Mortgage REITs, or real estate investment trusts, are companies that primarily invest in mortgage loans and mortgage-backed securities. They earn income by borrowing money at lower interest rates and using it to purchase these financial assets, which typically yield higher returns. This business model allows them to generate profits from the interest rate spread. Investing in mortgage REITs can provide investors with regular income through dividends, as they are required to distribute a significant portion of their earnings. However, they also carry risks, including interest rate fluctuations and changes in the real estate market, which can impact their profitability.