Association goes to bat for lenders

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Nova Scotia has released an investor cap proposal for Offering Memorandum (OM) investments that could sweep the nation, according to the Canadian Mortgage Brokers Association which is fighting back against the plan that it believes will negatively impact lenders.
“You may recall that in March of 2014 the securities regulatory authorities of Alberta, Saskatchewan, Ontario, New Brunswick and Quebec published for comment proposed amendments to National Instrument 45-106 Prospectus Exemptions regarding section 2.9 Offering Memorandum,” Samantha Gale of wrote in an email to on behalf of CMBA. “The proposal included a cap of $30,000 for eligible investors relying on the offering memorandum exemption, so that they would not be able to invest any more than $30,000 in all offering memorandum investments combined.”
The CMBA submitted a letter to Nova Scotia Securities Commission on Monday urging it to reconsider its proposal, which could negatively impact mortgage investment corporations – lenders that rely on OM exemptions to raise mortgage funds.
CMBA wrote in the letter:
The impact of the loss of MICs of in Nova Scotia would be profound and would include:
·      The loss of employment from mortgage industry members and support staff who would no longer be arranging and administrating mortgages – also the loss of construction related employment from developers and builders who would not be able to finance new projects;
·      The loss of safe and reliable investment opportunities for investors;
·      The removal of private mortgage lenders from the marketplace, which will make it more challenging for borrowers to find available mortgage capital but also push private lending underground where there is no regulation; and
·      Higher borrowing costs and less access to mortgage capital will lead to an increase in foreclosure rates and borrower defaults.
In the letter, the CMBA urges the regulator to look to B.C. for guidance on how to handle OM exemptions.
“Has the NSSC explored the British Columbia OM model and its success in achieving consumer protection without the intrusive restrictions contained in the NSSC proposal?” CMBA wrote. “If the NSSC has not done so, we would urge them to review BC’s OM model prior to opting for a significantly more restrictive OM regime.”
  • Blair Anderson on 2015-07-10 11:34:27 AM

    This $30,000 investor cap sounds like a death knell for MICs out east. It looks like MICs rely more on the bigger institutional investor vs the smaller retail investor. For example, if you look at the following Romspen OM (, clearly the average retail investor cannot meet a minimum investment of $150,000. For the sake of everyone involved, I hope more than just the fledgling CMBA is bringing pressure to bear on NSSC.

    Kudos to CMBA for doing their part.

  • Tom Jenks on 2015-07-10 1:49:18 PM

    Well done CMBA! Way to be alive to the issues.

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