Two Harbors Investment (TWO) 9 Feb 232022 Q4 Earnings call transcript

Good morning. My name is Sherry and I will be your conference facilitator. At this time, I would like to welcome everyone to Two Harbors' Fourth Quarter 2022 Financial Results Conference Call. All participants will be in a listen-only mode. After the speaker's remarks, there will be a question-and-answer period.

to conference like Karr. to now would turn over the Maggie I go Please ahead

and call Investment on to Harbors' morning, Nick Financial our welcome Good everyone, Officer. Executive Chief our Mary morning Bill XXXX Officer; Riskey, results. President Chief and this our fourth financial to and With call me Chief the Letica, are Greenberg, Officer; quarter Two discuss our

the have SEC's release release and at twoharborsinvestment.com. we In presentation, in conjunction as provided our our are to information measures, presentation been this call earnings a GAAP filed press reconciliation and today's non-GAAP with review and of financial and of with earnings today's the The have to you urge available we as call. with on website, well page Investor SEC the associated Relations website

Page include from our As our not subject to Except does risks as so. and a presentation and required to SEC. reminder, our These that with and any today Harbors expectations. differ be are Two of obligation to comments results Form filed reports in disclaims law, statements, are cause do by on the may forward-looking X uncertainties may materially which forward-looking the statements update subsequent will and XX-K described

will call I now over the turn to Bill.

Good to Thank our fourth morning, welcome Maggie. everyone and you, quarter earnings call.

the XXXX and as I team. Before on we from welcome before of XXXX to Head our have Carr couldn't Relations. to like stay Investor but I her worked try Maggie are she away would us to begin, back something leaving Maggie with to back delighted new,

outlook around XXXX. as market results our the Nick our well will Mary color will This as morning. will provide information environment and I our portfolio. discuss and financial provide performance for our on

results. turn Slide for quarterly our three an to of overview Please

at return. economic XX, a book XX.X% share Our representing per was quarterly positive $XX.XX December value total

for was available Our $X.XX distribution share. earnings EAD or per

reflect necessarily complicated is discussed not and our portfolio. of As metric calls, does the earnings on earnings EAD prior a potential we've

are representing investors the new market our when return called average discuss EAD preferred which number portfolio X% end excluding income of equity. up the assist that share quarter, detail we income, Mary of her changes net common remarks. of a through market-driven value thinking a fourth introducing value annualized we our $X.XX Post a in end, and quarter, more XX.X% on was was changes, value quarter view per will this in In base To metric quarterly and about accrual. our excluding book of provide further announced value returns. our January dividend this analysts will earnings potential, market-driven the

inflation Slide rate that already turn to four; and many say describe of any been the and more I throughout add year. volatility used except market too to will superlatives investors consumed try have environment to not Please to interest the XXXX fears

Although motion, rates hikes. continued slow and fed clues to swiftly. about additional magnitude of the fed increased interest Chairman fed Powell's act once provided in week's pace rate the comments and meeting Last

mid-year. Interest working consecutive a as funds have to retaining readings rate Fed come in the with Fed's several X% inflation it for some us may be anticipating settling While still market rate under that off have seems the quarters. caution, just down actions leveled by expectations

However, mortgage spreads have volatile. continued to be quite

the November after July, along on and Bloomberg spreads As on best have ratcheted that seen for record September the MBS last the in of with and US again seen RMBS returns one, October, so in months six of in excess Index in we significantly months. January, figure three widening in tighter

XX-year at points Due at the basis XX respectively nominal are and the high current during points spreads Nominal history. by and XXX tightened option quarter. points adjusted the of volatility, interest spreads RMBS coupon continuing still basis to for rate XXth basis percentile XX

figure On option trading are averages basis close seen spreads adjusted their to XX in the can long-term hand, longer as considered no other and cheap two. points at be

sloping three, displaying Finally, you downward are figure the that can in shape. see coupon the spreads typical their on stack

believe spreads, continue relative value, wider have nominal to more because that duration because coupons only higher also and option but not of sensitivities. shorter offer We they adjusted

MSR large with we MSR but an hedge attractive our for an a near part core, mortgage it At RMBS basis, to to to current are our When the underlying coupon, spread MSR are not plus the have our relative hedging agency mortgages REIT. benefits the MSR have as be of strategy. the does acts

the high MSR cash this returns. of money, with points upside with of flowing our half think we hundreds further our MSR capital basis there's note at Today, allocated historically With our very speeds low asset prepayment rates of out returns. is to levels, the on duration to low attractive

that volatility ahead, Looking market and RMBS we MSR. and anticipate follow for inflation lower tailwind provide the will a

market to advantage when year market returns this became exposures are While managed adjust ready opportunities the surprises the cheap portfolio in in of There saw benefit both mortgage actively they mortgage to and stand we take always to our extremes as spreads, extraordinary. conditions our and we rich arise.

in With portfolio slow believe speeds and MSR, and is we very and the market well in XXXX. for our environment RMBS wide expected current positioned spreads

results over it to detail. Mary Now, I discuss more financial will in turn to our

to and Slide five. Bill, everyone. morning, turn you, good Thank Please

basic $XXX.X comprehensive For the per company fourth of income weighted average million the share. $X.XX common or reported quarter,

December the Our positive quarterly of compared book results per to a return as dividend, was value in $XX.XX $X.XX September common XX.X%. economic Including $XX.XX XX. share XX, at

which $X.XX the preferred as our to ratio XX% well total equity reflect lowered of book preferred common to XX%. approximately spread tightening and primarily value mortgage stock repurchase million from X.X the as to of stock, of Results shares contributed

I'd Slide characterization re-taxable to distributions. six, XX, your to of where the have tax call dividend customary Slide appendix to we included turning our income like attention Before the on and information

tax refer to information website. the additional and section the the distributions of found the dividend in please For our regarding treatment, Relations Investor information

value This defined as and mentioned, retirement introducing with Bill income, excluding income changes, market-driven comprehensive the income as market-driven we value market-driven of six, and portfolio, preferred aggregate expenses, new this non-recurring quarter, value is metric; new the Slide operating the and gain a to changes on taxes repurchase metric Moving shares. total are changes. associated excluding

unchanged. concludes servicing portfolio servicing rates the This of accrued interest and incorporates the and price interest fair changes. into day based cash expenses are assumption ending income, portfolio prepayments, the changes which factored measured in flows, realization on previous that value actual changes spreads, metric daily and volatility, Price are

market-driven This new would you applies expenses be and if can EAD think to as what day. In changes. all is and associated of portfolio as sold derivatives operating being rebought applicable we our and taxes not net MSR, RMBS, value essence, with this measure and of every recurring income

market-driven table As you value in quarter, can the representing of changes see this was share annualized our per $X.XX XX.X%. return income page, excluding an this on

contributions in be reflects returns. our It the our changes, the and the prospective We hope investors environment. contributions complimentary current management's outlook value are to introducing view our quarter excluding deck, analysts will earnings our portfolio this in market-driven understand current the from we this EAD metric new return return be which that is metric metric on and as this of better on going deviates power, slide return instructive to market intend later and help potential the to forward meaningfully

compared turn $X.XX to per quarter. Please available for Earnings for Slide distribution the to seven. was share third $X.XX

whereas earnings was this an are last EAD As the the seeing another prepaid we on EAD the depends expected. non-market call, price, X.X%, the historical communicated our decline quarter this return speed purchase of we the based low-to-mid annualized measures. represents digits. in returns on in EAD on market double date, purchase quarter

this on of due rose holdings, size by income rates by cash Likewise, RMBS. and expense of decrease drivers to on higher average interest by the portfolio. million, partly higher $X.X balances In in financing terms partially increased borrowing was quarter, million rate of EAD on a interest lower by a our offset on the MSR. offset $XX.X agency borrowing This higher primarily balances

Net revenue increased of as result higher servicing is float MSR a income.

revenue offset futures million declined amortization dollar realized on between to to of a lower as as notional $XX US drop. cost lower EAD refill. by that as a balances to deliver original partially declined an calculation pricing being income implied the compression the million result roll Losses increased Treasury as favorably on higher CBA average almost servicing spread due we the result yield. well However, based price $XX.X

next associated we Finally, due costs to we In servicing the with several sub realized as expenses than transition MSR our for continue quarters servicing that higher we be anticipate accordance de-boarding plan, to RoundPoint. transitioning servicing articulated will servicing higher expenses portfolio. our average previously to these with

considerable to the achieve savings closed has fully expense has our portfolio We RoundPoint and acquisition of once transferred. MSR expect

that agencies points had amortized to unamortized Turning portfolio coupon lower yield of premiums. needs sales by increased to primarily agencies the eight, of and driven higher premiums lower X.XX%, XX coupon basis Slide high with purchases

our We in also on of securities our agency assets. experienced total proportion CPR lower portfolio higher had invested higher and yielding a

Our quarter non-market purchase X.XX% on reflect net A and the other financing. table in to that compared quarter yield XX the the realized spread calculations purchase historical basis in to points rates speed by in on measures. narrowed to as based this X.XX% reminder date, due higher prepaid the the prior price, portfolio also

to to Please XX remains diverse signs December no stress. capacity funding market XX and from increased marginally sheet of financing supported. quarter for turn liquid to a for MSR of with end. agreement access points on Spreads repo total XX RMBS basis at repurchase XX sources the unused in to $XXX Slide September [ph] nine. maintained balance approximately We points MSR Funding well financing basis to plus million with

the Nick out X.X our equity average Please times to at Average portfolio, the I'd at to fourth in economic of from hand the quarter times XX X.X turn end was to Slide the to quarter compared the XX; third of to to debt I X.X December times to X.X before quarter. discuss note times. declined call that third like our

I will to Nick. over call now the turn

Thank you, Mary.

ending in we of after sales the billion. As into about purchase reflected $XX.X added about moved XX% stock, stable the over specified in Mary quarter $X.XX our The tightening Continuing partially equity ratio. quarter, portfolio more as capturing on Bill debt decreased of attributed $X Slide predominantly down earlier, noted, pools. to our quarter to XX, million position, book decline the the in be can neutral from The portfolio to which MSR a the fourth the value. the spread much X.X billion of to common at of was our value shares decreased balance noted fair preferred of

spread XX, moved non-parallel risk interest page, parallel is XX shows section into one coupon are Slide we I the quarter, across more to exposures and current and in we reducing low. shocks sensitivity By over exposures top turn brought neutral a leverage that onto case, rate Slide virtue into the point quite The as positioning range. Before the appendix. historically of metrics our down which out also has wanted been our our portfolio our

both Slide to performance XX; by through for pools. having figure from Turning fives. RMBS benefited the two TBAs We specified and concentrated of positions shows in fours coupon

up OAS. We the rotate and continue pool positions, in both portfolio's in to in increasing yield coupon nominal TBA

our X.X to specified in Xs. Xs from TBAs added in We pools to X four to and

X% Mae over speed more the you ahead, performed over we our in of even seasonal range wide in down we returns why coupon better portfolio on the Higher environments the repayment is of months slowed X.X slow an showed quarter this slowing to move up we and prepayment see anticipated last Fannie quarter. CPR. and by graphically provide prepayment assumptions as coupon call. quarterly XX% came in coming last As anticipate XXXX. RMBS the can report throughout figure of speeds three, speeds prepayment down speeds slower with slowest in speed The stable XX-year average in a

slow captured multiple The price the runoff. unchanged book flow finished billion month levels, to and of CPR. speeds January strategy. book rates a times. portfolio three prepayment strong $X.X declined by prepayment three MSR $XXX in of recapture UPV half of purchases prepayment the CPR. X.X which decline. continued and for the mostly are provides channel The rate tailwind billion, was between the and a to These Projected are speeds XX, at three at of X.X historically offsetting as with MSR Slide book our Notably, The

XXXX annual over Regarding a MSR increase the at prior record XX% billion over year. a UPV, just worth noting that set Supply, volume transaction $XXX it's

A already XXXX market and supply. in far, have So in developed. been with strong demand the supply billion imbalance $XXX over MSR very interesting has volumes

have volumes origination motivated and risen have are sell rates companies As many MSR. mortgage slowed, to

than same have a whom on touch their single back to time, more the from holders some point. At publicly large MSR the market, step announced have customers they decision with focusing

look may opportunistically we allocate of MSR to this half all in the bulk some purchases Given supply, capital XXXX. to first

both Slide and composition our to last static XX% projection a our for XX chart capital or XX%. hedged XX. to XX% of We this XX%. half estimated what of introduced remaining available that capital components show estimate portfolio capital return with to return top on to not is the estimate to of quarter and We allocation of return transparency is allocated with provide primary this static slide MBS market, merely is basis. hedged to our equity MSR common specific The in the to about our a turn around a returns are Please portfolio strategy a of meant to portfolio. The allocated

in per shown common static before to to the between harbors, portfolio half for specific With XX.X% our with the lower on after of capital expenses, structural of equity leverage portfolio returns chart and the common top our focus is XX.X% a slide The allocation estimated and share. to estimate the return portfolio. this two applying section is

effect acumen. convertible return price selection, the giving that to include a to stock, After tightening static of XX.X% potential or to do quarterly to our hence asset including notes any share return believe hedging not mind keep falls do of do per to team return any and $X.XX include that benefit due management, not on include equity range not $X.XX. allocation, potential security from Please or benefit spread common any any the due potential asset the These XX.X% loss we in widening. skilled static preferred spread prospective estimates these estimates in and changes and

think acquisition Finally, of transfer are increased the market about the MSR benefits RoundPoint environment for the we these ahead well opportunities estimates arising XXXX. revenue savings any very do is not In and include portfolio closing, from our and of from or portfolio. in excited cost our positioned we

will you any happy very have. joining much Thank now take for be and might us we you to today questions

you. Thank

We session. will Please proceed. conduct Doug Suisse. [Operator is Harter instructions] a from now Credit question-and-answer first Our with question

Thanks. help potential. reconcile the return income value Hoping ex disclosure, you could market changes the and your new

This of potential. over quarter earned return kind you your

Just those to of understand what that there how think the kind and going is numbers trying difference to two I'm forward. about

Good Sure. Thanks for morning, question. the Doug.

static is and So look compounding daily prepayments. daily is spread and numbers forward actual many those why there includes are be will and whereas this XX metric changes, daily reasons interests different. Slide flows calculated a position cash changes,

Okay.

to that So, converge And over of that board -- I are how will the about two metrics setting a guess they kind those they're I they along level? historic, does always the of then kind management time so guess that is sort or would a each towards lead of importance could, would structural of dividend differences terms of lines each other? of think in difference

point So the Slide at is estimate. XX in time

mind one level the etcetera. So we dividend, at portfolio quarter with With is expectations. have is than supported dividend in and more value and the current dividend return shown changes, We regards sustainable the the set on Slide based this believe it as XX. range by we on differences will to book

decisions dividends many always, that factors of including well static sustainability requirements on and estimates on the ultimately redistribution future level As makes as return our and decision. final as directors board depend

income changes market day string day. new spread together. day and Good the XX take that excluding again changes and value Slide could those compound with -- and Right? morning, the it portfolio If shown -- calculate day. them metrics do calculation every add everything Slide that sell So changes, Buy changes, earlier one the and if together position I calculated Doug. the is XX, give The every thing. number just driven would market and then every every

the that's the looking next by is And up be the if is those time, compared so, which which with market the ends what would changes a which then happen were numbers XX, same backward value excluding with for and… to point static or the in portfolio as the being the way. income in market in looking, three two months, driven Slide forward nothing

world don't changes. nothing live a where we in But obviously

be be the day, the And -- the it if would on then quarter number at portfolio would the as same first we and our of also EAD. beginning bought sold that and

helps. Yep. you. Okay. That that. I appreciate Thank

with Securities. is Our from proceed. next question Trevor JMP Please Cranston

the on that. excluding Hey, new thanks. One, to follow market you metric, up from curious income the expense changes, I'm items line. specifically exclude value I the one-time trying operating understand about were

there going the expense that -- line there anything due to the adjustment line to is servicing a item? So the operating in else is transfer the or one-time on that's charges primarily is

expenses. included And from The are as as items with those are acquisition recurring transfers non-recurring are are two that excluded costs that related EAD in and well servicing note non-recurring I associated measures fees. operating operating just RoundPoint the that legal are same No, certain the would consistent.

Sure.

sizable sense. about capital MSR think to recent be you'd some of makes deploying bulk sale, MSRs. and your are you you how That And Okay. then maybe purchases discuss to -- up how Thanks. pending you're capital there the potential MSR the you'd sort capital, that portfolios potential how generally any you take then with -- of purchase allocation that and offering high come respect to can about large if talk willing how for how much pools

question. That's good Yeah, a thanks very that much for very one.

advantage was demand currently think of the is exciting main we the balance, reasons the is what to able which and to a One take be market. supply for in interesting existing capital of raise really and MSR

at what The the did attractive made UPB prices. we capital and portfolio $XX we raise, term spreads actually of very a acquire think to of are that that earning returns combination which MSR comments surrounding the capital on through we to sign while as well the sheet a start packages. Subsequent a look billion as purchased economic MSR at $XX some trade essentially placeholders course continue of of that deployed MBS as date is we we to billion, we already

of MSR in available the lots There's with market packages. today

As more alone than said, January and billion all there's been in more the we're time. in coming of market out Nick $XXX the UPB seeing

there's think packages. to really those there. some we So, some interesting continuing of opportunities We're on bid

If allocate how sort MBS. you MSR at see with can XX, we you Slide of look

of the $XXX And if which much to raise MSR $XXX to how -- additional were million capital into deploy into so be MSR see to support of apply could to, you also thought course, might all attractive MSR, we MBS it if that market we to was in were on our out we actually capital depending of redeploy can also. levels, do of million which value. some we And that range really would the

helpful. you. you. That's Okay. Thank Thank

Our with Capital proceed. from is question next RBC Kenneth Lee Please Markets.

Thanks my morning. good question. for Hi, taking

as very question metric, be we're that's market money there. more the to get be you market-driven going a that. fair way one ex mentioned since We capacity of backwards your would capacity Just yields on that income assess paying it value wanted dividend when assess to that changes good driven excluding say trying is Would forward to value just changes. Thanks. new still income returns the dividend that or the, the the earnings to potential new the static power thoughts looking, on

Yes.

a that's I fair think assumption.

of macro terms that or hedge hedging any point? particular of Got then strategy Thanks. -- you. Great. against in you you're in terms market at lower looking to scenarios the are sensitivity have, there spreads, the to that And the this

as is supportive Nick in This really certainly our the what for to question. Hey, the comments. very we the taken a and neutral noted has noted Letica. as market we Ken, strategy -- we of it call, No, stay, we've Bill trying while leverage thank position to believe been the we're it's is and you

good mortgages a -- attractive look but an a little the less on bit look basis, like nominal OAS basis. We on

trying to out rate and rate are of stay, have wide We scenarios do interest scenarios. terms typically balanced in and of variety very as we hedged of interest

right that So looking we here. for are specifically there's scenario no, there's nothing, no

into by still scenarios. across market the as injected market new the but, evidenced are report Friday a variety uncertainty is of payroll the amount think some, last out came of to hedged We we prone well some that volatility, that

there. Very you. Got helpful Thanks again.

George Our Bose question Please is KBW. next from proceed. with

Everyone, good morning.

matter slide, go assume you're one returns if that X; is Just, I back you, wanted doesn't hedging futures, means data generate to on if that so in guess right? really it with the in terms versus more swaps now of this that Slide

Yes, that's correct.

MSR comment okay. on, suggesting? suggest, and neutral that kind your about ways other positioning, you're in that of what basis And being Great. then now being of so risk through the your does is So, is most in hedged

thanks No, Bose. question for the

we the that But, -- we've between the naturally more two know, hedge degrees we strategy MSR and terms down each taken with as spread we we have noted, us the of think neutral to you broad-based time. of risk a risk As parent that is we and I to that as along have, our varying that those also risk manage MBS, you point our over other kind have into historically think -- exposure in what classes. asset other

and in I a of the in couple Nick hedged are our Bose. past MSR RMBS the With our comments is a than add far is mortgages decoupled in away current two we in hedge needed so the the which has the right? ways my coupon, piece that And prepared that. it that very segments, X.XX, piece number with that rate Slide remarks the portfolios and number, MSR more on of being on low to into I'll current amount coupon show is which some from between mortgages, this why terms by position now and itself. mentioned mortgage to the been XX

in changes XX, of Slide at on portfolio coupon this sensitivity half look you portfolio the value is the sensitivity if bottom sensitivity right, book we spread current mortgage there show you see where If to our parts or depending on move relative the down components you a the the where and to basis point X% up see, of slide, the XX themselves. two

with next from question is Our Please JPMorgan. proceed. Shane Rick

this guys for you Sure. taking morning. my questions Thank

back guys look way you historical got earnings well. We've would that consider by two least quarter, historical metric chance put quarter things so publishing at of but any rate. at perhaps be we the sort number, it there a would an years fourth helpful develop as really to can context new is in run Mary, First, the

and and are of distribution of terms about how things in the purchase when -- guys legacy much market That's purchase portfolios coupon you curious of lower the acquisitions I'm there in question bulk you because a request of higher be then selling flow risk. coupons think out look and we deals out might the actual at making today MSR like with of that ultimately higher versus with prepayment coupons and the potentially

the Thanks that metric backward of this measure, Rick. to will this morning, for you quarter determined feasible, consider continue Good be forward, it but that just we for produce a we but if regards hopefully questions. did to each years With isn't publishing helpful. couple going looking

there I of And are in your for the market packages question can Rick. take coupons. Okay. too. about today, We're the different looking Good question MSR, morning. Thanks

the you As three is and last gross over to this much in two years three and wax the half servicing, two of of variety, a know, been quarters has which produced coupon range. low the

are is small market the difference between meaningful. at changes money. also to the they But the Although more higher wax, sensitivity sure this not was numbers agree prepayment I'm because in suggest packages with that the risk. we the to with are starting you say small closer in ones more I'd would prepayment that. rates they're point I have have maybe higher when some see prepaid

turnover the correct, an in and I we're at think is prepayment that historically we're speeds. slow that think, is data do this speeds, historically showing We with environment -- view slow

CPR As slower experiencing February X.X be even that's think we January and Nick that that. said, X between is portfolio and our in than could

to very, is that projected or through eight by the all Everything in CPR. the you very is It's coupons, all that's, coupon course, existing And phenomenon about more low what about aren't is between, from different higher seven, paying five, and mortgages The speeds four, six, general much universe. the MSR the So be. speeds faster. slow. thing less the about them of are MSR whether way,

are bought as you speed expect which interest higher range, long it's are ones the more So pool then $XX we speeds coupon think all low one right? to any up, most returns. attractive rate coupon that variety and as open right, that's we the of relative higher very an we're was all The the that even if and you variety, and value. we of offer MSR go not And about bought to, which ones think those. coupon to offered value of fine, So to and purchasing pricing, attractive in billion within that

future risk. market the point a again, us a coupon? bit give sense, XXXX, that to bifurcated a seat, or in Got for two at dramatic a of that pull next some where terms just from of I divergence differential, is the for thread again, is and we suggesting appropriately you're the that the can to highly point look, world What our And we it. little in have How some pricing pricing years there's is pricing. speeds a more, sort MSR just the in it's you imagine on XXXX, because in at vintage don't think significant transparency imagine and XXXX scenario where loans pools XXXX and

Yeah. I'm me not I understand a let but question words. sure the exactly, say couple

So on know was the one oh, say. hand to what I going I the

benefit the in not and forward market, difference speeds important is which of and the is of right? So that were that so XXXX days created HPA coupon, saying right? course, of turnover in And were market up part loans that's significant had and the prices. XXXX the into that is have so an significant leads these but priced also although versus you of I XXXX, it, to HPA between a And understood significantly in run too, think well it's again, faster XXXX just understood XXXX, part the

generically, depending pool, said, the lower always gives the the servicing four at pools coupons, Just rule as characteristics, of everything, on on, multiple, pricing is higher everything, that stuff I coupon coupons terms where priced the say the right? with And coupon coupon. just on money say X.XX the say depends relative of but things oftentimes as In a distribution the Generically, you higher and it around a at again, and a see understood. are. right? to on portfolio thumb, depends that's I you like with is where something for between depends of as I'd are our differences where of I range marked

question BTIG. Please Hagen from proceed. is final Our Eric with

acquire you further MSRs around you morning. you in MSRs, opportunity a financing? bit think the then can talk when of thanks. recapture cost you in on how the negotiating Maybe could market? the this that bidding Hey, about little and on that the have the MSR, availability attractiveness think Good just going kind of about control you And the to debt about relative do bulk

envision with lever do packages, you the or of Thanks. Like, scenarios using MSR whenever where you that's full available you the rate leverage advance wouldn't to are you bulk maybe much? there sort to look acquire as

Sure. Thanks question. Eric for that

the recapture. you're of on there purchaser so aware, So to sure in the are first the market to, I'm out ability that as and there there are for recapture I'm some in and the alluding forth, bars sure to restrictions you're question terms solicit portfolios where

of or That is ability the whether course of not, of part the price asset. it's present

think history to loans good to So, backwards our seeing of to very is in a we portfolio. we be much worth recapture able be and able capacity have looking how that

recaptured loans. with We to our have, sub-services had acquire agreements

that's market know the include how excluding include and explicitly can we is days those that we most not of flows participants surfacing. or that from the know these that market velocity worth, price value or we what so the money much And think are cash and I in including and

part of just don't it for view price it's other the or than -- in we it price, adjusting negatively just really just So negotiations. positively that's the right? So

Your I I'm second about sorry… was question what forgot,

The attractiveness of using debt and leverage.

Yeah.

So, drawdowns forth. we spread question your a comfortable from either movement, an manage possibility feel so amounts and to really to our the in overall of rate kinds, interest movement risk various from how liquidity of and

to both sides, about we think need RMBS we rates whether we And to financing our protect how with in RMBS strategy, so, have MSR against cash we hedged with with to when that think order hold consider those on extra ourselves capital amount much we and drawdowns. adequately it's of or allocated hedged the

our see have on and filing how slide the we some in we strategy. much extra full look you do much as about terms liquidity, the outstanding capacity and much of each to we so after is that have and equity in position based XX numbers much elsewhere say it's the see our allocated what as And funded can how is attach figure to use answer is, so much we minds in question cash extra you are. of can And And on assets less that forth debt financing do portfolio? in our easy what you can how those there we and to how out

reached comments. session. have end to I our the closing for back We question-and-answer conference of Bill would turn over the like to

Harbors. your Just thank for you joining of everyone and for want the everyone today to Two support call thanks

will This you. concludes conference. today's Thank

you thank and time this at lines your for disconnect participation. may your You