I am a big fan of securitisation. It’s only been around since the 70’s but annually there is now a 3-4 trillion dollar market in securitised products. The major securitisations deal with things like residential mortgages and credit card receivables, but there have been some much more exotic securitisations such as David Bowies record royalties and a number of soccer clubs tickets receivables.

I invested in an Australian company, Bluestone Mortgages, when it was a start up. Bluestone is in the business of providing mortgages to people that don’t meet the normally criteria used by the high street banks – often referred to as non-conforming, or sub-prime, mortgages. The Canadian mortgage market is still dominated by the major banks but over the past 18 months some alternative lenders have started to make headway in the sub-prime market. These lenders uses securitisation as the method of funding there business models.

The sub-prime market has often had a bit of a bad reputation because it is associated with the “credit impared” borrowers and has been seen as an individuals last resort. In Canada however the compulsary mortgage insurance for loans greater than 75% loan to value (LTV) ratio actually means that most people get treated as “sub-prime” anyway. These alternative lenders don’t demand mortgage insurance and and offer greater than 75% LTV. (Some will even lend up to 100% LTV).

That’s the background ….

….. so I have been seeing if there are any opportunities in the Quebec mortgage markets. I’m planning on looking at two areas; the mortgage brokage business and the mortgage funding business. If anyone has any thoughts on either of these areas It would be great to discuss further.