MFA 10-K & 10-Q changes, risk factors and insider trading

•Our investments in residential mortgage loans (including BPLs), residential mortgage securities, commercial mortgage loans and other assets involve credit risk, which could materially adversely affect our results of operations.

•We have experienced, and may in the future experience, declines in the market value of certain of our investmentsinvestment securities resulting in our recording impairments and other losses.

The results of our business operations are affected by many factors, a number of which are beyond our control, and primarily depend on, among other things, the level of our net interest income, the market value of our assets and collateral, which is driven by numerous factors, including the supply and demand for residential mortgage assets in the marketplace, our ability to source new investments at appropriate yields, the terms and availability of adequate financing, general economic and real estate conditions (both on a geopolitical, national and local level), the impact of government actions and changes in the U.S. political environment (including as a result of the continuing impact of the change in administration or a potential prolonged U.S. government shutdown), especially in the real estate and mortgage sector, our competition, and the credit performance of our credit sensitive residential mortgage assets. Our net interest income varies primarily as a result of changes in interest rates, the slope of the yield curve (i.e., the differential between long-term and short-term interest rates), market credit spreads, borrowing costs (i.e., our interest expense), delinquencies, defaults and prepayment speeds on our investments, the behavior of which involves various risks and uncertainties. Interest rates and conditional prepayment rates (or CPRs) (which are a measure of the amount of unscheduled principal prepayment on a loan or security) vary according to the type of investment, conditions in the financial markets, fiscal and monetary policies and domestic and international economic and political conditions, competition and other factors, none of which can be predicted with any certainty or is within our control. Therefore, a period of high interest rates and flattening or inverted yield curves, such as the conditions experienced during the past few years, which may continue in 2025,2026, presents challenges on our ability to effectively manage the risks associated with our business operations, including interest rate, prepayment, financing, liquidity and credit risks, while maintaining our qualification as a REIT.

Our investments in residential whole loans (including BPLs), residential mortgage securities, MSR-related assetssecurities and commercial mortgage loans involve credit risk, which could materially adversely affect our results of operations.

Investors in residential and commercial mortgage assets assume the risk that the underlying borrowers may default on their obligations to make full and timely payments of principal and interest. Under our investment policy, we may invest in residential whole loans, residential mortgage securities, MSR-related assets, commercial mortgage bridge loans and other investment assets that may be considered to be lower credit quality. In general, these investments are more exposed to credit risk than Agency MBS because the former are not guaranteed as to principal or interest by the U.S. Government, any federal agency or any federally chartered corporation. Higher-than-expected rates of default and/or higher-than-expected loss severities on the mortgages underlying these investments could adversely affect the value of these assets. Accordingly, defaults in the payment of principal and/or interest on our residential whole loans, residential mortgage securities, MSR-related assets, commercial mortgage bridge loans and other investment assets of less-than-high credit quality could result in our incurring losses of income from, and/or losses in market value relating to, these assets, which could materially adversely affect our results of operations. This risk may be more pronounced during times of market volatility and negative economic conditions.

Before making an investment, we typically conduct (either directly or using third-partiesthird parties) certain due diligence. There can be no assurance that we will conduct any specific level of due diligence, or that, among other things, our due diligence processes will uncover all relevant facts, which could result in losses on these assets to the extent we ultimately invest in them, which, in turn, could adversely affect our results of operations, financial condition and business.

While the determination of the fair value of our investment assets generally takes into consideration valuations provided by third-party dealers and pricing services, the final determination of exit price fair values for our investment assets is based on our judgment, and such valuations may differ from those provided by third-party dealers and pricing services. Valuations of certain assets may be difficult to obtain or may not be reliable (particularly as related to residential whole loans, as discussed below). In general, dealers and pricing services heavily disclaim their valuations as such valuations are not intended to be binding bid prices. Additionally, dealers may claim to furnish valuations only as an accommodation and without special compensation, and so they may disclaim any and all liability arising out of any inaccuracy or incompleteness in valuations. Depending on the complexity and liquidity of an asset, valuations of the same asset can vary substantially from one dealer or pricing service to another. Wide disparity in asset valuations may be more pronounced during periods when market participants are engaged in distressed sales.

The newcurrent U.S. Presidential administration and Congress may propose and adopt changes in federal policies that have significant impacts on the legal and regulatory framework affecting the mortgage industry. These changes, including personnel changes at the applicable regulatory agencies, may alter the nature and scope of oversight affecting the mortgage finance industry generally and particularly the future role of Fannie Mae and Freddie Mac.

We rely on third-party servicers to service and manage the mortgages underlying our residential whole loans. We do not interface with borrowers under the mortgage loans in which we invest or otherwise service the mortgage loans in which we invest. The ultimate returns generated by these investments may depend on the quality of the servicer. If a third-party servicer is not vigilant in seeing that borrowers make their required monthly payments, borrowers may be less likely to make these payments, resulting in a higher frequency of default. If a servicer takes longer to liquidate non-performing mortgages, our losses related to those loans may be higher than originally anticipated. Any failure by servicers to service these mortgages and/or to competently manage and dispose of REO properties could negatively impact the value of these investments and our financial performance. In addition, while we have contracted with third-party servicers to carry out the actual servicing of the loans (including all direct interface with the borrowers), for loans that we acquire together with the related servicing rights, we are nevertheless ultimately responsible, vis-à-vis the borrowers and state and federal regulators, for ensuring that the loans are serviced in accordance with the terms of the related notes and mortgages and applicable law and regulation. (See the Risk Factor captioned “Regulatory Risk and Risks Related to the Investment Company Act of 1940 - Our business is subject to extensive regulation.”) In light of the current regulatory environment, such exposure could be significant even though we might have contractual claims against our servicers for any failure to service the loans to the required standard.

The foreclosure process, especially in judicial foreclosure states such as New York, Florida and New Jersey (in which states we have significant exposure), can be lengthy and expensive, and the delays and costs involved in completing a foreclosure, and then subsequently liquidating the REO property through sale, may materially increase any related loss. In addition, at such time as title is taken to a foreclosed property, it may require more extensive rehabilitation than we estimated at acquisition. Thus, a material amount of foreclosed residential mortgage loans, particularly in the states mentioned above, could result in significant losses in our residential whole loan portfolio and could materially adversely affect our results of operations. In addition, due to the COVID-19 pandemic, there were various federal, state, and local laws, regulations, orders, and ordinances limiting foreclosure and eviction remedies. Any similar limitations enacted in the future in response to a pandemic or other events outside our control could adversely impact the cash flow on those investments.

Federal laws and regulations have also been proposed or adopted which, among other things, could hinder the ability of a servicer to foreclose promptly on defaulted residential loans, and which could result in assignees being held responsible for violations in the residential loan origination process. For example, duevarious tofederal, regulations arising from the COVID-19 pandemic, the Centers for Disease Controlstate, and Preventionlocal (orlaws, CDC)regulations, issuedorders, aand federalordinances moratorium against evictions in September 2020, which limitedlimiting foreclosure and eviction remedies untilwere itenacted was struck down byduring the SupremeCOVID-19 Court in August 2021.pandemic. In addition, mortgage lenders and third-party servicers have voluntarily, pursuant to federal, state or local regulation, or as part of settlements with law enforcement authorities, established loan modification programs relating to loans they hold or service. These federal, state and local legislative or regulatory actions that result in modifications of our outstanding mortgages, or interests in mortgages acquired by us either directly through consolidated trusts or through our investments in residential MBS, may adversely affect the value of, and returns on, such investments. Mortgage servicers may be incentedincentivized by the federal government to pursue such loan modifications, as well as forbearance plans and other actions intended to prevent foreclosure, even if such loan modifications and other actions are not in the best interests of the beneficial owners of the mortgages. As a consequence of the foregoing matters, our business, financial condition, results of operations and ability to pay dividends, if any, to our stockholders may be adversely affected.

A decline in the market value of our residential mortgage securities that are accounted for as available-for-sale (or AFS) may require us to recognize impairment against such assets under GAAP. When the fair value of an AFS security is less than its amortized cost basis at the balance sheet date, the security is considered impaired. If we intend to sell an impaired security, or it is more likely than not that we will be required to sell the impaired security before any anticipated recovery, then we must recognize charges to earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. If we do not expect to sell an impaired security, only the portion of the impairment related to credit losses is recognized through charges to earnings with the remainder recognized through accumulated other comprehensive income/(loss) (or AOCI) on our consolidated balance sheets. Impairments recognized through other comprehensive income/(loss) (or OCI) do not impact earnings. Following the recognition of an impairment through earnings, a valuation allowance will be established for the security. The determination as to the amount of credit impairment recognized in earnings is subjective, as such determination is based on factual information available at the time of assessment as well as on our estimates of the future performance and cash flow projections. As a result, the timing and amount of impairments recognized in earnings constitute material estimates that are susceptible to significant change.

As of December 31, 2024,2025, we had goodwill of $61.1 million, which represents the excess of the fair value of consideration paid over the fair value of net assets acquired in connection with the acquisition of our wholly-owned subsidiary, Lima One. In addition, as of December 31, 2024,2025, we had approximately $16.8$20.2 million of non-controlling investments in certain loan originators from whom we acquire mortgage loans for investment on a periodic basis. These investments have taken the form of common equity and preferred equity. Unlike our investments in residential mortgage loans and mortgage-backed securities, our non-controlling investments in loan originators are unsecured and not collateralized by any property of the originators. In addition, we do not manage any of the loan originators in which we have made non-controlling investments, and because none of these investments give us a controlling stake in such loan originators, our ability to influence the business and operations of the originators is limited, in some instances significantly so. Also, because these loan originators are private closely-held enterprises, there are significant restrictions on our ability to sell or otherwise transfer our investments (which are generally illiquid). In the event Lima One or one or more of the loan originators in which we have made investments should experience a significant decline in its business and operations or otherwise not be able to respond adequately to managerial, compliance or operational challenges that it may encounter, we may be required to write-downwrite down all or a portion of the goodwill relating to Lima One or write down all or a portion of the applicable non-controlling investment, which could have a material adverse impact on our results of operations.

Moreover, although the loans originated by Lima One are Business purpose loans, they are still subject to substantial state and federal regulation including around origination, underwriting, licensure and servicing. Should Lima One experience a significant decline in its business and operations or otherwise not be able to respond adequately to managerial, compliance or operational challengeschallenges, thatit could have a material adverse impact on our results of operations.

In general, the mortgages collateralizing certain of our residential mortgage assets may be prepaid at any time without penalty. Prepayments result when borrowers satisfy (i.e., pay off) the mortgage upon selling or refinancing their mortgaged property. When we acquire assets collateralized by residential mortgage loans, we anticipate that the underlying mortgage loans will prepay at a projected rate which, together with expected coupon income, provides us with an expected yield on that asset. If we purchase an asset at a premium to par value, and borrowers then prepay the underlying mortgage loans at a faster rate than we expect, the increased prepayments would result in a yield lower than expected on such assets because we would be required to amortize the related premium on an accelerated basis. Conversely, if we purchase residential mortgage assets at a discount to par value, and borrowers then prepay the underlying mortgage loans at a slower rate than we expect, the decreased prepayments would result in a lower yield than expected on the asset and/or may result in a decline in the fair value of the asset, which would result in losses if the asset is accounted for at fair value or impairment for an AFS security if the fair value of the security is less than its amortized cost.cost basis.

•If we are unable to renew our borrowings at acceptable interest rates, it may force us to sell assets under adverse market conditions, which may materially adversely affect our liquidity and profitability. Since a portion of our borrowings to finance longer-term residential mortgage investments are under short-term repurchase agreements, our ability to achieve our investment objectives depends on our ability to borrow funds in sufficient amounts and on acceptable terms, and on our ability to renew or replace maturing borrowings on a continuous basis. Our repurchase agreement credit lines are renewable at the discretion of our lenders and, as such, do not contain guaranteed roll-over terms. Our ability to enter into repurchase transactions in the future will depend on the market value of our residential mortgage investments pledged to secure the specific borrowings, the availability of acceptable financing and market liquidity and other conditions existing in the lending market at that time. If we are not able to renew or replace maturing borrowings, we could be forced to sell assets, including assets in an unrealized loss position, in order to maintain liquidity. Forced sales, particularly under adverse market conditions, could result in lower sales prices than ordinary market sales made in the normal course of business. If our residential mortgage investments were liquidated at prices below our amortized cost basis (i.e., the cost basis) of such assets, we would incur losses, which could materially adversely affect our earnings.

•Adverse developments involving major financial institutions or involving one of our lenders could result in a rapid reduction in our ability to borrow and materially adversely affect our liquidity and profitability. A material adverse development involving one or more major financial institutions or the financial markets in general could result in our lenders reducing our access to funds available under our repurchase agreements or terminating such repurchase agreements altogether. Because all of our repurchase agreements are uncommitted and renewable at the discretion of our lenders, our lenders could determine to reduce or terminate our access to future borrowings at virtually any time, which could materially adversely affect our business and profitability. Furthermore, if a number of our lenders became unwilling or unable to continue to provide us with financing, we could be forced to sell assets, including MBS in an unrealized loss position, in order to maintain liquidity. Forced sales, particularly under adverse market conditions, may result in lower sales prices than ordinary market sales made in the normal course of business. If our residential mortgage investments were liquidated at prices below our amortized cost basis (i.e., the cost basis) of such assets, we would incur losses, which could adversely affect our earnings. In addition, any uncertainty in the global finance market or weak economic conditions in Europe could cause the conditions described above to have a more pronounced effect on our European lending counterparties.

•If a counterparty to our repurchase transactions defaults on its obligation to resell the underlying security back to us at the end of the transaction term or if we default on our obligations under the repurchase agreement, we could incur losses. When we engage in repurchase transactions, we generally transfer securities to lenders (i.e., repurchase agreement counterparties) and receive cash from such lenders. Because the cash we receive from the lender when we initially transfer the securities to the lender is less than the value of those securities (this difference is referred to as the “haircut”), if the lender defaults on its obligation to transfer the same securities back to us, we would incur a loss on the transaction equal to the amount of the haircut (assuming there was no change in the value of the securities). Our exposure to defaults by counterparties may be more pronounced during periods of significant volatility in the market conditions for mortgages and mortgage-related assets as well as the broader financial markets. At December 31, 2024,2025, we had greater than 5% stockholders’ equity at risk to the following financing agreement counterpartiescounterparty: Wells Fargo (approximately 9.1%) and Barclays (approximately 5.9%7.4%).

•Changes in interest rates, cyclical or otherwise, may materially adversely affect our profitability. Interest rates are highly sensitive to many factors, including fiscal and monetary policies and domestic and international economic and political conditions, as well as other factors beyond our control. In general, we finance the acquisition of our investments through borrowings in the form of repurchase transactions, which exposes us to interest rate risk on the financed assets. The cost of our borrowings is based on prevailing market interest rates. Because the terms of our repurchase transactions typically range from one to six months at inception, the interest rates on our borrowings generally adjust more frequently (as new repurchase transactions are entered into upon the maturity of existing repurchase transactions) than the interest rates on our investments. During a period of rising interest rates, our borrowing costs generally will increase at a faster pace than our interest income on the leveraged portion of our investment portfolio, which could result in a decline in our net interest spread and net interest margin. The severity of any such decline would depend on our asset/liability composition (including the impact of hedging transactions) at the time, as well as the magnitude and period over which interest rates increase. Further, an increase in short-term interest rates could also have a negative impact on the market value of our residential mortgage investments. Interest rates increased significantly in 2022 and 2023, remained high in 2024 and 2025, and may continue to remain high in 2025,2026, particularly as concerns of inflation have continued into 2025.2026. As such, we could experience a decrease in net income or incur a net loss during these periods, which may negatively impact our distributions to stockholders.

Inflation byremains some measures is at the highest readings since 1982,high and inflationary pressures have broadened from goods earlier in the pandemic to include shelter costs and a number of labor-intensive services. The rapid acceleration of inflation led to an abrupt shift inabove the Federal Reserve’s monetarytarget, policyalthough stanceinflationary aspressure theyhas nooverall longereased consider these price pressures to be “transitory.”post-pandemic. In an effort to control inflation,accelerating inflation during the pandemic, the Federal Reserve raised the federal funds rate seven times in 2022, followed by eleven rate raises in 2023. While the Federal Reserve made three rate cuts in 2024,each of 2024 and 2025, there is uncertainty as to the timing and extent of future rate cuts in light of ongoing inflationary challenges and generally resilient macroeconomic data. As the Federal Reserve lifts its federal funds target rate, the margin between short and long-term rates could further compress. Given our reliance on short-term borrowings to generate interest income and the fact that the yield curve remains relatively flat after the recentlatest inversion ended,ended in 2024, or if the Federal Reserve finds itself continuing to fall behind on inflation and more aggressively tightens its current projections, our results of operations, financial condition and business could be materially adversely impacted. For a detailed discussion of the impact of interest rates, see “Interest Rate Risk” included under Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk” in this Annual Report on Form 10-K.

The security measures we have implemented to protect personal information and prevent cybersecurity incidents may be compromised as a result of third-party action, including intentional misconduct by computer hackers, cyber-attacks, "phishing" attacks, service provider or vendor error, or malfeasance or other intentional or unintentional acts by third parties and bad actors, including third-party service providers. Furthermore, borrower data, including personally identifiable information, may be lost, exposed, or subject to unauthorized access or use as a result of accidents, errors, or malfeasance by our employees, independent contractors, or others working with us or on our behalf. Our servers and systems, and those of our service providers, may be vulnerable to computer malware, break-ins, denial-of-service attacks, and similar disruptions from unauthorized access to our computer systems, which could result in someone obtaining unauthorized access to borrowers’ data or our data, including other confidential business information. In the past, we have experienced unauthorized access to certain data and information. Our cybersecurity systems and processes that are intended to protect this type of data and information; however, they may not be effective in preventing unauthorized access in the future. Furthermore, because the techniques used to obtain unauthorized access to, or to compromise, systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures.measures, and generative artificial intelligence (“AI”) could intensify these cybersecurity risks. We may also experience cybersecurity incidents that may remain undetected for an extended period.

Our business is highly dependent on our information and communications systems, including systems containing or using open source software. Any failure or interruption of our systems or cybersecurity incidents could cause delays or other problems in our securities trading activities, which could have a material adverse effect on operating results, the market price of our common stock and other securities and our ability to pay dividends to our stockholders. Our use of open source software poses particular risk, including potential security vulnerabilities, licensing compliance issues and quality issues. In addition, we also face the risk of operational failure, termination or capacity constraints of any of the third-partiesthird parties with which we do business or that facilitate our business activities, including clearing agents or other financial intermediaries we use to facilitate our securities transactions as well as the servicers of our loans.

The mortgage finance market is subject to extensive regulation and scrutiny; government actions and regulations, however, may not achieve their intended effect and could bring uncertainty to the operations of the industry, increase our cost of compliance or otherwise materially adversely affect our business. The Federal Reserve announced in November 2008 a program of large-scale purchases of Agency MBS in an attempt to lower longer-term interest rates and contribute to an overall easing of adverse financial conditions. Subject to specified investment guidelines, the portfolios of Agency MBS purchased through the programs established by the U.S. Treasury and the Federal Reserve may be held to maturity and, based on mortgage market conditions, adjustments may be made to these portfolios. The program was reinstated in 2020 in response to the COVID-19 pandemic. ThisThe flexibilityFederal Reserve has since concluded this program and started a “runoff” process to reduce holdings which began in June 2022. A continuing portfolio runoff or potential sale by the Federal Reserve may adverselybring affectuncertainty to the pricing and availability of Agency MBS during the remaining term of these portfolios.

We operate in a highly regulated industry and continually changing U.S. federal, state and local laws and regulationregulations could materially adversely affect our business, financial condition and results of operations and our ability to pay dividends to our stockholders.

In particular, the Dodd-Frank Act resulted in a comprehensive overhaul of the financial services industry in the United States and includes, among other things (i) the creation of a Financial Stability Oversight Council to identify emerging systemic risks posed by financial firms, activities and practices, and to improve cooperation among U.S. federal agencies, (ii) the creation of the CFPB, authorized to promulgate and enforce consumer protection regulations relating to financial products and services, including mortgage lending and servicing, and to exercise supervisory authority over participants in mortgage lending and mortgage servicing, (iii) the establishment of strengthened capital and prudential standards for banks and bank holding companies, (iv) enhanced regulation of financial markets, including the derivatives and securitization markets, and (v) amendments to the Truth in Lending Act and RESPA, aimed at improving consumer protections with respect to mortgage originations and mortgage servicing, including disclosures, originator compensation, minimum repayment standards, prepayment considerations, appraisals and loss mitigation and other servicing requirements. Unpredictable events, such as the COVID-19 pandemic, may create economic shocks, to which federal, state, and local governments respond with new borrower and tenant rights and protections. Certain federal and state regulators continue to consider proposals to apply regulatory prudential standards to nonbank servicers, which may impact how our service providers, including the Servicer, are regulated. In addition, the continuing impact of athe newcurrent U.S. Presidential administration may lead to changes in the capital markets and regulatory landscape, including federal supervision and enforcement tools on residential mortgage lenders and servicers, which could result in increased regulatory scrutiny and potentially increased penalties assessed for determinations of non-compliance with applicable requirements.

Although we do not directly service residential mortgage loans (except for Business purpose loans originated and serviced by Lima One), we must comply with various federal and state laws, rules and regulations as a result of owning MBS and residential whole loans. These rules generally focus on consumer protection and include, among others, rules promulgated under the Dodd-Frank Act, and the Gramm-Leach-Bliley Financial Modernization Act of 1999 (or Gramm-Leach-Bliley). These requirements can and do change as statutes and regulations are enacted, promulgated, amended and interpreted, and the recent trend among federal and state lawmakers and regulators has been toward increasing laws, regulations and investigative proceedings in relation to the mortgage industry generally. For example, effective March 1, 2021, the General QM Final Rule provided certain changes to the definition of general qualified mortgage loans and the Seasoned QM Final Rule creates a new category of a qualified mortgage, referred to as a “Seasoned QMQM.” A loan is eligible to become a Seasoned QM if it is a first-lien, fixed rate loan that meets certain performance requirements over a seasoning period of 36 months, is held in portfolio until the end of the seasoning period by the originating creditor or first purchaser, complies with general restrictions on product features and points and fees, and meets certain underwriting requirements. These amendments and changes to the necessary policies and procedures to demonstrate compliance with these requirements for loans sold in the secondary market may increase the economic and compliance costs for participants in the mortgage origination and securitization industries, including us.

Certain jurisdictions require a license to purchase, hold, enforce or sell residential mortgage loans. We currently do not hold any such licenses, and there is no assurance that we will be able to obtain them in a timely manner or at all or, if obtained, that we will be able to maintain them. In connection with these licenses we would be required to comply with various information reporting and other regulatory requirements to maintain those licenses, and there is no assurance that we will be able to satisfy those requirements on an ongoing basis. Our failure to obtain or maintain such licenses or our inability to enter into another regulatory-compliant structure, such as establishing a trust with a federally chartered bank as trustee to purchase and hold the residential mortgage loans, could restrict our ability to invest in loans in these jurisdictions if such licensing requirements are applicable. In lieu of obtaining such licenses, we contribute our acquired residential mortgage loans to one or more trusts in which we or our subsidiaries hold beneficial interests; title to these residential mortgage loans is held by one or more federally-chartedfederally chartered banks as trustee, which may be exempt from state licensing requirements. There can be no assurance that the use of the trusts will satisfy an exemption from licensing requirements because regulatory agencies may adopt different interpretations of applicable laws. We are aware of one state regulatory agency that has inquired about our use of the trust structure. If required, there can be no assurance that we will be able to obtain the requisite licenses in a timely manner or at all, or in other necessary jurisdictions, which could limit our ability to invest in residential mortgage loans. Our failure to obtain and maintain required licenses may expose us to penalties or other claims and may affect our ability to acquire an adequate and desirable supply of mortgage loans to conduct our securitization program and, as a result, could harm our business.

In August 2011, the SEC issued a “concept release” pursuant to which they solicited public comments on a wide range of issues relating to companies engaged in the business of acquiring mortgages and mortgage-related instruments and that rely on Section 3(c)(5)(C) of the Investment Company Act. The concept release and the public comments thereto have not yet resulted in SEC rulemaking or interpretative guidance and we cannot predict what form any such rulemaking or interpretive guidance may take. There can be no assurance, however,assurance that the laws and regulations governing the Investment Company Act status of REITs, or guidance from the SEC or its staff regarding the exemption from registration as an investment company on which we rely, will not change in a manner that adversely affects our operations. We expect each of our subsidiaries relying on Section 3(c)(5)(C) to rely on guidance published by the SEC staff or on our analyses of guidance published with respect to other types of assets, if any, to determine which assets are qualifying real estate assets and real estate-related assets. The potential outcomes of the SEC’s actions are unclear as is the SEC’s timetable for its review and actions. To the extent that the SEC staff publishes new or different guidance with respect to these matters, we may be required to adjust our strategy accordingly. In addition, we may be limited in our ability to make certain investments and these limitations could result in us holding assets we might wish to sell or selling assets we might wish to hold.

The net income of our TRSs is not required to be distributed to us, and such undistributed TRS income is generally not subject to our REIT distribution requirements. However, if the accumulation of cash or reinvestment of significant earnings in our TRSs causes the fair market value of our securities in those entities, taken together with other non-qualifying assets, to exceed 25% of the fair market value of our assets, in each case as determined for REIT asset testing purposes, we would, absent timely responsive action, fail to maintain our qualification as a REIT. Additionally, if the accumulation of cash or reinvestment of significant earnings in our TRSs causes the fair market value of our securities in those entities to exceed 25% (20% for taxable years beginning before January 1, 2026) of the fair market value of our assets, in each case as determined for REIT asset testing purposes, we would, absent timely responsive action, similarly fail to maintain our qualification as a REIT.

Qualified dividend income payable to U.S. investors that are individuals, trusts, and estates is subject to the reduced maximum tax rate applicable to long-term capital gains. Dividends paid by REITs, however, are generally not eligible for the reduced qualified dividend rates. ForNon-corporate taxpayers may deduct up to 25% (20% for taxable years beginning before January 1, 2026, non-corporate taxpayers may deduct up to 20%2026) of certain pass-through business income, including “qualified REIT dividends” (generally, dividends received by a REIT stockholder that are not designated as capital gain dividends or qualified dividend income), subject to certain limitations. Although the reduced U.S. federal income tax rate applicable to qualified dividend income does not adversely affect the taxation of REITs or dividends payable by REITs, the more favorable rates applicable to regular corporate qualified dividends and the reduced corporate tax rate could cause certain non-corporate investors to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our common stock.

Title 3, Subtitle 8 of the MGCL permits our Board, without stockholder approval and regardless of what is currently provided in our charter or bylaws, to elect on behalf of our company to be subject to statutory provisions that may have the effect of delaying, deferring or preventing a transaction or a change in control of our company that might involve a premium price for holders of our common stock or otherwise be in their best interest. Our Board may elect to opt in to any or all of the provisions of Title 3, Subtitle 8 of the MGCL without stockholder approval at any time. In addition, withoutWithout our having elected to be subject to Subtitle 8, our charter and bylaws already (1) provide for a classified board, (2) require the affirmative vote of the holders of at least 80% of the votes entitled to be cast in the election of directors for the removal of any director from our Board, which removal will be allowed only for cause and (3) vest in our Board the exclusive power to fix the number of directorships. In addition, we have elected to be subject to the Subtitle 8 provision that requires a vacancy on our board to be filled only by the remaining directors in office and for the remainder of the full term of the class of directors in which the vacancy occurred and until a successor is elected and qualifies. These provisions may delay or prevent a change of control of our company.

The declaration,authorization, amount and payment of future cash dividends on shares of our common stock are subject to uncertainty due to disruption in the mortgage, housing or related sectors.

The declaration,authorization, amount and payment of any future dividends on shares of our common stock will be at the sole discretion of our Board. From time to time, our Board may adjust our quarterly cash dividend on our shares of our common stock from prior quarters. The payment of dividends may be more uncertain during severe market disruption in the mortgage, housing or related sectors.

At December 31, 2024,2025, we had total assets of approximately $11.4$13.0 billion, of which $8.8 billion, or 77%,68%, represented residential whole loans. Our residential whole loans include primarily: (i) loans to finance (or refinance) one-to-four family residential properties that are not considered to meet the definition of a “Qualified Mortgage” in accordance with guidelines adopted by the Consumer Financial Protection Bureau (“Non-QM loans”), (ii) business purpose loans primarily originated by Lima One, to finance (or refinance) non-owner occupied one-to-four family residential properties that are rented to one or more tenants (“Single-family rental loans”), (iii) short-term business purpose loans primarily originated by Lima One, collateralized by residential properties made to non-occupant borrowers that generally intend to rehabilitate or construct residential housing and then refinance or sell the properties (“Single-family transitional loans”), (iiiiv) short-term business purpose loans primarily originated by Lima One, collateralized by multifamily properties, typically with a loan balance below $10 million, made to non-occupant borrowers that generally intend to rehabilitate or stabilize and then refinance or sell the properties (“Multifamily transitional loans”)loans, (collectively,collectively with Single-family transitional loans, “Transitional loans,” also sometimes referred to as “Rehabilitation loans” or “Fix and Flip loans”), (iv) business purpose loans to finance (or refinance) non-owner occupied one-to-four family residential properties that are rented to one or more tenants (“Single-family rental loans” and, collectively with TransitionalSingle-family rental loans, “Business purpose loans”), (v) loans primarily secured by residential real estate that were generally either non-performing or re-performing at acquisition (“Legacy RPL/NPL”) and (vi) loans on investor properties that conform to the standards for purchase by a federally chartered corporation, such as the Federal National Mortgage Association (“Fannie Mae”) or the Federal Home Loan Mortgage Corporation (“Freddie Mac”) (“Agency eligible investor loans,” which are included in “Other loans”). In addition, at December 31, 2024,2025, we had approximately $1.5$3.3 billion or 13%25% of total assets invested in investments in securities, including Agency MBS, Term notes backed by MSR collateral, CRT securities and Non-Agency MBS.

With respect to our business operations, increases in interest rates, in general, maymay, over timetime, cause: (i) the interest expense associated with our borrowings to increase; (ii) the value of certain of our residential mortgage assets and securitized debt to decline; (iii) coupons on our adjustable-rate assets to reset, on a delayed basis, to higher interest rates; (iv) prepayments on our assets to decline, thereby slowing the amortization of purchase premiums and the accretion of our purchase discounts, and slowing our ability to redeploy capital to generally higher yielding investments; and (v) the value of our derivative hedging instruments, if any, to increase. Conversely, decreases in interest rates, in general, maymay, over timetime, cause: (i) the interest expense associated with our borrowings to decrease; (ii) the value of certain of our residential mortgage assets and securitized debt, to increase; (iii) coupons on our adjustable-rate assets, on a delayed basis, to lower interest rates; (iv) prepayments on our assets to increase, thereby accelerating the amortization of purchase premiums and the accretion of our purchase discounts, and accelerating the redeployment of our capital to generally lower yielding investments; and (v) the value of our derivative hedging instruments, if any, to decrease. Further, changes in credit spreads will also impact the valuation of our residential wholemortgage loansassets and securitized debt, which could result in volatility in GAAP earnings. In addition, our borrowing costs and credit lines are further affected by the type of collateral we pledge and general conditions in the credit market.

Premiums arise when we acquire an MBS or loan at a price in excess of the aggregate principal balance of the mortgages securing the MBS (i.e., par value) or when we acquire residential whole loans at a price in excess of their unpaid principal balance. Conversely, discounts arise when we acquire an MBS or loan at a price below the aggregate principal balance of the mortgages securing the MBS or when we acquire residential whole loans at a price below their unpaid principal balance. Accretable purchase discounts on these investments are accreted to interest income. Premiums paid to purchase loans,loans are amortized against interest income over the life of the investment using the effective yield method, adjusted for actual prepayment activity. An increase in the prepayment rate, as measured by the CPR, will typically accelerate the amortization of purchase premiums, thereby reducing the interest income earned on these assets.

It is generally our business strategy to hold our residential mortgage assets as long-term investments. As part of Lima One’s mortgage banking activities, from time to time, we sell certain loans shortly after origination. On at least a quarterly basis, excluding investments for which the fair value option has been elected or for which specialized loan accounting is otherwise applied, we assess our ability and intent to continue to hold each asset and, as part of this process, we monitor our investments in securities that are designated as AFS for impairment. A change in our ability and/or intent to continue to hold any of these securities that are in an unrealized loss position, or a deterioration in the underlying characteristics of these securities, could result in our recognizing future impairment charges or a loss upon the sale of any such security.

During the yearyear, we generated GAAP earnings per share (or EPS) of $0.83$1.31 per basic common share and Distributable earnings, a non-GAAP financial measure that excludes the impact of fair value changes and certain other items, of $1.57$1.00 per basic common share. For the year, compensation and benefits and other G&A expenses were $119.4 million, a 9.5% reduction from $131.9 million incurred in 2024 attributable to expense reduction initiatives. At December 31, 2024,2025, our GAAP book value was $13.39$13.20 and our Economic book value, a non-GAAP financial measure of our financial position that adjusts GAAP book value by the amount of unrealized mark-to-market gains or losses on our residential whole loans and securitized debt held at carrying value, was $13.93$13.75 per common share, each representing decreases ofdown approximately 4% as1% compared to December 31, 2023.2024. During the yearyear, we declared dividends oftotaling $1.40$1.44 per common share.

For the year, our Lima One subsidiary originated Business purpose loans with a maximum unpaid principal balance of $0.9 billion, a decrease from the $1.4 billion originated in 2024. During 2024the year, we expanded Lima One’s sales force, invested in technology initiatives that we expect to improve the borrower experience, and made key hires to Lima One’s leadership team in strategic growth areas. In early 2026, we relaunched multifamily lending and began funding loans through our newly established wholesale channel, which represent two key areas of growth for Lima One. During 2025, Lima One sold $193.7$212.9 million of recently originated single-family rental loans to third parties and realized gains of $7.4$6.1 million. We believe that these sales to third parties help to strengthen Lima One’s franchise value, create additional distribution channels to accommodate future growth, and enhance returns.

(3)Primarily includes sales,sales of residential whole loans and securities, changes in fair value and changes in the allowance for credit losses.

At December 31, 2024,2025, our total recorded investment in residential whole loans and REO was $8.9 billion, or 85.3%72.7% of our residential mortgage asset portfolio. Of this amount, $4.3$5.3 billion are Non-QM loans, $1.4$1.2 billion are Single-family rental loans, $1.1$0.7 billion are Single-family transitional loans, $0.9$0.5 billion are Multifamily transitional loans and $1.1$1.0 billion are Legacy RPL/NPL loans. Loan acquisition activity of $2.6$2.7 billion during 20242025 included $991.5$655.7 million of Single-family transitional loans (including draws), $1.2$1.8 billion of Non-QM loans, $331.7$235.4 million of Single-family rental loans and $145.0$14.8 million of Multifamily transitional loans (including draws). During 2024,2025, we recognized approximately $633.6$605.6 million of residential whole loan interest income on our consolidated statements of operations, representing an effective yield of 6.74%, with Single-family transitional loans generating an effective yield of 9.45%,9.48%, Multifamily transitional loans generating an effective yield of 8.20%,8.54%, Single-family rental loans generating an effective yield of 6.37%,6.43%, Non-QM loans generating an effective yield of 5.50%5.87% and Legacy RPL/NPL loans generating an effective yield of 7.91%.7.92%. Since the second quarter of 2021 we have elected the fair value option for all loan acquisitions, and 85%88% of our total loan portfolio is measured at fair value through earnings. Included in earnings in Other Income/(Loss), net are net gains on these loans of $46.0$133.7 million for the year ended December 31, 2024.2025. At December 31, 20242025 and 2023,2024, we had REO with an aggregate carrying value of $130.9$135.0 million and $110.2$130.9 million, respectively, which is included in Other assets on our consolidated balance sheets.

At December 31, 2024,2025, we held $1.5$3.4 billion of Securities, at fair value, including $1.4$3.3 billion of Agency MBS, $54.6 million of MSR-related assets, $67.6$34.9 million of CRT securities and $22.6$22.1 million of Non-Agency MBS. During 2024,2025, we addedpurchased $0.9$2.1 billion of Agency MBS and sold $26.9$27.0 million salesof CRT securities and $17.5 million of MSR-relatedAgency assets and an $8.7 million sales of a CRT security.MBS. The net yield on our Securities, at fair value was 6.59%5.93% for 2024,2025, compared to 7.57%6.59% for 2023.2024.

For the year ended December 31, 2024,2025, we recorded a reversal of provision for credit losses on residential whole loans held at carrying value of $3.1$0.9 million. The total allowance for credit losses recorded on residential whole loans held at carrying value at December 31, 20242025 was $10.7$9.7 million.

During 2024,2025, we completed eightfive Non-QM loan securitizations with unpaid principal balance (or UPB) of loans sold of $2.4$1.8 billion. This included $1.1 billion of Non-QM loans, $599.0 million of Transitional loans and 669.2 million of Legacy RPL/NPL loans. These securitizations provide longer term, non-recourse, non-mark-to-market financing. During 2024, heightened interestfixed rate volatility led to significant fluctuations in the fair values of our residential mortgage asset portfolio and associated financing liabilities and hedges, which drove volatility in our quarterly GAAP financial results.financing. We continue to closely follow the actions of the Federal Reserve regarding the path and timing of changes in interest rates and the impact such rate changes would be expected to have on levels of inflation, the overall economic environment and our business.

Our GAAP book value per common share was $13.39$13.20 as of December 31, 2024.2025. Book value per common share decreased from $13.98$13.39 as of December 31, 2023.2024. Economic book value per common share, a non-GAAP financial measuremeasure, was $13.75 as of ourDecember financial31, position2025, thata adjustsdecrease GAAP book value by the amount of unrealized mark-to-market gains or losses on our residential whole loans and securitized debt held at carrying value, wasfrom $13.93 as of December 31, 2024, a decrease from $14.57 as of December 31, 2023.2024. The decrease in GAAP book value and Economic book value during 20242025 primarily reflects dividends declared on our common stock in excess of our GAAP earnings. The decrease in Economic book value during 2024 primarily reflects dividends declared on our common stock in excess of GAAP earnings and a decrease in the fair value of our mortgage loans held at carrying value, partially offset by changes in the estimated fair value of our securities and our securitized debt at carrying value. For additional information regarding the calculation of Economic book value per share, including a reconciliation to GAAP book value per share, refer to “Reconciliation of GAAP and Non-GAAP Financial Measures” below.

(1)Includes $338.9$213.2 million of cash and cash equivalents, $262.4$173.5 million of restricted cash, $52.1$57.1 million of other securities, $51.0 million of Other loans and $16.8$20.2 million of capital contributions made to loan origination partners, as well as other assets and other liabilities.

Our Transitional loans contain various contractual extension features, typically ranging from three to twelvetwenty-four months subject to certain conditions, generally including our consent. Transitional loans are generally only extended if the loan is current and in compliance with various other loan terms. Given the short duration of our Transitional loans, maturity extensions are a regular occurrence, irrespective of market conditions. At December 31, 2024,2025, approximately 18%66% of our Multifamily transitional loans and 26%31% of our Single-family transitional loans held as of period end had been extended.

(1)Weighted average yield is annualized interest income divided by average amortized cost basis for Securities, at fair value held at December 31, 20242025 and December 31, 2023.2024.

Potential timing differences can arise with respect to the accretion of discount and amortization of premium into income as well as the recognition of gain or loss for tax purposes as compared to GAAP. For example: a) while our REIT uses fair value accounting for GAAP in some instances, it generally is not used for purposes of determining taxable income; b) impairments generally are not recognized by us for income tax purposes until the asset is written-off or sold; c) capital losses may only be recognized by us to the extent of itsour capital gains; capital losses in excess of capital gains generally are carried over by us for potential offset against future capital gains; and d) tax hedge gains and losses resulting from the termination of Swaps by us generally are amortized over the remaining term of the Swap.

We estimate that for 2024,2025, our net TRS taxable income (loss) will be $7.4$(56.0) million. Net income or loss generated by our TRS subsidiaries is included in consolidated GAAP net income, but may not be included in REIT taxable income in the same period. REIT taxable income generally does not include taxable income of the TRS unless and until it is distributed to the REIT. For example, because our securitization transactions that are treated as a sale for tax purposes are undertaken by a domestic TRS, any gain or loss recognized on the sale is not included in our REIT taxable income until it is distributed by the TRS. Similarly, the income earned from loans, securities, REO and other investments held by our domestic TRS is excluded from REIT taxable income until it is distributed by the TRS. Net income of our foreign domiciled TRS subsidiaries is included in REIT taxable income as if distributed to the REIT in the taxable year it is earned by the foreign domiciled TRS. A TRS may carry forward its net taxable losses indefinitely as net operating losses to offset up to 80% of its taxable income in future tax years, but REIT taxable income generally does not include the net taxable loss of a TRS unless the TRS liquidates for tax purposes.

For 2024,2025, our net interest spread and margin (including the impact of swapsnet Swap carry) were 2.10%1.84% and 2.91%,2.55%, respectively, compared to a net interest spread and margin (including the impact of swapsnet Swap carry) of 2.05%2.10% and 2.90%,2.91%, respectively, for 2023.2024. Our net interest income, which does not include the benefit of swapnet Swap carry, increased by $26.3$28.4 million, or 14.9%,14.0%, to $231.1 million from $202.7 million from $176.5 million for 2023.2024. For 2024, net interest income includes higher net interest income from our residential whole loan portfolio of $27.2 million compared to 2023, primarily due to higher asset yields and higher amounts invested in the loan portfolio, partially offset by an increase in average balance and financing rates for our securitized debt. In addition, netNet interest income for 20242025 includesincluded approximately $23.3 million of higher net interest income for our Securities, at fair value portfolio of approximately $0.9 million compared to 2023,2024, primarily due to higher amounts invested in theAgency MBS, partially offset by a related increase in average balance of securities portfolio,financing agreements. In addition, net interest income for 2025 included $12.7 million higher net interest income from our residential whole loan portfolio compared to 2024, primarily due to a decrease in average balances of, and rates on, residential whole loan financing agreements, partially offset by an increase in average balancebalances ofof, financingand agreementsrates foron, our securities.securitized debt and a decrease in amounts invested in the loan portfolio. Net interest income for 20242025 also includeshad approximately $4.0$11.1 million of additionalless interest income from cash and other interest earning assets compared to 2023.2024.

The following table sets forth certain information about the average balances of our assets and liabilities and their related yields and costs for the years ended December 31, 20242025 and 2023.2024. Average yields are derived by dividing interest income by the average amortized cost basis of the related assets, and average costs are derived by dividing interest expense by the average balance of the related liabilities, for the periods shown. The yields and costs may include premium amortization and discount accretion which are considered adjustments to interest income or expense.

(1)Yields presented throughout this Annual Report on Form 10-K are calculated using average amortized cost basis data for residential whole loans and securities, which excludes unrealized gains and losses. For GAAP reporting purposes, securities purchases and sales are reported on the trade date. Average amortized cost basis data used to determine yields is calculated based on the settlement date of the associated purchase or sale as interest income is not earned on purchased assets and continues to be earned on sold assets until settlement date.

(6)Reflects the impact of positive or negative swapnet Swap carry. Positive swapnet Swap carry results when income from the receive leg of a swapSwap is greater than the expense on the pay leg. Negative swapnet Swap carry results when income from the receive leg is less than the expense on the pay leg.

(7)Net interest margin reflects net interest income (including net swapSwap income or expensecarry) divided by average interest-earning assets.

(1)Reflects the difference between the yield on average interest-earning assets and average cost of funds (including net swapSwap income or expensecarry).

(2)Reflects annualized net interest income (including net swapSwap income or expensecarry) divided by average interest-earning assets.

(1)Reflects annualized interest income on Residential whole loans divided by average amortized cost basis of Residential whole loans. Excludes servicing costs.

Interest income on our Securities, at fair value portfolio for 20242025 increased $18.7$60.1 million to $61.1$121.3 million from $42.4$61.1 million for 2023.2024. This increase primarily reflects ana increase in thehigher average amortized cost basis of the portfolio of $368.5$1.1 millionbillion due to purchases of Agency MBS, partially offset by a decrease in the net yield on our Securities, at fair value portfolio to 6.59%5.93% for 2024,2025, compared to 7.57%6.59% for 2023.2024.

For 2024,2025, we recorded a reversal of provision for credit losses on residential whole loans held at carrying value of $3.1$0.9 million compared to a reversal of provision of $8.9$3.1 million for 2023.2024. The provision for the current period primarily reflects minor changes to modeling assumptions, partially offset by the run-off of loans held at carrying value. The reversal of provision recorded in 2024 primarily reflects the run-off of loans held at carrying value and minor changes to modeling assumptions. The prior period reversal primarily reflects updated modeling assumptions, as well as the run-off of loans held at carrying value, partially offset by the impact of loan charge-offs.

For 2025, we had no provision for credit losses on Other Assets. For 2024, we recorded a provision for credit losses on Other Assets of $1.1 million, related to an uncollectible receivable from an unrelated third-party servicer. No such provision was recorded for 2023.

Compensation and benefits expenses are composed of salaries, annual bonus, stock-based awards, long-term incentives, Lima One origination related commissions, related payroll taxes, medical insurance, 401(k) matching and other benefits expenses. Compensation and benefits expense increaseddecreased $1.9$10.0 million to $77.7 million for 2025, compared to $87.7 million for 2024, compared to $85.8 million for 2023 primarily driven by separation,lower retirement,expense recognition from cash bonus and stock-based awards, lower accrual of severance related costs, partiallyand offset bya reduction in originationLima relatedOne commissionsalary expenses andfrom lowerreduced stock-based compensation expense.headcount.

Other general and administrative expenses are comprised of leasing and other office expenses, professional fees, insurance costs, board of directors fees, and miscellaneous expenses. Other general and administrative expenses increaseddecreased by $0.4$2.5 million to $41.7 million for 2025 compared to $44.3 million for 2024 compared to $43.9 million for 2023,2024, primarily as a result of acceleratedlower depreciationexpense recognized on the disposal of afixed software assetassets at Lima One, higheras well as lower costs associated with IT infrastructureinfrastructure, atindustry our corporate officesconferences and tax related accountingtravel expenses, and lower professional fees, partially offset by lowerhigher depreciationrental atexpense ourfor corporatethe offices, and lower professional fees and miscellaneous expenses atnew Lima One.One headquarters.

Loan servicing and other related operating expenses are composed of non-recoverable advances, upfront costs on securitization and other fees related to our residential whole loan activities. These expenses increaseddecreased in 2025 compared to 20232024 by approximately $1.2$1.9 million, or 3.4%,5.3%, primarily due to higherlower non-recoverableexpenses advancesrecognized andon upfront costs on securitization.securitizations, with five securitizations in 2025 compared to eight in 2024, partially offset by higher expenses recognized related to property preservation, taxes, insurance, and certain other non-recoverable carrying costs on our residential whole loan and REO portfolios.

“Distributable earnings” is a non-GAAP financial measure of our operating performance, within the meaning of Regulation G and Item 10(e) of Regulation S-K, as promulgated by the Securities and Exchange Commission. Distributable earnings is determined by adjusting GAAP net income/(loss) by removing certain unrealized gains and losses, primarily on residential mortgage investments, associated debt, and hedges that are, in each case, accounted for at fair value through earnings, certain realized gains and losses, as well as certain non-cash expenses and securitization-related transaction costs. Realized gains and losses arising from loans sold to third-parties by Lima One shortly after the origination of such loans are included in Distributable earnings. The transaction costs are primarily comprised of costs only incurred at the time of execution of our securitizations and include costs such as underwriting fees, legal fees, diligence fees, bank fees and other similar transaction related expenses. These costs are all incurred prior to or at the execution of our securitizations and do not recur. Recurring expenses, such as servicing fees, custodial fees, trustee fees and other similar ongoing fees are not excluded from distributableDistributable earnings. During the third quarter of 2024, the Company changed the determination of Distributable earnings to exclude depreciation, for consistency with the reporting of similar non-cash expenses; this change has been reflected in all periods presented. Management believes that the adjustments made to GAAP earnings result in the removal of (i) income or expenses that are not reflective of the longer term performance of our investment portfolio, (ii) certain non-cash expenses, and (iii) expense items required to be recognized solely due to the election of the fair value option on certain related residential mortgage assets and associated liabilities. Distributable earnings is one of the factors that our Board of Directors considers when evaluating distributions to our shareholders. Accordingly, we believe that the adjustments to compute Distributable earnings specified below provide investors and analysts with additional information to evaluate our financial results.

(1)Reflects annualized Distributable earnings before preferred dividends divided by average total assets.

We seek to employ a diverse capital raising strategy under which we may issue capital stock and other types of securities. To the extent we raise additional funds through capital market transactions, we currently anticipate using the net proceeds from such transactions to acquire additional residential mortgage-related assets, consistent with our investment policy, and for working capital, which may include, among other things, the repayment of our financing transactions. There can be no assurance, however, that we will be able to access the capital markets at any particular time or on any particular terms. We have available for issuance an unlimited amount (subject to the terms and limitations of our charter) of common stock, preferred stock, depository shares representing preferred stock, warrants, debt securities, rights and/or units pursuant to our universal shelf registration statement and, atuntil DecemberSeptember 31,27, 2024,2025, we had approximately 2.0 million shares of common stock available for issuance pursuant to our DRSPP shelf registration statement. The CompanyDRSPP shelf registration statement expired by its terms on September 27, 2025. We did not issue any shares pursuant to itsthe DRSPP during 2024.2025.

For a discussion of the Company’s risk factors, see Part 1,I, Item 1A. “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”). There are no material changes from the risk factors set forth in the 2025 Form 10-K. However, the risks and uncertainties that the Company faces are not limited to those set forth in the 2025 Form 10-K. Additional risks and uncertainties not currently known to the Company (or that it currently believes to be immaterial) may also adversely affect the Company’s business and the trading price of our securities.

Forward LookingForward-Looking Statements

These forward-looking statements include information about possible or assumed future results with respect to our business, financial condition, liquidity, results of operations, plans and objectives. Among the important factors that could cause our actual results to differ materially from those projected in any forward-looking statements that we make are: general economic developments and trends, including the current tensions in international trade and the performance of the labor, housing, real estate, mortgage finance and broader financial markets; inflation, increases in interest rates and changes in the market (i.e., fair) value of our residential whole loans, MBS, securitized debt and other assets, as well as changes in the value of our liabilities accounted for at fair value through earnings; the effectiveness of hedging transactions; changes in the prepayment rates on residential mortgage assets, an increase of which could result in a reduction of the yield on certain investments in our portfolio and could require us to reinvest the proceeds received by us as a result of such prepayments in investments with lower coupons, while a decrease in which could result in an increase in the interest rate duration of certain investments in our portfolio making their valuation more sensitive to changes in interest rates and could result in lower forecasted cash flows; credit risks underlying our assets, including changes in the default rates and management’s assumptions regarding default rates and loss severities on the mortgage loans in our residential whole loan portfolio; our ability to borrow to finance our assets and the terms, including the cost, maturity and other terms, of any such borrowings; implementation of or changes in government regulations or programs affecting our business (including as a result of the current U.S. administration); our estimates regarding taxable incomeincome, the actual amount of which is dependent on a number of factors, including, but not limited to, changes in the amount of interest income and financing costs, the method elected by us to accrete the market discount on residential whole loans and the extent of prepayments, realized losses and changes in the composition of our residential whole loan portfolios that may occur during the applicable tax period, including gain or loss on any MBS disposals or whole loan modifications, foreclosures and liquidations; the timing and amount of distributions to stockholders, which are declared and paid at the discretion of our Board and will depend on, among other things, our taxable income, our financial results and overall financial condition and liquidity, maintenance of our REIT qualification and such other factors as the Board deems relevant; our ability to maintain our qualification as a REIT for federal income tax purposes; our ability to maintain our exemption from registration under the Investment Company Act of 1940, as amended (or the Investment Company Act), including statements regarding the concept release issued by the SEC relating to interpretive issues under the Investment Company Act with respect to the status under the Investment Company Act of certain companies that are engaged in the business of acquiring mortgages and mortgage-related interests; our ability to continue growing our residential whole loan portfolio, which is dependent on, among other things, the supply of loans offered for sale in the market; targeted or expected returns on our investments in recently-originated mortgage loans, the performance of which is, similar to our other mortgage loan investments, subject to, among other things, differences in prepayment risk, credit risk and financing costs associated with such investments; risks associated with the ongoing operation of Lima One Holdings, LLC (including, without limitation, industry competition, unanticipated expenditures relating to or liabilities arising from its operation (including, among other things, a failure to realize management’s assumptions regarding expected growth in business purpose loan (BPL) origination volumes and credit risks underlying BPLs, including changes in the default rates and management’s assumptions regarding default rates and loss severities on the BPLs originated by Lima One)); expected returns on our investments in nonperforming residential whole loans (or NPLs), which are affected by, among other things, the length of time required to foreclose upon, sell, liquidate or otherwise reach a resolution of the property underlying the NPL, home price values, amounts advanced to carry the asset (e.g., taxes, insurance, maintenance expenses, etc. on the underlying property) and the amount ultimately realized upon resolution of the asset; risks associated with our investments in loan originators; the failure to realize the expected expense savings resulting from the anticipated relocation of our corporate headquarters in New York City; risks associated with investing in real estate assets generally, including changes in business conditions and the general economy; and other risks, uncertainties and factors, including those described in the annual, quarterly and current reports that we file with the SEC. These forward-looking statements are based on beliefs, assumptions and expectations of our future performance, taking into account information currently available. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. New risks and uncertainties arise over time and it is not possible to predict those events or how they may affect us. Except as required by law, we are not obligated to, and do not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

At MarchJune 31,30, 2026, we had total assets of approximately $13.2$13.7 billion, of which $8.8 billion, or 66%,64%, represented residential whole loans. Our residential whole loans include primarily: (i) loans to finance (or refinance) one-to-four family residential properties that are not considered to meet the definition of a “Qualified Mortgage” in accordance with guidelines adopted by the Consumer Financial Protection Bureau (“Non-QM loans”), (ii) business purpose loans primarily originated by Lima One, to finance (or refinance) non-owner occupied one-to-four family residential properties that are rented to one or more tenants (“Single-family rental loans”), (iii) short-term business purpose loans primarily originated by Lima One, collateralized by residential properties made to non-occupant borrowers that generally intend to rehabilitate or construct residential housing and then refinance or sell the properties (“Single-family transitional loans”), (iv) short-term business purpose loans primarily originated by Lima One, collateralized by multifamily properties, typically with a loan balance below $10 million, made to non-occupant borrowers that generally intend to rehabilitate or stabilize and then refinance or sell the properties (“Multifamily transitional loans,” collectively with Single-family transitional loans, “Transitional loans,” also sometimes referred to as “Rehabilitation loans” or “Fix and Flip loans” and, collectively with Single-family rental loans, “Business purpose loans”), (v) loans primarily secured by residential real estate that were generally either non-performing or re-performing at acquisition (“LegacySeasoned RPL/NPL”) and (vi) loans on investor properties that conform to the standards for purchase by a federally chartered corporation, such as the Federal National Mortgage Association (“Fannie Mae”) or the Federal Home Loan Mortgage Corporation (“Freddie Mac”) (“Agency eligible investor loans,” which are included in “Other loans”). In addition, at MarchJune 31,30, 2026, we had approximately $3.5$4.1 billion, or 27%,30%, of total assets invested in investments in Agency MBS.

Our investments in residential mortgage assets expose us to credit risk, meaning that we are generally subject to credit losses due to the risk of delinquency, default and foreclosure on the underlying real estate collateral. Our investment process for credit sensitive assets focuses primarily on quantifying and pricing credit risk. With respect to investments in Business purpose and Non-QM loans, we believe that sound underwriting standards, including low LTVs at origination, significantly mitigate our risk of loss. Further, we believe the discounted purchase prices paid on LegacySeasoned RPL/NPL loans mitigate our risk of loss in the event that we receive less than 100% of the unpaid principal balance of these investments.

CPR levels are impacted by, among other things, conditions in the housing market, new regulations, government and private sector initiatives, interest rates, availability of credit to home borrowers, underwriting standards and the economy in general. In particular, CPR presents the annualized constant rate of principal repayment in excess of scheduled principal amortization. CPRs on our residential mortgage securities and whole loans may differ significantly. For the three months ended MarchJune 31,30, 2026, the average CPRs on certain of our loan portfolios were: 15.9%17.9% for Non-QM loans, 9.5%11.6% for Single-family rental loans, and 5.9%7.7% for LegacySeasoned RPL/NPL loans. In addition, for the three months ended MarchJune 31,30, 2026, the repayment rate (which includes both scheduled and unscheduled repayments of principal) was 65.4%67.1% for our Single-family transitional loans and 43.6%45.6% for our Multifamily transitional loans.

During the firstsecond quarter of 2026, fixed-incomemarket marketsconditions sawcontinued renewedto volatilitybe asadversely investorsimpacted navigatedby anheightened anticipatedgeopolitical significantuncertainty, transitionpersistent inconcerns about inflation, and a more restrictive monetary policy posture from the Federal Reserve leadership, escalating geopolitical tensions, and persistent concerns regarding inflation and deficit spending. Duringunder the quarter,leadership marketof sentimentnew shiftedChairman towardsKevin aWarsh. prolongedTreasury “yields finished the quarter higher across the curve, as markets repriced expectations for longer”interest rate cuts to reflect expectations that the Federal Reserve policywould regardingincrease interest rates,rates asbefore the Iranend conflictof triggeredthe renewed concerns regarding inflation and deficit spending and stalled expectations for more rate cuts.year. The 10-year Treasury rate rose by approximately 15 basis points during the quarter to 4.32%4.47% at quarter-end, while the Bloomberg US Aggregate Index wasreturned flat0.7% during the quarter. Agency MBS spreads finished the quarter wider, benefiting early from the announcement of a $200 billion GSE purchase program, but giving back gains as volatility accelerated in March. Despite these challenges, during the quarter, we were able to add approximately $1.1$1.4 billion of our target assets at attractive yields, including $470.6$462.3 million of Non-QM loans, $392.8$714.4 million of Agency MBS and $200.6$269.6 million of Business purpose loan originations and draws on existing Transitional loans by Lima One. We also opportunisticallyexpanded initiated aour long positionpositions in TBA securities by adding incremental TBA positions with a notional balance of $300.0$178.0 million during the quarter. During the quarter.quarter, we called threefour securitizations and issued two new securitizations collateralized by Non-QM loans with an unpaid principal balance of $757.2$817.4 million.

During the quarter, we generated GAAP net lossincome per share (or EPS) of $(0.11)$0.35 per basic common share and $0.34 per diluted common share and Distributable earnings, a non-GAAP financial measure that excludes the impact of fair value changes and certain other items, of $0.30$0.12 per basic common share. For the quarter, compensation and benefits and other G&A expenses were $34.3$31.2 million and included approximately $2.4$4.9 million in accelerated depreciation related to the exit of the lease for our currentformer corporate headquarters. At MarchJune 31,30, 2026, our GAAP book value was $12.70$12.71 per common share and our Economic book value, a non-GAAP financial measure of our financial position that adjusts GAAP book value by the amount of unrealized mark-to-market gains or losses on our residential whole loans and securitized debt held at carrying value, was $13.22$13.20 per common share, each representingrelatively decreasesunchanged of approximately 4% aswhen compared to DecemberMarch 31, 2025.2026. During the quarter, we declared dividends totaling $0.36 per common share.

For the quarter, our Lima One subsidiary originated Business purpose loans with a maximum unpaid principal balance of $219$316 million, aan decreaseincrease from the $226$219 million originated in the fourthfirst quarter of 2025. During the previous year, we expanded Lima One’s sales force, invested in technology initiatives that we expect to improve the borrower experience, and made key hires to Lima One’s leadership team in strategic growth areas. In early 2026, we relaunched multifamily lending and began funding loans through our newly established wholesale channel, which represent two key areas of growth for Lima One.2026. During the quarter, Lima One sold recently originated Single-family rental loans with an unpaid principal balance of $78.2$92.1 million to third parties and realized gains of $2.7$2.3 million. We believe that these sales to third parties help to strengthen Lima One’s franchise value, create additional distribution channels to accommodate future growth, and enhance returns.

FirstSecond quarter 2026 portfolio activity and impact on financial results

At MarchJune 31,30, 2026, our residential mortgage asset portfolio, which includes residential whole loans and REO, and Securities, at fair value, was approximately $12.5$13.0 billion, compared to $12.3$12.5 billion at DecemberMarch 31, 2025.2026.

The following table presents the activity for our residential mortgage asset portfolio for the three months ended MarchJune 31,30, 2026:

At MarchJune 31,30, 2026, our total recorded investment in residential whole loans and REO was $8.9 billion, or 71.3%68.2% of our residential mortgage asset portfolio. Of this amount, $5.5$5.7 billion are Non-QM loans, $1.2 billion are Single-family rental loans, $0.7 billion are Single-family transitional loans, $0.4$0.3 billion are Multifamily transitional loans and $0.9 billion are LegacySeasoned RPL/NPL loans. Loan acquisition activity of $671.1$731.8 million for the three months ended MarchJune 31,30, 2026 included $125.6$172.8 million of Single-family transitional loans (including draws), $470.6$462.3 million of Non-QM loans, $74.2$96.3 million of Single-family rental loans and $0.8$0.4 million of Multifamily transitional loans (including draws). For the three months ended MarchJune 31,30, 2026, we recognized approximately $143.1$141.0 million of residential whole loan interest income on our consolidated statements of operations, representing an effective yield of 6.42%,6.30%, with Single-family transitional loans generating an effective yield of 8.85%,9.25%, Multifamily transitional loans generating an effective yield of 6.70%,6.69%, Single-family rental loans generating an effective yield of 6.31%,6.05%, Non-QM loans generating an effective yield of 5.90%5.79% and LegacySeasoned RPL/NPL loans generating an effective yield of 7.93%.7.74%. Since the second quarter of 2021 we have elected the fair value option for all loan acquisitions, and 88%89% of our total loan portfolio is measured at fair value through earnings. Included in earnings in Other Income/(Loss), net are net gains/(losses) on these loans of $34.8$45.5 million for the three months ended MarchJune 31,30, 2026. At MarchJune 31,30, 2026 and DecemberMarch 31, 2025,2026, we had REO with an aggregate carrying value of $138.7$128.1 million and $135.0$138.7 million, respectively, which is included in Other assets on our consolidated balance sheets.

At MarchJune 31,30, 2026, we held $3.6$4.1 billion of Securities, at fair value, including $3.5$4.1 billion of Agency MBS, $34.6$34.5 million of CRT securities and $21.8$21.5 million of Non-Agency MBS. For the three months ended MarchJune 31,30, 2026, we purchased $392.8$714.4 million of Agency MBS securities. The net yield on our Securities, at fair value was 5.41% for the three months ended June 30, 2026, compared to 5.47% for the three months ended March 31, 2026, compared to 5.56% for the three months ended December 31, 2025.2026.

For the three months ended MarchJune 31,30, 2026, we recorded a reversal of provision for credit losses on residential whole loans held at carrying value of $0.2$0.1 million. The total allowance for credit losses recorded on residential whole loans held at carrying value at MarchJune 31,30, 2026 was $9.4 million.

During the firstsecond quarter of 2026, we completed two securitizations collateralized by $757.2$817.4 million UPB of loans. This included $508.4 million of rental loans and $309 million of Non-QM loans. These securitizations provided longer term, non-recourse, fixed rate financing. We continue to closely follow the actions of the Federal Reserve regarding the path and timing of changes in interest rates and the impact such rate changes would be expected to have on levels of inflation, the overall economic environment and our business.

Our GAAP book value per common share was $12.71 as of June 30, 2026 and was $12.70 as of March 31, 2026 and was $13.20 as of December 31, 2025.2026. Economic book value per common share, a non-GAAP financial measure, was $13.20 as of June 30, 2026, relatively unchanged from $13.22 as of March 31, 2026, a decrease from $13.75 as of December 31, 2025. The decrease in2026. GAAP book value and Economic book value during the firstsecond quarter of 2026 primarilywas reflectsrelatively the net loss applicable to common stockholders as wellunchanged, as dividends declared on our common stock.stock were offset by our GAAP comprehensive income. For additional information regarding the calculation of Economic book value per share, including a reconciliation to GAAP book value per share, refer to “Reconciliation of GAAP and Non-GAAP Financial Measures” below.

The table below presents certain information about our asset allocation at MarchJune 31,30, 2026:

The following table presents the contractual maturities of our residential whole loan portfolios at MarchJune 31,30, 2026. Amounts presented do not reflect estimates of prepayments or scheduled amortization.

(1)Excludes an allowance for credit losses of $1.4$1.3 million at MarchJune 31,30, 2026.

(2)Excludes an allowance for credit losses of $1.9$2.5 million at MarchJune 31,30, 2026.

(3)Excludes an allowance for credit losses of $6.1$5.6 million at MarchJune 31,30, 2026.

The following table presents, at MarchJune 31,30, 2026, the dollar amount of certain of our residential whole loans, contractually maturing after one year, and indicates whether the loans have fixed interest rates or adjustable interest rates:

(1)Includes loans on which borrowers have defaulted and are not making payments of principal and/or interest as of MarchJune 31,30, 2026.

Our Transitional loans contain various contractual extension features, typically ranging from three to twenty-four months subject to certain conditions, generally including our consent. Transitional loans are generally only extended if the loan is current and in compliance with various other loan terms. Given the short duration of our Transitional loans, maturity extensions are a regular occurrence, irrespective of market conditions. At MarchJune 31,30, 2026, approximately 77%85% of our Multifamily transitional loans and 27%24% of our Single-family transitional loans held as of period end had been extended.

The following table presents information with respect to our Securities, at fair value at MarchJune 31,30, 2026 and December 31, 2025:

(1)Weighted average yield is annualized interest income divided by average amortized cost basis for Securities, at fair value held at MarchJune 31,30, 2026 and December 31, 2025.

We estimate that for the threesix months ended MarchJune 31,30, 2026, our REIT taxable income was approximately $29.9$62.3 million.

We estimate that for the threesix months ended MarchJune 31,30, 2026, our net TRS taxable income (loss) will be $(13.436.5) million. Net income or loss generated by our TRS subsidiaries is included in consolidated GAAP net income, but may not be included in REIT taxable income in the same period. REIT taxable income generally does not include taxable income of the TRS unless and until it is distributed to the REIT. For example, because our securitization transactions that are treated as a sale for tax purposes are undertaken by a domestic TRS, any gain or loss recognized on the sale is not included in our REIT taxable income until it is distributed by the TRS. Similarly, the income earned from loans, securities, REO and other investments held by our domestic TRS is excluded from REIT taxable income until it is distributed by the TRS. Net income of our foreign domiciled TRS subsidiaries is included in REIT taxable income as if distributed to the REIT in the taxable year it is earned by the foreign domiciled TRS. A TRS may carry forward its net taxable losses indefinitely as net operating losses to offset up to 80% of its taxable income in future tax years, but REIT taxable income generally does not include the net taxable loss of a TRS unless the TRS liquidates for tax purposes.

Quarter Ended MarchJune 31,30, 2026 Compared to the Quarter Ended DecemberMarch 31, 20252026

The following table summarizes the changes in our results of operations for the three months ended MarchJune 31,30, 2026 compared to the three months ended DecemberMarch 31, 2025.2026.

For the firstsecond quarter of 2026, we had net income available to our common stock and participating securities of $36.2 million, or $0.35 per basic common share and $0.34 diluted common share, compared to a net loss available to our common stock and participating securities of $(11.4) million, or $(0.11) per basic and diluted common share, compared to net income available to common stock and participating securities of $43.6 million, or $0.42 per basic and diluted common share, for the fourthfirst quarter of 2025.2026. The decreaseincrease in net income available to common stock and participating securities in the current period compared to the prior period primarily reflects a $(49.1)$45.6 million change in Other income/(loss), net and higherlower primarily non-cash operatingcompensation expenses, partially offset by higher other general and administrative expenses and a $3.7 million increasedecrease to net interest income.

For the firstsecond quarter of 2026, our net interest spread and margin (including the impact of net Swap carry) were 1.64%1.56% and 2.23%,2.12%, respectively, compared to a net interest spread and margin (including the impact of net Swap carry) of 1.69%1.64% and 2.31%,2.23%, respectively, for the fourthfirst quarter of 2025.2026. Our net interest income increaseddecreased by $3.7$0.6 million and was $58.6 million for the second quarter of 2026, compared to $59.2 million for the first quarter of 2026, compared to $55.5 million for the fourth quarter of 2025.2026. For the firstsecond quarter of 2026, net interest income, which does not include the benefit of net Swap carry, includes lower net interest income from our residential whole loan portfolio of $3.1 million, compared to the first quarter of 2026, primarily due to a decrease in interest income from lower yield on our residential whole loan portfolio and an increase in interest expense from higher average balances of our residential whole loan financing agreements, partially offset by an increase in interest income from higher average balances of our residential whole loan portfolio. Net interest income for the second quarter of 2026 also includes higher net interest income from our securities portfolio of $4.3$2.7 million, compared to the fourthfirst quarter of 2025,2026, primarily due to an increase in interest income from higher average balances of our securities portfolio and a decrease in interest expense from lower rates on our securities repurchase agreements,portfolio, partially offset by an increase in interest expense from higher average balances of our securities repurchase agreements. Net interest income for the first quarter of 2026 also includes higher net interest income from our residential whole loan portfolio of $0.4 million, compared to the fourth quarter of 2025, primarily due to a decrease in interest expense from lower rates on our residential whole loan financing agreements and securitized debt, partially offset by a decrease in interest income from lower yield on our residential whole loan portfolio.

The following table sets forth certain information about the average balances of our assets and liabilities and their related yields and costs for the three months ended MarchJune 31,30, 2026 and DecemberMarch 31, 2025.2026. Average yields are derived by dividing annualized interest income by the average amortized cost basis of the related assets, and average costs are derived by dividing annualized interest expense by the average balance of the related liabilities, for the periods shown. The yields and costs may include premium amortization and discount accretion which are considered adjustments to interest income or expense.

(1)Reflects annualized interest income on Residential whole loans divided by average amortized cost basis of Residential whole loans.basis. Excludes servicing costs.

Interest income on our Securities, at fair value portfolio for the firstsecond quarter of 2026 increased by $5.7$7.0 million to $45.8$52.8 million, compared to $40.1$45.8 million for the fourthfirst quarter of 2025.2026. This increase primarily reflects a $460.8$551.6 million increase in the average balance of this portfolio to $3.3$3.9 billion for the firstsecond quarter of 2026 from the fourthfirst quarter of 2025.2026.

Interest income on our residential whole loans for the firstsecond quarter of 2026 decreased by $3.4$2.1 million, or 2.3%,1.5%, to $143.1$141.0 million, compared to $146.4$143.1 million for the fourthfirst quarter of 2025.2026. This decrease primarily reflects a decrease in the yield to 6.30% for the second quarter of 2026 from 6.42% for the first quarter of 20262026, frompartially 6.53%offset by a $32.2 million increase in average balance of this portfolio to $8.9 billion for the fourthsecond quarter of 2025.2026 from the first quarter of 2026.

For the firstsecond quarter of 2026, we recorded a reversal of provision for credit losses on residential whole loans held at carrying value of $0.2$0.1 million compared to a reversal of provision for credit losses of $0.3$0.2 million for the fourthfirst quarter of 2025.2026. The reversal of provision recorded in the current period primarily reflects minor changes to modeling assumptions and the run-off of loans held at carrying value. The reversal of provision for the prior period primarily reflects minor changes to modeling assumptions and the run-off of loans held at carrying value.

We had no provision for credit losses on Other Assets for the firstsecond quarter of 2026 or the fourthfirst quarter of 2025.2026.

For the firstsecond quarter of 2026, Other Income/(Loss), net was $(15.9)$29.7 million, compared to Other Income/(Loss), net of $33.2$(15.9) million for the fourthfirst quarter of 2025.2026. The components of Other Income/(Loss), net for the firstsecond quarter of 2026 and fourthfirst quarter of 20252026 are summarized in the table below:

(1) Includes realized credit losses, net of recoveries, on liquidated residential whole loans or residential whole loans that were transferred to REO of $(4.424.5) million and $(3.04.4) million for the three months ended MarchJune 31,30, 2026 and DecemberMarch 31, 2025,2026, respectively.

During the past two years we have seen an increase in realized credit losses on our residential whole loans at fair value, as we have worked to accelerate the resolution of certain non-performing loans. While we cannot predict the timing or amount of future credit losses, we expect that credit losses may remain heightened relative to historical levels in the short term as we continue to work to accelerate the resolution of certain non-performing loans. Credit losses are generally initially recognized in “Net gain/(loss) on residential whole loans measured at fair value through earnings” as unrealized losses and are later reclassified to “Other Income/(Loss), net” when the credit loss is realized.

Compensation and benefits expenses are composed of salaries, annual bonus, stock-based awards, long-term incentives, Lima One sales commissions, related payroll taxes, medical insurance, 401(k) matching and other benefits expenses. Compensation and benefits expense increaseddecreased by $5.2$4.2 million to $18.0 million for the second quarter of 2026, compared to $22.2 million for the first quarter of 2026, compared to $16.9 million for the fourth quarter of 2025, primarily driven by the inclusion of accelerated recognition of stock-based compensation in the first quarter of 2026 related to awards made to retirement eligible employees in January 2026.

Other general and administrative expenses are comprised of leasing and other office expenses, professional fees, insurance costs, board of directors fees, and miscellaneous expenses. Other general and administrative expenses of $13.2 million for the second quarter of 2026 increased by $1.0 million when compared to $12.2 million for the first quarter of 2026 increased by $2.1 million when compared to $10.1 million for the fourth quarter of 2025,2026, primarily driven by the accelerated recognition of depreciation expense related to the remaining undepreciated tenant improvements at our currentformer corporate headquarters.headquarters, partially offset by lower lease expenses associated with the early exit of the corporate office space in June 2026.

Loan servicing and other related operating expenses are composed of non-recoverable advances, upfront costs on securitization and other fees related to our residential whole loan activities. These expenses increasedwere relatively unchanged in the second quarter of 2026 compared to the priorfirst quarter periodof by approximately $2.5 million, or 34.1%, primarily due to higher expenses recognized on upfront costs associated with two securitizations entered into in this quarter, compared to one in the prior quarter, as well as higher expenses recognized related to property preservation, taxes, insurance, and certain other non-recoverable carrying costs on our residential whole loan and REO portfolios.2026.

ThreeSix Month Period Ended MarchJune 31,30, 2026 Compared to the ThreeSix Month Period Ended MarchJune 31,30, 2025

The following table summarizes the changes in our results of operations for the threesix months ended MarchJune 31,30, 2026 compared to the threesix months ended MarchJune 31,30, 2025.

For the threesix months ended MarchJune 31,30, 2026, we had net loss available to our common stock and participating securities of $(11.4) million, or $(0.11) per basic and diluted common share, compared to a net income available to our common stock and participating securities of $33.0$24.8 million, or $0.32$0.23 per basic and $0.31diluted common share, compared to net income available to our common stock and participating securities of $55.6 million, or $0.53 per basic common share and $0.52 per diluted common share, for the threesix months ended MarchJune 31,30, 2025. The net lossincome available to common stock and participating securities in the current period decreased from the prior period net income available to our common stock and participating securities primarily as a result of $40.4$23.0 million lower Other income/(loss), net, $2.9$7.3 million higherin operatingnonrecurring andnon-cash otherexpense expenses,related to the acceleration of depreciation expense related to the remaining undepreciated tenant improvements at our former corporate headquarters, and a $2.2 million increase in preferred stock dividends paid as a result of the current floating rate payable on our Series C preferred stock compared to the initial fixed rate payable in the prior period, as well as additional shares outstanding as a result of issuances through the Preferred Stock ATM Program, partially offset by $1.7 million in higher net interest income.Program.

For the threesix months ended MarchJune 31,30, 2026, our net interest spread and margin were 1.64%1.60% and 2.23%,2.17%, respectively, compared to a net interest spread and margin of 1.84%1.91% and 2.63%,2.68%, respectively, for the threesix months ended MarchJune 31,30, 2025. Our net interest income increaseddecreased by $1.7$1.1 million, or 2.9%,0.9%, to $59.2$117.8 million for the threesix months ended MarchJune 31,30, 2026 compared to net interest income of $57.5$118.8 million for the threesix months ended MarchJune 31,30, 2025. For the threesix months ended MarchJune 31,30, 2026, net interest income, which does not include the benefit of net Swap carry, includes higher net interest from our securities portfolio of $8.0$16.2 million compared to the threesix months ended MarchJune 31,30, 2025, primarily due to an increase in interest income from higher average balances of our securities portfolio, partially offset by an increase in interest expense from higher average balances of securities repurchase agreements. Net interest income for the threesix months ended MarchJune 31,30, 2026 also includes lower net interest income from our residential whole loan portfolio of $4.4$12.9 million compared to the threesix months ended MarchJune 31,30, 2025, primarily due to a decrease in interest income as a result of lower yield on our residential whole loan portfolio and an increase in interest expense as a result of higher average balances of our securitized debt, partially offset by a decrease in interest expense as a result of lower average balances of, and rates on, our residential whole loan financing agreements. In addition, the threesix months ended MarchJune 31,30, 2026 had $1.4$3.4 million lower interest income from other interest earnings assets and cash and cash equivalents when compared to the threesix months ended MarchJune 31,30, 2025.2025 from lower average cash balances as these amounts were deployed into residential mortgage assets.

The following table sets forth certain information about the average balances of our assets and liabilities and their related yields and costs for the threesix months ended MarchJune 31,30, 2026 and 2025. Average yields are derived by dividing annualized interest income by the average amortized cost basis of the related assets, and average costs are derived by dividing annualized interest expense by the daily average balance of the related liabilities, for the periods shown. The yields and costs may include premium amortization and discount accretion which are considered adjustments to interest income or expense.

Interest income on our Securities, at fair value portfolio for the threesix months ended MarchJune 31,30, 2026 increased by $21.1$45.1 million to $45.8$98.5 million from $24.7$53.4 million for the threesix months ended MarchJune 31,30, 2025. This increase primarily reflects an increase in the average amortized cost basis of the portfolio of $1.7$1.9 billion from purchases of Agency MBS, partially offset by a decrease in the net yield on our Securities, at fair value portfolio to 5.47%5.44% for the threesix months ended MarchJune 31,30, 2026, compared to 6.07%6.34% for the threesix months ended MarchJune 31,30, 2025.

Interest income on our residential whole loans for the threesix months ended MarchJune 31,30, 2026 decreased by $8.2$21.8 million, or 5.4%,7.1%, to $143.1$284.0 million, compared to $151.3$305.9 million for the threesix months ended MarchJune 31,30, 2025. This decrease primarily reflects a decrease in the net yield on our residential whole loans portfolio to 6.42%6.36% for the threesix months ended MarchJune 31,30, 2026, compared to 6.77%6.81% for the threesix months ended MarchJune 31,30, 2025.

Interest income on our cash and other interest earninginterest-earning assets for the threesix months ended MarchJune 31,30, 2026 decreased by $1.4$3.4 million to $3.1$6.1 million, compared to $4.5$9.5 million for the threesix months ended MarchJune 31,30, 2025. This decrease primarily reflects a $140.1$160.0 million decrease in the average balance of, and a decrease in the yield earned to 2.91% for the three months ended March 31, 2026 from 3.33% for the three months ended March 31, 2025, onof our cash and cash equivalents.

Our interest expense for the threesix months ended MarchJune 31,30, 2026 increased by $9.8$20.9 million, or 7.9%,8.4%, to $132.7$270.9 million, from $123.0$250.0 million for the threesix months ended MarchJune 31,30, 2025. This increase primarily reflects an increase in the average balances of securities repurchase agreements and securitized debt, partially offset by lower average balances of, and rates, on our residential whole loan financing agreements and lower financing rates on our securities repurchase agreements.

For the threesix months ended MarchJune 31,30, 2026, we recorded a reversal of provision for credit losses on residential whole loans held at carrying value of $0.2$0.3 million compared to a provision for credit losses of $0.1$0.9 million for the threesix months ended MarchJune 31,30, 2025. The reversal of provision for the current period primarily reflects minor changes to modeling assumptions and the run-off of loans held at carrying value. The provision for the prior period primarily reflects minor changes to modeling assumptions, partially offset by the run-off of loans held at carrying value.