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HRU Mortgage Investment Corporation (HRU MIC) is a mortgage investment corporation.

The company raises funds, primarily via subscritpion agreement through the exempt market, and invests the proceeds in Mortgage-backed securities. As of Dec 31st, 2019, 90.1% of the company's assets were mortgage-backed securities issued by HRU Mortgage Investment Corporation against Residential mortgages. The company generates profits from the net interest spread between the interest and fee earned from its assets and its fund costs, which is amplified from the use of leverage if any. As of Dec 31st, 2019, the company had a Loan-to-value ratio of 68 Percent (68%). As of Dec 31st, 2019, the weighted average days to maturity of its subscription agreement was 10 Months. The company is externally managed by HRU Financials Ltd which is owned by executives of the company; the company pays an annual management fee of 1.50% of assets for management services.

History
Since 2016, HRU Mortgage Investment Corporation (HRU MIC) was formed from its Parent Company Canfred International Corporation and maintained a ZERO default portfolio. It entered the residential mortgage sector during a period, which the housing market was booming. In 2018, HRU MIC underwent a major shareholder transition due to fast expansion and investment fund partnership. The private corporation was still called HRU MIC, and its business continued to support the lending of mortgages from the residential sector, but with an added insurance component to its product offering through merging with VP Financial Ltd.

Business
HRU MIC's primary method of making money is by charging a lending fee on loans that it originates and securitized into mortgage-backed security (MBS) shares, in this case, Preferred Shares. Investors, or purchasers of HRU MIC Shares, are willing to let HRU MIC keep this fee in exchange for assuming the credit risk. That is, HRU MIC secures the repayment of principal and interest on the underlying loan regardless of whether the borrower repays. Owing to HRU MIC's financial security, these MBS/Shares are particularly appealing to investors.

Shares of HRU MIC are qualified investments under the Income Tax Act (Canada) for RDSPs, RRSPs, RRIFs, TFSAs, or RESPs. HRU Mortgage Investment Corporation is provincially registered and licensed, with the management under the direction of mortgage brokers and security dealers.

HRU MIC mortgage portfolio includes everything from small second mortgages to large blanket first mortgages on residential property and commercial property mix. Every investment is typically based on a thorough investigation of the property. A typical mortgage lien (ideally) will never exceed 60% to 80% of the current value of the property. Compare this to a conventional bank's willingness to routinely loan 80% of the value of the property and sometimes even 100%. MIC's investment strategies can be very attractive, as do their rates of return on invested capital. HRU MIC has been generating returns averaging 6.55% and 8.5% for investors. However, returns vary based not only on the investment strategy but also on the nature of the investment share itself. Some MIC shares are designed to hold first position mortgage only, while other MIC shares are a mixture of different types of mortgages. Yields typically increase when the hold periods are more extended and are lower for shares that are immediately liquidable after a short hold period.

Profits generated by HRU MIC are distributed 100% to its shareholders according to their proportional interest after the management fee. The mortgages are secured on real property, often in conjunction with other forms of security, such as personal and corporate guarantees, general security agreements and assignments of material contracts, such as insurance policies.

Dividends
HRU Mortgage Investment Corporation currently pays dividends of $0.07083 per Preferred Share Class B every month and an average annual rate of $0.8500. The record date is the last business day of every month, and the dividend is paid starting on the 15th of one and a half months following. If you own shares on the record date, you will receive the dividend. HRU MIC has an uninterrupted record of paying dividends since inception. It is averaging 8.802% over the past four(4) years of performance.

Assumed guarantees
HRU MIC issues corporate guarantee certificates for all investments over $100,000 secured against equity and portfolio assets in addition to the mortgage liens on real estate to ensure protection over the principal of investment. These certificates are upheld for the guarantee on investment rate of return and principal of investment.

ISDA
HRU is engaged with ISDA institutions to better risk diversify their portfolio, schedule to introduce HRU Prominent Insurance product in the form of bond and credit default swap (CDS) to insure against mortgage default and offer true guaranteed investment

Unlike CMHC under NHA, Investment bank securitizers were more willing to securitize risky loans because they generally retained minimal risk. Whereas the CDS guaranteed the performance of their MBS, private securitizers generally did not, and might only retain a thin slice of risk. HRU has actively developed a proprietary finance structure to cope with the change in the economic environment and fulfill a missing component of private lending marketing in Canada.

Awards

 * HRU MIC was named one of the Emerging Leaders in Support of Art and Culture for Toronto, Art Gallery of Ontario
 * HRU MIC was named one of the 100 Fastest Growing Companies for Asian Startup in 2017 by CSBAC.
 * HRU MIC was featured by Yahoo Finance and described as Safe Haven for Wealth.

Credit rating
As of August 28, 2020.

Related legislation
In Ontario, the Ontario Securities Commission (OSC) considers a Mortgage Investment Entity (MIE) an issuer which proposes to invest all or substantially all of its assets in a pool of mortgages. In a typical MIE structure, money is raised pursuant to an Offering Memorandum or, in the case of publicly listed securities a Prospectus, and purchases are made through a registered Exempt Market Dealer (EMDs) or other Dealer licensed to sell securities.

There are rules in place governing the ability of an individual to invest in MIEs through the Exempt Market (or Private Market). In order to purchase an MIE through the private market, an investor purchase must fall under a Prospectus and Registration Exemption of OSC National Instrument 45-106. At present, the main way in which an individual in Ontario can participate in the returns of an MIE is by being an “accredited investor” – less than 5% of the population meet this standard. Registered sellers of MIEs must adhere to “Know-Your-Product” and “Know-Your-Client” guidelines and make a suitability assessment of the investment for the individual (for example, the investment cannot be more than 10% of the client’s assets).

Income Tax Act, Section 130.1: Salient Rules


 * 1) A MIC must have at least 20 shareholders.
 * 2) A MIC is generally widely held. No shareholder may hold more than 25% of the MIC's total share capital. Shareholders whose MIC holding are held in registered accounts (RRSP, TFSA, etc.) are limited to 10% due to regulations restricting ownership in those capital accounts.
 * 3) At least 50% of a MIC's assets must be residential mortgages, and/or cash and insured deposits at Canada Deposit Insurance Corporation member financial institutions.
 * 4) A MIC may invest up to 25% of its assets directly in real estate, but may not develop land or engage in construction. This ceiling on real estate holdings does not include real estate acquired as a result of mortgage default.
 * 5) A MIC is a flow-through investment vehicle and distributes 100% of its net income to its shareholders.
 * 6) All MIC investments must be in Canada, but a MIC may accept investment capital from outside of Canada.
 * 7) A MIC is a tax-exempt corporation as its income is instead taxed in the hands of its shareholders.
 * 8) Dividends received with respect to directly held shares, not contained within RRSPs or RRIFs, are taxed as interest income in the shareholder's hands. Dividends may be received in the form of cash or additional shares.
 * 9) MIC shares are qualified RRSP and RRIF investments.
 * 10) A MIC may distribute income dividends, typically interest from mortgages and revenue from property holdings, as well as capital gain dividends, typically from the disposition of its real estate investments.
 * 11) A MIC's annual financial statements must be audited.
 * 12) A MIC may employ financial leverage by using debt to partially fund assets.