More from FBR on financials (Previous: 1. Banks 2. Servicers): In mREITs (REM), stick with those in commercial real estate as higher rates and an improving economy are good things. Starwood Property (STWD) remains a favorite with a Q2 earnings catalyst: It should give management an opportunity to offer positive guidance relating to the Linamar acquisition. For the rest of the bombed-out sector, Q2 reports should give a needed look under the hood on book values. TWO Harbors is a favorite thanks to a cheap valuation and what FBR believes to be the firm's increased short rate exposure.