How did Hillmount help save a subdivision?
This article was produced in partnership with Hillmount Capital.
Desmond Devoy, of Canadian Mortgage Professional, spoke with Catalin Popa, director, origination and underwriting, and Lucas Wright, senior manager, residential and commercial lending, with Hillmount Capital, about the need for versatility in this challenging market.
With the right, flexible mindset, there are endless solutions that can be provided to a borrower.
Having a variety of financial tools at your disposal can make creative solutions even easier to realize.
For Hillmount Capital, the current volatile market has made it boost its flexible game – something it already has a lot of experience doing when it comes to finding solutions for borrowers.
“We have a number of unique offerings,” said Lucas Wright (pictured left), senior manager, residential and commercial lending with Hillmount Capital, during a recent interview. “And the reason we do is that, in order to tailor a solution, we may have to use multiple avenues to do so.”
The crucial role of the broker
The role of the broker is key to a successful deal. The borrower may not be expertly versed in the ways of the mortgage market – which is why it is important for the broker to fill that role and provide a full and frank assessment of their client’s needs, and realities, to lenders like Hillmount Capital.
Catalin Popa (pictured right), the company’s director, origination and underwriting, said that it all comes down to understanding the client’s needs and working together to find a solution whether it is a refinancing, property sale, or other deal type.
Wright agreed, adding, “on the larger commercial, construction and income-qualifying commercial deals, as long as we understand the challenge that the broker is bringing us, then we’re able to tailor a solution that’s flexible and transparent to the borrower.”
“Why are they here? What is the challenge they need the solution for? What’s the exit strategy they’re looking for?” said Wright. “We need to know the full story from the broker.” Otherwise, it’s like trying to solve a puzzle with missing pieces, he said.
A multitude of solutions
Flexibility is essential in this current environment because of variables like decreased property values, as well as deteriorating affordability because of inflation, increased debt, high interest rates, etc.
“Being creative is probably more important than ever to contend with these different factors,” said Popa,
When it comes to solutions, Hillmount Capital can be quite flexible, sometimes taking additional collateral to strengthen the deal. If, for example, a borrower is looking for a very high loan-to-value mortgage, Hillmount Capital can consider taking multiple properties to bring down the loan-to-value while still meeting the loan amount requirement.
Hillmount Capital can also look at putting together a loan where a borrower has multiple properties, for which they can offer a partial discharge provision, as opposed to forcing a borrower to discharge all properties at once. The structure of the partial discharge can entail both provisions allowing for refinancing, or the sale of the collateral properties.
“Mortgage fees for setting up, maintaining, and discharging the loan can really add up,” said Popa. “It’s important to be transparent about them. We walk our clients and brokers through all the fees, so there are no surprises.”
How flexible thinking saved the day
Hillmount Capital’s ability to be flexible has solved some real problems for borrowers over the years. Wright recalls one borrower who had just closed a large subdivision project. Many of the sales of the homes had been completed, but there had been a substantial delay obtaining permits during the COVID-19 pandemic. Over the same period, construction costs had increased quite significantly.
“We had a situation where the numbers no longer worked for the institutional lender with which they had their construction financing,” Wright said. Hillmount Capital was able to approach the deal from a different perspective. The company restructured the deal by taking additional collateral from the client’s real estate portfolio, allowing the client to receive more funds upfront, as an equity advance. Transparent terms, including the allowance for partial discharges from proceeds of sales, were agreed upon at the beginning. Popa proudly noted that Hillmount Capital is now starting to get paid off on the deal, meaning that everyone benefitted from the flexible plan.
“It’s very satisfying when you see it all come to fruition,” Popa said. “It’s very rewarding when everyone is happy.”
To find out more about Hillmount Capital’s flexibility, click here.
