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Mortgage Broker News | 04 May 2016, 08:45 AM Agree 0
With syndicated mortgages receiving backlash in the major media, are brokers becoming warier of offering them?
  • Jesse D | 04 May 2016, 01:41 PM Agree 0
    I just started offering syndicated through Fortress. Yes, there are some firms not doing this properly but Fortress has gone through the ups and downs and they are far more secure than most investments being sold by financial advisors and banks. Brokers not interested in selling syndicated are welcome to choose that for themselves but lay off those that do. Private mortgages are more unstable to home owners than syndicated and many of the brokers against syndicated push private lending. What happens when a client bounces a payments? Lenders like New Haven charge upwards of $1000 in fees. These people also lose their homes. We don't slam you for pushing private lending, don't slam us for trying to help client actually earn a retirement fund that by the way is fully disclosed much more so than private lending and much better regulated than private lending.
  • David Franklin | 04 May 2016, 02:54 PM Agree 0
    The Star article did not set out the further improprieties and lack of disclosure to investors concerning the Fortress syndicated mortgages. One area was the providing of free independent legal advice, which as provided to investors by the lawyers, is in breach of the Rules of Professional Conduct of the Law Society of Upper Canada. By the way has any seen the tax opinion concerning RRSP eligibility?
  • Ron Butler | 04 May 2016, 03:57 PM Agree 0
    Jesse D or whoever you really are. Your position is very hard to understand. Please consider few important questions:

    - What effective interest rate is the borrower paying on a Fortress syndication? If the lender is getting 8% to 12% and the referring mortgage broker is getting 4% to 7% and FDS is making something and Fortress is making something; when I add all that up what is the borrower actually paying as a cost of borrowing?

    - What is happening with the Alberta Brad Lamb projects? Mr. Lamb announced a delay in construction, what has been the effect on investors? Has that effect been negative? Has the facts of the delay become a warning on all the marketing materials. I am not saying I know every detail but I did read the delay announcement.

    - Are the issues described in the Toronto Star article regarding the two principals of Fortress and the Mutual Fund regulator and the Securities regulator part of the marketing materials used with investors?

    - Is there a possibility that the funds advanced to the borrower from the investors also fund all 3 years of the interest payments to the investor? If true this would mean the investors are paying themselves their own interest until the project completes. if so, is that fact made clear to the investor?

    There are a lot of questions and I think every mortgage broker has a duty to know the answers.

    Here's one thing I do know about many of us who do private lending, we worry about transparency to our investor lenders and try to treat their money as if it was our own.

    These syndicated mortgage investments are not even allowed to be sold through mortgage brokers in other provinces and if facts prove out in Mr. Franklin's comments that the ILR given the investors was a breach of Professional Conduct then it is all the more concerning.
  • David O'Gorman | 04 May 2016, 08:30 PM Agree 0
    Waiting for the kawsuits to start flying, & they will. Does MB E&O cover the referring brokerage if referred investor loses the bundle & sue's the referring brokerage?
    8% referral fee to brokerage referring the investor, then 8% to the investor? Appropriate investment/risk for "Mom & Pop"?"
    This is high risk lending at its best.
    I have confidence in people like Paul Magione, who do a higher quality syndicated lending. However it is in no way similar to lending on residential properties.
    Jesse D are you a shill for Fortress? There has not been little downward trend in major Canadian commercial markets since 2008 except for Alberta, and there is past presidence (1979) for cautious commercial lending, & the secondary markets.
  • Larry Smith | 05 May 2016, 08:00 AM Agree 0
    I would like to know where I can find the
    tax opinion concerning RRSP eligibility.
  • James Loewen | 05 May 2016, 08:16 AM Agree 0
    Just to play devil's advocate here, the Star article did mention that syndicated mortgage investors have paid out on 13 deals involving Fortress.
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