FSCO warns about some syndicated mortgages

Investors should be careful when choosing syndicated mortgage investments, according to FSCO.

Don’t be fooled by the big promises of high rates of returns from syndicated mortgage investments. That is the warning from The Financial Services Commission of Ontario (FSCO) as a number of unregulated and unlicensed operators are trying to capitalize on eager investors wanting to get into this investment type.

“The Financial Services Commission of Ontario (FSCO) is warning consumers that it has received complaints about some websites promoting syndicated mortgage investments,” an official release from FSCO states. “The businesses operating these specific websites are not licensed or registered to conduct this activity in Ontario.”

Many operators are using creative marketing terms to attract interested investors.“These websites may refer to the investments as ‘pooled mortgage investments’ or ‘principal secured investments’,” FSCO states. “These websites, along with their online ads, may guarantee high rates of return, secured by real estate, and claim to be RRSP and LIRA eligible.”

The commission also advises purchasers of syndicated mortgages to have a legal professional look over these types of investments. “Consumers should also be aware that all mortgage brokerages, brokers and agents in Ontario are required to disclose the material risks of any mortgage investment to investors in writing and in plain language,” FSCO says. “Investors should ensure they receive this disclosure and should carefully review it, ideally alongside independent legal advice, before making an investment or lending decision.”

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