The AHM problem reported by Calculated Risk is not just one company bankruptcy. It’s a stick in the heart of the whole REIT business.

REIT is a trust that is obligated to distribute 90% of all profits back to shareholders, in exchange it pays no taxes. The dividents are paid with significant delay, some REITs are still paying for 2006 profits. When the credit event happens many of those trusts will have warehouse lines pulled or repriced, but they still owe a lot of money to shareholders.

It spells massive defaults and market declines