Mortgage REITs: Not Just Yet
The housing market is in recovery mode, but one type of mortgage investment has gotten hammered lately. Experts say investors should wait awhile longer before wading back in.</br></br>Mortgage real-estate investment trusts are companies that buy mortgage-backed securities and pay most of the returns to investors as dividends. The group plunged 5.9% in the five days through Oct. 15, the largest such drop since October 2011.</br></br>The selloff might have some investors considering picking up the REITs on the cheap. In 2010 and 2011, similar drops have presented opportunities for people with the patience--and nerves--to jump back in. This time, however, investors should resist the urge, experts say.</br></br>Past selloffs were driven mainly by fears about the sustainability of the financial system. The current plunge has more to do with concerns about the sustainability of the sector's dividends, spurred by the Federal Reserve's decision to start buying mortgage-backed securities, and experts say the worries are unlikely to be assuaged soon.</br></br>"There's more room to go," says Andy Kapyrin, director of research at RegentAtlantic Capital in Morristown, N.J.