Be careful what you sign: Ontario man fighting for home after private mortgage gone wrong

A Markham, Ont., man is struggling to hold on to the home where he's lived for 15 years after he signed on to a high-interest mortgage with a private lending company that is now pursuing him in court for not making payments.

Mississauga-based Morex Capital initiated court proceedings earlier this year to take control of the home through power of sale, but has since changed tack after CBC News began asking questions about the situation. 

The company's lawyer now says it's willing to negotiate with 44-year-old Christian Brooks to reduce the amount owing on the $195,000 mortgage that has ballooned to $248,000.

Brooks went to the alternative lender seeking a loan in 2019 because he thought it was his only option.

The freelance graphic designer had a low credit score, bills to pay and a collections agency was after him. Tax returns show his annual income at the time was slightly more than $7,000, excluding savings.

"It was my first time doing something like this," said Brooks. "It was out of desperation."

This type of mortgage — funded by private investors that have pooled money to offer loans in exchange for a return on investment — has become more common in Canada. Borrowers should be aware, it's often not subject to the same kind of lending conditions as a traditional mortgage offered by a chartered bank.

An acquaintance referred him to Morex Capital, a company that invests in "high yielding, short-term first and second residential Ontario mortgages," according to its website.

Brooks wasn't buying the detached bungalow on Cheeseman Drive, it already belonged to his grandmother. Brooks says he was mostly raised by her and has lived alone at the home since his she moved to a nursing home several years ago.

He is a joint tenant on the title, meaning he would inherit the property upon his grandmother's death, and has power of attorney for her property, which he used to sign for her.

In June 2019, Brooks took out a loan against the $800,000 house in the form of a one-year, $195,000 mortgage with a 10.49 per cent interest rate, according to the signed mortgage commitment reviewed by CBC News.

Although he borrowed $195,000, Morex Capital provided $148,000 after fees and payouts. 

According to the mortgage document, the fees included a $29,000 payment to an individual who Brooks says he doesn't know, an $8,000 administration fee, a $4,000 broker fee and an annual renewal fee of up to $8,000, along with other potential charges for late payments and lawyers in case of default. 

Brooks willingly signed.