The Role of Transparency in Private Mortgage Funds: Why It Matters

When it comes to private mortgage funds, transparency is everything. As someone who’s been in this business for nearly two decades, I’ve seen how the lack of clear communication around fees and structures can lead to confusion—and worse, poor investment decisions. At Steepe & Co., we believe that every investor deserves complete clarity about what they’re investing in and how it works.

Private mortgage funds can be complex. Many funds disclose the management and performance fees, but that’s often just the tip of the iceberg. What many investors don’t realize is that there are often other fees involved, like borrower origination fees, administration fees, and exit fees, which aren’t always clearly communicated. Where fees get murky is when the private mortgage fund manager, that may not be registered with any securities commission in Canada, also owns the mortgage brokerage that collects and keeps all the borrower lending fees. Again, the mortgage manager can disclose the fees in the private mortgage fund but it is highly unusual to see any disclosure of the fees collected by the mortgage brokerage they also own. These fees can significantly impact your return, and it’s essential that investors know exactly where their money is going. Investors need to ask the manager for mortgage broker fee details which, depending on the type of mortgages being issued, can represent 25-30+% of the net investor returns. 

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The way we approach this at Steepe & Co. is simple: we choose managers who prioritize transparency and avoid conflicts of interest. We work with those who don’t keep the borrower fees because we know that when a manager’s interests align with those of the investor, everyone benefits. Our goal is to ensure our clients understand the full picture so they can make confident, informed decisions about their portfolios.

If you’re considering investing in private mortgage funds, ask the hard questions. Make sure you know exactly what fees are involved and how they’ll impact your returns. At Steepe & Co., we’re always here to provide the clarity and transparency you deserve. Want to learn more about how we keep investors informed and aligned with their goals? Reach out to us directly—we’re happy to have a candid conversation.

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