Due to stringent mortgage rules and higher interest rates brought upon by the government, borrowers have had to seek private lending. Canada Mortgage & Financial Group is looking to offset the financial blow dealt with private borrowers who must deal with the more expensive private lending.
With a primary focus on funding residential and construction, the firm has introduced a new product: the CMFG Limited Partnership. It acts as a lower rate for borrowers who’re more hesitant to take the private lending avenue on first and second mortgages. What’s most poignant, is that CMFG’s goal isn’t for high yield on the partnership.
Ameera Ameerulla, the CEO of CMFG explains that the lender fee is 2-3%, the broker fee is 2%, and the mortgage rate itself is somewhere between 8.5%-8.99% on a first mortgage. While second mortgages are commonly 12.99%-14.99%, with some reaching 17.99% compiled by elevated lender and broker fees.
Due to therigidity of B-20, attaining B lending is a process rife with obstacles and borrowers are pigeonholed into acquiring private funds. While most brokers are synonymous with empty promises of the contrary, the CMFG CEO believes his company’s product will offset this from happening.
With the product, CMFG yields approximately 10% with no broker fee nor a cap on dollar amounts. 12% is the most that would be yielded on a second mortgage, says Ameerullah.
As a means to coerce higher fees from clients, many brokers negotiate their own terms with lenders. Conversely, with CMFG, the brokers are mandated to not charge fees greater than the lenders’.
Only after investors meet the thorough suitability protocol can are they deemed suitable to invest a percentage of their assets, along with a minimum buy-in of $10,000 with no maximum cap. CMFG will place 50% of each fee and return into a reserve fun in case of defaults and late payments as a means to ensure investors see their return.
Investor-risk will be diversity, so an investor’s success won’t hinge upon one mortgage, preventing overleveraging in one investment.
CMFG has a sterling reputation without defaulting on a single syndicated mortgage. With strong planning in risk mitigation, CMFG’s CEO sees successful futures for borrowers and investors alike.