What is a MIC?

What is a MIC?

A Mortgage Investment Corporation makes it possible to participate in a diversified portfolio of real estate mortgages in order to reduce the risk of holding a single mortgage. The business model is quite simple, investors purchase equity shares of the corporation and management lends this pool of capital in interest earning real property mortgages.  The mortgage investment corporation then distributes revenue earned from mortgage interest through dividends.

Mountain Investment is predominantly involved in second mortgages, which offer higher rates of return, and correspondingly higher risk.  Mortgage investment corporations lend to people who are unable to access the prime credit market for a variety of reasons, including credit history, job stability and non-verifiable income. Unlike prime market lenders, mortgage investment companies assign higher weight to a person’s assets when deciding on whether or not to lend. These individuals must often borrow money from private lenders like Mountain Investment; at higher interest rates to compensate the lender for the increased risks and administration costs associated with the borrower’s credit history and other limiting factors.