Len 00:02
Welcome. My name is Len Lane, and I am the founder and president of Brokers for Life Inc., and we are Dominion Lending Centers in Western Canada. The topic of our podcast will be about what we consider to be Real Life Mortgage Solutions.

Welcome back. Today we’re going to talk about one of our private lenders, a little different than some of the ones we have done in the past. You probably were here at MCAP recently, and First National following this one. So today we are talking to Corey Cardelinni, CMI, BRM, a new one just taken over northern Alberta. Is that the territory?

Corey 00:39
Yeah, that’s correct. Alberta, yeah.

Len 00:41
Alberta, the whole thing. So maybe give us a little background of… Welcome to the show, and maybe some background on your time in the industry.

Corey 00:53
Well, thank you for having me. Yeah, I was in the industry for about 20 years. I started out underwriting for a B lender, and then was an agent for about eight years when my kids were small, and then moved back over to the lending side to work for CMI. I’ve been here for about three years, but just recently, as of July, I’ve moved into this BRM position. So quite excited to be in the BRM role for sure.

Len 01:25
So out of the office and away from the daily grind, you probably get as many phone calls now as you did as an underwriter.

Corey 01:32
Well, I underwrite my own deals as well, right?

Len 01:34
Yeah, okay, yeah, right. So that’s what your predecessor was doing as well. So maybe let’s talk about CMI. How did they start, maybe, and where they’re located in Toronto, obviously, as Head Office?

Corey 01:49
Mississauga, yeah.

Len 01:50
This is almost like Toronto, yeah. So, a little bit about their background.

Corey 01:54
So CMI actually started out in 2005 as a family-run brokerage, and then it sort of evolved into a private lender, and we funded over $2.5 billion in mortgages. We lend across Canada, except the territories, Saskatchewan, Manitoba and New Brunswick. We look at doing first mortgages, second mortgages. Will we have bundles. We’ll do bridge financing, equity mortgages. We look at refinances or Purchase Plus Improvements. Basically, look at the overall strength of each file and see how we can get the deals to work.

Len 02:34
Is there a particular niche that you guys deal in? I know I’ve done a few different ones with you. Lower loan to value, and a little bit farther out of town than normal, Canmore, for one and a couple of other ones that we’ve worked on with you. So is there a really tight niche… that product that they work with?

Corey 02:55
So we’ll go to 80% loan-to-value in major urban areas, and then in the rural areas, we will look at rural properties as well, but we’re looking at more like 65% loan-to-value. And then, you know, we’re basically… our turnaround time is fairly quick as well. We were pretty good with a quick turnaround time. If you send a deal in the morning, then generally, we can get a commitment out to you by the end of the day. So our turnaround time is quite a bit quicker than some of the traditional lenders, for sure.

Len 03:26
That’s fairly fast for some of them to be turned around within two days, even though it is a bit of a stretch for some of the private lenders. Anyway, I did notice you write probably the most extensive commitment that I’ve ever seen on the private side. It was kind of refreshing to see, because it really did cover every detail that I could think of to explain to the client, right? So, which is good? So, yeah, make sure that everything gets covered. You did do something for me, which I haven’t had much luck with some of the local private lenders, in that the interest reserve was not something that they were scared of. Let’s put it that way.

Corey 04:06
Yeah, we do. We’ll do prepayments for the term. We can also do, like, a six-month prepayment and spread that out just to cut their mortgage payments in half to help someone qualify better.

Len 04:21
Yeah, we did. We did one where we did a full year, but there was lots of loan-to-value left in the property, right? So, so maybe, I know you probably, having been in the industry for a while, you’ve probably seen quite a different level of client that’s coming through for private lending these days, right?

Corey 04:40
Yeah, definitely, yeah. We will pay out foreclosures. We will pay out consumer proposals, property tax arrears. We don’t have maximum GDS, TDS requirements. So if it’s a situation, we just want to make sure that, you know, it’s somebody… they’re actually able to cover the mortgage payments and their outside debts, but we don’t necessarily have a maximum GDS, TDS requirement, and we don’t have a minimum beacon scores either. So that’s another thing. And then for new builds, we will look at using the appraised value over the purchase price. So that helps in some situations as well. If it’s a situation where they purchased the property, you know, a couple years ago, and then the values increased since then, where we are able to use the appraised value on those.

Len 05:27
Well, that’s a big help in some parts of the country. I don’t think it’ll be a big help in Toronto very shortly, especially as they’re calling them the dog crate condos there. Seems that there’s going to be a small flood on the market there, right? So, but yeah, definitely in Alberta, we are on an up slope again. So far. See if we get trumped or not. We’ll see what happens with all the things that are going on there as well. So, the federal election would be great. So maybe, so let’s talk. So do you do any construction, like actual builds?

Corey 06:04
So just completion, we don’t do draw mortgages. We’ll do first improvements, or, you know, if they’re if they just have some renovations they want to do on their property. But yeah, we don’t do full draw construction mortgages.

Len 06:16
Have you? Have you rescued any that were already started, and they forgot to get a mortgage before they started?

Corey 06:24
We’ll look at that on a case-by-case basis, right? We want to know the reason why they ran out of money, but we will consider it for sure.

Len 06:31
Yeah, I usually know the reason. I was in the home building industry for 10 years before mortgages. So I get a lot of them just because people know that I know the difference between their foundation and their roof, basically, in some cases. So we often see that come across our desk here. I don’t know. So what other special things do you think that CMI does that make them stand out a bit in the crowd?

Corey 06:56
So we can close a deal within six business days of getting all documents. And you know, in situations, we’ve entered situations where people are purchasing a property, and then, for some reason or another, the financing falls through at the last minute. And for those, we’re able to actually close on a rush basis within four business days of getting all documents from you. But you do want to make sure in those situations that you do have all the documents up front, ready to go, so that we are actually able to close within those four business days. So there is a slight premium added for rush deals. So it’s a deal that could have closed in six days. It would have been more beneficial to do it as a regular deal, right? So we’ll go behind a chip to 65% loan-to-value. We’ll also go behind a STEP, but we do use the registered mortgage amount for the STEP.

Len 07:46
So if they have a fixed rate and a HELOC, you’d still go to 80% behind that?

Corey 07:54
Yes, as long as it’s based on the registered amounts and not the limit. We don’t use the global limit for STEPS.

Len 08:01
Yeah, we often counsel our clients on, okay, let’s do it as what the mortgage is. Because if you do exactly that, if you need something else down the road, it makes it a little more difficult to add in, you know, another 10 or 15% maybe if you really need it. So it’s always good to know that number as well. Don’t do… is good as well. So what are those other than land in Saskatchewan?

Corey 08:28
Yeah, so we won’t go behind other private mortgages. We will look at paying them out on a case by case basis. You want to make sure that we have a strong exit strategy, and we don’t want to just be taking on someone else’s issues, right? So you have to have a strong exit strategy for paying out another private one. We don’t do industrial zoned properties and properties where the sole source of heat is a wood burning stove, or situations where the property is in really poor condition and they have no way to mediate it. They don’t have any plans to renovate it. So those are going to be situations that’ll be a little tougher, for sure.

Len 09:06
Yeah, we’ve definitely seen a few of those over the years. But wood stoves, I guess that’s, I know there’s a wet… it’s called a wet certificate, you can get for that, but that’s not, not surprising if there’s going to be a fire, it’s probably going to be from a wood stove, right? Somebody didn’t clean the chimney quite correctly.

Corey 09:25
So, yeah, well, we will do properties with them, as long as that’s not the sole source of heat.

Len 09:32
So if they have another furnace or something else, yeah, probably should explain to people why not Saskatchewan?

Corey 09:39
So I believe it’s because of the foreclosure laws that they have going on there. Basically, it’s hard to foreclose if they have a property… they could even just have a blueberry bush, and say that that’s their main source of income, and then that’s going to just take things a lot longer to foreclose on that property. So that’s one of the reasons for sure.

Len 10:01
And that law goes back to the dirty 30s, believe it or not, when thanks for trying to foreclose on all the farms during the Depression, that it’s pretty much impossible. And we’ve had some good stories of that over the years where it was, you know, as simple as—somebody did have five acres and they put five cows in the backyard, and it became a farm in Saskatchewan, and that was enough to keep it out of foreclosure, right? So lots of those stories and nothing in Manitoba. Is that what I also heard?

Corey 10:31
We’re working on Manitoba. We were originally in Manitoba, and then we, I believe, we are looking at getting our commercial approval there, so we are reapplying for both commercial and residential. So I do believe that’s what should be coming up here soon.

Len 10:49
Yeah, we’ve been licensed there. We’re licensed in six provinces as well, since the day we started pretty much. But it’s, do one deal a year in Manitoba. But the license is only $350 so we’re even right, and it’s usually my deal… so big in Toronto. Do they have a lot of money out in the Greater Toronto Area, given that the markets are changing there so quickly. Is that a concern for them?

Corey 11:18
We’re definitely more conservative on the condos, smaller condos in in Toronto, for sure, you know our… we’re looking at minimum square footage of about 550 and then anything below that, we would want to, for sure, have a tag, and that would be sort of a case by case basis, if the square footage is below the 550 there.

Len 11:41
Yeah, you read Ron Butler’s… he calls those the dog crate apartments, right? He’s always picking on them. And I guess there’s something like 50,000 of them coming on the market over the next two and a half years. So I would be gun shy about those, I think, as well. Or most people, most lenders, will be, just to make sure that the covenant is good for them. But they’re worth $700,000 which is even crazier.

Corey 12:07
But you know, some things that we’re seeing right now is, you know, the appraised values have been coming in lower in some situations. Actually, in my last few deals, we’ve had to cut back because the appraisals came in lower so it’s important to not just go by what the borrower thinks. So the borrower hopes the property’s worth right? You do a little investigating…

Len 12:28
…a lot. So, and that’s interesting, because I think if you saw my I don’t know if you follow me on LinkedIn or not, but the latest thing that came out was that, let me just read it here. There’s a big change in the way that the appraisers now have to word things. So it was on Mortgage Logic news, which I start my day with two things, BNN and Mortgage Logic news, usually. So they’re talking about the way that appraisers now have to word their documents, right. So, you know, sometimes when we’re dealing with private deals that it may take more than one opportunity to try a different lender, or something like that, to, you know, make sure that it fits. So they’ve actually changed the appraisals now, where they have to, if you know how we do a transmittal letter, right? They call it something else in the write up they did, but it’s being worded that it now has to be… They called it a reliance letter. I’m assuming that must be Ontario speak for mortgages, price referred to change. So they’re talking about how the lenders or the appraisers are now almost putting it to the point where it’s only good for the person and the lender that we had it done for originally. A lot of times, of course, when I’m doing private deals, I’ll have it made out to my brokerage first and then do a transmittal. Or some of them will just change to the lender that we end up with, right? So there’s some big changes coming in the wording of who can use that appraisal, right?

So i’ll be curious to see what that looks like for the lenders coming down the pipe as well. Plus, there are some things that I never thought would really matter. And one of them is, is there an EV charger in the house? You gotta add them. They’re about 600 bucks to 2000 depending on where you get it done. But, the other way is that they’re talking about energy rating. So energy rating can only be done by somebody who has a certificate to do the air balancing in the house and do the test. So I don’t know how an appraiser is going to figure out that one. Yeah, I’m an appraiser, not a mechanical engineer, but yeah. So lots of changes are coming in the appraisals. So we use Purview quite a bit. We have a Purview account. So when you use one account, and then you know the agents are doing private stuff, we usually at least try to get an idea of how much the property is worth before we actually start the process. So yes, because clients will always think that it’s worth a lot more than maybe, that it will even appraise for right?. So when, when do you make your next trip to northern Alberta?

Corey 15:32
Actually, I will be out there March 11 for the AMBA. They’re having a bowling event out there.

Len 15:43
Let me know. By all means, are you going to be here during the 12th as well?

Corey 15:48
You mean March 12? Yeah, yeah.

Len 15:50
That day we have our live training. So we actually, once in the spring and once in the fall, we get everybody together, and then people are basically coming in from as far away as North Battleford and Grande Prairie and Calgary. So we have a couple of agents down that way as well. So if you’re around, by all means, track us down, and we’ll be at the west end. We have 9am till about two o’clock, and we’ll be doing live training sessions all through that day. But you could pop in and say hi, that would be great that day. So just email Margie. She’ll send you the details. Just maybe pop in and have a coffee with everybody.

Corey 16:27
Yeah, that sounds great, for sure.

Len 16:31
Always good to put a face to the name, right? That’s always the hard part. And if you’re just making out, starting out in the north part of the country, there’s definitely a lot of people here. So 38 agents were on the team, a variety of different places, literally from Grand Prairie to North Battleford and from Fort McMurray to Calgary. So we’ve got the province pretty well covered. We have a couple in southern Ontario as well now. So they just moved back, which was interesting. But yeah, I definitely have lots of places where CMI lends, so that’s always good to see.

Well, thanks for your time today. It’s like I said, good to put a face to the name and a voice, at least for everybody that’s listening. So have a good day and stay warm in southern Alberta.

Corey 17:19
Thanks you too.

Len 17:21
Thanks for listening today. I hope you found the information that we provided to be useful in your mortgage journey. And remember, you can always find our associates at www.brokersforlife.ca/associates. Have a great day.