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Friday, 17 October 2014


Do you work for a corporation that presently seeks or may one day, seek to apply for a mortgage? Don't go straight to a Mortgage Broker, it's the wrong thing for a corporation to do. To understand more, read below, an excerpt from the webpage entitled:

Corporate/Commercial (VenCap MortgageTM), Private Business Owner, Construction, Renovation & Developer Borrowers


PLEASE NOTE: only accepts corporate clients if the corporate entity has approached at least their own institutional bankers first; and preferably a second banker or institutional lender in order to get a first and possibly, second institutional opinion respecting their project and mortgage financing request. Why?

Institutional bankers are the best free source of guidance and the cheapest mortgage source for corporate entities.

Corporations often retain Mortgage Brokers when they don't need to. In a corporate context, a corporation's own banker is a far better source of capital to a corporate applicant.

Further, corporate transactions are based upon many more factors than non-corporate transactions and decisions to lend money to corporate applicants can only take place after a complete corporate underwriting process has taken place.

Unlike with institutional banks,'s corporate underwriting services are not free; both upfront  Mortgage Broker retainer fees and downstream Mortgage Broker service/origination fees are payable. Proper corporate governance requires that a corporation should only bind itself to a Mortgage Broker Services Agreement with if there is a clear and demonstrable need established for a non-bank, brokered financing solution.

Further, does not seek to enter into a services agreement with a corporation that could already be satisfactorily qualified for financing from an institutional bank or lender. It makes no sense because even if were to arrange a "cheaper mortgage", Mortgage Broker fees are still payable so when the overall cost of borrowing is calculated, the cost of the Mortgage Broker's involvement will increase the corporations overall costs and often make the broker-sourced "cheaper option", more expensive than a non-brokered institutional bank solution.

In many cases, one of the key benefits of a mortgage brokered transaction is that the Mortgage Broker may identify a lender who may be both "cheaper" and "less burdensome" conditions-wise, than the corporations current available financing option. Or, the broker-sourced lender may be more expensive but will also loan a higher amount of money, or require less conditions precedent. Only once a corporation has approached its own "go-to" bankers, can a starting level of understanding be established, so that the overall finance-raising strategy can include a determination of whether or not the corporation may want to invest in the services of a Mortgage Broker for a second opinion or alternate, broker-sourced possible financing solutions.

It would be considered poor corporate governance if a corporation simply retained a Mortgage Broker merely because the corporation does not have an employee available to manage the financing request process. This is a false logic because in many cases of corporate mortgage finance, the Mortgage Broker fee may be more than the annual salary of the corporation's average employee. Indeed, if the corporation is truly a going-concern, it should simply appoint its CFO or if the corporation does not have a CFO, then its accountant, to take the role of approaching its own bankers. That's far less expensive than a third party Mortgage Broker and proper corporate governance. Shareholders will require that all competent corporate managers would act like this.

Therefore, all potential corporate applicants should go to at least their existing institutional bankers first. It truly is the right thing to do.

If, after the corporation has approached at least its own bankers and the bankers can not approve the financing; or, the bank can approve some sort of financing but not enough; or, the banks conditions are too burdensome, or the bank is materially too slow, then the corporation may want to reach out to

The primary contact officer of the corporation will be required to disclose to the efforts the corporation sought to obtain financing from at least their own bankers and why exactly they realized the bank would not be helpful.

This process establishes two critically important and indisputable things:

1 - it provides with an honest, 3rd Party assessment of the corporation's financing request from the bankers point of view. This will enable to quickly and freely understand the corporations strengths and weaknesses from a credit underwriting prospective.

2 - it provides the corporation with the realization that if their project is truly worth it to them, then a mandate for a non-bank solution, namely a Mortgage Broker solution is established. The only question left for the corporation is "which mortgage broker to use".

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