Trying to understand how to secure your own private mortgage could be a daunting task, especially if you have more than one. Underwriting a mortgage loan is required before the loan agreement or mortgage commitment has been executed. The lawyers and law clerks at Levy Zavet can also facilitate the mortgage loan underwriting before it closes.
Levy Zavet often acts as legal advisors to mortgage lenders and their underwriters. Typically our mortgage lender clients outsource their mortgage loan underwriting (which we can also advise on).
Mortgage lenders should be busy originating potential mortgage loans, evaluating potential borrowers’ creditworthiness, the equity left on the collateral property and finally issuing loans. Following closing on a mortgage loan, private mortgage lenders must make sure to have sufficient infrastructure to service their own loans.
Servicing a mortgage after it closes requires the following of private mortgage lenders:
- Informing the borrower of their interest only payments, or repayment schedule, often called an amortization schedule for blended payments of interest and principle.
- Collecting the contact information of the borrowers and guarantors and any next of kin to use in the case of an absent borrower. Also, informing the borrower of any changes such as an assignment of the mortgage loan to a different lender or lenders, and if any changes in how to make the periodic payments are required.
- Depositing the periodic post-dated cheques of the mortgage repayments or interest only payments, on time when they come due. Or alternatively withdrawing the periodic mortgage payments directly from the borrower’s bank account or other form of payment.
- Ensuring the mortgage payments clear, and if not, to immediately record the date and reason for the payment being returned as not being able to clear, for example insufficient funds from the bank.
- To forthwith send a demand for payment to the borrower for the mortgage payment that was returned, informing them that they are in breach of the terms of the mortgage agreement, and that it is a form of default under the loan. In this letter any penalties, NSF fees, and compounded interest due because of this missed payment is calculated and the borrower is told to bring in certified funds prior to any enforcement proceedings.
- Collecting and depositing or withdrawing the missed payment from the borrower’s account, failing which a legal demand letter is sent out pursuant to the regulations and laws governing the mortgage enforcement proceedings in the jurisdiction where the collateral real estate property is located. This will also take into consideration any terms in the mortgage agreement.
- Communicating and reporting to the mortgage lender, and if more than one, ensuring that the terms of the any inter-lender or co-lender agreements are upheld.
- Remitting the cleared mortgage payments from the borrowers to the lenders in a timely manner. Along with a breakdown of the remittance and an accounting of the payments to-date as it compares to the payment schedule pursuant to the mortgage agreement with the borrower.
- Assisting co-lenders on the mortgage with assigning their interest or portion of the mortgage loan to a new mortgage lender or to one of the existing mortgage lenders on the same mortgage loan.
- Preparing any assignment agreements and transfer documents of the mortgage loan and security from the existing mortgage lender to the new mortgage lender, and completing any registrations to perfect same.
- Responding to any requests by the borrower or their lawyer for payment history information, delaying or moving the date of an upcoming mortgage payment, correcting any errors or miscommunications, preparing mortgage information statements and accounting of the payments made pursuant to its schedule, and preparing mortgage payout statements for discharge purposes including any prepayment penalty calculations.
- Handling any responses to other mortgage lenders and encumbrancers, such as construction lien claimants that have also secured or registered their interests in the same real estate property secured.
- Enforcing any mortgage loans that are in default, including power of sale and foreclosure proceedings, as well as suing the borrowers and guarantors for any shortfalls after recovery against the collateral real estate property.
August 2025
-
August 1, 2025
Notice of Use of Proceeds 45-106F16 and the Offering Memorandum Exemption
What is Form 45‑106F16 & Why It’s Required
Form 45‑106F16 is the Notice of Use of Proceeds that non‑reporting issuers relying on the Offering Memorandum (OM) exemption under NI 45‑106 ...
Read Post -
August 1, 2025
The Complexities of the Offering Memo Exemption, Ongoing Requirements and Pitfalls
Offering Memorandum Exemption under NI 45‑106 (Ontario)
Eligibility & Purpose
- NI 45‑106 section 2.9 allows non‑reporting issuers to raise capital from the public via an Offering ...
March 2025
-
March 1, 2025
Mortgage Income Fund Trusts and Limited Partnerships
A Mortgage Income Fund Trust could be established to give investors an opportunity to invest, indirectly through units of a trust, in Canadian mortgages and other real estate opportunities originated ...
Read Post October 2024
-
October 17, 2024
Do you need to do a SEDAR filing every month when issuing shares under a DRIP or other Reinvestment Plan?
Do you need to do a SEDAR filing every month when issuing shares under a DRIP or other Reinvestment Plan?
Short Answer: NO so long as you meet the requirements below.
National Instrument Policy ...
Read Post April 2024
-
April 28, 2024
Do MICs need to file an exempt distribution report for shares issued under a DRIP?
Should a Mortgage Investment Corporation (“MIC”), include exempt distributions of shares or other securities issued under a reinvestment plan (i.e. a DRIP or Dividend Reinvestment Plan), in its ...
Read Post November 2023
-
November 21, 2023
Example letter to shareholders on deferring dividends from your MIC until year-end
This letter is to inform you that we are deferring the regularly scheduled dividend until the financials for the year end are completed and audited, which we expect to be on or around {date}, in ...
Read Post November 2022
-
November 12, 2022
Can a lawyer act for both the lender and borrower?
In most conventional cases where the mortgage is not a “private” mortgage or loan transaction, there are no hard rules rather than good judgement and a lawyer’s duty to ensure that both the lender ...
Read Post August 2022
-
August 9, 2022
What to Know About Buying a Foreclosed Home in Ontario?
When you’re looking to buy a home, you may often come across a home for sale that is under foreclosure. These properties are usually identified by being listed at a significantly lower price than ...
Read Post February 2021
-
February 12, 2021
How to rely on the available exemptions in the Province of Ontario from the requirements to be licensed under the Mortgage Brokerages, Lenders and Administrators Act.
In Ontario, Dealing, Trading, Lending and Administering mortgages are all regulated activities, which requires licensing under the Mortgage Brokerages, Lenders and Administrators Act (the “Act”), ...
Read Post May 2020
-
May 9, 2020
Registering a Notice to try and save a Power of Sale
Often, borrowers loosing their home to a power of sale will take any advise they can get to stop the process. Borrowers are sometimes led to believe that if you register something on title to the ...
Read Post March 2020
-
March 16, 2020
Meeting your legal needs during Covid-19
Meeting your legal needs during Covid-19
At Levy Zavet, the health and safety of our clients and staff is our top priority. During this time, we are monitoring the COVID-19 situation as more ...
Read Post February 2020
-
February 11, 2020
Private Lending: Do not Rely on Someone Else’s Appraisal!
Often private lenders will receive a brief term sheet with an email introduction from a mortgage broker or agent trying to place a mortgage deal. Included in this email package may be an appraisal ...
Read Post October 2019
-
October 25, 2019
Do Private Lenders need a brokerage license to lend in Ontario?
Do Private Lenders need a brokerage license to lend in Ontario?
The Mortgage Brokerages, Lenders and Administrators Act, 2006 establishes that anyone acting as a mortgage lender in Ontario must ...
Read Post March 2018
-
March 30, 2018
Changes to the Mortgage Syndication Rules
Changes to the Mortgage Syndication Rules:
As of July 1, 2018, the Financial Services Commission of Ontario (FSCO) will begin enforcing the changes to the O. Regulation 188/08 Mortgage Brokerages ...
Read Post September 2017
-
September 20, 2017
A MIC’s Specified Shareholder, Related Persons and Prohibited RRSP Investment Considerations
What to consider and speak with your accountant, EMD or lawyer, when related persons, such as siblings, parents, children or spouses invest in your MIC.
To qualify as a MIC, under the Income Tax Act ...
Read Post July 2017
-
July 25, 2017
MIC Foreign Investors & Withholding Taxes on Dividends
The Quick and Simple is that Yes, withholding taxes (usually 25% of gross amount unless subject to a tax treaty with the resident country of the payee) do apply on Dividends paid out by a Mortgage ...Read Post -
July 24, 2017
Islamic Financing and Riba Free Mortgages
Over the last few years, and especially since the financial crisis of 2008, the concept of Islamic financing or banking has been gaining momentum as an alternative financial model for lending and ...
Read Post -
July 9, 2017
Challenges in Starting a MIC: Paying Dividends
One of the biggest challenges in running a MIC is when you first realize that the investors who were once your private lenders are now expecting the equivalent of their monthly interest cheques ...
Read Post -
July 7, 2017
A MIC does not simply allow you to raise money from the public!
Mortgage Investment Corporations (“MICs”) are on the rise in Canada. With many of these MICs the founders and managers are confused over what regulators may or may not govern certain aspects of ...
Read Post May 2017
-
May 4, 2017
What happens when Home Trust now needs to borrow money to advance you a mortgage loan?
What happens when Home Trust now needs to borrow money to advance you a mortgage loan?
What do you do when your mortgage lender now has to pay a higher interest rate to their own lender on the money ...
Read Post May 2016
-
May 13, 2016
Can a borrower redeem their mortgage under power of sale?
Can a borrower redeem their mortgage under power of sale?
The answer to this question is constantly evolving, with new and conflicting case law addressing specific facts released almost yearly. ...
Read Post January 2015
-
January 13, 2015
Annual Maintenance and Reporting Requirements of a MIC, a Mortgage Investment Corporation
Annually a Mortgage Investment Corporation (MIC) that issues its shares through a prospectus and registration exemption under securities law and regulations (e.g. not publicly traded companies), ...
Read Post December 2014
-
December 23, 2014
What If A Mortgage Goes Bad In A MIC? What are the Investment Benefits In A MIC?
MIC Investment Benefits
Management of the MIC must be vigilant and selective with whom they lend to, and investors can inquire about whether the MIC in question will allow investments within various ...
Read Post -
December 23, 2014
Securities Law & Regulations of a MIC, a Mortgage Investment Corporation
Securities Law & Regulations of a MIC, a Mortgage Investment Corporation:
A “Trade” (i.e. selling shares to investors in this case) triggers the “Registration” requirement, even if the trade ...
Read Post
