Oct 1, 2019

Q&A with an AIMCo vice president

Our Vice President of Real Estate and Private Investment Operations is seeing the results of a project that brought mortgage servicing in-house to AIMCo. In an interview, Monica McNabb explains the impact.

Can you explain the change that was made to mortgage servicing?

AIMCo manages more than $2.5 billion in Canadian commercial mortgage investments. We were paying mortgage servicing fees to a number of external agents. The fees were based on the outstanding principal balance of the mortgages – so they added up quickly over the course of a year.

We recognized the opportunity to save money for our clients by doing this work ourselves and created a private loan servicing team to internalize all servicing aspects of Canadian conventional core mortgages. This team provides services related to loan origination, funding, on-going portfolio administration and monitoring, and works closely with the private mortgage investment team.

What was the business case for making this change?

The business case was initiated by our private mortgage investment team, who approached us to provide the support for internalization. An estimated annual net savings of $900,000 was one of the reasons to manage servicing ourselves.

Additionally, we are no longer splitting loan processing fees with external agents, providing further savings associated with new loan transactions. Finally, payments from borrowers come to us faster so we receive our cash quicker and are able to return it to our clients.

There are some less tangible, but important benefits as well. We now have more direct contact with our borrowers, we are building up our internal expertise and standardizing processes across our mortgage portfolio and we have control over our mortgage information. Many of our Canadian peers had already internalized these functions, and we knew we could benefit from finding these efficiencies.

How successful has the project been?

We’re really happy with what we’ve accomplished. We started internally servicing loan accounts in the fourth quarter of 2018 and by the end of April we were managing more than 60 loans that were previously being handled by external agents. Our private loan servicing team is fully staffed and working closely with the investment team.

Building out the team has also provided cross-departmental benefits by having additional staff available to provide coverage for administrative and financial support, when necessary.