Subject: File No. S7-34-11
From: David Drumm
Affiliation: Self-employed Web Site Designer/Developer

September 16, 2011

I can understand the desire to reduce the reckless use of leverage and derivatives that's been a root cause of the financial mess that we currently find ourselves in. However, it is my opinion, as a small investor who is quite familiar with several mortgage REITs, and also as an American who wants to see an improved economy, that regulating away the leverage that mortgage REITs employ will do more harm than good.

The problem is not with the amount of leverage that mortgage REITs employ. I have found their use of leverage to be modest and they have generally operated conservatively, trying to maintain the use of just enough leverage to create high enough yields to attract investors, but not so high that it would subject the company to undue risks. As public companies, mortgage REITs' financial condition, including their use of leverage, is highly transparent. The real villains of the financial mess that has unfolded over the past few years are the opaque, hedge-fund-type vehicles that employed far higher leverage and engaged in far riskier investment activities.

To dramatically restrict the leverage that mortgage REITs are allowed to employ will drive away investors and ultimately cause mortgage financing to become more expensive for all Americans. Mortgage REITs are really the good guys in our current situation. The capital that they have injected into the mortgage market has helped lower mortgage interest costs for millions of Americans. That capital would not exist if mortgage REITs did not offer such attractive yields.

Personally, the yields from my investments in NLY, AGNC, CMO, HTS, MFA and ANH have paid most of my bills as I transition into a new career. My family would suffer if that income were disrupted by changing mortgage REITs business model radically. Lord knows that it has been hard enough to make any money as an investor this past decade. Mortgage REITs have been a blessing for my family.

Overall, the economic future is getting better. Please do not go in the wrong direction by changing the rules on mortgage REITs. There are plenty of real "bad guys" to go after without messing up something that is currently working just fine.