Private Mortgage Investing
As you know, mortgages are an integral part of our financial marketplace in Ontario. As an investment, a mortgage is an important vehicle for investors, enabling them to invest funds at an appropriate return in relation to other investments. Furthermore, mortgage investments today may represent a certain percentage of the savvy individual’s well-rounded investment portfolio. Today, more than ever, it can be unwise to have all one’s eggs in one investment basket. Therefore, many investors want to diversify their investment portfolio to include not just stocks, bonds, mutual funds, and income certificates, but also to include investments in local mortgages.
The relationship that has developed between the borrower and the investor/lender through mortgage investments has been an important economic benefit to the real estate industry in Ontario, allowing both the borrower and lender an alternative to conventional and institutional lending and investment sources.
A Brief Background of Our Company
UCC Mortgage Co. was incorporated in 1991. The company was formed to service the needs of the mortgage marketplace in Windsor – Essex County by creating a reliable alternative for both investors and borrowers. The name “UCC Mortgage Co.” was chosen in order to link back to the company’s inception as Unimor Financial Services, a mortgage brokerage company operating successfully since its establishment in 1974.
In August of 2008, UCC Mortgage Co. was granted a mortgage administrator’s licence in Windsor, Ontario. In order to maintain its status as a licensed mortgage administrator, Unimor must adhere to strict policies and guidelines regulated by the Financial Services Commission of Ontario.
While there are over fourteen hundred registered mortgage brokerage companies licensed in the province of Ontario as of March 2012, there are less than one hundred licensed and registered mortgage administrators in Ontario, with Unimor being the only one in Windsor – Essex County.
Currently, UCC Mortgage Co holds Mortgage Brokerage License #10675, and Mortgage Administrator License #11657.
Our Disclosure Policy
Our policy is to fully disclose all available information to our investors and lenders in order for them to be able to objectively evaluate the mortgage investment opportunities presented to them.
We feel that taking a conservative approach to mortgage investment can minimize the risk for everyone involved.
We recommend that in most mortgage investments, the amount of the mortgage does not exceed 75% of the value of the property as of the date of the appraisal and/or sale. There are exceptions to this guideline that depend upon the type of property, and the credit history and income of the borrower. Generally, this puts the mortgage investor in a position of reasonable equity.
We obtain a credit report (usually through Equifax) to confirm the information obtained from the borrower’s application for a mortgage. We cross-reference the debts disclosed on the application with those revealed on the credit report and we question the borrower for an explanation regarding any discrepancies.
In any case, we present to the investor or lender a summary of the mortgage requested and copies of the documentation that has been made available to us with respect to each application.
How to Invest with UCC?
There are 3 ways to invest in a mortgage and lend money through UCC:
- 1. As a lender on their own, where Unimor acts solely as a broker between the borrower and the lender. In this case, lenders administer mortgages themselves, collecting and depositing all mortgage payments, and dealing with any problems that may arise. The mortgage payments from the borrower are made payable directly to the lender, and the rate of interest earned by the lender is the rate that appears on the mortgage document.
- 2. As a lender who lends money through Unimor, where Unimor acts not only as the broker for the mortgage, but also administers the mortgage on behalf of the lender. In this situation, the lender usually collects a smaller rate of return, but Unimor administers the mortgage on the lender’s behalf, collecting mortgage payments and taxes, following up on any payment delinquencies, etc. Where Unimor acts as an administrator, the borrower makes their mortgage payments (which are calculated on the face rate of the mortgage) to Unimor. Unimor then remits a cheque to the lender. The rate of return to the lender in this case is the rate agreed upon between Unimor and the lender.
- 3. As a lender who lends money as part of a syndicated mortgage arranged and administered by Unimor. A syndicated mortgage is any mortgage that has two or more lenders.
In any of the above-mentioned alternatives, the lender’s investment can be in their personal name, in the name of their self-directed RRSP, or in the name of a corporation owned by the lender.