September 20, 2011
I believe the commission should not interfere in the Mortgage REIT industry at this time. The leverages used are in line with other financial institutions and they do an adequate job of disclosing their leveraging activities and other credit and interest risks to investors. The mortgage REIT allows ordinary investors like myself to participate in the ailing housing and mortgage industry. It provides needed capital for purchasing agency and non-agency backed mortgages. It rewards the investor for the risk taken in this sector by paying a respectable dividend. It also rewards the higher risk non-agency investor at a higher return. This complies with the overall strategies of risk/reward. The dividends paid are also taxed as ordinary income rather than preferential dividends which provides the treasury with much needed revenue in this current deficit enviroment. As long as the mortgage REIT industry does not abuse its exempt status, which I believe it has not, I see no reason for the commission to pursue this concept. I don't believe the fragile housing market needs additional shocks caused by regulatory uncertainty on top of all the other hurdles it is facing.
Thank you for allowing me to comment.