Canadian Mortgage Lender Romspen Investments Halts Withdrawals

Private Canadian real estate lender Romspen Investment has halted all withdrawals and redemptions as it faces a liquidity crunch due to borrowers failing to make scheduled payments.

The Toronto-based company said it is halting redemptions until it becomes clear when borrowers will repay loans and the fund can get cash from asset sales.

The situation at Romspen Investments highlights the stress being applied to Canada’s real estate market as interest rates rise sharply and roil the housing market.

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Romspen Investments is a specialty manager of private mortgage funds, providing pre-development, construction, and other loans for commercial and residential projects. It’s among the largest private mortgage lenders in Canada.

Romspen’s biggest fund had $2.8 billion invested in 134 mortgages at the end of June this year. The company said it is accelerating the sale of some assets to raise needed cash.