Ben Eisen

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1,467 appearances 35 recordings 1 series first heard Jul 2017 last heard Nov 2024

Ben Eisen’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · REITs Betting Big on the Mortgage Market · 29 May 2019 podcast

You get a dividend yield that could be 10%, could be 12% annually.

Yeah, definitely.

So when you think about what these mortgage REITs specifically are buying, on the one hand, they're buying up big pools of mortgage-backed securities, but they're also sort of venturing into other parts of the mortgage market, whether they're buying up the rates to service a mortgage or they're making their own mortgage-backed securities and selling them.

And one area where mortgage REITs have gotten into is what's known as a credit risk transfer, which is basically a bond that Fannie or Freddie sells that is made up of the credit risk of mortgages themselves.

And it's sort of a complex security here.

But basically what Fannie and Freddie have done is to make some tweaks to the structure that makes it easier for a mortgage REIT to buy.

And they've sort of ramped up buying of those as a result.

And

I think it is complex, but sort of one of the things that it shows is that sort of these traditional players in the mortgage market, Fannie and Freddie, are kind of making room for mortgage REITs here as sort of key players.

Yeah, definitely.

I mean, when you think about who works at REITs, there are sort of all sorts of people work there.

But in recent years, you've had people who worked at banks like JP Morgan and Bank of America and Citigroup who were sort of in this world as bankers and traders before the financial crisis who are now in the mortgage REIT world.

So a lot of people with name brand resumes work at these firms now.

I mean, I think that's definitely an issue that's... And it's sort of a perpetual issue here.

For as long as mortgage REITs have been around, they've sort of had kind of boom and bust cycles.

So before the financial crisis and during the financial crisis, you had some of the weaker mortgage REITs went bust.

And the last sort of boom time for mortgage REITs was in 2012 and 2013.

And this was...

Sort of another time when the Fed was winding down its mortgage bond portfolio and there was like a lot of there were a lot of mortgages, mortgage opportunities after the financial crisis.

And you had a big you had a similar building up of mortgage REITs and some of them got pretty leveraged during that time.

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