Mortgage REITs Show Recovery Signs
March 26, 2020 11:36 AM
Keith Griffin

The US market for mortgage real estate investment trusts (REITs) showed a recovery Wednesday. Investors liked the government stimulus efforts, as well as the equity market rebound.

Reuters reported Mortgage REIT shares have faced wild market swings so far this week as some funds were forced to sell assets to meet margin calls on loans used to finance their positions, according to an IFR report analyzing the situation.

The U.S. Federal Reserve on Monday unveiled a broad support plan including purchases of government-guaranteed mortgages, but its stimulus does not cover non-agency mortgages that have no government guarantees.

Mortgage REITs were faced with funding gaps as they hold both types of loans. The latest one to come under pressure was Exantas Capital Corp whose shares fell 31% to $1.92 after it said on Wednesday that it received margin calls from repo financing counterparties.

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