Definition of a Mortgage Company
A mortgage company is a business with the principal activity of providing or servicing mortgage loans.
A mortgage company may be a chartered bank, a credit union, a trust company or other financial institution providing mortgage loans. In addition, a mortgage company may purchase mortgages from the original mortgage lender and service the mortgage loan.
Example
Mr. McGillicuddy desires to purchase a home and seeks a mortgage broker to obtain a loan. The mortgage broker will review the offerings of numerous mortgage companies, including banks and other financial institutions in the business of loaning funds for mortgages and select the most favorable product and lender for their client. In this case, Bank C offers the most suitable mortgage and agrees to provide a mortgage to Mr. McGillicuddy. Bank C is a mortgage company. The mortgage broker is not considered a mortgage company, since the broker does not directly lend funds to Mr. McGillicuddy. Instead, the mortgage broker deals with Bank C on behalf of Mr. McGillicuddy.
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Mortgage Companies in Canada
There are hundreds of mortgage companies in Canada, ranging from the “Big 5” chartered banks to small town credit unions or savings and loan. Mortgage companies may be regulated through the federal government, if they are federal financial institutions, or may be regulated by province, if they are provincial institutions.
Regulation of Mortgage Companies
Each province has its own regulatory agency to oversee the mortgage companies under their jurisdiction. For instance, in Alberta, the Alberta Superintendent of Financial Institutions oversees mortgage companies in that province. The regulatory agency, whether at the provincial or federal level, is charged with the duty of insuring mortgage lending laws are met by mortgage companies.
In addition, the regulatory agencies will examine the financial conditions of mortgage companies on a periodic basis to insure a mortgage company is fiscally sound. If necessary, such an agency has the ability to order a fiscally unsound mortgage company to take corrective actions, and even place the company into receivership.
Mortgage Companies and the Consumer
The large number of mortgage companies means more choices for consumers. Borrowers seeking a home mortgage are no longer confined to the Big Five chartered banks, or the local credit union. Borrowers now have the ability to find the right fit for them from a wide variety of mortgage companies, each offering a selection of unique mortgage products and services.
At First Foundation, we know that choosing the right mortgage company is as important as choosing the right mortgage. We use our experience and expertise to make the best match possible between mortgage company because we want your mortgage experience to be a smooth one, even after your mortgage has funded.
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