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About Mortgage Investing
What makes CMI different from other mortgage investment firms?
At CMI, we’re dedicated to offering our investors innovative, full-service mortgage investment products. Our team of award-winning mortgage professionals has enabled CMI to become a national leader in the mortgage lending space, having successfully funded over $1 billion in mortgage investments.
While many of our competitors present their mortgage investment opportunities to investors as a simple list or bidding process, our investment matching is more of a placements process. We take the time to allocate mortgage assets to the right investors, curating the mortgage investments we present to you so you’ll only see those that suit your investor profile and investment objectives.
How does mortgage investing differ from traditional investing?
Mortgage investments are classified as alternative investments, which means their returns aren’t correlated with the volatile stock and other publicly traded markets. They offer investors a number of key benefits, including:
Diversification – Mortgage investments are a way to diversify your fixed income portfolio with investments that produce higher yields than bonds and many other fixed income securities
Personalization – Mortgage investment products vary widely in terms of their loan-to-value (LTV) ratio, risk profile, and yield. Their diverse nature translates into more options for investors looking for a specific risk level, property location or type, or yield.
Predictable, consistent yields – Investors earn fixed yields from mortgage investment products at CMI, creating a predictable income stream from their principal investment. CMI does not underwrite variable rate mortgages.
Backed by collateral real estate – Unlike investing directly in real estate, all our mortgage investments are backed by collateral real estate security. CMI Mortgage Services, our mortgage administration team, handles all administration and risk management functions.
Are my mortgage investments guaranteed?
No, your mortgage investment is not guaranteed. However, our rigorous qualification and underwriting process helps to ensure your funds are well protected, and all CMI Mortgage Investments opportunities are also backed by collateral real estate. In the unlikely event the borrower defaults on their mortgage, our servicing team at CMI Mortgage Services manages the entire resolution process.
What is the difference between MICs and individual mortgage investments?
Individual mortgage investments are tied to a specific investor or investor group, as well as to the respective individual borrower and mortgage. Due to the nature of these mortgage investments, they require a larger capital investment. MICs, on the other hand, are a diversified, professionally managed portfolio solution that pools multiple mortgages into a single investment fund. Rather than owning a particular mortgage, investors purchase shares in the respective fund and invest in the multiple mortgage assets that comprise these funds.
Getting Started with CMI
What does the mortgage investment process at CMI look like?
Once you complete your KYC (Know Your Client) form, your Investment Manager will create your investor profile and present investment opportunities to you that match your unique profile. If you choose to invest in any of these investments, you’ll be sent documentation to sign and our lawyer will finalize the investment transaction. When the investment is ready to close, our team will take care of all the administrative details and notify you when the funds have been transferred to the borrower. Over the term of the investment, it will earn a fixed yield, which will be paid to you primarily monthly, directly from the borrower.
What information do I need to get started?
In order to start investing with us, you need to complete a Know Your Client (KYC) form and provide the appropriate identification. The KYC form provides us with details about your financial situation and investment objectives so we can present you with the appropriate investment opportunities. We also ask for a void cheque so we have your bank account details, which is where we will deposit your interest payments. For Corporate trust accounts, we’ll need your Articles of Incorporation and/or Trust documentation. On closing the deal, you will need to sign an Identification form that we will provide to the lawyer.
How much capital do I need to start investing?
Our mortgage investment program has no specific minimum investment amount. However, this type of investment is best suited to higher net-worth investors who have a larger amount of liquid financial assets, anywhere from $500,000 – $1,000,000 and who meet the Accredited Investor status.
Can I use registered funds for my mortgage investment?
Registered funds are eligible for our mortgage investments, provided your investment is through a trust that allows you to invest in mortgages. CMI use Olympia Trust Company if you don’t already have a trustee set up. If you already have an existing trustee, your funds will need to be transferred to Olympia Trust.
Do I need to be located in Canada to purchase your mortgage investments?
Only Canadian residents are eligible to invest with CMI. However, we are able to serve investors who are temporarily out of the country. Using our digital fulfillment processes, we can assist investors in completing their mortgage investment transactions remotely.
How long will it take before I am presented with a mortgage investment option?
It takes approximately 30 days to present you with an appropriate investment match, depending on your available capital and flexibility, though this can occur sooner. The frequency with which we present investment options to you will depend on the extent to which our available pool of mortgage assets matches your investor profile and investment objectives.
How do I ensure I am contacted with new investment options?
Once you’ve opened an account with us and completed your Know Your Client (KYC) form, your Investment Manager will send you potential mortgage investments via email. Your first investment option will be exclusive to you for four hours after you receive it. After this time, investments will be offered to you on a first come, first serve basis.
How will CMI decide what investments to present to me?
We’ll send you potential mortgage investments based on your investor profile, investment objectives and other information included in your Know Your Client (KYC) form. To ensure we’re presenting you with investments with the best possible fit, it’s important to keep your Investment Manager updated with any changes to your financial situation and investor profile. This would include a change to your investment capital, risk tolerance, or rate of return expectations. Let us know if we present you with a mortgage investment that isn’t a good match for you so we can adjust your investor profile accordingly.
How do you select specific mortgage investments to present to me?
CMI works with over 7,000 independent mortgage brokers from across the country, who submit mortgage deals to us. Our underwriting team works with these brokers to facilitate and ultimately approve their deals, leveraging our extensive due diligence process that includes a close evaluation of the borrower’s financial situation. From there, our unique Mortgage Matching Process takes these mortgages and matches them to your investor profile, which was created after you completed your Know Your Client (KYC) form. The selected mortgage investments are thus tailored to your investment objectives and risk tolerance.
What types of investment products does CMI offer?
CMI offers a wide variety of options through our customized mortgage investment program, along with three separate MIC funds. All of our mortgage investment products are professionally managed, with residential mortgages being the underlying asset. Our investment products have a range of risk and return profiles to suit any investor.
What areas of Canada do you invest in?
CMI is a national lender, and as such our mortgage investments originate from across Canada. The majority of CMI’s mortgage investment properties are in major urban cities in Ontario, Alberta, British Columbia, Manitoba, Quebec and the Maritimes.
What types of properties can I invest in through CMI?
CMI deals solely in residential mortgages as they have a lower risk of default than commercial mortgages. Specializing in residential mortgages in Canada enables us to have a deep, comprehensive knowledge of this market. We also conduct thorough, ongoing research on the macro-economic influences affecting residential mortgages to foster a thorough and continuous level of expertise in this area.
Can I make monthly contributions to your mortgage investments program?
No, you can’t contribute on a monthly basis to the CMI Mortgage Investments Program. Investors are required to fund the entire mortgage transaction upfront in order for us to advance these funds to the borrower.
How long is the term of my mortgage investment?
Our most common term is 12 months, although bridge loans as short as 3 months or mortgages as long as two years are sometimes also available. We generally extend credit on a fixed rate basis for a maximum of 24 months to give us the flexibility to alter rates depending on the current financial landscape.
Can I withdraw my money prior to the mortgage’s renewal date?
Your money is locked-in for the duration of the term of the investment. Our renewal department will make a recommendation about renewing the mortgage 60 days prior to maturity, at which time you can decide to renew your investment with us or cash it out.
Will I have partial ownership of the property I am investing in?
The investor is added to the title as the mortgage holder, however, for all practical purposes the borrower retains ownership of the property for the duration of the mortgage transaction, just like with any other mortgage.
Will I need to sign an investment contract with CMI?
All investors must first complete a KYC form in order to receive investment opportunities from CMI. Once you’ve accepted a mortgage investment, you will need to sign a contract to allow us to service your mortgage assets.
Why do I need a lawyer for these mortgage investments? How does that benefit me?
A lawyer will review the mortgage before it’s presented to an investor. They will be looking to identify any claims, liens or encumbrances on the property in question. For example, a lawyer can ensure that any outstanding property taxes, legal writs, or other liens against the property are paid off first from the mortgage proceeds, if they exist, thus protecting your interests. In other cases, the borrower may be refinancing an existing mortgage, in which case the lawyer will ensure that the existing mortgage is paid out and removed from the title, with the remaining balance going to the borrower. The lawyer will also ensure your name as the investor is added to the mortgage on closing.
Is there an administration charge when CMI services my mortgage investments?
No, there is no charge to you for our mortgage services. Our in-house administration team at CMI Mortgage Services will manage and safeguard your mortgage investment from beginning to end, at no additional cost to you. At CMI, we maintain our rigorous standards of quality and due diligence, offering our investors a passive, worry-free investment solution.
Does CMI allow investors to service their own mortgages?
No. All our mortgage investment products are fully serviced by CMI Mortgage Services, our in-house administration team. This enables us to protect your investments and those of our other investors through our daily monitoring and management processes. This also allows you to grow your capital without the hassle of administering your own mortgage. Servicing mortgages in-house streamlines our approach to better protect your needs as well as those of our company.
What trust company do you deal with for your registered plans?
We work with Olympia Trust Company to collect interest payments for investors investing through a registered account. The funds are deposited directly via pre-authorized withdrawals from the borrower’s account.
How would you verify that the mortgage I invest in has closed properly?
On closing, our team of lawyers and servicing team oversee the closing process to confirm all the closing requirements have been fulfilled, property titles are checked, and the signing is complete.
What happens if my mortgage goes into default?
In the unfortunate event that the borrower defaults on their mortgage, our dedicated enforcement team will make every effort to achieve a satisfactory resolution to this matter or initiate legal action if necessary. In most cases, there is enough equity in the property that the investor will get back their principal as well as any accrued interest.
Can I use my own lawyer to close this mortgage investment deal?
No. CMI assigns a lawyer for you for each mortgage investment transaction. This occurs prior to the start of our due diligence process of title searches, etc. The lawyer works on your behalf to protect your interests and investment. This will include adding you to the title of the mortgage once the funding has been completed. Best of all, there is no fee for these legal services, they are completely free for all our mortgage investors.
Investment Risk and Returns
What rates of return can I expect from your mortgage investment program?
Returns from our mortgage investment program range from 6–16%. Rates of return will vary based on your risk tolerance and investment objectives.
What determines the rate of return on my mortgage investments?
Mortgage investment yields vary based on the risk profile of the underlying mortgage asset. Thus, the type of borrower and mortgage they have applied for along with the location of the real estate property and the amount they are borrowing from us can all impact the rate they are charged for the mortgage. This will in turn affect the return you’ll receive on your investment. Of course, larger economic forces such as the current interest rate environment will also impact your returns. The level of risk an investor is willing to take on has the most immediate influence on investment yields.
Who is responsible for the costs and/or fees associated with the mortgage closing?
The borrower is responsible for all costs and fees associated with the closing. None of these costs are paid by the investor.
What beacon score do you use when approving borrowers?
For over 6 years, we’ve selected borrowers with an average beacon score of 600 or above. However, CMI does not evaluate borrowers exclusively on beacon scores, though it is an important factor in determining whether the borrower meets CMI’s rigorous underwriting standards for our mortgage portfolio.
How often are my interest payments paid out?
Interest payments are usually paid out monthly, however we also have many “pre-paid mortgages” where the interest is paid up front to you for the term of your investment. When investing in our MIC funds, we offer an optional DRIP (Dividend Reinvestment Plan) that allows you to re-invest your interest payments on a monthly basis. This allows for compounded growth on future yields.
What happens if the house I’ve invested in burns down or is otherwise significantly damaged?
A prerequisite for every one of our mortgages is that there is adequate home insurance to cover most potential losses.
Do your mortgages come with title insurance?
Yes, each and every one of our mortgage assets come with title insurance on the property.
Contact us for more information or to book an appointment with one of our Investment Professionals.