Mortgage REITs are distinct from equity REITs; instead of focusing on owning and managing properties, they primarily invest in mortgages or mortgage-backed securities (MBS). They obtain the majority of their revenue from the interest earned on these financial instruments. By leveraging their cash flow through borrowed funds, mortgage REITs aim to amplify profits, but this also introduces higher levels of risk. The performance of mortgage REITs is heavily influenced by interest rates, economic conditions, and the housing market.