A proven track record and solid funding will help the company navigate a challenging market, says company founder
This article was produced in partnership with CYR Funding.
Fergal McAlinden, of Canadian Mortgage Professional, spoke with Rena Malkah, founder of CYR Funding, to discuss how the company is shaping up for the year ahead.
Turbulent times may be ahead in Canada’s mortgage market in 2023 – but a long record of experience and funding for a range of different situations have set CYR Funding in good stead to achieve continued success this year, according to the company’s founder.
Rena Malkah (pictured) told Canadian Mortgage Professional that the mortgage industry should brace for some of the challenges that lie ahead, including difficulty for borrowers in renewing their mortgages when their home values drop or when interest rates rise, meaning their monthly payments will be higher.
Borrowers who bought houses or condos on a preconstruction a year or more ago and are now closing the purchase may also have to come up with more for the down payment to meet the purchase price if the property value is now less, Malkah said, with builders also potentially in trouble on the construction financing side when purchasers are ready to close on a building where the value has dropped.
With that in mind, what should lenders be focusing on in the current climate? “Everybody tries to be more cautious on lending today. Most of the lenders have cut back to 75%, or can protect themselves by lending less, to be on the safe side,” Malkah said.
“There’s only so much you could do. I would recommend, though, that any mortgage lenders that are in the situation where the value has dropped and the borrower cannot get refinanced anywhere else, that they should just ride it out and renew for them, because eventually it’s going to go back up again.”
In that case, borrowers should eventually be able to refinance and pay off the debt in a couple of years, Malkah said – a situation that’s preferable to seeing people lose their homes and lenders lose money.
How does CYR Funding work with brokers?
As for brokers, developing sources of private funds will be an essential step in 2023, Malkah said, “because private money’s going to be needed more than ever. That’s a space that we do a lot in, and many other brokers come to us to fund private deals.”
Established in 1975 – a year after Malkah, 2021 recipient of CMP’s Lifetime Achievement Award, entered the mortgage industry – CYR sees half or more of its business coming from other mortgage brokers.
“We’re like the broker’s broker, because we have experience and funds for all different situations including land, construction, commercial, and residential first and second, anywhere in Ontario,” Malkah said.
The company also funds special-purpose properties such as churches, banquet halls, residences, nursing home resorts, and gas stations, catering to a wide array of options as long as it makes sense on an equity or cash flow basis.
“If it’s just land, or some other situation where the income cannot support the debt, we would take an interest reserve to prepay the interest for a year,” Malkah added.
“I would look for when the exit strategy is at the end of the term to pay the mortgage off, such as they’re selling the property or they’re going to refinance it or they’re going to do construction on it, and the construction money will pay it off – we’d like to see what the exit is.”
Other reasons that a broker might explore a private option may be if they mainly do residential but don’t know how to do construction or commercial, according to Malkah. “If it’s a bankable deal for commercial, quite often we can be the client’s bank, because we have other funds like pension funds and life insurance. So if it’s a good deal, a bankable deal, we can be very competitive.”
Flourishing in the face of market turmoil, CYR also opened a company in the US last year, meaning that in addition to being licensed in Ontario, it is financing any type of property (other than residential owner-occupied) in any state south of the border.
Brokers or borrowers interested in CYR and what it offers can find more information on the company’s website, while being on its email list allows subscribers to receive newsletters on current rates and existing or upcoming specials.
Rena Malkah is founder of CYR Funding, an independent mortgage broker firm based in Ontario with a presence in the US.
