Shares of mortgage real estate investment trusts dropped Monday as the broader market fell into volatile trading on worries over JPMorgan Chase & Co.'s government-backed buyout of Bear Stearns Cos.
Announced on Sunday, the deal values the investment bank at just $2 a share, or $236 million, which spooked investors about other banks' exposure to the troubled credit markets.
The Federal Reserve tried to calm jitters Sunday night by cutting the rate it charges to loan directly to banks by a quarter-point, two days before its scheduled meeting Tuesday. The Fed also set up a lending option for firms to secure short-term loans using a broad range of collateral.
The crisis gripping the credit markets has battered both commercial and residential mortgage REITs as capital for lending has disappeared.
Among the biggest decliners Monday, CBRE Realty Finance Inc. plunged 52 cents, or 15 percent, to $3.06; Deerfield Capital Corp. lost 18 cents, or 15.5 percent, to 98 cents; Newcastle Investment Corp. declined $1.05, or 12 percent, to $7.81; and MFA Mortgage Investments Inc. decreased 36 cents, or 6.1 percent, to $5.50.
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