Understanding Private Lending and Mortgage Investment Corporations with Reaza Ali

In this episode, Len Lane chats with Reaza Ali, a mortgage expert, about private lending and Mortgage Investment Corporations (MICs). They explain how private lending and MICs work differently from traditional banks, providing options for people who may not qualify for bank loans.

Reaza clarifies the risks involved and emphasizes the importance of choosing reputable lenders. They also discuss changes in mortgage qualifications, especially for self-employed individuals, and how different provinces in Canada are affected by market shifts. Len and Reaza highlight the need for careful research to ensure clients find the best mortgage solutions for their financial goals.

About Reaza Ali

Reaza Ali brings over 26 years of experience in the mortgage industry, with a rich background encompassing roles in business development and broker relations. Currently serving as the National Broker Relations Manager for Fisgard Asset Management, Reaza leverages his expertise to navigate the dynamic landscape of private lending and MICs, empowering clients and industry professionals with strategic financial solutions.

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Contact Len Lane | Brokers for Life:

Contact Reaza Ali:

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Transcript

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 Centres in Western Canada. The topic of our podcast will be about what we consider to be Real Life Mortgage Solutions.

Len 00:19

Welcome back, today we are going to talk about private lending and mortgage investment corporations that are known as MICs of the industry. My guest today has been in the industry, since almost as long as I have by the looks of it, according to LinkedIn anyway. They started as a mortgage broker back in 2008. Working for an investor group, was a business development manager for HomeTrust and got scooped up by our good friend Hali and now he’s now he is actually the National Broker Relations Manager for Fisgaard Asset Management. Reaza Ali.

Reaza 00:58

You got it. That’s a long one. That’s a long one. Thank you very much, Len. I appreciate that. Yeah, even going back further than 2008, I actually, and you’ll remember some of this started in the industry with household finance back in the day, HFC. So yeah, it’s it’s been I think I’m it’s been almost 26 years now, in the industry. So yeah, I really don’t see myself leaving it now.

Len 01:25

Yeah, it’s too late and too hard to retrain. That’s right. You’re probably not unlike me, we’re pretty much unemployable outside of this industry.

Reaza 01:36

You kind of wonder what you do with yourself afterwards, you know, it’s, but I do love it. Absolutely love, the people in the industry.

Len 01:43

Seven to eight years ago, somebody asked one of my team, if I had gotten tired of this, because I had been in work for a concrete company and sold concrete and then new homes and, a few other things. But I had moved around within those industries as well. Right? And, and when I heard that question, I’m gonna like, No, I don’t think I’ll ever get tired of mortgages, because there’s no two days the same. And we just had another week where it’s like, there’s a whole bunch of different things that came across my desk, but I hadn’t had never seen so. So–

Reaza 02:13

That’s one thing I do say. There really is not a day, that’s the same. You hear so many different scenarios, although we’ve been in the business as long as we have. And we’ve probably seen most of everything. But the nice thing is each day is different. It does bring a different scenario, and the industry is ever-changing. So, you do have to stay on top of things.

Len 02:39

That is true. And it’s hard to do. I can’t imagine being part-time in the industry at this point. There’s a change every day. So–

Reaza 02:48

Very difficult. But talking about change.

Len 02:50

Yeah. Talking about change. Well, I guess part of the change is asking this question. The average Canadian probably lumps private lending in with MICs and syndication and all of those different definitions that we understand. But, of course, lots of things that we see happening in the private lending side. What makes that different from mortgage investment corporations, which is what Fishguard is.

Reaza 03:13

Yes, and we do love talking about this, because to your point, you know, the word private, is associated with everyone and that’s not necessarily the case. I’d like to break it out in this way. Either one of us can be an individual investor, we want to put our money out on a particular property, there’s certain risks that go along with that. And as an individual investor, we take that into consideration and charge accordingly. But at the same time, we’re human, we listen to the news, individual investors react differently, whereas when you’re talking about a mortgage investment corporation, it’s exactly as it’s it sounds, almost institutional, private lending, if you will. And there’s infrastructure behind it. There’s regulations behind it. And when I talk regulations, whether it’s Securities Commissions, or the the Broker Regulation side, in each province that we lend in, that is a big part of the operation and consideration. So, we have to protect our investor funds, whereas an individual investor, it’s their own personal money going out on a property and all of the risk is on that property versus someone investing into a Mortgage Investment Corporation, their risk is spread amongst the entire portfolio.

Len 04:48

Right, it’s not quite syndication, but it actually goes to that next step where it’s however many investors and then there’s probably hundreds, I’m sure with this guy If not 1000’s.

Reaza 05:02

Yeah, there’s literally 1000s and investors in the corporation. Exactly. And it varies. It varies between organizations and mortgage investment corporations. But to your point, you’re correct, we actually have control on that money, we put out an operating memorandum to our potential investors and our existing investors. And they look at the risk of the portfolio and our history in the business and determine if it’s somewhere that they would like to place their funds to see, you know, a reasonable return on their money.

Len 05:37

Excellent. So, lots of news lately about private lenders, especially in Ontario, and how unregulated they seem to be, but especially after recent collapses. So how is that different in the world of MICs? We …