The Securities and Exchange Commission (SEC) believes that mortgage REITs are beginning to look more like mutual funds and has initiated a review of their exemption from the Investment Company Act.

At a Wednesday meeting, the commission agreed to solicit public comment in similarities and differences between mortgage REITs and mutual funds.

The Investment Company Act requires mutual funds to disclose their investment objectives, as well as company structure and operations. 

SEC chairman Mary Schapiro noted that the commission has not reviewed the status of mortgage REITS in relation to the ICA since 1960.

To some investors certain REITs and other companies that invest in mortgage pools "look very much like traditional investment companies," Schapiro said.

The SEC is issuing an advance notice of proposed rulemaking for a 60-day comment period.

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