How CMI Sources Mortgage Opportunities – and What Happens When They Default
CMI Financial Group. is one of Canada’s fastest-growing mortgage lending and investment providers. With a strong focus on risk management and due diligence, we employ stringent criteria for evaluating mortgage opportunities and have developed an industry-leading approach to addressing borrower repayment issues, including non-sufficient funds (NSFs) and defaults.
How a lender sources mortgage opportunities and handles defaults is an important consideration for any investor seeking to enter the private mortgage market. Faced with years of declining interest rates and diminishing returns on fixed-income securities, many investors are starting to explore the possibility of adding private mortgages to their portfolios.
CMI offers a family of mortgage investment corporations, or MICs, that provide investors with direct exposure to Canada’s mortgage market. CMI also offers a whole loan program for investors who would like to assert more active control over their portfolio. In both cases, investing through CMI provides access to a pool of well-analyzed mortgages with a strong focus on risk management and diversification.
CMI is responsible for all aspects of the mortgage investing process, including loan analysis, underwriting, and management. Each mortgage applicant is evaluated carefully through an extensive due diligence and underwriting process to verify income, assets, debt, and repayment history. The quality and location of the property are also reviewed by our team of underwriters. After carefully assessing a borrower’s ability to repay the proposed loan, we appraise the property and evaluate the risk exposure to investors while also analyzing the yield potential of the mortgage. CMI maintains specific yield targets for its mortgages, so this area is carefully evaluated to ensure that we invest in mortgages that meet the expectations of our investors.
Each mortgage sourced by CMI is managed by our professional fund managers through a fully integrated software solution and is assessed at maturity for its potential for renewal. When the mortgage is discharged, our in-house accounting team ensures all fees have been collected, and any outstanding expenses or interest are fully recouped. We also retain an industry-leading legal team to represent investors, and manage the process end-to-end. The process for renewals and discharges begins 60 days prior to mortgage maturity with a detailed file review by our skilled servicing team.
The best way to manage defaults? Avoid them in the first place
As they say, the best defence is a good offence. Our rigorous qualification process enables us to manage mortgage quality at the very onset of the investment process, minimizing the potential for repayment issues within the loan portfolio over the term of each mortgage. Still, returned and late payments cannot be proactively managed 100 per cent of the time. We employ an expert team of collectors, equipped with game-changing technology, to recoup the vast majority of missed payments.
In cases where a repayment issue remains unresolved, we engage our recovery team to move ahead with a monitored repayment program, and if necessary, active enforcement and liquidation of the underlying property. From legal enforcement through to possession, listing and sale, CMI Financial Group fully manages each step of the process.
More then 99% of total portfolio value since inception has successfully progressed to renewal or full repayment – an impressive achievement that has contributed to CMI’s rise to the top of the industry as Canada’s premier private mortgage lender.
CMI aims to make the mortgage investment process as transparent and seamless as possible. We employ the strongest risk management strategies in the industry to ensure that investor funds are not put at risk by defaults or NSFs. The impact of these measures is reflected in the strong yields produced by our funds.
What’s next?
CMI has a proven track record in the private mortgage market, having successfully funded more than $500 million in loans across Canada. To learn more about our investment process, contact one of our Investment Account Managers today.