Ann Berry is joined by Dynex Capital Co-CEO Smriti Popenoe, who explains how mortgage REITs operate and how Dynex invests in agency mortgage-backed securities. Popenoe walks through the mechanics of leverage, interest-rate sensitivity and how those factors affect returns and dividends. They also discuss the Fed’s role in shaping financing costs, the function of Fannie Mae and Freddie Mac in the housing finance system and proposed limits on institutional ownership of residential real estate.

00:00 Dynex Capital Co-CEO Smriti Popenoe Joins

01:03 What Dynex Capital Does and How a Mortgage REIT Works

02:26 How Mortgages Are Sourced Through Fannie Mae and Freddie Mac

03:44 Government Guarantees, Credit Risk and Mortgage Securities

04:25 Could Fannie Mae and Freddie Mac Go Public? Potential Impacts

06:21 Due Diligence and Mortgage Selection at Dynex

06:41 Specified Pools and Managing Prepayment Risk

08:38 Mortgage Yields, Dividends, and Interest Rate Sensitivity

10:49 Leverage Strategy and Risk Management at Dynex

13:55 Competition in the Agency Mortgage REIT Market

15:53 Dynex’s Growth Strategy and Focus on Housing Finance

19:29 Institutional Ownership of Housing and Proposed Regulations

22:01 Portfolio Duration and Weighted Average Life of Mortgages

23:19 Why Dynex Uses a Co-CEO Structure

26:45 Decision-Making, Accountability, and Leadership Structure

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