What are the Risks of Investing in Private Mortgages?

Please see below the risks that are associated with investing in private mortgages, We ask you to take time and read through the disadvantages of mortgage investments.

1. All mortgage investments carry a risk. There is a relationship between risk and return. And In general, the higher the rate of return, the higher the risk of the investment. You should very carefully assess the risk of any potential mortgage transaction and in the supporting documentation before making a commitment.

2. Syndicated mortgages (defined as a mortgage with more than one investor/lender) may carry additional risks pertaining not only to the risk of default but also to the risks associated with participating in a syndication and the financing of real estate transactions.

3. Inexperienced investors are not advised to enter into mortgage investments.

4. This mortgage investment is not insured by the Government of Ontario or any other investor protection fund.

5. You are strongly advised to obtain independent legal advice before committing to purchasing a  private mortgage.

6. A private mortgage investment cannot be guaranteed by the mortgage brokerage, or mortgage administrator If you are not prepared to risk a loss, you should not consider mortgage investments.

7. If you choose to invest in a mortgage to fund a development, construction or commercial project, the repayment of this investment may depend on the successful completion of the project, and its successful leasing or sale.

8. If you are one of several investors in a syndicated mortgage, you may not be able to enforce repayment of your investment on your own if the borrower defaults.

We also suggest to read the details provided in the Merit Valor Capital MVC servicing agreement which accompany our private mortgage selections carefully,for more details as to how enforcement would take place in case of syndicated mortgages.

9. We try to make all efforts to ensure you have access to sufficient documentation to support the property valuation quoted in this Disclosure Statement that will accompany your request to purchase a mortgage investment. However the property value may decrease over time, including the period between the date of the most recent appraisal and the date you complete the transaction. A decline in property value may also affect the return and/or value on your investment in the event of a default in payments under this mortgage.

All investments are appraised by a 3rd party appraisals before presented on our platform, and available at our head office for review.

10. You should satisfy yourself as to the borrower’s ability to meet the payments required under the terms of private mortgage investment.

11. The mortgage administrator, (Merit Valor Capital Asset Management Corporation) if applicable, cannot make payments to you except from payments of principal and interest made by the borrower under the mortgage. Therefore, the mortgage administrator cannot continue mortgage payments to you if the borrower defaults.

Please see Merit Valor Capital MVC servicing and Private Mortgage Investor agreements that accompany each mortgage deal, for details in regards to how defaults will be handled.

12.  Private mortgages are termed private and as such not exposed to open markets and thus considered illiquid and may not be liquidated easily in the absence of private mortgage purchasers, lenders, refinanciers, or in the event that borrowers exit strategies do not align with the maturity dates.

The Mortgage terms also although listed an agreed upon terms may be extendable in cases for an additional terms, and may also be extended beyond these listed terms at maturity.

In these cases, additional renewal fees may be charged to compensate the private mortgage member, for the renewal.

13. There may be additional risks when investing in private mortgages. You should satisfy yourself regarding all factors relevant to each potential investment before you commit to invest.