.