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The FMP news release tells prospective investors there is “stability and predictability in a syndicate mortgage, where your money is secured against the value of the land and not a variable share tied to markets.” It also states that “an increasing number of Canadians are using their RRSPs and TFSAs to invest directly in Canadian real estate through a syndicate mortgage.”

FMP is named in two of the lawsuits that target syndicated mortgages. Fortress spokesperson Alibhai said “Fortress is not affiliated with FMP,” while the lawsuits claim it is one of three mortgage brokerage firms that have agreements with Fortress “to market the mortgage investments widely to other mortgage brokers and agents who, in turn, solicit interest from members of the public in the Fortress investments.”

Peter Natyshak, executive vice-president at FMP Mortgages, said the firm is aware of the lawsuits, and added that “virtually all of the defendants are bringing motions to strike,” including FMP. He said his firm offers lenders the opportunity to fund Fortress projects, but the two companies do not share any common ownership, officers or directors.

Asked whether regulators had approached FMP or taken any issue with the news release in March, Natyshak said the mortgage brokerage “has ongoing regular dialogue with FSCO, and ensures all rules mandated by the regulator are followed.”

Ontario’s new framework for syndicated mortgages, once in place, should increase scrutiny on the sector, close some of the monitoring gaps, and go some way to enforcing the rules consistently rather than waiting for a complaint or audit.

Such changes would be welcome by investors, but still leaves them with at least one question: What took so long?

Financial Post

bshecter@nationalpost.com

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