One of the country’s largest brokerages is getting into the private lending game, just ahead of an expected bulge in business for that segment of this turbulent market.
"Advanced Private Lending deals directly with investors, borrowers, and in many instances, assists other mortgage agents and brokers from across Canada in funding their own financing deals, Michael Hapke, CEO of of Mortgage Brokers City and now the fledgling mortgage administration company. “Advanced Private Lending has also made it easy for agents and brokers to submit deals by listing its services under the D+H/ Expert System.”
The move may add to writing on the wall for brokers exclusively focused on A deals, with an increasing number already looking to incorporate some element of private lending into their business. It’s a hedge, of sorts, against a slowing prime market.
A “sister firm” to Mortgage Brokers Ottawa – the brokerage with the highest number of originators on last year’s CMP Top 50 – Advanced will likely draw most of its deals from its extensive team.
"With roughly a billion dollars in annual mortgage volume on the Mortgage Brokers City/Mortgage Brokers Ottawa side,” said Hapke, “an increased need for private mortgage financing has become a necessity."
Broker networks are moving in the same direction and for the same reasons. The prod, in many instances, have been tighter underwriting by the Big Six still using the broker channel as well as mono-lines and other A-lenders. Ottawa’s announcement it will reduce the maximum amortization to 25 years and cap insurance eligibility at home values of $1 million are also expected to challenge some broker clients.
Still, most of that business is likely to get sopped up by institutional alternative lenders such as Home Trust, although a switch to conventional A lending is also anticipated,