Mortgage Investment Corporations (MICs) are specialized investment and lending companies in Canada that provide an alternative source of mortgage financing. MICs pool funds from investors and use these funds to provide mortgages to borrowers.
A Mortgage Investment Corporation (MIC) provides brokers with mortgage solutions that the big banks can’t offer. A MIC presents a way to invest in the real estate market, mitigating the time and risk of investing in individual mortgages. Investors pool their money by buying shares in a MIC, creating an alternative fixed-income investment. Through Section 130.1 of the Income Tax Act, MICs are unique businesses that enable investors to invest in a pool of mortgages. They are governed by the Canadian Income Tax Act and must adhere to certain regulations. Mortgage Investment Corporation may borrow from a bank or other lender, employing both the shareholders’ capital and loan proceeds to fund its mortgage portfolio. The pool of mortgages is continuously managed. New share capital is invested, and the proceeds of repaid and discharged mortgages are used to fund new mortgages.
Key characteristics of MICs include:
Investment in Mortgages:
MICs primarily invest in mortgage loans. The types of mortgages can vary and may include residential, commercial, construction, and other types of real estate loans.
Income Distribution:
By law, MICs must distribute at least 50% of their net income to shareholders annually in the form of dividends. Many MICs distribute 100% of their net income to take advantage of certain tax benefits.
Diversification of Risk:
MICs mitigate risk by diversifying their mortgage portfolio across different types of properties, geographic locations, and borrowers.
Accessibility to Investors:
MICs offer investors, including individuals and institutions, an opportunity to invest in a portfolio of mortgages. This can be an attractive option for those seeking income-generating investments.
Lending Flexibility:
MICs often provide loans to borrowers who may not qualify for traditional bank mortgages, such as self-employed individuals, those with non-traditional income, or properties that do not meet conventional lending criteria.
Examples of Mortgage Investment Corporations
RiverRock
RiverRock Mortgage Investment Corporation (MIC)https://www.riverrockmic.com/ is a leading and trusted non-bank lender in Toronto, Ontario. RiverRock works to provide mortgage alternatives for mortgage brokers and agents, and a fixed-income source for investors. RiverRock’s mission is simple: Offer investors an opportunity to invest in shares in a profitable and highly marketable residential mortgage portfolio, while providing mortgage brokers and agents with mortgage solutions for their clients.
RiverRock MIC offers investors an opportunity to participate in a diversified portfolio of high-yield Canadian residential mortgages. RiverRock is primarily focused on residential real estate in Ontario in both urban and suburban markets. RiverRock’s principals have decades of experience in mortgage underwriting, risk management, and administration.
Fisgard Asset Management Corporation
Based in Victoria, British Columbia, Fisgard Capital Corporation offers a range of mortgage investment products and is known for its residential and commercial mortgage lending. Fisgard Asset Management Corporation has been locally owned and operated in Victoria, BC, since 1994. A client-focused, independent Mortgage Investment Manager as well as an Exempt Market Dealer, Fisgard offers investment products to thousands of investors from British Columbia to Ontario. Fisgard provides borrowers with residential and commercial private mortgage solutions, from residential first and second mortgages to multi-million dollar commercial and construction loans. Fisgard has grown to become one of Canada’s most respected mortgage investment managers, specifically focused on Mortgage Investment Corporations (MICs).
Timbercreek Financial
Timbercreek Financial is a publicly traded MIC that focuses on providing shorter-duration structured financing solutions to commercial real estate investors. Timbercreek Financial fulfills the demand from an underserved sector of the Canadian mortgage market by investing in shorter-term, structured mortgage loans, which are provided to commercial real estate investors looking for faster execution and more flexible terms than are typically offered by Canadian financial institutions. This segment of the Canadian borrower market is typically under-serviced by commercial banks that are reluctant to dedicate resources to these smaller, shorter-term mortgage investments and cannot typically provide the structure required to meet the borrower’s needs.
Antrim Investments
Antrim is a MIC that provides residential and commercial mortgage lending.
A pioneer in the Private Lending Market, Antrim Investments has been helping self-employed, stated-income and low-beacon clients obtain mortgage financing for over 50 years.
Antrim’s mortgage products are specifically designed for clients who have built up substantial equity in their property but for one reason or another cannot obtain financing with prime lenders like the Banks and Credit Unions; usually because they cannot meet the strict debt servicing requirements of these institutions.
Antrim underwriters are experts in helping create custom mortgage solutions tailored to the needs of borrowers. Furthermore, Antrim acts quickly. Same-day commitments are standard, and most applications can be funded in days, not weeks. Open terms are standard on all Antrim mortgages, so borrowers can refinance to prime rates with no penalty as soon as they qualify.
Capital used for the funding of mortgage loans is sourced from Antrim Balanced Mortgage Fund Ltd. Antrim Balanced Mortgage Fund, managed by Antrim Investments, is the largest residential Mortgage Investment Corporation in Canada.
Atrium Mortgage Investment Corporation
Atrium is a non-bank lender that provides creative financing solutions and is publicly traded on the Toronto Stock Exchange. Atrium is a market-leading provider of creative financing solutions to commercial real estate and development communities in major urban centres in Ontario and Western Canada. Over the last 20 years, Atrium MIC has grown to be one of the largest mortgage investment corporations in Canada and is publicly traded on the TSX under the symbol “AI”.
Atrium’s Single-Family lending department provides alternative solutions to individuals in Southern Ontario and Western Canada. Atrium provides lending alternatives that meet the needs of individuals who are restricted by traditional lending policies.
Atrium specializes in mortgages for self-employed business owners, families that are new to Canada and investors who are capped at major financial institutions.
It’s important for both investors and borrowers to conduct due diligence when dealing with MICs. Investors should consider the risk profile, dividend history, and management expertise of the MIC, while borrowers should understand the terms, rates, and fees associated with MIC mortgages. As with any financial decision, consulting with financial professionals is advisable to ensure that involvement with a MIC aligns with one’s financial goals and risk tolerance.
