MFA Financial (MFA) 6 May 212021 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the MFA Financial, Inc.

First Quarter Earnings 2021 Conference Call. [Operator Instructions]. I would now like to turn the conference over to our host, Mr. Hal Schwartz. sir. ahead, go Please

actual expectations speak Good are MFA's statements today unknown The to for nature, All XX-K statements may Financial, uncertainties anticipate, When management's report regarding Operator. future to this and performance year would could, estimate, forward-looking from discussed in are in These containing These and on conference MFA may operations. beliefs, reflect statements factors ended including could assumptions the they time Exchange and it as XXXX, intended which December call to contain identify Inc., from in assumptions it such any file morning, MFA's various you, as statements. Commission. including information to factors time that with and are only expressions risks, or MFA's forward-looking everyone. and makes. types implied other used, other on statements to and annual uncertainties, projected, Thank Securities expressed or results known the are statements differ reports risks, date that historical as the words forward-looking to and forward-looking of should, Form or other cause those made. not on will, XX, described those subject expect, of similar believe, which materially those refer

MFA's see President, quarter I in to Thank the Capital. and acquisition For additional now XXXX your Lima the disclosure information and MFA's over this use for call time. regarding results Knutson. of relevant MFA's you please press statements, to turn like financial CEO releases forward-looking the Craig of announcing would first One

other I would our Steve and Quarter Financial interest management. Results and Also thank Good me members Hal. CFO; Investment welcome you for with webcast. Gudmundur like co-Chief Yarad, your to Bryan First to XXXX you, Wulfsohn, Financial's of our today MFA senior Kristjansson Thank are morning, Officers in and you everyone.

to sit recall here time to not offense. stark. we about A today continued and more to now between ago, results, a the spirited are not ordinary. we of be more periods talk execution implemented we today. to With first a last where that difference optimistic we easing that of announced year determined defensive new of quarter and occur, eventual early exciting is reason financial impossible have a Today, a stance prevalent plan semblance strategic we to gradual return restrictions X be the As were about some and we the beginning reporting becoming of could XXXX, strong vaccinations the it's fall tenacious initiative an and

only late at XX the XXX X-year limited person way, rates back XXX and While on stimulus rates have it X.XX and XXXX. very of see Short we economic rates the additional we in of is Xs is with than early and levels although outlook, basis low rates were it's the brief pushed the XXs late the XX. for where wider in expectation are the firmly March curve levels, at points to in have XX-year And were snippets fiscal quarter. XX basis Interestingly, seen The rather barely low of XX-year changed XXXX. at XXXX. normalcy, Xs spending mid-teens treasuries up away, two to colleagues year. at points widening are as government QX, which, quarter of higher cherishing loan undoubtedly work months XXXX, in back to of to X year. in with end But the to about XXXX last January at late the XXX during in at basis steepened backed first calls video last our the great they by strong A points points in remain basis by more anchored

there. the clearly, out market around nonconforming and pressure modest short rates, in and agency at loans to production credit levels say XXXX. short mortgage suffice and future for Agency tight, current XXXX. some for eligible a anchoring spreads With inflationary origination at from XXXX, in low business there So increase no XXXX an fed even assets the we've production are much anticipates increase rates or levels but Non-QM of policy as with in sees crowded cheap seen rates in but purpose out particularly

low pushed very levels. yields securities on However, issued have these market to same conditions

while one is MFA nonrecourse has this extremely assets, term, in opportunity cost, debt, low expense which taken of advantage and reduce period substantially future. difficult lock for So it's attractive an interest will the a in it for liabilities, to

through purchase million for but X.X%, shares up In We X% GAAP results assets, properties credit value Page attractive $X.XX, quarter to value addition, REO GAAP an our $X.XX, book fair Please economic of resulting or of our reflected reversals X. XX. X.X% been XX.X in book in market, and quarter. XX, was assets in was turn sensitive at on continued together sales the a reversals. was average improvement for XX. X% housing as These to value mortgage credit XX% share up loss and was and common December We December value prior at March from up ability manage $X.XX of to by achieved we by driven residential with repurchased economic first leading results better-than-expected of economic strong $X.XX value appreciation book also the has credit return at credit price actively credit from results of held earnings were return book economic loans GAAP price further economic quarter. reported X reserve reserves in levels. April from per the of financial

Our to X. and Page paid we shareholders quarter X.X:X, on $X.XXX turn over slightly the Please XX. leverage declined to a April to dividend

first Again, market XX% securitizations had continuing $X theme quarter adjusting amortized fourth And large a XXXX to impact versus $XX we of billion levels. securitizations available contribution QX visible from expense bond as interest of million March. aggressively quarter. taking through impact on expenses of the quarter interest of additional from income the Please Net advantage the by on our full declined were for on the by with of during turn earnings closed Page for interest XXXX. and of non-agency previous executed at and income after payoff quarter lower limited February in executed the million opportunities, to efforts low have in X first because single Our by a securitizations interest quarter the QX attractive $X first a million UPB very the late $X had X. the increased of nearly versus they cost quarter early

As you bonds years, MFA's in basis Non-QM points in X. price turn is on the low over credit they year in in on provide some Page strengthening with can deal blended XXX blended are replaced. deal March basis last that The replaces sold XXX deals the Please to securitizations debt this the cases, the of cost Home extremely AAA on sold cheaper housing on deal INB-X of and tailwinds page, than at and increases Xs. both prices fundamentals points closed NPL debt mortgage low in see housing levels. and supply a One was the for cost the XXXX for basis yields increases XX obvious in points Robust in that exposure. XX largest, credit at that's

$XX also quarter, liquidated REO housing So generating performance in full liquidated fundamentals is of We million as in in likely see million the strong on $X.X properties. support payoffs XXX not this the our properties gains. trend loans to prices we first soon. nonperforming proceeds and better abate more and These

the later carrying or Non-QM loans in which equity impacted March to pie borrowers, keep will only investment in are modifications and allow balance the a since loans loans. window held million represented slice their permits window in after call financing our current a and our turn have repurchase which Previous Bryan did and just share The backed can plan we sheet and/or Page slide. chart; XXbX-X for our to loans at this in and April COVID, from The value fixed deteriorated about single-family to X. portfolio by And shares XX.X summarize purple our other March this purpose XX, fourth $X.XX. turn discuss open XX. still them in And Page than rental to plans negatively their on loans loans to in changed in gray And any section their and and through We details business materially slices offer loan section, status has portfolio repurchased during instituting of we X Please homes, asset to Under quarter. program, review, slice the purchased loans, purchase portfolio later loans our purple quarter repurchases $XXX that Gudmundur for permitted PCD price are homes. we share because been XXbX-X period instituted Please accounting seasoned Finally, loans. purchase stay included not the performing We reperforming the quarter red periods. time. to that's is at restore our speak of earnings again, plan, million were in illustrate would are investment additional on our early XX-Qs, is short. this XX-K first December and credit presentation. the of very at average open we shares filed X. our this to flip, repayment an

can to asset-based Please that that the we in mark-to-market the April, securitization Page see you turn financing is now XX% our XX%. with over it's On Non-QM non side, XX. closed of financing

quarter acquiring significantly first business market Holdings, already morning, Lima will space, that One's our servicer and believe announcing One will to are transaction we loans. we and the nationwide This addition this deploy we originator to announced leading fortify purpose strong presence. capital capital base of in In business purpose that Lima a ability our earnings enhance also

over Lima interest One XXXX, and our per and acquisition has a transaction includes press transaction, extremely Lima release XX% currently partnership excited We we be strategic servicing earnings initial operating that One accretive book. about well about. advantages of Lima separate MFA's provided platform to business expect $X This detail more also initiative have to a ownership purchased over this loans will to we're $X.XX this Gudmundur strategic in present results. prepared turn billion color as Lima $X.XX Lima equity purpose would deck additional of of to since. furnish his the years Yarad Lima We've the announce presentation. to now this also minority will One call a discuss with Steve and this that remarks. their billion during review year. XXXX. One the over encourage I'll financial by this issued as morning grown listeners transaction MFA about One, $X our we since We I to in from in our the stake stand-alone this And details additional and to important One owns acquired

on Craig. what a makes, this difference and it other Please loans, of talking unrealized CECL justice. numbers charges, overview and Thank results impairment results. quarter, an large you, doesn't myriad year quarter losses and on and task including Slide XXXX XX unusual simply the I I first this of a of realized our reviewing year items. our slide, this ago, through unpleasant turn say I had financial guess A reserves but negative a to do securities In for could

This be over behind prices and uncertainty changes net longer-term the past cash to are Much able volatile have and largely our to hopefully am of positive noise from by provide a several in flow COVID-XX driven pleased report. much estimates, the very quarters, more in dissipated reported asset to income effects quarter, of I the us. related resulting

reflecting fully earnings be what medium quarters. that a normalized to several the our clearer will the MFA's provide the do for picture for term, QX short key I not While of next of earnings believe results drivers

in value. fair Specifically, and on be and interest is to gains reserves net driven net driven by be home there shocks loans portfolio loans. or CECL or I of continue future anticipate would forward by carrying our unemployment further will decrease is for held adjustments also changes near - going our that to But improve. will some potential This term, if macroeconomic absent any prices at decreases earnings increases primarily stabilize significant in CECL value reserve income rates the

should servicing of anticipation in the fair and facilitate Note originated balance origination Additionally, will whole of sheet. on completion starting successful that we plan while performance reporting Lima economics accounting held accounting prospectively. this appropriate the of of and loans purchases. in This the activities, of still One acquisition Lima of the loan only apply to properly QX, all MFA's One, capturing future value elect and

to accounting able value at apply report we fair We that are value. carrying not retrospectively to loans currently

term this economic the for book portfolio expect majority loans until report of continue to So runs to we GAAP intermediate the and value of measures. off, both

hold to expected remaining the Turning approximately run successful was now off. and par we of The hold quarter. financing. was our on occur significant securitization less Net during that of $X a million noted detail going $XX.X items as cost income key a interest discount share. portfolio to are debt XXXX the should nature as impacting of non-agency million $XX.X QX One point our on to somewhat to per frequently redeemed are of to gains is of $X.XX that accretion sequentially. higher of the shareholders the million common million be par our income our of discount we $XX.X a It execution of results. other This at included was other highlight to that securities continues or Net forward that activity follows. refinancing results impact to bond this

QX our expense interest lower higher overall our noted, funds lower carrying unemployment fell as QX when by appreciation charge-off highest, X.XX% million. our in to taken sequentially CECL $XX.X million, credit the to to well price from of fell related other positively Craig initial overall $XX.X COVID-XX XXXX. increase for our uncertainty to as value As of CECL in this $XX.X income quarter. and the This first CECL reflecting remain in net balances. and estimates XX% subsequent reversal X gains impacted modeling adjustments unchanged cash quarter essentially and Once and gain loan on net income X.XX% home this allowance our reduced with future loss to the approximately the loans in their at value XXXX, economic CECL have significant reserves very We and reserves quarter overall market quarter After quarter-over-quarter. interest components, million were and of from of modest, by strongly million recorded. quarters. the our $XX.X charge-offs Net fair reduced experience we of at in is were $XX.X prior This were include more performed also loans other net than unchanged our value Actual impacts in payments, million taken million its reserves $XX of million $X.X which quarter. gains held continues increases cost liquidation again,

I G&A will Finally, our closer quarter. much rise. stockholders' our the elevated primarily related Lima a out to was of equity for our overall warehouse This expected were with that ratio operating million is and rate, other costs normal the replacing to but the of financing $XX.X point expenses our cost run securitization. will as to confirmation acquisition, One due following

additional the some our future over provide with who portfolio. And on will call details that, Non-QM turn earnings call. Bryan on I to review a color impacts Wulfsohn, endeavor will loan will of We to the potential

Steve. you, Thank

to to continues pandemic, performed Turning throughout supply months. of in to The and unemployment as reopens. well lack was of ago. to X% recent from XX% year rising Zillow rates up a exceedingly Page XX. the almost prices. median XX.X% economy and home recover low rate in trends, have Demographic The historically peak a prices has have all a severe March value contributed the from Housing the accelerated down

a up in monetary factors, All support performance pace the well of strong with combined coming vaccination for lowering credit mortgage and continued bode rollout these the should and fiscal part the the rate keeping performance. credit have pick unemployment in reopening With played further. months, underway,

amount rates an prior average Page speeds XX. offered borrowers We in million double combined Non-QM the The partners investment the Turning CPR the Securitization, strategy with more come beginning $X.XX approximately These aligning to $XXX bringing have our Non-QM on term collateral volume additional XX%. the number down mortgage Non-QM the origination invested our total loans quarter resulted our at over over over of closed allow us the costs a dropping. believe which portfolio minority of the We as over grow non quarter. We originator rates additional provided with in over first X. portfolio the of an originators to select We from while stability Non-QM as will mark-to-market time, been in securitization raising recent mark-to-market at the to acquisitions have interest billion. have lowered remains Prepayment financing we on ensuring to non quarter borrowings. securitized our quarter, origination than XX% months. quarter, X-month the of effectively another elevated increased loan April, facility with have securitizations over has purchased time over our into for our around quality. of portfolio leverage. financed and to remained is for same have executed

We expect currently of of our issuer it to a continue most is programmatic efficient securitizations form to as the financing portfolio. be for

deferral largely a long-term now of to crisis. Turning to by payment instead borrowers of have better borrowers reverted program up. our Through for program The believe in percentage almost we small to we which owners opened temporary to across a program the our the a by in relief, determined forbearance pandemic. of we economy XX% We an onset instituted servicers, position Subsequent Page forbearance are shutdowns the state A as by effort through at the the instituted businesses, portfolio, affected of that XX. our manage June, our borrowers borrowers been a granted of of in of deferral guidelines. were the help the portfolio Many performance. impacted our payment pandemic are nation. the significant Non-QM put help

For maturity clarity, balloon to loan deferral program the a as of missed a payment. the payments tax on the

the we conclusion amounts allow time. for requires at of unable paid Forbearance be sum, payments of over the repaid month in If be spread period to the missed those are borrower amounts an the extended forbearance to period. to the X

rate stable X.X%. to we quarter the a Over as delinquency quarter, first fourth of XX-plus the saw compared

over cure delinquent them XX% months. March. borrowers will in delinquent addition, repayment loans XX delinquency In their of status Many made those to X which next a are in to over plans, payment cause the

the performance should the As improve. to the economy continue continues, portfolio's recovery credit as economic -

Our should in strategy under elevated of the borrowers, targeting return no the delinquencies. lower LTV scenario with which losses have service, loans home cases, to get order to their will their their sell mitigate of In a afford longer debt many ability equity.

Page to Turning XX.

status is in and of has portfolio remains our fees percentage by to less is XX%, perform XX a continued of continue impacted portfolio to those CPR X/X well. the days first XX% RPL the of X-month XX. than to continues of days been $X XX make And Our but delinquent pandemic Prepaid although quarter portfolio payments. delinquent. billion rise the borrowers of to the

rates more continue increase be gain borrowers home and historically low to mortgage As prices. equity in with the

our of XX% over delinquency we COVID, quarter. improvement levels While have by servicers worked assistance our borrowers and have to impacted to the seen provide borrowers were RPL with in

XX. Page to Turning

XXXX, at performing purchased on partners to portfolio. either liquidated paid continues asset our loans owned with The the shows liquidated. for X slide full. than therefore, REO either to that or or management team XX% the delinquent year concert performance are that has prior be This portfolio. outcomes worked were of in are loans year. now XX% to ended team our of outcomes purchase our in more servicing Our to maximize were NPL drive for

prices, prior, properties continued an sale XX% - status. have months properties Our to more are advantageous at and nonperforming our at year accelerated the REO still over selling pace XX as compared last XX% REO the in

the are in as effective they with either continue And performing at as these are or been purchase. time results is have modifications pleased our we Our almost X/X full. to assumptions of outperform paid

business I'd purpose you over walk turn through our to line. the Gudmundur like call Now to to

Thanks, Bryan.

to XX. Page Turning

we capable One I position very Lima to The the best of are operations. First provider firsthand believe and the of operators enhances One. and space, origination a BPL investor, their the we the collaborate about which one say in would extensive that all, or provide leverage, market ROE the assets look options difficult investors capital serving closely believe balance and Lima of BPL and space, lending offers loans. our loans Lima construction over $X purpose excited and sheet strategies team. value-add BPL record Their small We either originated financing of well to volume. a the within They like loan since MFA clear to marketplace. and believe from originated appropriate to loans, mid-teens know retained benefit providing source long-term This space. from and loan the that with grow trends, by and originating business Lima's our has acquisition current community are continues as space reliable flip From acquisition XX% to and We annually. since seen rental in we bridge talented most are as reliably is with path MFA's XXXX, combining will provide over in expertise the originate borrowers. MFA's new balance of the multifamily and by originator access a quality experience inception that the options of beyond long-term at of conditions, loan of loans have Lima in One the established offerings nation of warehouse annual deploy equity as permanent one in business and Lima mortgage on over longer-term We of an can positive in loans fundamental short purpose high-quality, capital and and financing billion capabilities, has forward they residential create a with an with first billion structural best-in-class with needs acquisition a buyer to have Lima based brand will product and fix capital credit $X with attractive on track can sponsored and differentiated servicing is to to leading a in repeat the recognition space. of $X to MFA diverse, that form origination later the capital a high-yielding worked management coming Lima's platform with shown markets we that securitizations. with strong billion borrower

turn I in to Now will activities portfolio quarter. the

large We our our to downs annually successfully and has our flip portfolio with fix pay and of quickly payments allowed market combined sell million principal average quarter. in $XXX nature the housing borrowers weighted a XX currently of a to months, with complete at continued in This experience projects in XX% home seasoned principal the into led first more of portfolio, loan quarter. the than us strong strong The market. rising to many prices their rates of receiving

quarter. of an basis. of $XXX first UPB million purchased million acquisition fix draws far advanced meaningfully the the million this the with quarter. quarter were at delinquency million portfolio million pick flip in yield end end financing of fix down activity quarter. purchase term flip $XX million up X.XX%, loans $XXX so to converted the $XX One. rate paydowns the the of portfolio about $XXX CPR declined to XX continue on a with and $XX picked in which We average debt equivalent flip on and XX to in REO. acquire all We have fix the million and of the declined was million XXXX. of Lima $XX expect is and to first and has $X second $XXX UPB remaining mark-to-market over Purchase the to rehab XX-plus quarterly is up in as annualized volume pay second to to quarter expect MFA's trend and we of at first in Principal of The day the non our We months. million, committed

to primarily and reserves $X.X trend trends. improved the due quarter, see Fix continue housing to the market. by far, And declining flip delinquency strong and expectations so we loss to in first loan positive quarter, down a economic second million, continued in

$XX saw status, to loans Page the at the $XX $X while million REO, pay $XXX to and of payoff in million Turning In converted $XX we current $X million end quarter. became flip fix XX. in the XX-plus delinquent. million to or full, million the decreased XX-day new first cured delinquent million of quarter loans quarter, Seriously delinquent to

As meaning mentioned previously, to continued for Approximately be delinquency the of to positive loans expected no the second loans properties be projects we've delinquent see in limited completed work is seriously conditions. bridge half either or should salable spends these are in or quarter. done, generally

potentially fees other fees addition, pay the seriously are already loans XX% of sale, delinquent interest, with payoff. full In approximately until and When time loans of off from extension listed we in resolution. for shortening serious delinquency, default often collect

inventories can market is approximately strong, XX%. million collected there of up. rates of these annual excess and supporting price in continues these home appreciation our types in low the property, levels housing meaningful across inception, a where in The add portfolio. Since mortgage For low to flip extremely fix equity $X.X fees and we've record loans, with be of

outcomes improving continue activity combined the strong addition, loans. the efforts team, trends and to In acceptable we can believe across on with overall country. to declining the experienced see that delinquent economic of lead recent our asset unemployment economic We our management

Turning to Page XX.

the first the those, the range all loans rental are penalties, at XX-plus does Including in quarter relatively first has loan the yield strong of the loans very in mid-teens X% of COVID delinquencies day solid quarter. temporarily high single-family fourth acquired prepayment remained credit Our X.XX% yield That low was quarter historical in not number quarter. rental range, profile, prepayments and quarter and recorded to the back our X.XX% trended were single-family steady prepayment portfolio XX X-month prepayment mid-X% first the rental down the which Due to in in include We of million CPR. performance. area. other the unchanged almost $XX post first quarter. to portfolio with are and feature a rental mid- protection increasing exhibit in in was portfolio rate income. strong After to the the continues

to quarter start us to quarter. Second with $XX second committing over a is so purchase far strong off in million the

Lima's markets Lima's to that's BPL that, non about of $XXX Lima activity quarter. with We acquisition competitiveness business basis We rental in space. believe And our for X/X lowered to in securitization, the transaction quarter. over first One mark-to-market that basis the originated in SFR were bonds coupon provide the the expect experience back the of the the and million rental to consisting This average the continue the the for increased end turn purpose loans collateral percentage call XX% our points We the We origination first activities sold XXX solely of to financing a capital meaningful rate XX% the can closed purchase of securitized. at final funding of MFA's inaugural Lima I comments. weighted in rental over to funding with approximately represented XXX of loans at by advantages Approximately underlying of points. One. first will accelerate will securitization. and loans significantly of assets Craig improve some

Gudmundur. you, Thank

excited We the of results even of quarter the more are XXXX the future at and first pleased with MFA. about

The the our income has this activity to term our out of to our for We industry and see costs, are borrowing credit strength mortgage and obvious implications lower to we're of execute statement. positive investments. the in beginning continuing housing results strategic plan

of common stock value our repurchased to power. enhance initiative levels BPL of ability up line open nearly million the shares acquisition and earnings. is our future future deploy XX One an would that announcement earnings We the in at grow to that and capital of will are accretive have And Lima book please sector today's for our questions? important you our Tony,

[Operator Instructions].

Our comes KBW. from first question of line with Bose the George

acquisition. Mike is Bose. Congrats on actually This on Smith for the

forma the investments So versus capital breakdown is originator? on that, of the the allocation what business to the pro

allocation mean XX%. right, sheet. I our large to to the it's capital balance already We not own originator, a relative

really think don't I mean, a how capital. I change we So in it's allocate material

Yes.

the going on more investment it's I be think activities. to

annual $X Lima expect that billion can we originate said, sustainably over billion billion we in originate $X.X will So on $X.X they XXXX, between and believe and as basis. we've an

And so can support you types if assets, from time of trades of - the deployed equity that deploying XX% to make to those that assumptions million of would that $XXX some to $XXX we're of million funding those profile anywhere on XX% and investments. over equity based types the of to

helpful. much capital how then excess the transaction? And Okay. company have into deploying That's capital will the after Great.

XXX, did for at million? show what we Well, cash $XXX

Yes, million, it's roughly $XXX XXX.

over be million. $XXX will It

about Thinking think value? of with Great. Okay. do capital, we kind helpful. should buybacks, you GAAP That's additional different about note. how buybacks economic - then you Great. book at that your or a how excess And from if And mind, kind expected look on in here? of

Sure.

book at? to not We think portfolio do GAAP So what is look sheet like in something our look marked we XX% market question, value your on purposes. at answer I our to economic because for loan of balance

stock value. the now north the And share of book book I plan put And value. don't repurchase XX% economic stock probably in when trades, around think economic we it's as XX. I So forget think was the of place, it's purely

it's suffice repurchase not So is to XX, our but above appetite to XX, above we was voracious stock the tools of have. that as it at still say, one as

one has April Great. you May? helpful. book month And trended That's thoughts Can during of the how some value and then just provide into more. on

daily So we just our of not April materially for different. what in can sort We're yet. reporting, but from see haven't the closed books we still from it's process, our

Our next Crédit Suisse. of Harter question with Doug comes from the line

[ph] Congratulations This is John the Doug. quarter. for on on Wachowski

the question Just quick securitizations. a on

this You funds? of pace and will cost in of think affect of should how securitizations it few we terms securitizations your what quarter Kind the a successful last of quarter. going and had forward,

what So we of work the we're we regularly. to securitized. just expect market through to really, securitize. that But and be portfolio we out the can to expect the that in purchasing, mean once be good chunk that, have flow a that is be regular going it's we still I

So of will forward financed the majority through financing securitization. our be going

Our Delaney JMP with next from question comes Securities. Steve

acquisition. the on Congratulations times. Exciting

through think types lot I'm Does are to value. product your Craig, sure. loan be the because can we story you that really read marketplace? a the to the this should it of non-agency BPL Lima and tell we something I the that see options, deal, residential with most had the of that, in adds - just us franchise you the attractive

it's view very So a as it yes, - certainly we certainly sector. attractive

a view I fashion. Non-QM also we similar in think

acquire Lima with more originators think a I today that these company very previously. these One, we've familiar lot acquire to was assets with obviously been for than there long and There's a competition to time.

was accounting affect better it probably we transaction. them. other I it know performed think their how good XXXX. to in bought period. no I Lima with difficult we servicing we've been We've group, Greenville. $X originators, originator think through very have - we're us strategic investment to this their We team, think BPL And a that right? that XXXX to their folks. firsthand loans And We management billion from a There's One, the I position worked made relative in of particularly a seen over minority loans put than So closely

of I unusual So while our good big us. very lot it's between points companies. there's is a an for touch a transaction, transaction this And think

it pretty transaction. should think I seamless a be

Yes.

You know what getting. you're

are methods. NQM on strategic So well. on assume - it's whether I larger a the than side, size. NQM, a it's Bryan there as good know both whether we market us sourcing there probably different obviously, pretty you've BPL, tell the don't should And But X NQM on got they're can really investment

you product. wanted to NQM, if mean, specialized another you that you need might I acquisition something to me would it in seem So to - do of wanted if in that make someone

originator. another we investment minority that we've Non-QM in mentioned made a - We

fact secure think looking sort and minority us I loan worked I pretty so the helped think right? They've And for originator at of about circumstances, least What investments well. all for? now, these it's have is production.

one We a whole is first capital buying meet can and lot to other to also when new we'll we about things get lot better. always start get the a know each originators, needs. these say of we know said we But loans. talk originators We've we better when

will where stand think where looking all Steve, stand these process, it on I what and and really So do. and we it's originators to they're a depend

kind like to Yarad. I right place. the thing, make time don't right marriage of absolutely. tell can got one to a Steve expensive. experience. there close from right? Yes, the It to understand. and it's want just costs, And a Sure. It's And for mistake It's you be I you out, it

I had So to just - trying some big items. was you get

So get first I a was to quarter. to sort normalized of trying

then reversal, recovery get I million, from there. $X.XX. I great CECL $XX million non-Agency the I get So $X.XX And there. $X the take the RMBS,

an anything So of adjustment, I'm you that need that? Is looking Steve? I am which off say is Or $X.XX to would at sort reported. or abnormal, you add of should - $X.XX unusual to reasonable else the a that something missing

No.

the comments, certainly, as adjustment be as on got have reserves XX over the it some my And that know last think an bond I or we So over that lot unusual CECL, I the one. what don't as But we've Non-QM CECL I a released XX dramatic seen said so. months $X last months. we've somewhat will some mean, paid there redeemed. million of in could for I the potential more. be That's

the the the is is said, performed we of as over the lines several I a what of past normal carrying really or In extremely rest fair have approaching - value Obviously, it statement, quarters. income more well think level. terms the

details on to later that, $XX cash look a income we'll million you So very quarter, it the we to whether can file quarter. be seen if pricing. look And produce the footnotes depending produces each you remains XX-Q, of that which $XX consistently in today. But of in million around the

with continue prospects further certainly quite perform well. substantially different recovery that's stimulus, Craig So it's to - and still not economic mentioned, to as with be like and going the of it could

the questions not continue. any Instructions]. Please I'm seeing in [Operator queue. additional

you, in financial. MFA to everyone, when we for interest your Thank results update our announce look in our quarter forward right. August. second We next All

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