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Accredited Mortgage Trust (AMT)

An Accredited Mortgage Trust (AMT) is a type of real estate investment trust (REIT) that invests in mortgages and mortgage-backed securities. A REIT is a company that owns, operates, or finances income-producing real estate. An AMT is a specialized REIT that focuses on the mortgage market and generates income from interest payments and capital gains from its mortgage portfolio.

An AMT may have different types of mortgages in its portfolio, such as residential, commercial, or construction loans. Some AMTs may also invest in other types of debt securities, such as corporate bonds or government securities. An AMT may use leverage to increase its returns, but this also increases its risk and volatility.

An AMT is required to distribute at least 90% of its taxable income to its shareholders as dividends. This allows the AMT to avoid paying corporate income tax and pass through most of its earnings to its investors. However, the dividends received by the shareholders may be subject to ordinary income tax or capital gains tax, depending on the source and nature of the income.

An AMT may offer some benefits to investors who are looking for a steady stream of income and exposure to the mortgage market. However, an AMT also carries some risks, such as interest rate risk, credit risk, prepayment risk, and liquidity risk. Investors should carefully evaluate the performance, strategy, and financial condition of an AMT before investing in it.