#606: How Canada's Strict Banking Rules Are Creating Above-Market Yields for US Investors

Canada’s residential mortgage market is a $32 billion annual asset class in Ontario alone. Plus, it’s structurally undersupplied. Unlike the US, Canada has no 30-year fixed mortgage. As a result, strict banking regulations push Canadian homeowners into the private lending market every few years. That forced refinancing cycle produces delinquency rates roughly one-eighth of what US private lenders see. On top of that, the recourse process in Canada runs just 60–90 days. Chris Lopez sits down with Hugh Tawney, founder of Leeward Capital Partners. Together, they walk through how Property Llama Capital gained access to this market and why they made it part of their Capital 3 fund.

Hugh brings an institutional finance background in public equities, fixed income, life settlements, venture, and structured credit. Before founding Leeward, he spent years building fund vehicles across multiple asset classes. His CFO managed fund accounting for 38 entities at a Denver venture firm. His COO, meanwhile, helped build ArrowMark’s multifamily origination platform — a $5 billion book. Their Canadian operating partner, Aman Mann, ran a mortgage investment company from 2017 to 2023. In total, he originated approximately 500 loans with zero impairment of principal.

The fund focuses on first and second lien residential mortgages — bridge loans, fix and flip, and short-term refinances. Currently, the portfolio sits at a 76.4% weighted average LTV with an 80% hard ceiling. Also worth noting: two-thirds to three-quarters of the loan book is owner-occupied. Homeowners, after all, default at a fraction of the rate that investment property owners do. For third-party validation, the fund works with Baker Tilly (tax and audit), NAV Consulting (fund administration), UMB (custody), and Stout (quarterly independent valuations).

• Why Canada’s lack of 30-year fixed mortgages creates a structural private lending opportunity every 3–5 years
• How Ontario’s power of sale process delivers 60–90 day recourse vs multi-year US foreclosure timelines
• The tax structure that classifies fund distributions as qualified dividends — potentially a 30–50% reduction in tax burden vs ordinary income
• How currency hedging via forwards contracts protects principal at a cost of 8–15 basis points
• The pending leverage strategy projected to take gross yields from 12% unlevered to 20% levered
• Why Leeward targets the lower end of the Canadian market — less competition, more inefficiency, higher yields
• The 15-month liquidity window and how it mirrors a short-term bond fund duration with a private credit return profile

If you’re an accredited investor looking at private credit and want to understand an asset class that most US investors have never encountered — this is the episode to start with. Property Llama’s due diligence included a three-to-four day on-site asset tour in Toronto and a personal investment from Chris before the fund was opened to the broader investor community.

Interested in learning more about the Leeward opportunity? PLC 3 LLC: PL Leeward 1 Data Room

Property Llama Capital

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Passive Pockets Podcast (hosted by Chris Lopez)