Mortgage Investment Entities (MIEs) in Canada

A Mortgage Investment Entity (MIE) is a broad term used in Canada to describe an investment vehicle that pools capital from investors and uses those funds to lend money secured by Canadian real estate. MIEs operate as private or alternative lenders and are commonly used to finance borrowers who do not qualify for traditional bank mortgages.

An MIE can be structured as:

• A corporation (public or private)
• A trust
• A limited partnership

Mortgage Investment Entities generate returns by pooling investor capital and lending it out as short-term mortgages (typically 6–24 months) secured by Canadian real estate, with interest and fees flowing back to investors after expenses. Mortgage Investment Entities operate through a structured lending cycle — understanding this process helps investors evaluate how returns are generated and where risks arise.

• Step 1: Capital is Raised from Investors — Individuals or institutions invest capital in the MIE, either by purchasing shares (in a corporation), units (in a trust), or partnership interests.
• Step 2: Funds Are Deployed into Mortgages — The MIE manager originates or acquires mortgages, typically short-term (6 to 24 months), secured by Canadian real estate.
• Step 3: Borrowers Pay Interest and Fees — Borrowers make regular interest payments, often at higher rates than traditional mortgages due to increased risk or non-prime status.
• Step 4: Income Is Collected and Expenses Deducted — The MIE deducts management fees, servicing costs, and potential loan losses.
• Step 5: Net Income Is Distributed to Investors — Remaining income is distributed periodically (monthly, quarterly, or annually), depending on the structure.

MIEs are actively managed, and returns depend on loan performance, property values, and borrower repayment.

Note: Data is based on publicly available information and fund disclosures. Returns, LTV, and terms may vary by share class or offering. WOWA does not guarantee the accuracy, completeness, or currency of the information in this table. Figures change frequently and may already be out of date by the time you read this. Verify all details directly with each fund or its dealer before making any investment decision. Nothing in this table constitutes investment advice.

List of Mortgage Investment Entities in Canada

Data sourced from fund disclosures, offering memoranda, and publicly available reports. Superscripts indicate data source. Figures may have changed. Verify all details directly with each fund before making any investment decision.

Mortgage Investment Corporations (MICs) are the most common and most standardized form of MIE from a tax perspective. While all MICs are MIEs, not all MIEs qualify as MICs.

The MIC structure was created under the Income Tax Act to encourage mortgage lending by allowing eligible corporations to act as flow-through entities, avoiding double taxation.

A Mortgage Investment Corporation is:

• One specific type of MIE
• Defined explicitly in section 130.1 of the Income Tax Act
• A Canadian corporation that meets strict criteria to receive favourable flow-through tax treatment.

Because of these rules:

• MICs pay no corporate tax on income distributed to shareholders
• All net income must be distributed to investors
• Distributions are taxed as interest income, not dividends

That makes MICs the most common and standardized form of MIE — but not the only one.

Mortgage Investment Entities typically fund private mortgages rather than conventional bank loans. These may include:

• First mortgages
• Second mortgages
• Construction or bridge financing
• Commercial mortgages

Interest rates on MIE-funded mortgages are generally higher than bank rates due to borrower risk and flexibility.

• Regular income from mortgage interest
• Exposure to real estate without direct property ownership
• Portfolio diversification beyond stocks and bonds
• Potential eligibility for registered accounts (in some structures)

Benefits depend on the specific MIE structure, lending strategy, and manager.

Investing in an MIE involves several layers of risk that differ from traditional fixed-income or equity investments.

MIEs sit at an unusual intersection: they're at once mortgage lenders (regulated provincially in most cases, federally for the few that hold a bank or loan-company charter like MCAN) and securities issuers (a provincial matter). Three overlapping regulatory frameworks apply, and a serious problem in any one of them can take a fund off the rails.

The Federal MIC Rule (Income Tax Act s. 130.1)

To call itself a MIC, a fund must clear these tests:

• At least 50% of assets in residential mortgages or short-term cash-equivalent deposits
• Cannot directly own real estate except property acquired through foreclosure
• At least 20 shareholders
• No shareholder (with related parties) may hold more than 25% of any class of shares

In return for meeting these tests, the MIC pays no corporate tax on income it distributes – it acts as a flow-through. Distributions in shareholders' hands are taxed as interest, not as dividends, which is the single most important fact for tax planning purposes.

Trust MIEs (Romspen, Trez, Capital Direct I, Morrison, Neighbourhood, etc.) are taxed under the trust rules in sections 104–108 of the Act instead, and the federal MIC tests don't apply to them.

Securities Regulation

MIE units and shares are securities regulated by provincial commissions through the CSA. Almost all MIEs are sold under prospectus exemptions in National Instrument 45-106. The main exemptions are:

• Accredited Investor – the workhorse for higher-minimum funds. Qualifies with $200,000+ personal income (or $300,000+ with a spouse), $1 million+ financial assets net of liabilities, or $5 million+ net assets
• Offering Memorandum (OM) – lets retail investors into smaller-minimum funds. Investors sign a Risk Acknowledgement (Form 45-106F4); capped at ~$30,000/year for non-accredited investors (varies by province)
• Eligible Investor – broadly $75K+ income or $400K+ net assets; lets investors put more in than the standard OM cap

Mortgage Lender Licensing

Mortgage lending is split between federal and provincial regimes:

• Federal (OSFI) – amongst MIEs, only MCAN Mortgage Corporation holds this status
• Ontario – regulated by FSRA
• British Columbia – regulated by BCFSA
• Alberta – regulated by RECA
• Quebec – regulated by AMF

Recent Regulatory Action

The Romspen and Trez Capital redemption suspensions have sparked CSA discussions on liquidity disclosure and gating policies. Key developments:

• Investors who treated these funds as quasi-cash discovered they aren't – regulators are now sharper about how funds describe redemption terms
• Frontenac MIC was hit with an OSC failure-to-file cease trade order in July 2025 and is now winding down
• After the Fortress Real Capital scandal, Ontario tightened its regime for syndicated mortgages
• The CSA, OSC, and BCSC have all signalled increased scrutiny of private/exempt-market funds in 2025–2026

What This Means for an Investor

You'll be classified as Accredited, Eligible, or Non-Eligible – that controls which funds you can access and how much you can invest. Key things to know:

• Be prepared to fill out a Risk Acknowledgement and Subscription Agreement
• The OM governs the fund – read the redemption mechanics, gating language, and related-party disclosure carefully, because those are the parts that bite when something goes wrong
• Exempt market means exempt from the prospectus requirement, not exempt from regulation – disclosure standards are lower, and the secondary market is essentially nil
• If liquidity matters to you, choose a publicly-listed MIC (Timbercreek, Firm Capital, Atrium, MCAN) instead

With the exception of rare cases like MCAN Mortgage Corporation – which is both a MIC and a federally regulated loan company – most MIEs are not supervised by OSFI and instead operate under provincial mortgage and securities regimes.