REIT Profits in Danger as Obama Proposes Refinancing Plan for Underwater Homeowners
February 29, 2012 08:20 ET
REIT Profits in Danger as Obama Proposes Refinancing Plan for Underwater Homeowners
Five Star Equities Provides Stock Research on Invesco Mortgage Capital & CYS Investments
NEW YORK, NY--(Marketwire - Feb 29, 2012) - Shares of high yielding REITs have been relatively flat this month. The Vanguard REIT ETF -- which tracks the performance of an index that measures the performance of publicly traded equity REITs -- is underperforming the Dow Jones Industrial in February with the latest problem for mortgage REITs involving government-backed refinancing programs for underwater homeowners, Forbes reports. Five Star Equities examines the outlook for diversified REITs and provides investment research on Invesco Mortgage Capital Inc. (
[ www.fivestarequities.com/IVR ]
[ www.fivestarequities.com/CYS ]
Earlier this year President Obama proposed to help about 3.5 million people with good credit that are unable to refinance at historically low rates because their homes are worth less than their mortgages. The Obama administration took steps last fall to help as many as 11 million underwater homeowners whose loans were backed or owned by Fannie Mae, Freddie Mac or the Federal Housing Administration, and now the administration wants to expand that program to the remaining underwater homeowners, whose loans are owned by banks or investors.
According to Forbes, Mortgage REITs stand to "lose millions in profits" if big numbers of the mortgages they're holding now are paid off early in favor of new, cheaper loans.
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Invesco Mortgage Capital Inc. is a real estate investment trust (REIT) primarily focused on investing in, financing and managing residential and commercial mortgage-backed securities and mortgage loans, which it collectively refers to as its target assets. Earlier this month the company reported net income of $76.5 million, or $0.66 per share (basic and diluted), for the quarter ended December 31, 2011 compared to $82.2 million, or $0.79 per share (basic and diluted), for the quarter ended September 30, 2011.
CYS Investments reported net income of $76.5 million, or $0.66 per share (basic and diluted), for the quarter ended December 31, 2011 compared to $82.2 million, or $0.79 per share (basic and diluted), for the quarter ended September 30, 2011.
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