I can hear the class action lawsuits being lined up already. On July 30th, mortgage REIT Luminent Mortgage Capital (LUM) issued a press release confirming that their 32 cent per share quarterly dividend would be paid as scheduled and not canceled, as many on Wall Street were predicting. The stock closed above $7 per share on the news. A week later on August 6th, they canceled the dividend and may be on the verge of bankruptcy, as evidenced by the stock's more than 85 percent drop to less than a buck.

Either Luminent's management team has no clue about their business, or there was some wishful thinking inside the company that will likely have to be defended in court. You often hear investors getting upset when companies fail to come out and deny Wall Street rumors that appear are untrue. However, in the case of Luminent it appears that even if a company does issue a statement it might not be accurate.

Now, it's true that the mortgage-backed security (MBS) market has dried up quickly, but given the market environment, if there was any chance at all that things at Luminent could have worsened that much in a week's time, the company really blew it by confirming the dividend. Just think how many people held on to the stock (or even bought) because of that press release.

If you own stock in any mortgage REIT, make sure you understand how quickly things can turn for them. Since they are forced pay out their income in dividends each quarter, they can't stockpile cash for tough times. As a result, when the margin calls come there is no money there to pay, causing the stocks to be worthless nearly overnight. New Century Financial might have been the first mortgage REIT to go under, but it wasn't the last, and Luminent won't be either. Many think NovaStar (NFI) might be next.

Full Disclosure: No positions in the companies mentioned at the time of writing