Fallout Hits RAIT Financial

RAIT Financial Trust (RAS Quote) plunged more than 20% Tuesday on fears about the company's exposure to collateralized debt obligations tied to American Home Mortgage (AHM Quote), a lender teetering toward liquidation.

RAIT Financial invests in residential and commercial mortgage securities. The company's exposure to American Home Mortgage stems from its 2006 acquisition of Taberna Realty Finance Trust, according to a research note from Piper Jaffray analyst Robert Napoli on Tuesday morning.

Taberna specialized in providing real estate companies with a form of financing known as trust preferred securities, which are essentially a hybrid of debt and preferred stock. ...