MIC Investing Glossary

Shared language for clear MIC conversations

Accredited investor: A regulatory category (definition varies by instrument and province) generally based on income, financial assets, or net assets. Often used for certain prospectus exemptions. Not a compliment; a legal status.

Appraisal: An opinion of value, typically by a designated appraiser. In private lending, independence and lender-directed instructions matter.

Arrears: Missed or late payments on a mortgage. A leading indicator that deserves attention in portfolio reporting.

Bridge loan: Short-term financing intended to span a transition (purchase timing, refinance path, reorganization), not necessarily a 25-year homeownership mortgage.

Dealer / dealing representative: Registered channel and individual authorized to trade certain securities and conduct suitability processes.

Default: A defined failure under loan documents (missed payments and/or other covenant breaches). Definitions vary; ask for the MIC's definition.

Distribution: Payment of income (and sometimes other amounts) to shareholders according to share terms. Targets are not guarantees.

EMD (Exempt Market Dealer): A registered firm authorized to distribute certain exempt-market securities.

Enforcement / foreclosure process: Legal and practical steps to realize on mortgage security after serious borrower failure. Timelines and outcomes vary by province and facts.

Exempt market: Securities distributed under prospectus exemptions rather than a full public prospectus offering. Still regulated; different disclosure and liquidity profile.

First mortgage: Highest-ranking mortgage on title (subject to prior claims and legal specifics). Generally paid before lower-ranking mortgages in many enforcement scenarios.

Gate: A limit or temporary restriction on redemptions, used by some funds to manage liquidity stress.

ITA s. 130.1: Income Tax Act provisions that define Mortgage Investment Corporation qualification tests and related tax mechanics.

Know Your Client (KYC): Dealer process to understand an investor's circumstances, objectives, and risk profile for suitability.

Know Your Product (KYP): Dealer process to understand an investment product deeply enough to assess suitability.

Lien priority: Ordering of claims against a property. Critical to loss severity analysis.

Liquidity: How quickly and reliably an investment can be converted to cash under its rules. In private MICs, usually policy-based rather than exchange-based.

Loan-to-Value (LTV): Mortgage debt divided by property value. A core underwriting metric; not a guarantee against loss.

MIC (Mortgage Investment Corporation): A Canadian tax-qualified corporation that invests in a portfolio of mortgages (and related permitted assets) under ITA rules.

MIE (Mortgage Investment Entity): Broader term for pooled mortgage investment vehicles; MICs are a subset with specific tax qualification.

Offering memorandum (OM): Disclosure document used in certain prospectus exemptions. Read it.

Prospectus exemption: Legal pathway allowing securities to be distributed without a full prospectus, subject to conditions (e.g., accredited investor, OM exemption, etc.).

Qualified investment: An investment type permitted inside registered plans when conditions are met. Confirm specifically; do not assume.

Redemption: Process of returning capital to an investor under a MIC's policies (notice, windows, caps, fees, gates).

Registered plan: Tax-advantaged accounts such as RRSP, TFSA, RRIF (and others). Rules differ.

Second mortgage: Lower-ranking mortgage behind a first mortgage. Often higher yield and higher loss severity potential.

Suitability: Regulatory and professional standard: whether an investment recommendation fits a particular client's circumstances.

Target yield: An intended or historical distribution objective. Not a promise.

Underwriting: The disciplined process of evaluating borrower, property, structure, and exit before lending.