The upstick being that customers are increasingly turning to private lenders for mortgage financings and refinancing is not something new in the legal profession. However, there is a unique set of challenges that one must understand to know best how to overcome them.
First and foremost, a private mortgage is one involving a lender that does not fall into any of the exceptions listed in s. 24(2) of bylaw 9 of the Rules of Professional Conduct. In this case, we refer to Schedule I or II banks, registered loan or trust companies, licensed insurers, pension funds and/or other entities that lend money in the ordinary course. Thus, these are funds general advanced from an individual, a corporate client or a group of clients, rather than funds advanced by a financial institution. Private mortgages are therefore the product of a borrower failing to secure a mortgage at a bank or other finance provider because of strict requirements imposed by these lenders.