What are the two types of mortgage REITs?
What will be an ideal response?
Let us first point out that a mortgage REIT does not own real estate. Instead, a mortgage REIT originates and then retains in its portfolio various types of debt that are used to purchase real estate or purchase various types of mortgage-related debt such as mortgage-backed securities (where the latter is a type of asset-backed security that is secured by a mortgage, or more commonly a pool of up to hundreds of mortgages).As such, the portfolio of a mortgage REIT includes debt instruments that represent financing to owners, developers, and purchasers of real estate. The returns to investors are generated from the interest earned on the financing they provide.
In regards to the two types of mortgage REITS, they are classified based on the type of real estate property for which financing is provided: residential property and commercial property. Residential property includes single-family homes. Commercial property includes the other types of real estate properties described as commercial MBS.
You might also like to view...
An advantage of starting a new business (versus buying an existing business or becoming a franchisee) is the _____
a. established name and following b. time lag before opening c. flexibility in controllable variable selection d. management assistance and training
A geographic information system contains demographic information
Indicate whether the statement is true or false