Mortgage REITs See a Slump

Real estate investment trusts that purchase mortgage debt has taken a dive after an employment report that was better than forecasted spurred speculation that the Federal Reserve will begin to make its asset purchases smaller in size. According to data, the United States added 195,000 jobs in June, even though a median forecast in a Bloomberg News survey predicted only 165,000 new jobs. Meantime, mortgage securities backed by the government experienced their largest quarterly losses in 19 years during the three months leading up to the end of June. Certain mortgage REITs even had to use money that was borrowed to amplify possible returns.

Financial firms that purchase mortgage bonds and loans have been contending with speculation that the Fed will lower its $85 billion of monthly debt purchasing as the economy begins to look like it is improving. Unfortunately, a lot of mortgage REITs did not see the recent sharp rise in interest rates. These higher rates decrease the likelihood that homeowners will refinance their mortgage rates. To reflect the upped risk of holding high duration bonds in the long-term, the securities have dropped in value. That many of the REITs did not foresee the interest rates job could be an indictor that they were unprepared and have been complacent.

Mortgage REIT Fraud
Mortgage real estate investment trusts purchase mortgage-backed securities or mortgage that exist or lend money to the owners of real estate for their mortgages. These REITs are involved in investing and owning property mortgages while revenues primarily come via interests made on mortgage loans.

Our REIT lawyers represent investors that have sustained losses due to securities fraud. Contact Shepherd Smith Edwards Kantas, LTD, LLP today.

Rising Interest Rates Burn Mortgage REIT ETFs, ETF Trends, August 14, 2013

Mortgage REITs in the cellar, Investment News, July 8, 2013

More Blog Posts:
Brokerage Firms Change Hands as Insurers Divest In House Securities Firms, While REIT Manager Schorsch Buys First Allied Securities, Stockbroker Fraud Blog, June 14, 2013

FINRA Plan May Dramatically Change The Way Brokerage Firms Report On Nontraded REITS & Other Illiquid Investments on Client Statements, Institutional Investor Securities Blog, April 28, 2013

Majority of Non-Traded REITs Underperform Compared to Benchmarks, Reports New Study, Stockbroker Fraud Blog, August 25, 2012