MFA Financial (MFA) 5 Nov 212021 Q3 Earnings call transcript

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

Third Quarter Earnings Conference Call. At this time, all lines are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] And as a reminder, today's conference call is being recorded. to conference like to now would turn over the Mr. I Schwartz. Hal ahead. Please go

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

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

other like third our Yarad, and XXXX today Good Management. your and Hal. Steve thank members are me Investment and Financial’s results welcome our Thank morning, for Co-Chief I'd Kristjansson Bryan CFO, you financial quarter Wulfsohn, webcast. of you, with MFA Senior to Also you everyone. Officers interest in to Gudmundur

quarter excited was transformational for a about MFA, we we quarter our are and and about third enthusiastic as today, future. The company sit here our

execute our and We on term to continue strategy and to portfolio out reduce our liabilities. grow

quarter third results and growth. book value financial featured earnings Our strong

our quarter, Page to continued the GAAP assets, bolstered attractive and trends credit per securing properties between own reported have delinquent equity or the difference we our $XX.X share strong growth as X. these of in to relative of driven both underlying prices One, purchase pandemic. early One the on created trends tailwind housing LTVs. thus Robust preferred Lima common were resolution value mortgages related for as investments Lima Lima also impaired of a REO of by from share side, of One. for which and efforts mortgages These portfolio the and lead the the in and third to On have of $X.XX of record rewarded also largely strong led housing turn billion. MFA's new in both gains the to resulted fair $X.X Please We previous the runoff outcomes. our exceeded $X.XX basis equity acquisitions our investments, improved per to earnings tireless quarter value the find million of in third the gains were acquisition asset lowering

for value. million $X.XX, economic by and the GAAP value $X.XX net X.X% over and from was million. X.X% XX%, $X.XX also to our second $XX $X.XX, up interest GAAP book quarter. book from Our return increased June from economic X.X% from was up value book XX. X.X% $XX or the income quarter June or XX was Economic loan portfolio strong

shareholders on grew we and of quarter, of history, agency up third versus leverage X.X [Technical X. June And X Please dividend portfolio quarterly Difficulty] in to billion sorry to XX. X eligible that. paid our XX. to Our X.X October at investor to volume billion turn picked $X core billion. million to highest the We in a slightly Page about purchase over our acquired loan loans the by loan purchases $XXX $X $X.X These we included to $X.XX

likely The approximately million Gudmundur of volume grow at on of highest loan of in eligible investor production investor these Lima of X. purpose purchases. as included sheet taper ever. their month agency GSE somewhat loan Lima loans origination recent In and will So purchases loans loans $XXX fairness, agency balance future But business discuss were given business $XXX loans. shortly, the million investor to October the loan million and eligible cap was $XXX included will of July removal purchases One's One's it's quarters, purpose that their acquisitions on continues that

was So while well grow are to portfolio we our that positioned partners $X.X we billion believe extraordinary portfolio. continue to of growth an quarter, originator our with

by QX $XX.X million. versus increased income interest to net X% Our

to liquidating our Despite offer the and/or acquisition with restore a the billion in progress strong lot is agency a financed for to Lima they at during continue Page as of and investor in versus to eligible mark-to-market Lima acquisition, negatively beat the both increase last capitalize properties, our did are the Page in miss asset-based to normal related of status July not our primarily as in as retain And Please current which securitization. and them to One loans to We allow modifications REO One. million a over Please on thanks their portfolio turn excellent can MFA challenges quarter on loans, corporate bridge We One traditional the X, $X third quarter. at financings. repo equity components to payment X. home. closed Lima we associated the of X. quarter work, $XXX plans also investment hard still This of their with illustrates their The their trends. of financing COVID, make we housing homes, slide by borrowers in the repayment impacted nature to stay to turn approximately and originated

for We Tennyson four over have his and with an now. with relationship One closely years at excellent Lima them having Jeff team worked

you recent announcements of lenders. have large As business acquisitions of probably many of similarly know, been purpose there two

We Lima are this welcome time are no best review Yarad Page excel to believe to steps to we admittedly some to team and provide can the that shortly. resources turn to the and we space, One Lima the Please business. to will that we cultivate that we're family. bought costs. reduce grow confident expenses. excited their of There in lender strongly can at X. with but the biased, the accounting we've that lower the continue already to MFA Steve over point, efficiencies of to And Lima's interest doubt we taken transaction aspects We're

our in the fifth deal securitization pricing in on continued We Non-QM to third August. our strategy quarter, execute

end, lowest As at retained bonds turn quarter. of $XXX X. quarter luck it, this would a first securitization X% slice Subsequent vertical in priced have agency we their to levels when investor structured and eligible we Page yields We to the our Please October. priced million were the we deal in deal.

today. principles you and website. for been committed and section growing. added prevalent corporate support these our and publicly. investment they never we ESG And responsibility endeavors are real to been has focus issues the have communicating decisions to social governance a Finally, noticed principles MFA as on we've have Environmental, is these policies to as our but remiss may have years, that in in been

Yarad finally always talk over turn now financial will about call improve We efforts, progress to the but to to are we continue date. Steve to substantial our to proud details our communicate our additional of And I'll results.

inclusion that driven XX accounting MFA's loan Slide third for results consolidated growth our well you, quarter portfolio record quarter quarterly Craig Lima of turn as One related results. noted, has in an the Thank and delivered Please strong already overview certain financial to by as acquisition, purchase earnings results. Lima to One XXXX Craig. the of adjustments MFA for were the

Before discussing on quarter portfolio as minute One third accounting discuss end impact the of I'd well to statement in balance for results as Lima a purchase income quarter, the our their more on to take sheet. like detail, core the

fair closing Firstly, revealing Lima purchase investment value when of the of highly gain remaining adjustment investment million of at Consequently, incremental uncertain. previously the common is impairment includes gains One's the previously of fair prior reflects value million charge, the relate the March accounting million XXXX. purchase interest the its by by of $XX.X our includes in equity the were preferred $XX.X the represents current to One The prior the a outstanding to following: million its earnings our An GAAP the $XX.X totaling impaired MFA valuations This million at while requires XX% at approximately reversal. held transaction. from repaid value XXXX, implied back transaction. current reflect was adjusted arising to Lima the $XX equity. roughly reversal recorded include prior initially $XX of as of also mortgage recorded million that held That Lima gain in March implied held recorded gain originators half. was We gain investment by transaction. impairment additional full, the which $X in of impairment

Lima today. difference the MFA's The intangible million the of paid net their to residual relationships, the fair customer in file sheet, million to $XX.X we purchase value of Lima including GAAP under developed is Lima assets detail amortized with between value Q, expense under assets subject acquire technology. represents Further lives These million amortized One. is provided One One name $XX include current this onto impairment recorded the but goodwill. later assets required and of consolidate price estimated balance acquired not quarter. assets accounting purchase we the to intangible Secondly, GAAP, XX One internally accounting to which expect is and the purchase the of residual to over the brand assets. Goodwill asset the goodwill allocated $X.X are recorded periodic testing. amortization for And Lima our Intangible useful on

interest QX was higher the million highlight $XX.X X% results, Net Turning our XXXX are now to to components key as higher follows: million of of the or core $X.X sequentially. income items

by residential the to financing. income portfolio As this loan whole to and growth interest increased, quarter ongoing of Craig due noted lower the securitizations primarily impressive net of XX%, impact again cost

million. nine-month period Pricing business on higher September value the than loss in of loans approximately fair was this we Now portfolio modest million in $XX.X was carrying on at to runoff elect the particularly third-party sale purpose September used This taken because loan by during million to and process. ended value charge-off our income these XX, X.XX%. recorded very the $XX.X remain allowance credit this for macroeconomic amount quarter The $X.X end net to positively At $X.X to in based to our estimated assumptions loans net last at decrease relates $XX.X the and prepayment primarily our business fair The quarter, loans. Approximately net net row, by carrying continues option of of XX. XX, interest end, a from million decreased the speed charge-offs loans at the Lima they're originated loan purchased experience six loans with at in value impacted and continued gains adjustments One drove modeling. reserves million held the on XXXX. This reversal second quarter CECL the reflects purpose quarter par of $XX.X quarter, at and flat third million. June down Actual loans. spread of quarter the value on for non-performing CECL mark-to-market essentially

value fair million detail more In fee originated also discuss this the in strong other quarter, will of Gudmundur contributed addition origination on Lima during reflecting to servicing $X.X the shortly. and income origination, volumes. gains One loans,

of primarily approximately One approximately Finally, million, our with which G&A expenses and excluding $XX.X the is line of This quarter. includes compensation quarter million related Lima assets was in million One. were for run amortization this operating expenses, our Lima normal at intangible the other expense, rate. MFA’s $XX.X $XX.X

to a run One around with changes expect Moving Wulfsohn. not I million Other $X we expense to at incurred will consolidated in turn around $X warehouse Lima up the are securitization Bryan related at significant costs forward, the on to volumes. we One Lima costs extent portfolio financing. loan would fluctuate call portfolio favor loan the expenses at acquisition origination to run quarter, origination those over related $XX million expected And activity, servicing to G&A since over level our to meaning loan per to will quarter, but based that, continue REO of management and million

Steve. you, Thank

XX, home prices increased saw to Turning the at strength quarter. continued showed Page rate year-over-year of prices over XX%. We

have of as a however home month-over-month have a the had increase We prices of in bit, seen increases affordability. the slight pace dramatic on moderate impact

as rates. fundamental now trends and continues such low down All low The rate of remain demographic activity play, inventory, below historically factors X% the same unemployment at increase. is as to economic

continue and factors these monetary credit in keep combined continued to of should the credit All performance fiscal well bode term. support, near mortgage with and for performance strong

combined Turning the XX, remain the we $XXX loans, almost of collateral total the month and average increase. in origination quarter another third over provided as to the our in funded end to Securitizations our speeds on of stability of executed in Prepayment approximately elevated significant billion. Page lower three another financing elevated CPR non-mark-to-market over which securitization non-mark-to-market $X to leverage bring purchase we XX%. over facility the Non-QM the portfolio amount quarter. time, volume were resulted our remained securitizations at have quarter-over-quarter quarter to to continue fourth Non-QM loans for securitization with represents the borrowings. million quarter, and with have bringing the And able We These expect cost fifth portfolio Non-QM securitized XX% was the of term our to at additional the of quarter. same

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

performance to steady the and of percentages coming XX. have Non-QM Turning We've small strong manage Non-QM onset effective. have deferral handful the portfolio pandemic. effort The our our the Page been employed seen onset borrowers by created from uncertainty very or program improvement crisis. to exhibited through loss of an help plans. the has the tactics mitigation as back the in Currently, pandemic We instituted at a deferral forbearance a borrowers of delinquency in

that third X.X% delinquency borrowers by saw repayment dropped day delinquencies them plus day by one forbearances, on receive and are improved today we plan be a current the did quarter, two In For of many either within current years’ to to X.X%. or rates XX XX time.

addition, In most the recent those of approximately payment in loans months. delinquent XX% made a

continues, performance recovery we the As improve. portfolio's economic to credit expect the

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

competitive our our the an and a limits size new quarter this the subsequent environment. our end to before advantage and one on Turning in to future. at executed loan the time ability X% the being, end of again and loans Page over to year. over year. in execute since We securitization acquiring the announcement XX. suspended opportunity FHFA another In September, the the to over We these investor cap Mae testament example purchasing opportunity Freddie originator collateral is our expect quarter, of adapt from acquiring arise the the for the purchases of prices. to least This Treasury or for Fannie ever-changing of another on for at Mac quarter second $X billion we started $X billion existing in attractive but first environment to could originator a loans relationships in relationships This strong and took

Turning to Page XX.

month three More equity CPR quarter prices gaining environment. home Our more payments. portfolio increase $XXX percentage borrowers XX advantage approximately the interest at XX% was our less continue to the taking to perform of RPL of and And the borrowers of are elevated low well. make and XX% of remains third although be portfolio our of days Prepaid million the a are of than the those speeds in almost continues of XX days continue delinquent to in XX. rate delinquent. with in XX%, status portfolio of

de will of COVID the believe borrowers going impact amount portfolio RPL small and COVID assistance on our be still from forward. a have minimis receiving We

Turning to Page XX.

either purchase performing liquidated. purchased either team team our year portfolio. shows performance in prior NPL with management our to to our were to servicing are liquidated asset loans in have push that maximize paid of partners XXXX. portfolio. Our of XX% or continues The not worked This REO XX% delinquent the at on were outcomes for the has that to loans concert slide or full. be have outcomes ended

at of have sales an advantageous at pace properties REO Our accelerated prices. continued

almost the loans of quarter, we are properties times still many XX% a to as REO. Over as sold three converted a non-performing number we status.

almost performing modifications in are as quarters have have effective full. been either three paid Our or

as outperform our loans. We business are to to pleased Gudmundur our time call with And through these continue assumptions purchase. of like you I'd they to results at the walk to turn the purpose now over

Bryan. Thanks,

acquisition quarter. our a solidifies mortgage One, provider the opportunities of BPL MFA's We we the capital the leading deploy Page most of purpose some the attractive position at to in residential XX. of to leading Lima acquisition to beginning space, originator as nationwide the offers which This Turning closed space. a believe business capital

multi-family strong offer solution record start with short million. real the origination short-lived the $XXX with company to of over residential continue investment Our but teams Lima's of heights. third month utilizing setting for single purpose over the a million of a and family strengths diversified in and million record estate record the to quarters record was wasted demand collective Lima One financing all to the second fourth strong We was quarter, Lima's that a XX% no saw for $XXX business originated and for small long-term company, the offerings, business $XXX September our October experience strategies as off to a a the to markets. take time over quarter origination over with new origination quarter and balance in new of products of volume levels. investors increase which benefits product loans

MFA with had grow source yielding run in believe provide to When of One quality, that mentioned are a time marketplace. of potential also origination. May, we high Lima's the transaction beyond $X.X announce the assets of Lima the in key is substantially the to that annual this transaction the rate reliable at benefits we that we high the to billion difficult ability flow of

We volume full seeing suggests continued now billion between are the XXXX to quarter $X.X growth as already fourth third billion. And that $X.X we expect play in origination volume out of XXXX. and

In balance the an to company. assets servicing income million equity generated allocated on XX%. representing addition our $XX.X return profitable the adding Lima origination activities of as in annualized of net quarter, sheet Lima from to approximately of benefit

our to the third on consistently facilities assets, units in BPL efficiency first with month which acquisition per financing the of loan up rent the loan We financing business Lima timeline team's quarter, to the by have We Lima’s XXX loans increased scaling now we up the for quarter. purpose One our securitization, closed These – We believe very XXX has support for the they've strategy. the from sets And the months, nicely added facilities. for of last allow impressed in future operational expect will a about as units volume experience accelerated over been closing to two volume as next growth rent new close operational growth. of up capacity quarter of quarter. in broad and few loan large we continued us capacity of range acquisition $XXX financing close million fourth it BPL finally, the in quickly from in BPL our

Turning to Page XX.

added in and $XX including Purchase so benefited their balance maximum will very loan picked XX% the over loans we UPB as on in we amounts the amount $XXX total, million million quarter up far over Lima loan portfolio quarter. Flip closed max or quarter. million we strong $XXX purchased fourth million by from Fix Here origination significantly have with activity in activity. approximately and the sheet In on acquisition, portfolio. discuss the grew the $XXX and The

of completion max homes. reminder, a rehabilitation increase The the on As the XX%. of represents the strong average UPB in certain from held appreciation of housing the Flip market a an annual Typically, rates construction a which home the holdback, finance strong difference the the at of day Fix the the quarter, second and and fully low levels XX record X.XX% and loans The mortgage income acquisition, amount loan quarter form amount, of a portfolio loan portfolio inventory in extremely basis in in funded one supporting of quarter. of explains remains point between projects. loan which and is excess delivered Fix and price yield the with construction Flip back third low with

continue In LTVs of $XXX When improving third see payoff of economic million plus $XX activity or million and combination extension from see collect our declining these of continue country. addition, our to loans XX delinquent asset continues to the we on day end default lead full and fees management unemployment efforts initial we XX% about the drop to loans in interest, acceptable at solid outcomes to economic continue payoff. serious plus. and in payoff across our of we The XX overall And the experienced positive loans. decline the low to other to of loans delinquency, loans team quarter. fundamentals, a delinquent of full out amount often and fees in

is and the takes have over the to billion Fix X% have in remain XX% we performing held acquired loans $X.X where had here of day quality meaningful to loans note Flip thing originated expected approximately $X.X as Fix billion delinquent of and loans outstanding months, the XX day Lima speaking longer than simply XX% inception, approximately appropriate add One six UPB can to to in loans complete Flip Since origination delinquency, loans of time and servicing. the to Flip in types million full. be to of there's somewhat XX can property, to in mind loss percentage are Keep Fix with our term XXXX have Due nature these and that XX declined plus a of short working foreclosure. about by to these the Flip we plus through For Fix portfolio. up. were way delinquent for over elevated. loans day of the payoff all and the and MFA $X.X prior that of due delinquency originated XX mitigation across activities. Almost and fees payoff and collected March and it loans equity

As expect our as percentage as portfolio’s delinquency increased would last loans our activity was year performing paid rank. one off, limited purchase and the naturally

continue delinquent on As expect have outcomes loans, decline both to seriously positive and percentage we now we dollar grow as to our to portfolio well amount forward. as continue going again delinquency

Turning to Page XX.

continues the the Acquisition to single quarter. We rent we loans grow our and in family end million to our price fourth rental in quarterly Purchase XX% rental volume. in SFR group the strong and robust in in able loan Approximately, will quarter, activities XXXX continue third steady by quarter, we of Underlying single our than of in have post-COVID attractive has single future. financing over family near first million fourth first of loans, portfolio acquired October. to the at month second family Our has of credit The of credit quarter, in of boosted portfolio believe, The XXX family portfolio the at Lima securitizations. rent as already expect trends deliver and The a yield XX% source over and second added to to day and end rental was from doubled quarter the ability portfolio million $XXX activity to of the the performance. and rental and close to portfolio more $XX quarter. the significantly single another financed quarter. non-mark-to-market to X.XX% we we've remained record our single One is remained as the to yields third family over quarter. a acquisition delinquency slightly be the family of remain the mid-to-high XX in solid X% one $XXX basis securitization one-thirds range X.X% acquisition single plus in points declined

final We securitizations for the Craig finance family to to efficiently I expect will comments. that, with some to rental call our programmatically execute And portfolio. single over turn

you, Thank Gudmundur.

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

We're Our positive is to for to investment continuing One initiatives up our term and picking contributing plan please credit the Lima firing the durable out questions. implications all and industry for securitize our has execute the on growth. open strategic up are mortgage assets steam strength housing our of obvious portfolio financing. investments. cylinders Cynthia, line and to

the first mute your of line Steve Instructions] Steve JMP your is open. line And with DeLaney button, And [Operator Securities. is from line come check your our question And will open.

you're I Steve we so basis complex profit a you third-parties to sell to servicing center, structured and have standalone balance ability value. on do have got I One, You've TRS for gain beyond Thanks. was I originate somewhat guess mute. My them acquisition, I as but little expect to that makes of to you capability, the accounting in it not of origination okay? for adjustment, – on now. accounting Yarad, fees? your and a with on an an apologies. if and assume so on exciting great It's it's just a an Thanks – and obviously going Lima try lot on set way of then things purchase consolidate My always – ongoing loans, you're a going see the sell as basis, on and course, they fair and should Congratulations you're Craig a only but curious, beyond guys Lima. sheet Obviously, up separate everyone. going sale, integration the future to terms but quarter, a could okay? just standalone loans was you're of question that, to take

comment Craig maybe Yarad. as start I’d well. can David. Thanks, Steve add and

balance that note not sheet operations we consolidated we we into Just our to some through this right. integration a MFA's fully how the that fully separate in we today, Lima allocate some separate of it for potential everyone. accounting, of the terms financing when Lima. potential us to and later on But you're arrangements It's get in on – There's released segment. period sure. future the for a show that of And sort for our capital in optimize integrated showing yes, One’s initial we with There's in it XX-Q the as as you'll segment, now. as we're depending

speak taken in think, all portfolio And it's in the we've forward. to seen way as specifically, quarter, – I’ll it but the initially quarter. be and Gudmundur the you've that's that going obviously, in of let I enjoy. doesn't more we've growth almost benefit of future Lima have been this the been future Craig able in to production this to that

So…

Interesting.

Okay. Thanks.

the So Steve, certainly ability answer loans. to sell to your yes. has Lima question,

this at I taking in the change point, our sheet. think production happy But future. think, on the could I we're that balance

of right, terms they're example how because the loans present it, best rental is loans. the the and In consolidated we

pay So loans rental premium to a for. the we used significant

probably value, because value. as even to rental $XXX much And those would a loans the loans. now, then or but So we'd elected gain for loans at we the Lima buy on book the par million We they're scale, million, as of $XXX fair pay those market because we consolidated. actually mark value

get million, $XXX So worth if million. marked to back $XXX they they're

in of used origination used on if we that It have. to gain will, the Lima sale. So form you preserve economics, that to be

And our million try mark, economics. said, quarter. made other for to through $XX third do of contribution in a to Now Lima it a as those income comes fair Gudmundur but income significant value we the over net in preserve

just the say, source a But well. suffice a a as source of it's changes bit. not profitable. geography of loans. it's some – a Yes, income It's little the of to So

of One, about $XX.X in million that comment at where value originated their on my reiterate value of was noted we them in fair the $XX.X fair that to third fair end. lines marks value the just gains from to the I origination of that had comments, we've Steve, Lima marked Craig's power these there, quarter million of quarter

Great. it And But different taxes retaxable than shareholders. retained the some dividends there TRS residual move may earnings boost could value One Steve, be an forward, income at income, is rather as I to tax forward, in terms help after that that over that is of paid Lima know go entire – out just we possible animal. be book level TRS all the and that having to it that income we as as possible is

TRS great potentially Steve. book I retain the point. certainly TRS, in ability to value. a could mean, which the earnings with Yes, structure, That's grow

one to of have have way you capitalized. limit lot the And way in the your manage TRS like, you TRS. and the you complicated certain can depends retax is are though. that a the the it's capital of of to It tests very it's there have in on a terms things TRS amount You structure managing

do out rate to those you test make distributions the income distributions asset at at your level. generated as level, you to that sometimes and the be have And rate the to the that, cause manage of TRS

to So is it the book test. TRS, through to only retax certainly would grow value overall possible subject to just managing say I but retaining

Understood, helpful. the Thank you for comments.

with Our of and James. line is from the Raymond Stephen next come One moment, open. question Laws will your line

seeing eligible you're of you you segments? about talk -- across business Good have this morning. very lot kind here on seems ROEs the it progress a the about can Congrats where quarter I of I Can seeing nice where best strength. know Hey, talk and here as mean, the made with like the a a guys some, quarter. being these opportunities money you caps best you you look door attractive caps or coming the that most mention lifted or changing off the of but you to quarters? put out agency lot taper are in did

the Stephen. Non-QM entire now a horse business five We've we went for Sure. Thanks question, side, as fantastic for purpose securitizations that's Clearly ROEs and purpose the really done Gudmundur big loans. on us. also Non-QM I there see the the sector. yields some of mean, been on through well, business of

in So name known marketplace. a the or securitize we're known

machine think, up there good we've as a set well. I got So

being the I As went loans be before that that to eligible will into investor that where lifted the you well. with again, cap on agency said that, existed is. But it opportunity that place opportunity where as cap remains seen, say

that on, trade, now So our depends necessarily opportunity maybe where forward, that's going it could on it done. execution right don't highest that be But the expect an really we opportunity depends gets the really but where securitization loans

ability I color the shy million. continue you I appreciate $X assets? Can remaining the there REO of you REO, down and about just timing sales how talk those think there. of on to I’ll sell about touch I $XXX REO XXX the balance or think think the or through the million opportunity gain, to

of as you, Servicing prices eat And job to with that become to and a through the estate trying has REO. tell has those the is fantastic the right? given certainly a been get your -- Fay while what's team to liquidate tailwind holdings I are that property So our many places winners. mean, Fay prices, REO advances And now advantage insurance continue for on big one un-reimbursable market into housing advances or right, recoverable. you're runs the of real sell. your not always who Well, those Ed REO most home it of strong pay I of generally taxes done fixed think of to happened those. expenses, will up you properties I are taking But it's maybe think, losses

of there taking So profit housing of just is, you some I see it's think advantage of that's part how prices. the strong

So move to we advantage out take to this can try of we'll market. those and best as continue

And it financing a out to shift clearly but Dip] segments, really lays made you've without pretty the [Audio a release really the yield dramatic up it Right. reduced switching and press across Dip] from at. [Audio costs

can is transactions that? is to or financing you much work in segments How legacy much and how so. if and So how opportunity cost more or much to there additional any opportunity there, reduce to the continue different do collapse

in securitize business now. a that points. think the opportunity on gut bit rates Gudmundur side, know have year the end the that to there's certainly we September, all the purpose don't We've of to pick two on side, an legacy basis a We I points about seen XX basically since short XXXX. of and But of up basis talked Non-QM little still went couple as XX I So much from those re-securitization. did

and savings as cut ebbs market and the well. So that flows into does the securitization

now, securitization right of a think, lot there's I activity.

And so spreads widen a little bit, but spreads wide and spreads tighten.

aren't case sense, today, durable of that view – not be, necessarily because I and of X% used yield time. we a savings Because it's as it think AAAs but great year. if out the that it was term financing less can I you makes for been so the a think looking as knew at yes, we've financing. that That's than that X% for. it's significant or the still does much non-mark-to-market, lot savings remember to the sold significant we we're Again, as securitization at they this even it's non-recourse

to do year. on So not were but savings I the as be as significant earlier the think, may continue it, we'll some this of they transactions

of Right. you a Well, lot of as that financing. mentioned, of positive characteristics type

a this comments the Have Craig. for thanks good morning, So weekend.

you, Stephen. Thank

You too.

you. Thank

open. KBW. Next, to Bose the is of your we'll go And with George line line

on guys, Mike Hey strong on actually really Smith quarter. is Congrats a this Bose. for

loans question, like another Lima Just sounds it One, economics purchasing from are better. the on are a the bit

if I'm or maybe So appetite a to wondering just sourcing shore in channel. Non-QM the for just there's transaction, another to loan of any some area your different strategic continue up

take phone is we for Thanks answer Mike. calls. question, short always the the the Sure. I guess

with happy our really we're Lima think, transaction. I One

case had past, we we've that One And sort in to taken of acquisition. turned originators. into of know minority interests a that that originators You the Lima in, equity, that the stake strategic corporate the was approach in

But exists. these certainly – possibility are pretty transactions the So complicated. they're

the of transaction I us. take calls. case was like all One, I the that phone really Lima a compelling in we for But think say,

question. a for Thanks lot great. the Great, taking

no question BTIG. And this we And actually questions do Hagen queue. with of is open. now at Eric in your the further you. line a And Thank from I'm line time, have showing

thanks. Hey, morning. Good questions. couple a of I have

Can typically, -- is value an managed to carrying intention has Is in that do one that fair a portfolio risk the at the agency market you're you against of loans you First that have borrow questions offset held forward? MFA credit taking. a going that are as then to liquidity the here. couple unrealized in value? there And

to that that a of borrowing they're or there's on So depending line those assets on whether the value loans capacity on a line, are capacity a of carrying non-mark-to-market appreciate. additional certainly value mark-to-market have

Right.

sort on is So financing the we asset. value that the from do, securitization based traditional away any of right of

value is. care So the what the market is. care the what lender They carrying doesn't value

number. the past. So And that's relevant of own And the again. really agencies, the yes, at in terms may we only owned future, agencies in point agencies in some we've

in allergic of mean we're agency now, but, shorter what think, And the we agencies, own it opportunities don’t least in them. at investments as doesn't we're most see probably just I duration market, or we're not – we the see look that in at doesn't terms credit. better right because that of mean than to making, we're we we

liquidity Steve, and around to is low our just perspective, a as from we our two cash I to tremendous also leverage alluded that. And better amount very times have you it mean, balance of sheet.

liquidity don't a think really why we So if this at you that's about from would not perspective, we agencies time. –

seem be Craig as point of because from better we're doesn't owning opportunities lot pointed out, on. a that, so it And lot finding to a away

Thanks.

least the at, which competitive opportunity – Thanks. feels other the I is you that, really you se. per it of that liquidity But a what typically Flip, to in than sort of focused stock zone at against that guys and of higher and think a is originators the doing loans think the a east on and the a which high-end balance you what some value like – west risk credit how liquid The was and asset. coast, half getting and as other yourself see couple One in Fix can in recently, guys risk-adjusted transactions credit addressed Flips, than homes I other of you Fix are of where taking investment types back markets? like latter are getting of just I what opportunity the classify ties kind borrowing the the said, noted on liquidity style is on space the two guys those the of rather form Maybe somewhat, Lima

BPL historically great heavy to that's loan don't a across diversified they Yes. space. but originate approach the country, Yes, their in No, has larger Lima they so been really point. in And the you have have balances. where all a California presence really are fairly

Lima’s for sizes of $XXX,XXX, probably Fix Flip higher. are to refer opposed other the are as some average, loan companies on so that to around and And these substantially

loans very the they that produce to incredibly of is operational that a diversified have number in one benefits see phase. so And a large forearm Lima from high of capacity we

And to so perspective, up a way easier see a number either it, we to least what after from that means is the increasing lot or go by feels if it's targeting that, at harder units our Lima scale you're of higher small number in high as to get of up more opposed loan clients, volume, loan the opposite it side, scale there. on balances balances to from a

feel scale provides of opportunity and where various ways. we amount up it sit. about Lima it And to in good tremendous pretty So they

it. you much. very Got Thank

Eric. Thanks,

I'm continue. no time, questions And at further this in Please queue. showing

Thank we results our right. MFA everyone All holidays, we we'll to announced fourth you forward wish in look for Financial, quarter to update next and in your interest everyone like February. happy when

Service. you, and your and participation conference your that AT&T conclude Thank for does for gentlemen, Thank call Teleconference Executive ladies for today. you using

disconnect. now may You