Operational Strategy

Mortgage Company of Canada’s objective is to focus on investing primarily in a portfolio of conventional first and second mortgage loans that generate income to allow Mortgage Company of Canada to pay monthly dividends to its shareholders.

In order to achieve this objective while mitigating the portfolio’s overall exposure to risk, Mortgage Company of Canada’s investment activities are governed by a strict set of underwriting criteria based on a credit policy framework established by the Board of Directors.

Mortgage Company of Canada’s mortgage portfolio at a glance:

  • The portfolio is diversified with ~800 mortgages.
  • The portfolio is primarily concentrated in the Greater Toronto Area, which is the largest and among the most economically diverse city in Canada.
  • The portfolio is composed of a mix of first and second residential mortgages. Currently, the portfolio has an average weighting of 78% first residential mortgages and 22% second residential mortgages in terms of dollars funded.
  • Based on third-party appraisals obtained at the time of funding, the Loan-to-Value (“LTV”) ratio of the portfolio is approximately 69.7%.
  • The average mortgage size is approximately $340,000 in the portfolio.
  • Mortgage Company of Canada typically makes investments with a term of up to 1 year with the average term to maturity currently within the portfolio being approximately 5.7  months.
  • Management continually monitors concentration risk with no one loan exceeding $1,750,000 of the total portfolio.

 

How an Investment in Mortgage Company of Canada Works

Examples of who we lend to?

Profile #1 – Self-employed entrepreneur

This individual was looking to take out a second mortgage on his house to pay for his daughter’s wedding.  After being unsuccessful in obtaining mortgage financing from a Canadian bank, this individual was referred to Mortgage Company of Canada through our brokerage network.

He had been self-employed for many years as a florist, running a small shop in Richmond Hill with several employees.  His application indicated that he had a modest income, which was corroborated by his income tax forms.  He explained that his income was reduced by a number of business expenses that were discretionary in nature, which reduced his taxable income.  After carefully reviewing his application package, including his company’s financial statements and tax returns, we concluded that after adjusting for these expenses his income was more than sufficient to qualify for this mortgage.  We approved his application and we are happy to say that this individual repaid his loan in full without any complications.

Profile #2 – Recent immigrants with limited credit

This young family moved to Canada several years ago and had received permanent resident status.  One an accountant and the other a software developer, they had both been working in their respective fields for the past three years.  However, because of their recent immigrant status, they had limited credit in Canada and were in the process of building their credit score.

The couple had accumulated enough for a down-payment on a home in Vaughan, however because of their limited credit history their bank was unable to grant them a mortgage.  A close friend recommended that the family contact Canada lend, an affiliated mortgage broker, to explore the options offered by a non-traditional lender.

During our due diligence process, we reviewed the couple’s financial records and verified that their household income was well into six figures and sufficient to support the loan they had applied for.  The family has since moved into their new home and are well onto their way of building a healthy credit score.

Profile #3 – Blemished credit

This individual was looking to refinance her mortgage to pay for a kitchen renovation, however she was unable to do so through a traditional lender due to her recent credit history.  Mortgage Company of Canada was contacted by a mortgage broker on behalf of this individual who explained her situation.  We were informed that her father had become ill a few years earlier and was unable to pay for the medical treatment he needed.  His only child rallied behind him and paid for the necessary medical treatments only to subsequently lose her job shortly after his recovery.  As a result, some medical bills went unpaid, blemishing this individual’s credit score.  It had been over five years since this occurred, over which time this individual secured gainful employment and paid the entire balance of the overdue medical bills.  Her credit score, however, was still haunted by these earlier events.

Through our personal underwriting approach, we were able to understand the circumstances surrounding her credit history, and looked beyond what was a very atypical event to see her entire story.  Upon verifying that her income qualified her for the mortgage, we approved her application and are happy to say that she has not missed a payment.