Review of REIT and MBS

Chiuling Lu () and Chou-Yen Wu ()
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Chiuling Lu: National Taiwan University
Chou-Yen Wu: Feng Chia University

Chapter 26 in Encyclopedia of Finance, 2022, pp 835-848 from Springer

Abstract: Abstract In this chapter the history and the success of Real Estate Investment Trusts (REITs) and Mortgage-Backed Securities (MBS) in the US financial market are discussed. REITs had both great losses during financial crisis of 2008–2009 and the COVID-19 pandemic of 2020. They enhanced their financial positions after the financial crisis and their leverage ratios at the lowest records before near the pandemic. REITs have had a partial recovery at the end of 2020 and are more likely to recover in 2022. Both REITs and MBS are derived from real estate-related assets and are able to increase the liquidity on real estate investment. They also provide investors with the opportunity to diversify portfolios because real estate assets are relatively less volatile and less correlated to existing investment instruments. Therefore, REITs and MBS enhance the width and the depth of the financial market.

Keywords: REIT; MBS; Real Estate; Mortgage; FHA; VA; Fannie Mae; Ginnie Mae; Freddie Mac; Prepayment; Public Securities Association (search for similar items in EconPapers)
JEL-codes: G10 L85 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-030-91231-4_26

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DOI: 10.1007/978-3-030-91231-4_26

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