IMC Mortgage Corp. has started originating loans in Ontario, Canada, this quarter and plans to extend it efforts throughout the country by yearend.
The opportunities in the country are immense, said Dennis Pitocco, director of international opportunities for Tampa-based IMC. "Canada has no structured nonconforming market," he said. Borrowers who don't qualify for bank loans have no other option but private investors if they want to buy a home, he said. "There are very few people in our business in Canada."
But despite the virtual lack of competition, making loans in Canada isn't as easy as just jumping the border, he said. "It requires patience and perseverance."
IMC has been gearing up for about a year to make loans there, he said, because the company needed to jump tax hurdles, clear regulatory requirements, and find warehouse financing. In addition, there is no securitization market for nonconforming loans there. "These are things we did in the United States 10 years ago," Mr. Pitocco said.
IMC has about a dozen people in its Canadian division, which is making loans through established conforming mortgage brokers there. Mr. Pitocco declined to put a dollar figure on the loans the company has made so far but said the product has been "very well received by experienced brokers."
The loans are all renewable term loans, comparable to adjustable-rate loans in the United States.
Clearing regulatory hurdles was one of the biggest problems IMC faced when entering the market, Mr. Pitocco said.
"We are bringing a different type of industry to Canada," he said. IMC had to convince regulators that the company was fulfilling a real need, educate them about nonconforming lending, and simultaneously file for a business license. The latter is much different than applying for a license in the United Kingdom, where IMC also lends, he said.
For example, guidelines differ from province to province, and in many, a lender must have a licensed Canadian citizen on board to do business. Because of the lack of any real nonconforming market there, finding a Canadian with experience required training someone, Mr. Pitocco said.
But now that the shop is up and running, IMC is thinking big. "We fully expect to be the leading nonconforming lender there," Mr. Pitocco said.
