General Information

Mortgage Investment Corporation (MIC)

When you invest into an MIC, your investment money goes into a pool of mortgages. The MIC will then distribute their income out to investors through dividends, which is considered interest income. This means that the income is not eligible for tax credits, but some MICs will allow you to hold within a registered account. Higher operating and administrative expenses can reduce the interest income you will earn compared to a syndicated mortgage option. Less risk but lower returns.

Syndicated

Syndicated mortgages involve a group of private investors that provides a mortgage to a single borrower. Each investor has control over what borrower they would like to invest in. Investors in the group contribute toward the mortgage and will receive a return proportional to their contribution. The syndicated mortgage will realize higher returns as it allows investors to keep more of the interest the borrower pays on the mortgage. Once the mortgage is paid off by the borrower the investor will receive their initial investment back and will be sent new opportunities.

Engaged Capital is a syndicated private investor.

Private mortgages are designed to be temporary loan instruments. Borrowers that have subprime credit below 600 or GDS/TDS ratios outside alternative lender guidelines often require private mortgage financing. Some borrowers simply need funds for renovation purposes or to bridge the gap before securing long-term financing.

Private mortgages lenders look at the value of the property and not typically the credit score or ratios. If the borrower is unable to make these payments, the lender can take possession of the property and sell it to pay off the debt. Because of the higher risk involved private loans are typically shorter and come with higher interest rates and fees for borrowers.

Borrower scenarios:

• Has reached max qualification with bank
• Unique property – fixer-upper, or unique location
• Construction or land required in rural areas
• Has not been at their current job long enough
• Thin credit history
• Refinance of current mortgage involves high break fees
• Collateral mortgage allows no room for equity pull
• High GDS/TDS ratios
• Self-employed with fluctuating income and cash component
• Currently laid off or job loss with plans to return back to work
• Foreign income
• New to Canada
• Divorce causing temporary financial issues
• Previous consumer proposal or bankruptcy

Mortgages are originated exclusively through our mortgage broker referral channel which allows us access to a greater volume of business at the lowest overhead cost.

Types of loans:

• Construction Financing
• Renovations
• Debt Consolidation
• Poor Credit
• Bridge Loans
• Non-Verifiable Income
• Purchase
• Equity Take-Out

We offer our agents and their clients multiple private lending solutions with more flexibility than an institutional bank!

Types of loans:

• Highly experienced group of managers servicing each mortgage investment transaction
• Money is not pooled but connected to a single mortgage.
• A constant flow of qualified mortgages
• Short 1-year term loans to minimize risk
• Every borrower goes through a strict underwriting process to ensure they have the ability to repay the loan and who have marketable property
• Clear Exit strategy
• Monthly interest distributions
• $50,000 minimum
• Legal ownership of that mortgage
• Fully managed by Engaged Capital Administration Team, including all associated costs.
• Utilization of specialized software to enable tracking of each mortgage

The industry average is between 5%-8% return.

Engaged Capital’s investors has an Average Annual rate of return of between 8-10% on 2nd mortgages.

Investors will receive monthly interest distributions on the 15th of the month.

Example 1:

$100,000 – Investment, 9% – return: = $9,000 per year => $750 per month

Example 2:

$50,000 – Investment, 10% – return: = $5,000 per year => $416.67 per month

Example 3:

$250,000 – Investment, 10% return: = $25,000 per year => $2,083.33 per month

You will not see this type of return from your bank investments!!

Note: The principle is returned at maturity/discharge of the loan.

• Professional due diligence
• Full transparency on every asset
• Short one year investments
• Monthly dividend payout
• Focus on capital preservation
• Managed and Enforced

Through our established relationship with the mortgage broker channel and decades of experience in Mortgage sales, underwriting and risk management, Engaged Capital Inc (ECI). is able to offer its investors the opportunity to invest in qualified mortgages with maximum returns.

Professional Due Diligence and Underwriting

The role of a mortgage underwriter entails working alongside the mortgage broker or agent to ensure that the borrower is not overextending their budget. To approve or deny a loan, the underwriters at Engaged Capital create an in-depth analysis of the loan package to determine if the potential borrower presents an appropriate amount of risk. Our mortgage underwriters will further assess the risks to both the borrower and the lender thereby reviewing risks from all perspectives.

Full Transparency

The firm prides itself on following fundamental lending strategies that have demonstrably minimized capital loss to investors. Through full transparency into each asset, ECIEngaged Capital Inc. ensures the highest level of protection for its investors.

Short Term Loans

To reduce risk we offer short one-year loan terms.

Monthly Interest Payments

Interest payments are directly deposited into your account on the 15th of every month (or the next business day). Monthly investor statements are sent on the 15th of every month with a portfolio overview, so clients can easily keep track of their investments.

Capital Preservation

Our main goal is to protect our investor funds. Capital preservation has and continues to be the core of Engaged Capital lnc.’s mandate.

Managed and Enforced

Fully managed and enforced through Engaged Capital, including all associated costs. If anything happens to the mortgage and needs legal action, the company’s lawyers will handle everything for you. Engaged is also registered on the mortgage charge, so if the payment bounces from the borrower, the investor will still receive their monthly interest payment.

“Market fluctuation, credit risk and exposure are all elements that we consider when determining the validity of a potential mortgage investment. The exit strategy is a main focus, as we believe getting our clients into the mortgage investment is just the beginning, the true success is getting them out.” Shubha Dasgupta

New Mortgage Opportunity (NMO) is sent to Investor which includes:

• NMO Summary of loan, property and borrower information
• Mortgage Application
• Credit
• Appraisal

If accepted:

• Investor documents (Form 1 and Trust Agreement) are issued for signing
• Money is deposited to Trust Account until the closing date of the property
• Funds are issued to the borrower at the time of closing at the Lawyers office

Once the mortgage is closed, the investor receives the Closing Package, which includes:

• Investment summary
• Mortgage Charge
• Insurance
• Signed Trust Agreement and Form 1

The Investor will then start receiving a monthly statement in addition to their monthly interest
deposits.

Mortgage underwriting is the process used by lenders to determine if the risk involved in offering a mortgage loan to a borrower is acceptable. Engaged Capital’s guidelines involve underwriting the borrower’s credit, collateral and capacity, to determine whether or not said borrower qualifies for loan approval.

To better understand the process of a mortgage underwriter, it is important to know what their role entails. Our mortgage underwriters work alongside the mortgage broker or agent to ensure that the borrower is not overextending their budget. To approve or deny a loan, our underwriters at Engaged Capital create an in-depth analysis of the loan package. This is used to determine if a potential borrower presents an appropriate amount of risk. Our underwriters are the best judge for reviewing applications, as they are experts in Engaged Capital’s policies and procedures. Furthermore, our mortgage underwriters will assess the risks for both the borrower and the lender.

During the verification portion of the loan approval process, an underwriter will review the information provided on a borrower’s application and analyze all supporting documents. The amount of verification that occurs varies from borrower to borrower. If the lender perceives a borrower to be high risk, a much more detailed verification process will take place.

Throughout the verification, credit reports will be pulled. The credit report pulled will be used to determine a credit score and demonstrate how well a borrower manages their current debt.

An income analysis will also be conducted. To accurately indicate whether or not a borrower will be able to make payments on their loan, ECI mortgage underwriters will take an in-depth look at a borrower’s employment, income, assets, and current debt. Due to there being various types of income, the documentation provided for each will vary.

A mortgage that requires the borrower to pay interest only on the principal in monthly installments for a fixed period of time.