New Latitude Vision
Canadian uninsured mortgage lending platform
- Common sense lending based on financial logic
- Target borrowers abandoned by OSFI regulated lenders
- Focused on uninsured, single family, liquid urban homes
- Transparent, efficient, scalable, funding platform
- Outsource origination, underwriting, servicing, bond distribution
- In house adjudication, structuring, risk management and tech
- Maintain strict governance, ops and risk management practices
- Focused on mitigating risk while charging borrowers market rates
First mover creates a virtuous circle attracting high quality borrowers, lowest cost of funds and competitive advantage..
■ Opportunity aided by the re-regulation of global banks
■ Canadian government and regulators also focused on:
■ Reducing government influence and distortion of mortgage
■ Reducing government and tax payer exposure to CDIC and CMHC insurance
■ Tighter CMHC guidelines and OSFI regulated entities restricted underwriting standards has tightened Canadian lending criteria
■ Governments and regulators want more private capital and market discipline injected in the Canadian mortgage market
■ Over $1.6 trillion of mortgages are outstanding in Canada
■ Most mortgages are 5 year term, our target market currently take 1-2 yr terms
■ Estimates of the uninsured non traditional market range from 5-15% of total
■ 5% and 2 year term suggests a $40B annual volume target market
■ Highly fractured market offers significant risk adjusted returns
■ MICs are the largest unregulated lenders and New Latitude competitors
New Latitude’s efficient structure better mitigates risk is more cost effective, scale-able and aligns interests.
MIC’s structure require borrowers to be charged 6-12%.
MICs are the most significant unregulated lenders. The 4 Largest MICs have limited single family exposure, Smaller MICs tend to be regional and direct New Lat competitors. The problem with MICs are:
High cost of capital as MICs offer investors returns of 5-10%
The MIC structure is legally constrained on ownership and leverage.
MICs are too small to effectively diversify risk or amortize expenses.
Difficult for MICs to scale up or down to respond to market environment.
MIC’s Management generally have little skin in the game.
MIC management’s interest may not be aligned with investors.
CEO Certicom, MKS,
Bank of Canada Board
COO Canaccord, CA,
Chief Technology Officer
Roles & Players
■ One of Canada’s largest non-bank lenders, founded in 1991
■ National presence with over 700 professionals located across 9 offices
■ Originates, underwrites and services residential, commercial and construction
■ MCAP has $53B in AUM
■ Originates $14B/year of mostly insured including $600MM uninsured
■ Works with 5,000 mortgage brokers
■ Use uninsured Eclipse origination channel to source New Latitude product
■ Work through a small sub set of “proven” brokers
■ Make origination very efficient and disciplined
Portfolio Collateral Status Review
■ New Latitude leverages Technology to manage collateral
■ All partners can access mortgage data base via a portal
■ Data base analytics will show risk limit compliance
■ It will allow informative drill down and portfolio analysis
■ This platform and analytics are central to New Lat strategy
■ Non traditional data will provide a deeper view of collateral
■ Tracking and management of mortgages collateral status and relationships over time maintained to provide real time transparency to all stakeholders