"The public's search for yield and the incredible growth of private, MIC or Syndicated mortgage financing of development and/or construction properties in Ontario will someday have a reckoning,” Ron Butler
, owner of Verico
Butler Mortgage, wrote in the comments section of MortgageBrokerNews.ca. “While many mortgage brokers are almost flawless in their due diligence and rigor in choosing projects to offer mortgage investors others are aggressive in a way that has to be called reckless and self-serving.”
Butler’s warning comes on the heels of news that one former broker referral partner is currently under OSC investigation.
Titan Equity Group and its CEO, Lance Kotton, are under investigation by the Ontario Securities Commission for allegedly misappropriating investor funds. No charges have in fact been made or those allegations yet proven in court.
The OSC alleges that Kotton used investor’s funds to purchase a home, luxury cars, and pay himself “excessive” management fees.
An Ontario Superior Court of Justice placed Titan in receivership at the behest of the OSC on November 16.
And Butler argues more referral partners may soon find themselves under the regulator’s microscope.
“Although this was a OSC prosecution based on limited dealer offerings there were mortgages involved in the investor presentations,” Butler wrote.
With brokers relying on more alternative revenue streams than ever before, one industry veteran is warning players about the required due diligence required when it comes to placing clients in these investments.