You may have heard of mortgage investment entities (MIEs), which are funds that collect money from investors and lend it out as mortgages. Borrowers who cannot qualify for a mortgage with a bank or credit union because of spotty credit histories typically turn to MIEs instead, paying higher interest rates in exchange for easier qualification.
MIEs have delivered weighted average returns of 9.2 per cent and 7.7 per cent in 2024 and 2025, respectively, according to WOWA Data Lab analysis. That’s compelling for a period when real estate markets were broadly sluggish. But do they warrant a place in your portfolio?
What exactly is an MIE?
An MIE can be structured as a corporation, trust or partnership. The most familiar form is the mortgage investment corporation (MIC). There are around 45 MIEs in Canada with mortgages under administration that exceed $150-million, representing a combined portfolio of roughly $40-billion.
About half focus primarily on residential mortgages, most serving subprime borrowers, who have a hard time getting attractive loans from big banks. A notable exception is MCAN Mortgage Corp., the largest publicly traded MIC, which operates in the regulated space and serves prime borrowers – those with healthy credit scores. The remainder focus on commercial, construction, multiresidential or mixed-use properties.
Unlike mortgage finance companies, such as First National Financial Corp. and MCAP, MIEs do not have direct access to capital markets and mainly serve borrowers who do not qualify with traditional lenders.
MIEs’ returns
MIE returns averaged in the high single digits over the past two years, with residential-focused MIEs delivering more than 10 per cent in 2024 and 2025.
To earn a comparable yield in public bond markets, an investor would need to accept high-yield “junk” bonds, which have significant default risk and little collateral backing. MIEs, by contrast, are secured against physical real estate, offering better protection on a risk-adjusted basis.
But high returns always carry risk
While the risk of default is real, it’s not the primary concern with MIEs, since real estate collateral limits catastrophic loss in most scenarios. The real concern is getting your money back when you want it.
Unlike stocks or bonds, which you can easily sell, private MIEs can freeze redemptions for months or longer while they wait for borrower repayments or property-sale proceeds. Right now, at least three well-known MIEs, Romspen Investment Corp., Trez Capital Mortgage Investment Corp. and Frontenac Mortgage Investment Corp., have restricted investor redemptions, leaving investors unable to access their capital.
Romspen, one of Canada’s most prominent MIEs, left investors with a loss in 2025. These are reminders that past performance and structural security do not eliminate the risk of being locked in at an inopportune moment.
The bottom line
MIEs sit somewhere between bonds and stocks. They offer steady income backed by real estate, with returns that rival equities. But investors considering non-public MIEs should remember that getting your money back on short notice is not guaranteed.
Hanif Bayat, PhD, is the CEO and founder of WOWA.ca, a Canadian personal finance platform.
