What Could Cause Your Mortgage REIT to Fail

What Could Cause Your Mortgage REIT to Fail

There is a common belief among investors and analysts that mortgage REITs like Annaly Capital Management and American Capital Agency are immune from failure because they're not exposed to credit risk, but this belief is only half true. That is to say, while they indeed aren't vulnerable to credit risk, this doesn't mean they're immune from all risk.

In the video below, Motley Fool contributor John Maxfield challenges this misconception by identifying the specific risk that rendered the savings and loan industry effectively obsolete in the 1980s and could do the same to mortgage REITs in the future.

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The article What Could Cause Your Mortgage REIT to Fail originally appeared on Fool.com.

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