Granite Point Mortgage Trust REITs Unsuitable For Investors

COVID-19 Causes This Mortgage REIT to Drop in Value

If you lost money from investing in Granite Point Mortgage Trust (GPMT), you may be able to file a Financial Industry Regulatory Authority (FINRA) arbitration claim against the broker and their brokerage firm that sold this real estate investment trust (REIT) to you. Unfortunately, shares of Granite Point Mortgage Trust plunged in March in the wake of COVID-19 and continued to drop.

Our REIT fraud lawyers at Shepherd Smith Edwards and Kantas (SSEK) are speaking with GPMT investors to help them explore whether they have grounds for a broker negligence case.

Granite Point Mortgage Trust REITs

According to its website, the real estate investment firm concentrates mostly on originating, investing in, and managing debt-like commercial real estate investments, senior floating-rate commercial mortgage loans, and other debt.

In March, this mortgage REIT’s (mREIT’s) share price fell, as did that of other mortgage REITs. The Wall Street Journal reported that this was because of concerns about firms that utilize borrowed funds to power returns when “turmoil” is rocking the funding markets. The novel coronavirus hit the mortgage REIT sector so hard that many of them were forced to suspend or reduce their dividend payments significantly.

By early May, Granite Point Mortgage Trust REIT was down -74.32% YTD and it suspended dividend payments. Its current share price as of June 22 was around $6.60. Compare that to a year ago when its share price was $19.

Unsuitable Investment Recommendations, Misrepresenting the Risks

Mortgage REITs are not suitable for every type of investor. There are definite risks involved that not every kind of portfolio can handle, including that they are:

Usually externally managed meaning their management is outsourced. This can lead to more conflicts of interest, higher costs, and lower returns over time.
Easily impacted by the interest rate curve. This makes for a more unsteady business model and unreliable growth.

In other words, mortgage REITs function as a less regulated, riskier kind of bank that aggregates cheap capital and then indirectly lends it out at higher interest rates by purchasing mortgage-backed securities.

Mortgage REIT Fraud Lawyers

Unfortunately, not all Granite Point Mortgage Trust REIT investors were fully apprised of or didn’t understand the risks they were taking on when they agreed to invest. This mortgage real estate investment trust may not have even been suitable for many of them to start with and should not have been recommended by their broker.

Contact our Mortgage REIT fraud attorneys at SSEK Law Firm today for your free case consultation. We help investors throughout the US to recover their losses.