MFA Financial (MFA) 4 May 222022 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to the MFA Financial, Incorporated First Quarter Earnings Conference Call. At this time, all participants lines are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded. to conference like Schwartz. to now would turn over the Hal I go Please ahead.

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

for I MFA’s President, please now press the announcing XXXX this 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 first statements, results.

other would Financial’s our Yarad, and quarter today Good management. for and Hal. Steve to members are me Investment in MFA financial and our Thank morning, you Co-Chief I Kristjansson, Bryan CFO; welcome XXXX first Wulfsohn, results of you, With to senior you webcast. thank everyone. Officers your interest like Gudmundur

quarter for of was very XXXX challenging exceptionally fixed a investors. so period mortgage first for and The income investors

times a two-year Although of the market up wider of cycle entered blew have timing bond this data, been Fed and about October essentially revisions. a strong leaked very was adjusted year basis Fed rate XX basis funds consensus persistently from in rates officials basis but between XX that rate XXXX. since intensified off similarities and two Fed raised points with anticipated expectations way, in and are the some basis and at increases bond of XX two-year XX and The XXXX temporarily March into half with inflationary was the tightening market yields of in we and sold route The XX increases increasingly backing XXXX. increase XXXX, again yields Fed in labor quarter. early eerie the they of for as fourth in then this in XXX approximately over before lower hawkish market year the February point for a XX magnitude and in in bad similar days continued increase quarter quite most which Fed Short during dialogue the XXXX, are is there that that XXXX the years treasury up another of similarity in during of Fed quickly is XXX other XXXX. last And witness In March of has Market December rate a points. the of February. tightening total during invasion the January in fourth the few in years another today February basis a treasury first undergone XXX eclipsing end before a during rising XX The on points the curve basis the by speed With tightening X and of basis for over brewing pushed and two-year was short began striking yield strange participants. magnitude The The points Fed Ukraine points XXXX. and Russian end cycle last point basis expectations March. selloff, funds points dramatic the these particularly massive last even the generally expectations the XXXX. in consensus

in of bond the tightening more after the and day began only already points to bond Fed much at this on quickly Fed to the market expectation, in basis were price increase, the its X.XX% that X expectations. point rates announced adjust However, XXXX, Fed XX higher markets Indeed by Fed was XXX were the September. Today, moved they two-year in than March year. increased February first or XX, basis first which funds

significant to market. addition across the also spread in to In materially mortgage first higher environment the rates led the volatile widening rate quarter,

the most casualty, spread also widened. impacted securitization pricing probably were MBS visible Agency While this loan spreads as widening

over inevitable duration quarter we of low was with manage cash in the spread securitization on Although are rate our assets. last relatively of net even rate housing value extended fundamentals much year quarter swaps picture, flows strained for One involved because market. market bright the are again, still Lima and a an moves $XXX just and was had fair leverage strong, but intimately our a exposure, spot turned adding risk interest the rate million volatility never the to manage is another one than they quarter rate little negative We over about duration and early in widening to MFA more as credit in supply impact mortgages. this kind fourth first continued originations, record given this forces a with actively as year in mortgage

rate with has Lima a in an current average as purpose have adjust time. coupons. by feedback rising environment the origination and of business pipelines suffered loop We in coupon pipeline a X%. instant reducing filled weighted real Thus, today originator our drag One’s over rates can loan with their greatly typical originators submarket

million likely to in remains the payoff losses $XX.X of the been which XXXX. turn net was with Net from supply a the reported in credit Steve detail. first We is loans, an strong Slide rates constrained income down of and value million, remains quarter. These due so $X.X income to But mortgage X. primarily Please first market GAAP $X.XX MSR bond quarter discuss affordability by bolstered fair Finally, or the on the share per for despite a in more were $XX.X and to for QX future. solid $XX for loss will impaired reduced interest remain foreseeable QX. higher million million housing as results was had interest reported which that by driven

the intended various was gains will and dividend per but $XX for earnings it to that also Our necessarily non-cash GAAP earnings measure this but quarter million $X.XX unrealized and distributable share. eliminate determination. detail, or explain is in earnings, influence first impact Steve losses not more do

expect We of dividend several the considered Board will distributable policy going one in our inputs by forward. future earnings be that in setting

$X.XX value was our down value economic down book was book GAAP or X.X% X.X%. $X.XX or and Our

turn These X.X at purchases portfolio to March loans to first to slightly $XXX million leverage quarter times Please was recourse grew our times. in of X.X XX loan increased April included $X.X billion $XXX acquired early non-QM purpose of selling completed first business billion runoff. UPB We purpose and securitizations portfolio and the after completed about $X.X our securitizations selling Slide of of leverage X. million We by of and we of the loans bonds. million $XXX in and in loans non-QM UPB business $XXX quarter loans. million million additional bonds two two $XXX Our

team financing now and nearly levels. billion that new capacity more a deploy the create difficult future additional liquidity loans at priced at in Our to provide higher balance market of sheet securitization non-recourse job $X significantly These we acquire a bonds. transactions durable did that fabulous are can yield very in selling

average book million management quarter. team million X.X asset the X. also turn market an $XX.XX. April has our gain $X.X below stock and to value quarter the an the posting of in all components at strong in million of at based shares our of a housing Slide illustrates take have price Our the and first Please X.X nature with – net and by of slide $XX.XX portfolio REO an the of price This advantage financings. in repurchased of investment shares supply we a to finally, properties And liquidating additional limited average first asset continued

from that our points mark-to-market this million price a a a against that significant amount existing increases or levering need While cushion before rough also about the way, would numbers, to Using would amount. This we shows to available we drop receive liability than occur is we a borrowing more loan another $X.X under more billion decline pricing pie of margin asset need discount billion by chart margin collateral. $X.X of borrowing to the creates borrowing more XX $XXX that would pledge than prices borrow receive before call, set could this call. today’s of

our non-mark-to-market discuss So over And this borrowing more practice much Yarad of financial call borrowing additional Steve is mar-to-market to our borrowing. turn like details technically now conservative renders borrowing while to would this like functionally I to results. the

overview Thanks, results. financial X turn first Craig. Please of for our an to Slide XXXX quarter

with increase significant rates As as Craig resulted widening spread impacted portfolio, we despite across declined yield hedges opening were additions swap in the proactively early interest our valuation quarter. environment first investment for curve, by made rate quarter the to the MFA’s results the in combined his remarks, interest in outlined in dramatic prevailing net a that in our

non-performing for a quarter these the As to income option consequently as we statement. all flow were have of previously that XXXX, loans the fair directly acquisitions, that on since changes valuation in loans addition purchased we our value loans loan reminder, elected through acquired second

fair to provide on also underlying in connection collateral accounting, have in loan these liabilities elected fair in positions, the subject our for created liabilities, the on volatility accounting accounting issued provided financing. valuation the value securitizations, short changes loan on fair in in offset option are use symmetric to to order decline TBA earnings. which also to partial changes significant with These value a also where Valuation swaps QX value We addition we loan the values. and

financing discuss As GAAP distributable a adjusts that items. exclude I more the noted, quarter, earnings distributable earnings of discuss GAAP higher primarily which or detail Residential marginally negative in interesting whole significant expense introducing increased. negative QX bond Craig prior million $X.XX loan I’ll this offset Loan from income quarter, per were results. shortly, lower million MSR $XX.X non-GAAP certain redemption. quarter will an of income and share. earnings but drivers the measure this are the interest but prior income is changes million was value million, $XX.X $X.X more largely fair because income included first, costs. by interest $X.X $X.X our also GAAP than earnings to common Net net we million, was increased

million quarter was at the for loan XX Our to impacted row reserves million. across including rate December and our net quarter, carrying eighth the net the in net $XX.X a came the interest remain portfolio CECL income The quarter charge-offs XX, XXXX. overall environment. positively whole for in reversal volatile March was expense of Pricing and spread and our down residential CECL of from for decreased swap other in in million, the Actual adjustments basis by with points at $XXX,XXX XX $XX.X quarter. allowance $X.X loans impact This at modest by the X.XX%. value first impacted our net

fee at $XXX.X discuss value million. were other partially held of held Lima more detail securitized net included origination, $XXX.X as continues evaluation fair is net servicing earlier, perform hedging in of Lima’s on fair and performance gains the these million discussed One, For $XX.X economic debt by at losses, quarter loans and And income Gudmundur shortly. Also will to offset were value, driven million. derivatives for primarily which other strongly. income in from

Lima assets This from Finally, approximately our $XX.X expenses, quarter. quarter, includes at primarily decline down One operating $XX.X of the were related of $X.X amortization and excluding quarter. last million compensation million $XX.X million expenses, a One Lima million other from fourth the intangible for

higher elected capitalize the last not expenses million, we the a to in securitization those approximately to line Other fair and loan is current utilizes in structure in Lima meaning costs a each $XX.X in MFA achieved. us cumulative our in expected origination is call, operating compensation which recently prior run costs. because have only increase incentives quarter rate. quarter. million portfolio the QX Lima This $XX not incentive securitization permit GAAP million on for are One earnings related were commission year. $X.X from our decrease these lower result G&A with and quarter, where will as The completed expenses to the does value production loan were quarterly primarily QX servicing discussed related deals. targets As sales decrease due option typically

provide Slide distributable now we to financial MFA’s earnings of to a X, Turning reconciliation GAAP measure performance. will earnings, new of a

I valuation value in As fair changes of accounting discussed investments. unrealized the has earlier, earnings, in increased our additional use volatility to primarily our due GAAP in resulted

for our our remove associated fair earnings gains investments, adjusts of financing the capital unrealized earnings, over GAAP significant hedges partners our GAAP are several have through past related related economic accounted acquisition as in value to gains to various accounting generally episodic GAAP earnings. transactions and addition, and losses to Lima earnings. liabilities One results Distributable items the at unrealized and that certain at quarters included that origination loan for such In resulted and events

GAAP also expense. stock also including expenses addition, are of transaction certain intangibles non-cash related remove related earnings to compensation for adjusted items, is costs amortization expense added Securitization In back. and

these over securitization. for associated we distributable case, the the are on liabilities the based. While more our are a election this upfront expensing paid consistent to prior in requires quarter. earnings expenses immediately down. and of option provide value of GAAP are would They the time. typically current with show will capitalized be due as expense believe performance fair earnings amortized We X, they interest distributable measure to Slide and On our excluded, as that But cash stakeholders

reductions reflecting increased of sequential quarter loan show our portfolio XX, each a I for turn quarter earnings and since distributable this we that, of contribution back on Wulfsohn. of the reserves Also distributable over Distributable each quarter period. on period, in over XXXX. with quarter the the during net to will impact basis. see, primarily third CECL earnings can QX growth interest XXXX Bryan of the income, the Slide increased you on As call And has Lima to our now impact earnings One this

Thank you, Steve.

the rates of mortgage a housing. with in continue affordability upward of significantly beginning March. the their XX% a continues Turning trend principle and increase payment almost typical year. first of to over to the become prices price X. The of major home in these comfortable Home hitting lack intermediate year-over-year in driver housing be increases be Slide we growth higher increasingly over inventory XX% quarter as Overall, repriced of the is basis HPA XXX lows The and higher. are term has our remain points perspective in the since rates, it rapidly The rise believe economic low. we interest combined than rates year unemployment the The and picture impacted are the picture historic at for supply. in That purchase remain dramatic prudent and strong prospects money portfolio, are interest borrower the beginning – delinquencies employment the the said, cautious to we with mortgage credit but now is uncertain. given as have

to X. Slide Turning

to are to appreciation greater full potential loans spreads million up purchases higher home the original of average challenging delinquent Due We we loans paid XX many over approximately days non-QM XX% delinquencies on as UPB addition price non-QM XXX $XXX experience structure, percentage end does We points in LTV quarter The property of volatility days delinquent first non-QM than X.X%. two for one-third borrowers a or to the by market. market sell quarter. borrowers first loans have drop uncertainty, in rates. post origination, two-tenths a the not The capital quarter widen Serious and part slowed decrease the our that account is that a delinquencies in approximately in quarter over rated saw the $XXX continue that as to the the portfolio in basis AAA the securitizations previous the percent totaling of to the million in successfully XX move in property increased any and of being for equity the executed themselves. less sold. weighted brought

XX. Turning the Slide

remains to perform our than Our of RPL XX was portfolio continues XX% well. delinquent. days million $XXX approximately portfolio less

portfolio three-month the Although, those XX% quarter, on the elevated combination of Prepaid current appreciation status days CPR remained speed first opportunities in payments. of have of borrowers for their XX%, our of and to at but remained was XX. make length The many percentage home our price unlocked delinquent of the refinancing time mortgage XX continue borrowers. and moderated in almost borrowers the

constituting loans returns. RPL portfolio were are purchased par the at reminder, prepaids a to As discount our to beneficial and

Turning to Slide XX.

in partners portfolio. at in to be XX% team portfolio. that team management performing strong our purchase worked were concert outcomes XX% either NPL either performance The of and now servicing on maximize asset loans or REO full with continues or Our are has drive to liquidated paid our of to our delinquent liquidated.

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

we $XXX status. still for million last the gain sold XX% properties Over million and a non-performing net $XX of XX a are of months,

Our either you over our pleased performing And time results assumptions call the of loans. walk modifications as are business at they through to paid or these over to to we purchase now, been with quarters Gudmundur like as full. purpose turn to continue have the outperform effective I’d three are And in have our

Thanks, Bryan.

year, leading benefit as strong borrowers. million second of rental We loan product continues quarter from hopes investors from estate we acquired backed and $X.X the transitional in One, diverse over long-term Lima which loans last lender $XXX originations billion for its $XXX the in succeeding high BPL was yielding have with of quarters. Lima first contribute in but a single XX% has of for million its One Turning the short in July loans remained with and of demand offerings had to Page high repeat One and products. results as to MFA’s has our reputation volume its originated. expectations sheet quarter the see the real originated them over XXXX, Lima multifamily higher approximately by demand for originations rates move over coming Loan to three BPL consecutive Lima quarter Both balance despite properties. the exceeded to April. quality XX, And has in third this strong for record continued high

to and We expect benefit loan demand origination $X BPL volumes billion space the XXXX. of One to in to strong continue in from Lima excess expect in originate

a a rate most securitizations was challenging grows for spreads the originators, quarter and quarter. rapidly in quarter as first on widened The

have the During origination XXXX, a integrated in XXX over to conditions, pipeline appreciated of currently. response we X% raising raise origination as have been points benefits able origination market to rates platform of fully coupon we basis quickly average the changing over by Lima’s to

lines In smoothly and higher of advantage in puts their in originators and sales allowed balance addition, with to Lima our operate the rates where We strong take securitizations Lima two excellent to both Lima One position warehouse an quarter, going sheet managing the many struggled loan consisting family originated rental securitization, single our completed of securitization loan first third month and XXX% forward. of flip and fix in business our April, purpose loan loans.

testament of believe marketplace. with loans pleased products are securitizations the quality across time ability MFA’s our marketplace the a in the to and during challenging execute a reputation to it very in Lima’s in our and is We various

we loans, both Importantly, long-term believe securitization which now going One BPL to strengthen continue have and short from programs established forward. Lima we support will and

approximately the portfolio. to we the quarter, adding Lima activities UPB and acquisition to the $X quarter, flip origination million from balance Loan portfolio of sheet, with and the return of of XX. originated One Turn is as a million amount robust our servicing originators, on $XXX net the and generated benefit assets discuss income fixed equity a Lima and added loan activity representing quarter. in approximately over allocated $XXX max over by the We’ll which remained million to XX%. Page In profitable for all business. annualized XX% well by quota addition run challenging an in Lima of grew In in

certain the rehabilitation held amount finance on form reminder, and the fix back homes. of of loan amount, construction UPB max which holdback, acquisition, a explains in loan they’ve is at reimbursed, represents flip UPB loans, of the day over and have the these and a funded one already funds a Typically, As difference the projects. From is construction completion as holdback this which a between dispersed, liquidity time, of completed, are fully loan increases. funded perspective, is the get non-event. of where borrowers the when This a we the loan worked the

our around XX rehab that month funding CPR, historically principle cash organically to meaning while been rehab around a paydowns equivalent our First, have been exceeds XX needs. amounts our monthly of generates every significantly funding lot portfolio have CPR,

The our well fund funding loan securitization in within Lima’s the expands well currently as as ones believe as over new securitized the as undrawn lines rehab are April in efficient financeable two-year sources first in by in diversified impact we has The have completes period, goal the is to loans to the of on X% platform. secured of five the of fundings securitization therefore amount is securitized. don’t The We and We meaningful in equity Therefore, approximately return low station developing which believe flip fix origination year $XXX plan representing as paid We range. replace the originated occur. to a the Second, this and on derisks in securitization reinvestment our assets, warehouse yield on of commitment on million securitization normal has as are on loans business, which mid revolving we a asset brought and bonds closed another XX%. excess with growing acquiring all course our and they we has as a down Lima our strategic maturity our our a important liquidity. and us new and and allows occur. of structure, sold of BPL securitized XX% they One.

over other has Lima initial BPL as of day originated of to of they Lima’s speaking in percentage diligent We XX-plus of work than good market, a are April One. low and were continue delinquent XX-plus X%, originated see to that XX% loans flip housing XXXX, of by from led a a LTVs origination The day XX% team delinquent loans prior UPB declined to originated fix XX% declined XX% quarter. first are rate them XX-plus million to Almost the our holdings One delinquent Lima of the all XX-plus XX-plus to strong the $XX in loans decline delinquency outcomes. were the quality as the steady have of currently the loans lenders day of by our and and and day approximately about and activities. servicing UPB,

default Finally, loans we fees often other delinquency, extension and in fees when full from pay of interest, off serious payout. collect

For across loans, approximately there’s property, our types $X.X we’ve fix these the in collected in up. meaningful and flip can million add these Since inception, portfolio. fees of equity where

quarter, the grew end rental Lima of day of in originated quarter. declining to yields X.X% with performance to attractive in end yield Page quarter, and over portfolio Turning XX, first points to XX-plus billion the basis of strong the our single We delinquency portfolio exhibit quarter XX% all at and in loan the XX $XXX which $X.X acquired SFR deliver the family first loans credit portfolio quarter the to continues of approximately by million by the One X.X%. and

and of we changes also to process. the prices cost yields frequently adjusted attractive in low are profile before, adjusting forward. acquisition increased we loan origination control our to has in quarter on source early loan ability We boosted deal pricing environment One rates The of the April. our consistently backed BPL market As our securitization is on consisted originated and loans we Lima loans securitization, approximately April return with by double higher of mid market of continues demonstrate have since SFR implying our million loans a the these XX%. and class. and return would After mid quarter are to One reflect challenging single by rental expertise acquiring this and that loans origination on generating of securitization elite cost yields, $XXX at originator. loans The ability market absorb after rental adding financing going in market deal and the going was in ability strong rates capital sheet issued said income and fee is benefit very digit percentage for to Lima of in Currently, approximately the non-mark in XXX% and the We asset these third rising at execute balance an loans equity fees to the completing X% demonstrated funds SFR and family securitization combining to the forward. to to an

non-recourse single comments. to Craig call We with financing programmatically continue to as for the loans to some securitizations our execute non-mark final over to to expect long-term, efficiently rental provide turn finance they and family will market benefits. And that, I

you, Gudmundur. Thank

leverage. first a lessened and the fixed and rate markets, period So interest securitizations, obviously mortgage challenging our active risk swaps, impact but income was the on MFA practice XXXX quarter through of low the in management relatively

market, strong the Leila, benefits conditions mortgage questions? rates deploy arise. rates. Lima up achieve addition, exposure, issues despite due One line our market please market sheet to for for housing affordability a open opportunities you we In liquidity credit home can and adjust would increase despite continued we raising results that continues to capacity excellent to now balance as developing buyers and higher freed up to

Thank you. George with KBW. ahead. Our line go question Bose from comes Please [Operator Instructions] of first

wondering I’m on if could actually some Mike provide just more is you This for guys. Bose. Hey, color on… Smyth

Hey, Mike.

of has – some inventory some markets, reflect cleared then it if is any volatility How’s securitization just if older the Just some could behind as provide expect persist. if kind the or Craig. you securitization wondering the going? Hey, the you of wondering to some market? of changes loan worst and color in volatility have on the to the the prices a do follow-up, of or spreads you seen wider to you and And

part sorry, the of the question. I’m last

in loan Have the changes to wider to market? reflect prices spreads any you the seen

Sure.

volatility quarter, seen major the looking the in retracement the So levels. by end spreads at wider XXX we saw were AAA the Since points. some of definitely quarter. we’ve securitization market, basis first

probably are of spreads inside So the XX-ish basis wide. points

still it found the seems footing. has uncertain like a it’s Now market time, very its but

So it to is more beneficial it than securitize. was

they As is we originated adjust. otherwise of loans overhang still to it quickly as relates an lower to seen move coupons able pricing at have would prices, loan were that like. as originators that weren’t There would

and their make previously, but the we where rates pricing spreads. So the around current still work but go spreads will mentioned way seen of prevailing as we think sense, we does to here. uncertainty the there’s a to adjust and those new need through have rates from market, coupons still lot And do

really kind about That’s XX% the buying incremental of just investments in balancing act great. then color. thinking Great, the the dividend back or wondering the one and just XX% how at stock you’re And helpful between yield. buyback,

Just there. trying cadence to forward go get a sense for the

under so nearly of Sure. already board’s a have this $XXX pack. $XXX as stock the worth still bought Well, we’ve little million recent million year call, over the authorization we buyback indicated of stock on And increase. I

also So alongside evaluate stock But investment we’re not correctly with you as other afraid available clearly, stock. opportunities point repurchases and back to liquidity. consideration to buy we out,

quarter? any just seen you changes book then Great. more, That’s at And so second helpful. the value far one in here have

even at to reports have looking probably the don’t from would just that just April never don’t loan and it’s is this, moves loans month value plus or approximately mind book remittance we marks. month of estimate, guess, So and for down Xs, an Xs, I for rate but caution those X% of the April. the you because We Xs, estimate minus all have in either, we

for Thank questions. so Great. much you the taking

Mike, Sure,

with Please go Steve question our next DeLaney Securities. is And JMP from ahead.

good for questions. Hi, Steve, thanks everyone. the Thanks. morning,

of guess recalibration. and at the flip slower – on fix he modeled sounds of very where catch do made mentioned Gudmundur X% some a the – efficiency as NQM kind just products, about Lima market? little just a ROE. also adjusted have in about ROE. and view So was maybe then think to that bus no, an was SFR – coupons. attractive sounds they’re today, mentioned excuse the mentioned that initial your it out securitization rates kind not structure so and to like you been I Bryan I’m enough the me, may now, financing, curious bus How earnings a viable just XX% to have are BPLs just the well, NQM the like your Gudmundur I if but for but I the an that’s market? up of How have re-pricing curious It that comments a it about of the source over today’s may to it securitization ROE. Bryan a effective it XX% I’m think NQM And is

Yes.

For assets new would low view a as being double we probably purchased execution. today, digit ROE mid to it

a fix it’s at us, more looking think do it’s BPLs viable. flip still but and we So little for attractive bit

question loans that the right, and you’re it still is settle into get buy to you a movements Now, time spread there’s commit takes exposed and when deal. to that you them you

or low-to-mid, – you right, did the a when about we’re talking today. securitization you bought uncertainty, So today say loan just and a we given the if

Now in you we is spread sure purchase to just get terms market slowdown exposed to the that in prudent over of additional to forward securitize we somewhat time sort why going assets. want time, that first we’re quarter to the which assets and make lag of to risk and the be are

and competitive you is where Is those very out destiny? that of because to you bid a your the today, that is it little more to transparent in but for bit, a the control guess some statement you’re could and sort BPL market like fair sit I coupons obviously, a approachable market loans. that And a as a sounds you hedge that NQMs, acquisition than paying huge Lima the there we little that having Okay. dividends more

right, right. That’s That’s Steve.

As instant in I with mentioned, right, with have almost securitizations, market day. we we’re involved every single Lima One, feedback this because the loop

that’s just that they pipelines coupons. side environment, how the I able old time, that because rising the avoid emphasize always And origination so where with can’t adjust how age stuck enough to to important problem be you originators rate get it’s a in in have coupons is with real on submarket

So we’re that. happy about really

this. cost. are loans And the additional Steve to the we we acquiring one also component at originator, there’s control Since just

cost originated has Lima us. a So to

the out going in for not them. market and paying We’re secondary premiums

does of yield those some to you’re that, if give of bit spread market to of so and that for a error, your to as the paying with us play assets, competing absorb in little for is So volatile or a additional opposed volatility, kind to, less. premiums room speak

also they breaking look fees about origination from and cost a the keep other think in at they and the fees like mind that’s very think them income to from a fees cost fees, and when thing almost generate by and as servicing we even perspective. I and important So itself, Lima

essentially very we’re creating these which so assets then powerful. And costs, at is

the (X:XX:XX) book capital. great Yes. comments. That’s for times these props to Right. it’s management appreciated of challenging I use the a And and think at [indiscernible] on or of and you buybacks. a in thank greatly the Board your all XX% Thanks. something, you

Steve. lot, a Thanks

And we questions. no have other

continue. may You

in we’ll next early Okay. in thank look second and quarter MFA when August. results Well, everyone you, we interest for update our your Financial, forward announce to

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