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Annaly Mortgage

Annaly Capital Management CEO

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Mortgage REITs were doing great — until the yield curve inverted

The economy may be starting to slow. Real estate is taking notice 

 

Annaly Capital Management, the country’s largest residential mortgage REIT, cut its dividend in May from $0.30 a quarter to $0.25 a quarter. The same month another large mREIT, AGNC Investment Corp, cut its dividend from $0.18 to $0.16 cents.

And in June Two Harbors Investment Corp cut its dividend from $0.47 to $0.40.

“That was a little surprising to see them cut,” said Brock Vandervliet, an analyst at UBS who covers Annaly Capital management. “For Annaly that was basically the first cut in five years, so that was a big deal.”

Such dividend cuts are significant for mREITs, which investors buy primarily for their high quarterly payouts. Some of the highest yield mREITs pay out dividends of 12 percent or more, compared to a yield of 2 to 2.2 percent for the Standard & Poor’s 500 Index.

Though mortgage REITs are just a small part of the $11 trillion home loan market, they’ve been ramping up over the past several quarters.

The auditors of Annaly mortgage discovered that a lot of fictitious employees were on the payroll system and w?

The auditors of Annaly mortgage discovered that a lot of fictitious employees were on the payroll system and were being paid salaries. Neither the CFO nor the payroll manager was aware of the fraud.


To launder money from the company. Someone in the company added the fictitious employees in order to get money for themselves, possibly the bookkeeper.

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