An investor client approaches Mortgage Broker David to syndicate a private mortgage for a new construction project in Vancouver. David is recommending an investment in a mortgage syndicate where his brokerage firm will earn an administration fee for ongoing management of the syndicated mortgage. What specific disclosure must David provide to the investor?

Question: An investor client approaches Mortgage Broker David to syndicate a private mortgage for a new construction project in Vancouver. David is recommending an investment in a mortgage syndicate where his brokerage firm will earn an administration fee for ongoing management of the syndicated mortgage. What specific disclosure must David provide to the investor?

Answer options: ✅ David must provide the investor with a detailed investment summary using Ontario Form 1.1 or a similar provincial investor disclosure document, outlining risks and all compensation.

• David must verbally inform the investor about the potential returns and the construction timeline, obtaining their verbal acknowledgment.
• David only needs to disclose his brokerage's administration fee if it exceeds 1% of the syndicated mortgage amount.
• David must provide a copy of the construction project's blueprints and permits before investment.

Correct answer: David must provide the investor with a detailed investment summary using Ontario Form 1.1 or a similar provincial investor disclosure document, outlining risks and all compensation.

Explanation: For syndicated mortgage investments, brokers must provide comprehensive disclosure, often mandated by provincial regulations similar to Ontario's Form 1.1 (or Form 1.2 for investor assignments), to clearly outline the investment, risks, and all compensation received by the brokerage and other parties.