Mortgage Investment Corp Problems

Añadido: 2026-05-23

[00:00:00]Okay, let's talk about mortgage investment corporation [ __ ] okay?

[00:00:05]Because we got some [ __ ] going on.

[00:00:08]So, what is a mortgage investment corporation? Well, I I'm going to oversimplify everything because it's a quick video. Uh but the mortgage investment corporation people invest in an operation that does essentially private mortgages, alternative mortgages, mortgages that institutions typically will not do. So, that's like not great credit, bridge loans, commercial of different types, um and sometimes just um can't prove your income or some twist of fate has put people in a bad position. And these are So, it's it's a mortgage solution for people who have no ability to go to any institutional lender, not a bank, not a credit union, not any of those people.

[00:00:51]So, that's who the customer is. So, these mortgage investment course There's a lot of them. There's tons of them.

[00:00:56]There's hundreds and hundreds of them across Canada, okay? Some are very big, some are very tiny. So, it's like they range from like a couple billion dollars to like um several billions in some cases, and to like 50 million, 25 million, very small, okay? So, what these companies do is they take people's money, investors' money, all kinds of members of the public pooling money together, and that goes into the mortgage investment corporation, and then is put out as mortgages, okay? I'm oversimplifying the [ __ ] out of this, but let's just say that's what it is.

[00:01:31]So, why is there problems now? There's problems, and this is the interesting part.

[00:01:38]The problems are only with some of the companies, which can range from the very biggest ones. So, I'll I'll give you an example of a huge one, Romspen. Romspen is a huge huge commercial mortgage lender, huge commercial um mortgage investment corporation.

[00:01:57]Sometimes they were also trust, sometimes I won't go into all that stuff, but it's it's like a trust, but not a trust company.

[00:02:05]Yeah, I know. There's a lot. So, they're huge. Their biggest fund has been gated. Gated means you can't get any money out. If you put money in, you cannot get your money out.

[00:02:18]Been gated for a couple years now, and shows no sign of being reopened, and the the distributions, like the money you get for your investment, the the return you get, is dwindling, dwindling, dwindling. Um I'm not saying anything wrong, because they it's published. It's public record, okay? Um there's a couple of other companies. I got to go in depth in one in a second, but yeah, it's really important to say there's lots of great companies. There's great companies that never have any almost effectively never have any problems. They're beautifully well run.

[00:02:53]The successful mortgage investment corporation is very disciplined, very detail-oriented.

[00:02:59]Disciplined meaning they only work within a box. This is what we'll lend on.

[00:03:04]We'll lend on nothing else. The If it the box is very conservative, and very structure-y sound, they don't get into trouble. If the box is as big as Canada, and they've done done everything, there's a good chance they'll get in trouble.

[00:03:17]Uh so, what what we're talking about is an another There's there's some There's some receiverships of them. Yeah, I I've talked about some of this stuff. There's been receiverships in some of these companies. I'll get into that next week on one that I thought was a particularly bad receivership.

[00:03:34]But, there's also more and more gating.

[00:03:36]More and more, "Hey, we're not going to be able to pay you anything. You can't take your money out, and we're doesn't look like we're going to give you any more return investment return at all." And I'll take the example of one which is called uh mortgage More I think it's actually called the company is Mortgage Investment Corp, okay?

[00:04:00]Mortgage Investment Corp uh mortgage sorry Mortgage Company of Canada.

[00:04:06]The Mortgage Company of Canada. CEO is a guy Roger Barber. I've met Roger a couple of times. Haven't seen him for a long time. I've met Roger a couple of times.

[00:04:13]And they have now gone into both gating, like you can't get your money out.

[00:04:20]And as of June no more distributions. You're not going to get any any money out.

[00:04:28]But wait, there's more.

[00:04:30]Um that you're going to be able to get a plan The plan is you're going to be able to get I'm just I'm just repeating stuff that's published.

[00:04:40]The plan is you're going to get about 8% of your money back each year.

[00:04:46]So that's going to take like more than a decade to get your money back.

[00:04:52]And no promise of any investment income during that period. So if I was an investor, I would say that's a disaster. Like I not only I put half a million dollars in, I expected to get a decent return, which for years and years they did pay a decent return, a nice return.

[00:05:11]Uh solid good you know everybody was happy.

[00:05:16]And then it stopped. And the reasons given are what we know. There's been a tremendous drop in values in Ontario. And uh this company was mainly Ontario based. They did some work across Canada if I remember was my recollection, but it's mainly Ontario based.

[00:05:33]And their position is really simple.

[00:05:36]That there's been an extreme deterioration of the real estate market.

[00:05:40]There's been a an increase in delinquencies. In other words, people aren't paying them.

[00:05:46]And that the disputes that the way to get Cuz what do you mean people stop paying, you've got to go to court, look for an order of possession, get possession of the property, and sell it to try to realize whatever it return you can.

[00:06:00]Okay?

[00:06:02]That process is really slowed down. That process in some points it was very fast like just you know after the courts reopened after COVID, uh but a year later things had ramped up and because there was really no power of sale actions, it's hardly any. There was hardly been any for years. Now there's a lot more. But the [clears throat] courts uh were it's like sometimes quick, sometimes 4 months, 5 months, boom, take possession, sell it, off you go. Now the court particularly if the if the uh borrower files a defense, but it can go long, it go a year or more than a year.

[00:06:31]So that So everything's like working against you, okay? Like the the um there's more delinquencies, the values are down. If values are down, let's say that you did a mortgage it was a second mortgage, you didn't do the first mortgage, first mortgage was a bank, you did a second mortgage, you thought you were okay, you thought you were at like 70% loan to value, values have fallen in some parts of Ontario, values have fallen depending on when the vintage when you did that second mortgage have fallen like 35% and boom, you are you're wiped out. You're probably close to wiped out and you again [clears throat] it it just becomes an unmanageable problem, so.

[00:07:08]But there's lots of ones that are doing fine, okay? I I could give a list, but you know, I'd leave somebody off and they'd be mad. Okay? But I know many of these organizations, many of these companies that are not gated. And by the way, if you if you gate for 90 days because you've just got to unload some properties and you successfully do, a 90-day gate in my mind is not meaningful at all, period. It's not important.

[00:07:34]It's when the gate never reopens. It's very very [ __ ] important, okay? So, what's my word to you?

[00:07:42]First of all, there are still some great great mortgage investment corporations and there's some great private lending to be done very safe very conservative.

[00:07:49]Again, that small tight box of where you lend out of.

[00:07:52]And there's great companies that have great still got great returns. They're paying eight and a half, seven and a half, 9% return to this day. They're not experiencing that much problems because they're just their extreme discipline in how they did their lending. Uh and they're fine. But there are going to be more and more problems with mortgage investment corporations because in a declining home value market residential real estate market, equity vanishes and equity was the main reason these companies exist. So, stay tuned. There's going to be more issues. Hey, Ron, what do I do if I got my money in some of them?

[00:08:33]Well, you can DM me or you can just analyze where you're at. Hey, if there's no gating, if you're getting your good return, do a little bit of research, do a little Google your company, Google your investment mortgage investment company, see if there's any stuff on the internet about it.

[00:08:49]If everything's quiet, calm, and peaceful, you're probably fine. Because again, many of these companies are excellent.