To make it easier for you to prepare meeting materials, we’ve developed these slides on how to use mortgage investments to diversify. The presentation is in a Word file to make it simpler to customize content to meet your clients’ information needs.
Enjoy, and we hope this offering helps enhance your client meetings.
Mortgage Investment Corporations (MICs) can provide yield and help diversify your fixed-income portfolios.
MICs are pools of Canadian commercial mortgages.
But don’t worry…
…MICs have no relation to the mortgage-backed securities that triggered the 2008 market collapse.
After the U.S. housing bubble popped, Canadian investors braced for the negative side effects.
But our housing market remained relatively stable because we didn’t have the same lending practices or underwriting styles.
Canadian banks never signed off on exceptionally high-risk mortgages.
And, there was never an investment offered to Canadians where banks and investment firms packaged up non-transparent mortgages and sold them as an investment.
Canada also requires buyers to have mortgage insurance, which is backed by the Canada Mortgage and Housing Corporation (CMHC).
So, if we’d been severely impacted, this insurance would’ve helped ease the fall.
Banks demand longer, fixed terms; interest plus principle payments; and they typically don’t want to get involved in smaller, new build projects, or with new Canadian borrowers who don’t have a lengthy credit record in the country.
That’s where MICs come in.
They offer loans to borrowers who typically wouldn’t get approved by traditional lenders.