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Tag: private mortgage

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 package may be an appraisal that was used perhaps to satisfy a prior lender on the property, or if looking for a second priority mortgage it may have been used for the first mortgage lender on the property.  What this means is that the appraisal was not commissioned for you, the private lender.  Its very easy to skim through an appraisal, see if it was ordered for a Big Bank, and rely on it as accurate and reliable.  How often do you read every single page, the assumptions, disclaimers and conclusions?  Most readers are ill-equipped to understand how the appraisal was prepared, under what requirements and circumstances.  Finally, its believed that if  you are relying on an “opinion” any damages by way of gross inaccuracies could result in a claim to recover against the appraiser.

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Do Private Lenders need a brokerage license to lend in Ontario?

The Mortgage Brokerages, Lenders and Administrators Act, 2006, requires that a mortgage lender hold a brokerage license in Ontario. And that a person or entity is a mortgage lender in Ontario when he, she or it lends money in Ontario on the security of real property, or holds themselves out as doing so. However there are exemptions, such as financial […]

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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 however in the form of a dividend.  With a mortgage, a private lender is accustomed to receiving a monthly cheque of interest only (usually).  The formula is simple, the private lender is expecting the equivalent of the monthly interest rate applied to the principal outstanding on the loan they funded.  With a MIC however, there is no direct attribution of the investor’s investment, through the purchase of MIC shares, with any of the investments the MIC makes, such as mortgage loans.  Hence your once private lender, now turned investor/subscriber in the MIC, has no way of knowing what they will earn except for the expectations you leave them with.The challenge as a newly started MIC should mean no such expectations at all.  Securities law and regulations require that you provide information only based on actual facts and not on a forward looking basis.

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How to be a Private Mortgage Lender

This video is an excerpt of an interview with Jeff Levy, the managing partner at Levy Zavet PC, Lawyers. The interview is about lending and private mortgages. As well as the most basic tips on how to start private mortgage lending.

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MORTGAGE DEFAULT: Power of Sale or Foreclosure?

Although generally the real estate market in Ontario has been robust, the frenzied market of the past has caused an increase in mortgage defaults as a result of an overall weakened economy and a tighter lending market.  Many clients of Levy Zavet PC are both lenders (“mortgagees”) who make investments in mortgaged property and borrowers (“mortgagors”) who are making real estate investments.  When

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