Mortgage real-estate investment trusts have been exempt from the Investment Act of 1940, which regulates the fees that can be charged to investors and limits the amount of leverage a fund can use. But the Securities and Exchange Commission said last month that it had initiated a review of that exemption, as mortgage REITs are beginning to look more like mutual funds.

The SEC's review has rattled the mortgage REIT industry, which analysts call a narrow-but-important source of liquidity for the housing market. Property prices are depressed, demand for new home loans is low, and banks and government-sponsored agencies Fannie Mae and Freddie Mac are still trying to sell their backlogs of foreclosed homes.

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