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A Mortgage Finance Company (MFC) is a non-deposit-taking lender that originates and funds mortgages — typically through the broker channel — using securitization and institutional capital rather than a retail deposit base.
Banks and credit unions fund mortgages largely with customer deposits. An MFC has no deposit base at all, so it funds and holds mortgages using warehouse lines of credit and securitization — bundling mortgages and selling interests in them to investors, including through programs like NHA mortgage-backed securities.
That funding model is exactly what lets an MFC operate without branches, which is why many of the monoline lenders brokers deal with day to day are legally structured as mortgage finance companies. MFCs depend almost entirely on the broker channel for origination volume, making them a key partner for independent brokerages.
Funded differently than banks: MFCs typically fund mortgages through securitization and institutional capital rather than customer deposits.
Often the entity behind a monoline: many monoline lenders that brokers work with are legally structured as mortgage finance companies.
Broker-dependent origination: MFCs rely almost entirely on the broker channel to originate volume, making them a key partner for independent brokerages.
Same prudent lending expectations: MFCs are expected to underwrite to sound risk practices consistent with OSFI guidance even where their direct regulatory oversight differs from a deposit-taking bank's.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
Every term a Canadian mortgage professional needs — defined, sourced, and kept current.
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