Thursday, February 22, 2007

Mortgage Lenders
HBSC's bombshell (if you call a drunk getting a DUI a bombshell) from two weeks ago is still being felt across mortgage lenders. Fieldstone (FICC) (who is a tenant in a TIC deal I reviewed a year and a half ago) agreed to be bought this week by a company called Credit-Based Asset Servicing and Securitization, LLC, and its price doubled in a day. The stock went from $2.50 to $5.00, but is off its 52-week high of $12.64. Another mortgage lender, Novastar Financial (NFI), lost half its vaue from Tuesday ($18) to Wednesday ($9) when it said it expects no taxable income for five years. The mortgage REITs are known for their high dividends, with yields of 10% or more not unusual. The yields are increasing as prices fall, but beware because I would not count on the dividends staying at current levels.

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