Mortgage Reit

Invests in loans secured by real estate. These mortgages either may be originated and underwritten by the Real Estate Investment Trust or the REIT may purchase preexisting secondary mortgages. The funds the REIT invests may come from either shareholder equity capital or debt borrowed from other lenders. Mortgage REITs earn income from the interest they are paid and fees generated. This net income is generated from the excess of their interest and fee income and their interest expense and administrative fees. The other kind of real estate investment trust-called an Equity Reit-takes an ownership position in real estate, as opposed to acting as a lender. Some REITs, called hybrid REITs, take equity positions and make mortgage loans.

A Real Estate Investment Trust that specializes in Mortgage and Mortgage-Backed Securities. Contrast with Ereit.
Example: The mortgage REIT specialized in making construction and acquisition loans for warehouses.