Topic: How To Invest

Pat: I would appreciate your comments on mortgage investment corporations in general, and HarbourEdge Mortgage Investment Corp. in particular. Thanks very much.

Article Excerpt

HarbourEdge Mortgage Investment Corp. is a mortgage investment corporation (MIC). MICs invest in pools of mortgages, then distribute most of their profits to their shareholders. Some MICs yield 6%, 7% or more annually. They sound like conservative investments because they invest in mortgages rather than stocks. However, mortgages vary widely in their investment quality and risk, and MICs can earn high profits because they take on riskier mortgages. HarbourEdge currently yields 9%. Conservative mortgage lenders, such as banks and mortgage funds, mainly invest in top-quality first mortgages on commercial, industrial and/or residential properties. HarbourEdge provides loans—primarily short-term construction mortgages—to the residential and commercial building industry. Interest rates on MIC loans are higher than they are on corporate or government bonds with the same term to maturity, because they entail increased risk. MIC managers typically believe they can control the risk in their investments by paying close attention to certain factors. However, lending to higher-risk real estate borrowers mainly tends to be…