Subject: File No. S7-35-11
From: Ben Swoyer, Mr
Affiliation: Manager of Credit Analysis

September 3, 2011

Mortgage REITS have been a reasonably safe and secure investment choice for those seeking high yields. The mechanics and business plan is very easy and transparent. The MREiT buys agency mbs financed with repo agreements. The average yield on the MBS is 3.3% and the cost of financing is say 1.00% to make it easy. The net yield is 2.3%. Because the repo money allows them to finance the mbs at LTVs of 90%, the investor receives a leveraged yield ranging from 10% to 20%. The agency guarantee underwrites the quality of the assets, and they are rated AAA (needs exact confirmation). Basically, the mreits have been filing 10ks, 10qs, 8ks, and other filings with your agency outlining these basic principles that you must have ignored.

We have relyed on your silence as evidence that this was a good investment, and as an investor, I have done well investing in this sector. It had been a solid investment until it has now been undermined by your investigation, a possible mass refinancing by the Administration and now lawsuits filed against the banks, thrifts and others. This news has wiped years of dividends away through a reduction in the price per share. Your announcement challenging the MREIT legal status has hurt the most.

If you are looking after the investor interest, you have blatantly ignored it. The investor as a stakeholder was and will not be helped by your investigation,and if the MREITs have to de-lever, then we lose a lot more. So, I dont know why now and who you are protecting. There are no depositors, just investors who are and have been happy with the risk of investing as outlined in the filings your office wad supposed to read and comment on. We should not have been blindsided like this and should
have been notified years ago. This, along with MLPs, are the only invrstments I can think of where I can get a good yield with some growth. The MREITs have in effect been helping support the mortgage markets by buying the MBS, RMBS, etc. My suggestion is that you do some analysis of the REIT industry, as I am certain that you will find that real estate REITs own and finance agency paper too.

It would be wrong to now to disallow the MREIT exemption, and all this is doing is causing real and paper losses and making regulatory risk higher than any other investment risk. Surely, that is not what you are supposed to do.