XCeed Mortgage is back in business, as the company found a new bank backer on Tuesday to fund the loans it makes to homeowners.
XCeed competes with banks and other mortgage lenders and has originated $1.9-billion of mortgages. But the company had its legs taken out last month when Deutsche Bank announced it was dropping an arrangement that saw the German bank fund XCeed's mortgages. The loans were then insured under the federal government sponsored Canada Mortgage Bond Program.
XCeed's new backer is another German institution with strong ties to Bay Street. XCeed won backing from Maple Bank, the local arm of Maple Bank GmbH. This 260-employee bank was spun out of independent brokerage house First Marathon a generation back: First Marathon was subsequently sold to National Bank. Maple Bank has offices in Toronto, Frankfurt, Jersey City, London, Milan, and Halifax.
"Obtaining this new warehouse facility at a competitive rate provides Xceed with an additional source of funding for our origination of insured mortgages," said Ivan Wahl, Xceed's chairman and chief executive officer. "Further, if the regulators approve our pending application to convert to a deposit-taking bank, we will have other cost-effective means of raising funds for our mortgage underwriting."
BMO Nesbitt Burns analyst Atul Shah said in a report on Tuesday that the new relationship is a "potential positive" for XCEeed, and noted that the company has already funded $59-million of mortgages with Maple Bank.
Deutsche Bank's decision to exit this relationship "is the result of a change in the bank's strategies and it is not the result in any way of the conduit's views of Xceed's mortgage business," the Toronto-based company said last month in a press release.