Riskmetrics(the most trusted name in the business and advisor to half of the World's Central Banks) gave NFI the highest risk rating. Basically saying that NFI is the next subprime mortgage lender that will file bankruptcy behind AHM! Here is the article by AP./ AP Five Mortgage REITs Said at Risk Wednesday August 8, 4:20 pm ET Report Identifies 5 Mortgage REITs As Possible High Liquidity Risks Due to Short-Term Debt NEW YORK (AP) -- A research report released Wednesday fingers five mortgage real estate investment trusts that could fall prey to the liquidity crisis currently squeezing the credit markets. The Center for Financial Research and Analysis, a unit of RiskMetrics Group, ranked NovaStar Financial Inc. as a high liquidity risk and Crystal River Capital Inc., Thornburg Mortgage Inc., Luminent Mortgage Capital Inc. and Deerfield Triarc Capital Corp. as moderately-high liquidity risks. ADVERTISEMENT NovaStar and Luminent declined to comment on the report. A spokeswoman for Crystal River Capital said it was difficult for the company to comment on the report during its quiet period. Calls to Deerfield and Thornburg weren't immediately returned. NovaStar originates and sells subprime mortgages, home loans made to borrowers with shaky credit, while Deerfield and Crystal River invest in various mortgage-backed securities. Luminent and Thornburg both purchase home loans to securitize as well as invest in mortgage-backed securities. All five depend on short-term financing to fund their businesses and use either mortgages or securities backed by home loans as collateral for the financing. If the issuer of credit feels that the value of the collateral is decreasing, it can ask for more money for collateral, called a margin call, or pull the credit altogether. Those REITs that have little capital on hand or unencumbered assets to cash in most could have trouble meeting the margin calls. The report compares each company's unrestricted cash, short-term debt, and assets being financed. Higher-risk REITs are those most likely to face margin calls and struggle to come up with the cash if necessary. An increase in margin calls is what unraveled American Home Mortgage Investment Corp. and forced the home lender into bankruptcy protection Monday. On Tuesday, Luminent said that it's working to beef up its liquidity positions in the face of increasing margin calls since Aug. 3. It reported Wednesday that it received default notices from two of its financial backers. Recently, investors and banks have begun to revalue home loans and mortgage-backed securities as delinquencies and defaults, especially among borrowers with spotty credit, spike. The sputtering housing market also has undermined investor confidence. Not all mortgage REITs are at risk, CFRA said. It identified Alesco Financial Inc. and Friedman Billings Ramsey Group Inc. as lower risks based on their lower short-term financing, while Vestin Realty Mortgage II Inc. is also low risk because of its conservative debt-to-equity ratio. CFRA also said it's reviewing its assessment of Deerfield after the company reported its second-quarter earnings late Tuesday. The current rating only takes into account information through the REIT's first quarter. Earnings are supposed to be out(after delay) tommorrow. They will show tremendous losses, I expect a major sell off of the stock tommorrow. Will tank like AHM and LUM did. I loaded the boat on the Aug 2.50 puts for only .20!!! You can still get them at .30-.40 if you place a order at the opening bell! I missed those 500%+ gain puts on AHM. Not this time as NFI falls like a rock those puts will sky rocket in price!!! Enjoy!