MICs

MIC's

The alternative mortgage market continues to thrive, given changes to bank legislation. As competition increases, there are only two options for MIE’s to raise capital in a compliant manner.

  1. Become a captive dealer (seek registration as an exempt market dealer);
  2. Market through a third party EMD.

Both of these options are wrought with significant pitfalls.

Issues with the captive dealer option:

Expensive:
  • Initial registration costs;
  • $100K in unproductive capital is required;
  • Bonding;
  • Insurance;
  • Audit;
  • Accounting;
  • Legal fees;
  • Agent for Service fees.
  • May need to hire a compliance officer if the expertise is not resident in-house.
Conflict:
  • In most cases the President of the fund will be the Chief Compliance Officer of the EMD and a Dealing Representative –approving one’s own trades.
  • This is NOT in investors’ best interest.
Liability:
  • The proficiency requirements do not adequately prepare an individual to be a CCO.
  • The Partner, Director and Officers’ Course (a CCO requirement) does not contain any information whatsoever on the exempt market or running an exempt market dealer.
  • New CCO’s must get on-the-job training. Unfortunately, our regulators do not allow for on-the-job training, they demand perfection out of the gate.
Contact Waverley today to learn about our Elegant Solution for Mortgage Investment Entities.


Share by: