Tack

AmREITs on Fire: Prelude or Crescendo?

No way the government walks away from mortgage backing. Not a chance.

The risk with agency-mortgage plays is almost entirely interest rate spreads. As long as the Fed keeps holding rates, these firms will make nice margins.


On Sep 23 01:09 PM trekking1999 wrote:

> good article; thanks; i've owned AGNC, HTS about a year now &
> are among my best performers plus income; recently bought a little
> CMO, and am considering NLY too; i'm always a little nervous about
> them, though, due to mortgage connection even with agency guarantees;
> i'm mildly concerned about fannie & freddie; brokers etc. say
> the gov will never let them fail, but there will be debate about
> it later this year i think when some of their financing expires.

American Agency Mortgage: Huge Dividend REIT

There's another item, specific to AGNC, that's been left out of this discussion:

Unlike almost all the other "agency-related REITs, AGNC did not come into existence until near the end of the mortgage meltdown, so they had no pre-existing portfolios, subject to writedowns and/or losses and did have a sizable warchest to "go shopping" for debt that was depressed to unprecedented levels.

This means, not only does AGNC profit from the record spreads, but they make sizable gains on improving mortgage-debt valuations versus their average cost.