Mortgage real estate investment trusts have been a favorite among investors seeking some of the highest-paying dividends in the investment world. But is the dividend party about to end?

Anwar Elgonemy is the author of the new book Skin in the Game: The Past, Present, and Future of Real Estate Investments in America. In part one of my interview, he explained two hidden threats to mortgage REITs and shared why he believes Capstead Mortgage, Chimera Investment Corp., and PennyMac Mortgage are undervalued.

In this audio segment, he analyzes the biggest misconception about mortgage REITs as well as the three primary reasons for investors to own them. After identifying two mortgage REITs he believes are overvalued (including one with a "heart-burning valuation"), Elgonemy shares the one thing investors should always keep in mind about mortgage REITs and their huge dividends.

Looking for dividend-paying stocks trading at bargain prices? Check out The Motley Fool's free report "2 Dirt-Cheap Stocks With HUGE Dividends." You can be among the first to get analysis of a market leader in payment systems and a high-yielding energy company by accessing this just-released report. Simply click here -- it's free.

Chris Hill does not own shares of any of the companies mentioned. The Motley Fool owns shares of Annaly Capital Management. Motley Fool newsletter services have recommended buying shares of Annaly Capital Management. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.