That being said, I am not a lawyer, and I am not providing any legal advise here in any way shape or form. Please consult with your own investment advisers and legal counsel before deciding on any particular investment strategy.
That being said, here is a very basic overview of the process to invest in private mortgages.
Off the top, investment may not be the best term to be using as that conjures up images of securities regulations and legal disclosure requirements.
There are some forms of mortgage investing, such as mortgage investment corporations, that do have regulatory guidelines to follow.
But for an individual that wants to put their own money into a mortgage, there likely aren’t going to be any regulations specific to securities law that you’re going to have to worry about, regardless of the jurisdiction you are in.
Not to over simplify things, but most private mortgages are loans from one person to another, where real estate is offered for security to which a mortgage is registered to protect the interests of the borrower.
In order to invest in private mortgages, you basically are going to need a source of funds to advance to a borrower and a lawyer to prepare a mortgage commitment, register the mortgage commitment, and disburse the funds.
You can source your own deals or you can work through a private mortgage broker who has the ability to qualify their own deal flow against whatever lending/funding criteria you establish. You may even want to utilize a mortgage broker to take care of all your administration related to your outstanding mortgages as well.
If you are the only person funding a particular loan request where a mortgage is being issued as security, you can have complete control over the decision making process and the mortgage registration process, and if you so choose, you can get the borrower to pay for your legal costs as well, provided the borrower is prepared to accept all the costs associated with putting the mortgage in place.
Once again, as an investment vehicle, private mortgages are fairly straight forward to get into place.
If the mortgage goes into default, then you have the same rights as any mortgage holder to act on your security in order to reclaim both the funds advanced and the interest cost outstanding.
As a private mortgage broker, I work with a number of different private mortgage lenders to locate private mortgage investment opportunities for them.
If you would like to learn more about how to invest in private mortgages, or would like to see how we can work together, please give me a call and we can set up a time that works for both of us.