A Toronto broker’s collapse leaves investors chasing millions in vanished mortgage funds
The collapse of Sussman Mortgage Funding Inc. has sent shockwaves through Ontario’s real estate investment community, as investors scramble to recover more than C$100 million in missing syndicated mortgage funds.
The case, now under receivership, has drawn comparisons to infamous Ponzi schemes and raised urgent questions about oversight in Canada’s booming and now faltering housing market.
For years, Sandy Sussman, a well-known Toronto mortgage broker, leveraged community ties to attract investors to lucrative-sounding cottage country mortgages, Bloomberg reported.
The receiver’s investigation found that much of the money Sussman raised was never lent out as promised. Instead, investor payouts were likely funded by new investments, a classic hallmark of Ponzi operations.
Sussman’s business thrived during the multi-decade bull run in Canadian real estate, particularly in Barrie and Muskoka, dubbed the “Hamptons of the North” for its luxury lakeside properties.
As home prices soared, so did investor appetite for high-yield, private mortgages. But when rates spiked in 2022 and the market cooled, cracks appeared. Lawsuits allege Sussman missed repayments and failed to register some mortgages, leaving investors unprotected.
Lessons for syndicated mortgage investors
The Sussman case underscores the risks of syndicated mortgage investments, especially when trust and affinity play a central role.
Many investors, drawn by personal connections, invested without legal review or proper documentation — a vulnerability that regulators and industry groups have repeatedly warned against.
Mortgage fraud has been a key focus of regulators including the Financial Services Regulatory Authority of Ontario (FSRA), which has placed fraudulent activity in the mortgage space squarely in its sights in recent times.
A vast majority of Canadians believe mortgage fraud is undermining trust in the housing market and driving up costs for honest buyers. An online survey by Pollara Strategic Insights for Mortgage Professionals Canada (MPC) and the MTIIAC found that 78% of respondents agreed mortgage fraud creates an unfair playing field, while 64% said it inflates housing prices.
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