The Appraisal Institute of Canada Welcomes New Regulations to Protect Investors of Syndicated Mortgages Investments

OTTAWA, March 23, 2018 (GLOBE NEWSWIRE) -- The Appraisal Institute of Canada (AIC) supports the regulatory amendments introduced by the Government of Ontario that govern syndicated mortgages investments within its jurisdiction. Under Ontario Regulation 188/08 Mortgage Brokerages Standards of Practice of the Mortgage Brokerages, Lenders and Administrators Act, 2006 (MBLAA), mortgage brokers will have to comply with new and expanded rules as of July 1, 2018. Amongst these new requirements, mortgage brokers will have to collect and document expanded disclosure information using a new Financial Services Commission of Ontario (FSCO) form. This includes information regarding the appraisal of the property in question.

“Appraisals provide an unbiased, independent and reliable market value for a property. The amended regulations now ensure that an appraisal is completed for a syndicated mortgage investment and that it will include the condition and value of the property within 60 days of the inspection. This information will ensure that a potential investor has a clearer understanding of the “as-is” value of the property to make a well-informed and prudent investment decision,” said Richard Colbourne, AACI, P.App., president of the AIC.

AIC shares concerns about allegations of fraud relating to syndicated mortgage offerings and applauds the Government of Ontario’s initiative on taking the necessary measures to protect investors. AIC has collaborated and continues to collaborate with FSCO, the Ontario Securities Commission (OSC) and the Ontario Ministry of Finance to ensure consumers obtain sufficient information when making investment decisions. AIC encourages governments across the country to implement similar measures to ensure a consistent approach to protecting all Canadians from mortgage fraud.

“AIC believes that the measures taken by FSCO and the Government of Ontario to protect investors in the case of syndicated mortgages investments is warranted and is the prudent approach to take” said Keith Lancastle, AACI (Hon.), AIC’s chief executive officer.

A syndicated mortgage may be offered as an investment in either a specific mortgage or a group of mortgages and may range from a single home to a large commercial development project. Investors in syndicates may also invest in a "bundle" or grouping of residential property mortgages.
Designated Members of the AIC can help mitigate lending and investment risks by providing an unbiased opinion of value on the property or properties. An on-site appraisal prepared by a qualified professional is the most effective way to confirm the value of an individual property used as collateral to underwrite a mortgage. AIC Members are guided by a Code of Conduct and Canadian Uniform Standards of Professional Appraisal Practice (CUSPAP) to ensure the highest level of professionalism and integrity.

Sound mortgage underwriting requires a balanced approach that includes due diligence on the creditworthiness and credit history of the borrower as well as the value of the collateral used to secure the loan.

AIC encourages investors to mitigate potential investment risks by verifying that the real estate used to secure a mortgage has been appraised by a designated appraiser.

The Appraisal Institute of Canada (AIC) is a leading real property valuation association with over 5,400 members across Canada. Established in 1938, the AIC works collaboratively with its 10 provincial affiliated associations to grant the distinguished Accredited Appraiser Canadian Institute (AACI™) and Canadian Residential Appraiser (CRA™) designations. AIC Designated Members are highly qualified, respected professionals who undertake comprehensive curriculum, experience and examination requirements. Our members provide unbiased appraisal, appraisal review, consulting, reserve fund study and machinery and equipment appraisal services within their areas of competence. For more information, go to the AIC Website and follow AIC on LinkedIn, Twitter, Facebook and the AIC Exchange.

Sheila Roy, Director – Marketing & Communications
Appraisal Institute of Canada
Phone: 613-234-6533, Ext. 224
Cell : 613.863.0127