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UNDERWRITING STANDARDS

In broad terms Trillium-Accessible Investment Fund (MIC) Inc.is focused on residential first and second mortgages placed on properties located in urban areas in British Columbia and Alberta. The lending practices of the Manager of the MIC involve preparing the same level of disclosure for the MIC as are provided to private investors in second mortgages. Mortgages are funded on the basis of equity – no more than 85% of the value of a property based on an appraisal; on ability to pay, based on a review of the credit record of the borrower and his job situation; and on various other intangible factors – primarily the assessed risk of losing capital on an investment in a mortgage always assuming the worst case analysis, collection of the interest and principle by way of foreclosure.

Borrowers of funds from a MIC are generally people who do not obtain bank financing for a variety of reasons – credit problems, income verification, business for self, ownership of too many separate properties, etc. For this reason second mortgage based MIC’s are riskier than 1st mortgage loans, insured by CMHC or Genworth but at a similar level of risk as institutional loans from Finance companies such as HSBC Finance or Well Fargo. Rates charged to borrowers range between 10% and 16% based on various factors, but influenced by perceived risk and competitive factors in the market place.

In addition to second mortgages as discussed above, Trillium-Accessible will from time to time and for a portion of their portfolio invest in other types of Mortgages within the rules and guidelines set out under the income tax act. Ultimately the decision to fund mortgages will be based primarily with the view to acceptable levels of income consistent with preservation of capital under the provisions of the offering memorandum.

Thus as outlined in the Offering Memorandum:

We invest in investments permitted of a MIC under the Tax Act. The Tax Act provides that a MIC may invest its funds as it sees fit, provided that a MIC must not invest in mortgages on real property (land and buildings) situated outside of Canada or any leasehold interest in such property, debts owing by non-resident persons unless secured by real property situated in Canada or shares of corporations not resident in Canada.

The Tax Act also provides that at least 50% of the cost amount of a MIC’s property must consist of debts secured by mortgages or otherwise on “houses” or property included within a “housing project” (as those terms are defined by section 2 of the National Housing Act (Canada)) and money on deposit in a bank or credit union. No more than 25% of the cost amount of a MIC’s property may be real property, including leasehold interests in real property (except for real property acquired by foreclosure or otherwise after default on a mortgage or other security).

We are in the business of investing in mortgages granted as security for loans (the "Mortgages"), to builders, developers and owners of commercial, industrial and residential real estate located in the provinces of Canada.

Investment Practices and Restrictions Our investment guidelines are consistent with our articles of incorporation, the provisions of the Tax Act and real estate legislation that applies to us. Our investment activities will be conducted in accordance with the following investment practices and restrictions:

  1. Our only undertaking will be to invest funds in accordance with the objectives, strategies and restrictions of our investment guidelines;

  2. We will invest in commercial, industrial and residential Mortgages;

  3. All Mortgages will, following funding, be registered on title to the subject property in the Corporation’s name;

  4. All Mortgage investments will be made in established or developing areas in the provinces of Canada;

  5. Generally, we will only invest in Mortgages on properties for which we have reviewed and evaluated an independent appraisal and, with respect to environmentally sensitive properties and on commercial loans we will generally receive an evaluation of the property subject to the Mortgage in the form of a Phase I Environmental Audit;

  6. We will not invest in a Mortgage or loan any funds to be secured by a Mortgage unless at the date the Mortgage is acquired or funds are initially advanced (as the case may be) the indebtedness secured by such Mortgage plus the amount of additional third party indebtedness of the borrower in priority to us, if any, generally does not exceed, on a property by property basis, 85% of the appraised value of the real property securing the Mortgage, provided that the appraised value may be based on stated conditions including without limitation completion, rehabilitation or lease-up of improvements located on the real property which activities we will monitor on an ongoing basis;

  7. If the independent appraisal reports an appraised value for the real property securing the Mortgage other than on an ''as is basis", we will advance funds under a loan by way of progress payments upon completion of specified stages of construction or development supported by receipt of reports of professional engineers, architects or quantity surveyors, as applicable, or upon completion of other specified milestones;

  8. We will not make any investment, or allow an investment mix, that would result in our failing to qualify as a MIC;

  9. Subject to subsection (p) below, we will not invest in securities, guaranteed investment certificates or treasury bills unless such securities, guaranteed investment certificates or treasury bills are issued by an arm's length party and are pledged as collateral in connection with Mortgage investments or obtained by realizing on such collateral;

  10. We will not invest for the purposes of exercising control over management of any issuer;

  11. We will not act as an underwriter;

  12. We will not make short sales of securities or maintain a short position in any securities;

  13. We will not guarantee the securities or obligations of any person;

  14. We will not loan money to or invest in securities of the Manager, or the Manager's affiliates;

  15. To the extent that, from time to time, our funds are not invested in Mortgages, they will be held in cash deposited with a Canadian chartered bank or Trust Company or will be invested by the Manager on our behalf at a Canadian chartered bank or Trust Company in short term deposits, savings accounts or government guaranteed income certificates or treasury bills so as to maintain a level of working capital for our ongoing operations considered acceptable by the Directors.

PRODUCT DEFINITIONS AND REQUIREMENTS FOR LOANS

  • Terms of mortgages – generally one year terms although longer terms are available upon special request.

  • Interest only – borrowers pay interest only on mortgages, although amortized mortgages may be made available under special conditions.

  • Pre-payment penalties – the company charges a prepayment penalty for the early payout of a mortgage, equivalent to Three months interest charge by way of liquidated charges as opposed to a penalty payment

  • Rates are set based on market conditions – current rates are higher than previously due to reduction in competitor product due to USA mortgage meltdown.

  • Loan to Value ratio – maximum loan to value available is 85% based on appraised value subject to review by underwriter. If the loan is made on an equity basis alone, without substantial evidence of either credit worthiness or income stability, then the loan to value will be reduced to the lesser or 75% or 65% based on an evaluation of current borrower situation.

  • Beacon score is not used to evaluate credit worthiness, but is used to assist in determining Loan to Value. Beacon scores lower than 550 will result in a maximum loan to value of 80% in urban markets.

  • Rural market loan to values will be reduced to reflect local market conditions, with the practical application reducing the loan to value to 75% maximum in many markets, and 65% in more remote areas. The company will not lend in communities with less than 5,000 residents within 30 minutes driving time.

  • The company requires loan committee approval of any loan representing more than 10% of the loan portfolio.

  • The company will make no loans to officers, directors or other management of either the MIC or its manager. It will make no loans to the manager.
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Disclaimer - This is an information portal providing information for qualified investors and mortgage borrowers in British Columbia and is not a mortgage broker in any jurisdiction in Canada. Nothing in this web site should be considered an offer for sale of securities or mortgages, as securites are sold only through an Offering Memorandum, and mortgages are placed only through a qualified mortgage broker. All mortgages placed in reference to this mortgage information web site are brokered through a BC Financial Commission registed subbroker registered with Trillium-Accessible Mortgage Corp. All mortgage loans granted by Trillium-Accessible Investment Fund (MIC) Inc. are made under the brokers license to the company under the Financial Services Commission of British Columbia.