Farm Lender Corp.

Successful lending requires a thorough hands-on process which is absolutely essential in order to avoid a loss. Our investment strategy follows a simple yet proven approach which has produced excellent returns for our investors since 1998! While our investment strategy is simple, our consistent execution over the years is based on the following guidelines:

• solid underwriting is our foundation
• diversification | although we specialize in agriculture, we are open to including loans that would also include residential and commercial mortgages
• experience | difficult situations are our specialty!
• exit plan | it is CRUCIAL that we have a crystal clear understanding re the re-payment plan as private mortgage lenders/investors want their clients to be able to re-finance with a traditional lower rate mortgage within 12-24 months.
• monitoring| in order to safeguard your investment, monitoring of the borrower and the property is done until the mortgage is re-paid

WHAT IS A PRIVATE AGRICULTURAL MORTGAGE?
A private agricultural mortgage is a loan which is secured by real estate. Although these investments are not without risk, the fact that real property [farms/farmland] is used as security has made our investors much more comfortable!

In a private mortgage investment, YOU become the lender and you decide who you will lend your money to and under what terms and conditions. You choose to invest in first or second mortgages. A first mortgage means that, in the event of default, your mortgage would have priority over other creditors. A second mortgage is only paid off after the first mortgage is re-paid in full. The risk in any mortgage investment is that the borrower may not be able to make their mortgage payments. The typical remedy for this is to sell the property under Power of Sale. Please keep in mind that property taxes and expenses like real estate commissions and legal fees must be paid from the sale proceeds before any money is paid to creditors.

To minimize risk, most first mortgage lenders will only lend up to 65% of the value of the farm property. Second mortgage lenders are usually looking for a higher yield and are willing to take more risk. In this market, most second mortgage lenders will lend up to 75% of the value of the farm property. Private mortgages fill the gaps that traditional lenders like banks/credit unions, are unable or unwilling to fill. When a borrower has a unique situation or doesn’t fit standard traditional lending criteria, a private mortgage is usually the only alternative for a borrower. The tricky part of this whole process is finding an investor to meet the needs of the borrower. This is exactly where we come in as our office acts as the "go between" for investors and borrowers.

When we present our investors with a potential mortgage investment, we'll provide you with the borrower's detailed application, credit report, and personal net worth statement as well as a current AACI appraisal of the farm property. We'll thoroughly explain the investment pros and cons and recommend the terms and conditions of the mortgage. You can use a lawyer of your choice if you decide this investment makes sense to you.

Most private mortgage investors only agree to lend for a 1-2 year term to help minimize the risks inherent to the real estate sector. Self-directed RRSPs are ideal to invest in private mortgages. Interest earned is sheltered from tax within the RRSP and your trustee will administer the mortgage for you. Private mortgage investments are not for everyone, but they can be a solid performer for many portfolios. After yield, one of the key attractions of these investments is that they are "hands on" and can be easily understood. You can literally touch and feel your security [the real estate] and you can predict your risk much easier than you can with other investments eg stocks and income trusts. If you prefer to choose your investments, a private mortgage would be a great addition to your portfolio!

"An investment in knowledge pays the best interest." | Benjamin Franklin