Risk Mitigation Profile

Management of EquityLine MIC believes the key to the Corporation’s success is its risk mitigation strategy. The Corporation’s risk mitigation strategy differs from the strategy adopted by a majority of other MICs.

Many MICs operate on the fringe of the mortgage lending markets. They focus on 2nd and 3rd mortgages from individuals with soft or distressed credit. These MICs leverage this fringe credit profile to charge high interest rates that mitigate a default/arrears ratio that averages approximately 1.9 percent.

EquityLine’s model is focussed on lower risk mortgages. That allows us to target an average default ratio of 0.5% to 0.75%. This is achieved through a unique, well defined and strictly adhered to set of investment criteria.

EquityLine's Mortgage Target Criteria

  • Investment in a mix of qualified 1st and 2nd mortgages in carefully selected urban residential Southern Ontario communities
  • An average mortgage duration of 6 to 12 months
  • Mortgages limited to a maximum 80% loan to value (LTV) ratio
  • A mortgage average less than $300,000
  • A requirement that high value LTV 2nd mortgages prepay interest for the term of the mortgage:
    • Generally, 35% of all mortgages require prepaid interest
  • Targeted properties are classified as prime urban in larger communities around Southern Ontario
  • All properties must have a current appraisal produced by an accredited member of the Appraisal Institute of Canada