Subject: File No. S7-34-11
From: Chloe Sowers

October 5, 2011

Please do not add additional regulations to the mortgage REIT industry. The market favors certainty, and additional regulations will be disruptive to the market at this time. With a potential default in Greece and a European and American depression looming, it would be unwise to further disrupt the market with additional regulations.

The private REIT industry is needed to supplant the role of Freddie Mac and Fannie Mae, so they may be wound down in the future. Fannie Freddie's losses are potentially in the trillions, and there needs to be a private mortgage industry to soak up the volume that Fannie Freddie have enjoyed with government support. Their drain on the deficit and taxpayers is unsustainable, and will eventually need to be shut down.

Adding regulations will cause the valuations and stock prices of the mortgage REITs (and regular REITs through 'contagion' and fear) to plummet, which is counter to Ben Bernanke's and Timothy Geithner's goal of propping up asset values.

If you must add regulations, I would suggest forcing mark-to-market asset prices so the book value is accurately reflected. This is the most important. I would urge any additional regulations to be added very slowly, in gradations, over a period of 5-10 years. For example, reducing leverage 10% per year. This will give time for the markets to react and reduce volatility.