The regulated nature of mortgages
The regulated nature of mortgages

Regulations surrounding mortgage financing have always been a source of debate — in Canada, the United States (where the last housing and financial crisis started) and worldwide. As with most things in life, there needs to be a balance.

On the one hand, mortgage regulations need to be in place in order to protect citizens’ interests. Without such regulations, people could find themselves taking on too much mortgage debt, and their financial situation collapses. During the last global housing crisis, much of the world’s financial situation collapsed because regulations did not protect the citizenry.

Risk vs. stability

On the other hand, too much regulation can stifle financial activity. Risk is part of the foundation of any financial system. If you take risk completely out of the picture, then nobody really innovates, takes chances, or makes any real money.

In Canada, this balance between regulation and risk has been managed rather effectively throughout the country’s financial history. The recent financial crisis, or what some people refer to as the Great Recession (as opposed to the Great Depression of the 1930’s), is a perfect example.

Although Canada was most certainly affected by the crisis, and did enter a period of recession, it was rather short lived and the country has now surpassed the housing and economic performance seen before the crisis and recession.

Mortgages are regulated

The mortgages market is no different. There has to be a balance between safe and sound investment practices, and the allowance for some risk taking. For example, in Ontario recently, the Financial Services Commission of Ontario (FSCO, under which ASCEND MIC is regulated) issued a public alert against unlicensed syndicated mortgages.

A syndicated mortgage is when more than one lender invests in one specific mortgage. This differs from a mortgage investment corporation (MIC) or other mortgage investment funds that pool more than one mortgage together for the benefit of investors.

In Ontario, syndicated mortgages have been selling under unlicensed brokerages and practitioners, thus exposing investors to undue risk. Therefore, the FSCO has started to move in to warn the public to the dangers of such unregulated mortgage activity. This is just another example of Canada’s regulators trying to strike a balance between safety and risk.

It should be noted that ASCEND MIC is licensed and abides by all provincial and federal regulations that ensure investors get the proper information they need to make sound and profitable investment decisions.

ASCEND MIC is a mortgage investment corporation that specializes in offering investors high returns at low risk in Canada’s mortgages market. Please contact us to learn more.