Is MFA Financial a Buy?
Early spring was a brutal time for mortgage real estate investment trusts. Unlike typical REITs, which invest in property and charge rent, mortgage REITs invest in debt securities secured by real estate. This can create problems because these assets are usually leveraged with short-term loans, which are hard to refinance during turbulent times.
The financial markets seized up early during the pandemic, and mortgage REITs were hit harder than most. MFA Financial (NYSE: MFA) was beset by margin calls and forced to enter forbearance with its creditors. This gave the company enough breathing room to sell some of its assets in an orderly manner. Eventually MFA was able to secure a rescue package and satisfy all outstanding margin calls. The worst is over and MFA is going forward as a smaller company. But is it a buy?
Source Fool.com
