In the twisted tale of Fortress Real Developments, should brokers bear any blame for selling the syndicated mortgages?
Trevor Daly - President and founder - DLC Home Capital Solutions
“Brokers who sold the Fortress product are absolutely culpable, for two reasons: Either they were too greedy and saw nothing but a way to make a quick buck with no concern for any potential negative outcome, or they didn’t research what Fortress was doing and perhaps didn’t understand what a syndicated mortgage was, despite selling them.
The second of these is the worst of the two, as it shows that these brokers were unwilling to educate themselves. Be, get and stay educated and informed before selling something. Our industry should always represent integrity and transparency.”
Sadiq Boodoo - Principal broker and president - Approved Financial Services
“I tend to believe that brokers who sold for Fortress were working under the direction and guidance of the upper management of their company. Like any other sales force, the training, product knowledge and procedures are provided by the company for which they work – or in this case, by Fortress. This would include project fact and term sheets, which would be utilized in the sales process.
Unless the brokers had authority or influence in the decision-making and direction of the company, there is no reason to hold them account for actions beyond their level of control and knowledge.”
David Franklin - Barrister and solicitor - Ontario bar
“Fortress is culpable; so are the mortgage brokerages and sales force. The broker is required to make sure that the investment is suitable for the client. In 2004, the Ministry of Finance, which oversees FSCO, posted that syndicated commercial mortgages are riskier than residential mortgages.
Fortress sold syndicated mortgages as safe, secure investments, and the people who were purchasing them – some I have met – had never invested in a mortgage before. Another group that I have worked with do not speak English. How can a broker sit down with such a person and get them to invest in complicated, high-risk products?”