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By News Canada
(NC)-Investing money in a private mortgage for attractive returns has its
merits and its risks. This type of investment is one in which a person lends
money to a borrower who pledges real estate as security for the loan. These
types of mortgage investments may be arranged through a Mortgage Broker.
All Mortgage Brokers in the province of Ontario are required to be registered
with the Financial Services Commission of Ontario (FSCO), an agency of the
Ministry of Finance.
Do business only with a licensed Mortgage Broker. Confirm that the broker you
are dealing with is qualified and registered by visiting FSCO`s website: www.
fsco.gov.on.ca, or by calling (416) 226-7776.
Mortgage Brokers must give you full information
Mortgage Brokers are required to provide each prospective investor with
information in the form of an Investor/Lender Disclosure Statement, as well
as supporting documents such as an appraisal and an Agreement of Purchase and
Sale.
This information package must include: a description of the property or
project to be mortgaged; the terms and conditions of the mortgage loan; how
the mortgage will be administered; in case of mortgage syndications, terms of
the syndications; all prior claims on the property, such as other mortgages,
liens or taxes owing; information on the borrower, including ability to repay
the loan; any relationship or connection the broker has with the borrower and
appraiser; any interest the broker has in the property; and the broker`s fees
for the transaction.
By law, the broker cannot accept money from you until 48 hours after you have
received this specified information and have signed a commitment to fund the
mortgage.
Do your homework
It took a long time to save the hard-earned money you want to invest, so it`s
wise to carefully review all documents before making any decisions. You are
entitled to take at least 48 hours (not including Sundays and holidays) to
review the investment documents. Read them carefully.
Consider the value of the real estate. The Mortgage Broker must provide
documentary evidence of the property`s value, other than an Agreement of
Purchase and Sale. This could include an appraisal.
Unlawful activity
Mortgage Brokers are prohibited from selling or arranging the sale of
mortgages that are, or have been, in default within the past 12 months.
Mortgage Brokers cannot accept funds from you to hold for a future investment.
Risks to consider about mortgage investments They are not insured by the
Government of Ontario. They cannot be guaranteed by the Mortgage Broker. They
may be difficult to resell quickly.
Mortgages can be high-risk investments. Consult your financial advisor to see
if mortgage investments would be suitable for you.
Visit FSCO`s website: www.fsco.gov.on.ca (http://www.fsco.gov.on.ca), or call
(416) 590-7298, or toll free, 1 (800) 668-0128 for a copy of its
comprehensive guide to investing in mortgages.
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