v3.25.2
Other Assets
 6 Months Ended
Jun. 30, 2025
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
Other Assets Other Assets
The following table presents the components of the Company’s Other assets at June 30, 2025 and December 31, 2024:

(In Thousands)June 30, 2025December 31, 2024
REO$135,824 $130,854 
Commercial REO20,294 18,373 
Goodwill61,076 61,076 
Intangibles, net (1)
3,200 4,800 
Capital contributions made to loan origination partners20,182 16,793 
Commercial loans7,435 7,435 
Interest receivable105,133 104,395 
Other loan related receivables13,698 21,643 
Lease right-of-use asset (2)
45,662 35,461 
Other67,894 58,725 
Total Other Assets$480,398 $459,555 
(1) Net of aggregate accumulated amortization of $24.8 million and $23.2 million as of June 30, 2025 and December 31, 2024, respectively.
(2) An estimated incremental borrowing rate of 7.5% was used in connection with the Company’s primary operating lease (see Notes 2 and 9).
(a) Real Estate Owned and Commercial REO

The following table summarizes the aggregate carrying value of REO properties by loan source prior to foreclosure proceeding or from completion of a deed-in-lieu of foreclosure or similar legal agreement.

(Dollars In Thousands)June 30, 2025December 31, 2024
Non-QM loans$5,562 $1,278 
Business purpose loans80,457 71,090 
Legacy RPL/NPL loans49,805 58,486 
Total$135,824 $130,854 
Number of properties377 416 
At June 30, 2025, $135.8 million of residential real estate property was held by the Company that was acquired either through a completed foreclosure proceeding or from completion of a deed-in-lieu of foreclosure or similar legal agreement. In addition, formal foreclosure proceedings were in process with respect to $41.8 million of residential whole loans held at carrying value and $256.6 million of residential whole loans held at fair value at June 30, 2025.
The following table presents the activity in the Company’s REO for the three and six months ended June 30, 2025 and 2024:
Three Months Ended
June 30,		Six Months Ended
June 30,
(Dollars In Thousands)2025202420252024
Balance at beginning of period$130,634 $106,185 $130,854 $110,174 
Adjustments to record at lower of cost or fair value(3,565)(2,690)(6,777)(3,957)
Transfer from residential whole loans (1)
30,286 25,609 55,734 44,951 
Purchases and capital improvements, net182 52 317 203 
Disposals and other (2)
(21,713)(21,143)(44,304)(43,358)
Balance at end of period$135,824 $108,013 $135,824 $108,013 
Number of properties377 352 377 352 
(1)During the three and six months ended June 30, 2025, the Company recognized $(4.4) million and $(4.4) million of gains/(losses), respectively, on Residential whole loans in Other Income/(Loss), net associated with the transfer of loans to REO. During the three and six months ended June 30, 2024, the Company recognized $(1.2) million and $(2.4) million of gains/(losses), respectively, on Residential whole loans in Other Income/(Loss), net associated with the transfer of loans to REO.
(2)During the three and six months ended June 30, 2025, the Company sold 107 and 201 REO properties for consideration of $21.8 million and $46.0 million, realizing net gains of approximately $0.6 million and $2.3 million, respectively. During the three and six months ended June 30, 2024, the Company sold 63 and 136 REO properties for consideration of $25.6 million and $49.8 million, realizing net gains of approximately $4.5 million and $6.5 million, respectively. These amounts are included in Other Income/(Loss), net on the Company’s consolidated statements of operations.

Commercial REO

In the third quarter of 2024, the Company received 75% and 49% interests, respectively, in two VIEs through foreclosure of a multifamily property and a senior living facility underlying delinquent commercial mortgage loans. Each of these entities was determined to be a VIE but the Company was not determined to be the primary beneficiary; as a result, the investments in the entities are considered equity method investments. Each entity accounts for its respective commercial REO property (the “Commercial REO”) similarly to the manner in which the Company accounts for its residential REO. The entities generally do not own any other significant assets or carry any significant liabilities, except that two entities contain properties encumbered by third-party financing. The properties foreclosed in 2024 were considered held-for-investment. During the second quarter of 2025, one of the properties was transferred to held-for-sale status.
(b) Goodwill and Intangible Assets

On July 1, 2021, the Company completed the acquisition of Lima One. In connection with the acquisition of Lima One, the Company identified and recorded goodwill of $61.1 million and finite-lived intangible assets totaling $28.0 million. For the Lima One reporting unit, as of the most recent testing date (October 1, 2024), the estimated fair value of the reporting unit exceeded its carrying value. Key assumptions used in the valuation included loan origination volume, expense levels, discount rates and capitalization multiples, all of which are subject to variability in the current market.
The amortization period for each of the finite lived intangible assets and the activity for the six months ended June 30, 2025 is summarized in the table below:
(Dollars in Thousands)Carrying Value at December 31, 2024Amortization Six months ended June 30, 2025Carrying Value at June 30, 2025
Amortization Period (Years) (1)
Trademarks / Trade Names$2,600 $(200)$2,400 10
Customer Relationships1,000 (1,000)— 4
Internally Developed Software1,200 (400)800 5
Total Identified Intangibles$4,800 $(1,600)$3,200 
(1) Amortization is calculated on a straight-line basis over the amortization period, except for Customer Relationships, where amortization is calculated based on expected levels of customer attrition.
(c) Capital Contributions Made to Loan Origination Partners

The Company has made investments in several loan originators as part of its strategy to be a reliable source of capital to select partners from whom the Company sources residential mortgage loans through both flow arrangements and bulk purchases. At June 30, 2025, the carrying value of these investments (including adjustments for impairments or mark-to-market changes) was $20.2 million, including $5.1 million of common equity (including partnership interests) and $15.1 million of preferred equity.

During the six months ended June 30, 2025 and 2024, there were no impairment charges recorded by the Company on its investments in loan origination partners.

Prior to December 31, 2024, the Company had elected to account for certain of these investments pursuant to the fair value option, where changes in estimated fair value were recorded on the statement of operations. Such changes in estimated fair value resulted in gains (losses) being recorded of $2.6 million and $3.4 million during the three and six months ended June 30, 2025, and $(1.5) million and $(1.5) million during the three and six months ended June 30, 2024.

For certain of the Company’s investments, the interests acquired to date by the Company generally do not have a readily determinable fair value. Consequently, the Company accounts for these interests (including any acquired options and warrants) in loan originators initially at cost. The carrying value of these investments will be adjusted if it is determined that an impairment has occurred or if there has been a subsequent observable transaction in either the investee company’s equity securities or a similar security that provides evidence to support an adjustment to the carrying value. In addition, for certain partners, options or warrants have also been acquired that provide the Company the ability to increase the level of its investment if certain conditions are met. At the end of each reporting period, or earlier if circumstances warrant, the Company evaluates whether the nature of its interests and other involvement with the investee entity requires the Company to apply equity method accounting or consolidate the results of the investee entity with the Company’s financial results.
(d) Commercial Mortgage Loans

The Company owns two participations in commercial mortgage bridge loans, which are accounted for at fair value under the fair value option, and are classified as Level 3 fair value measurements in the fair value hierarchy. Each of the participations is 75% of the total UPB of the related loans and the remaining interest in each loan was retained by the originator of such loan. The commercial mortgage loans are collateralized by one multifamily property and one office property. The commercial mortgage loans are first liens and bear variable interest rates. The Company has received interests in two of the previously underlying properties, as further described above under “Commercial REO.”
The following table presents certain additional information about the Company’s commercial mortgage loans as of June 30, 2025 and December 31, 2024:
(Dollars In Thousands)
Fair Value / Carrying ValueUPBWeighted Average CouponWeighted Average Term to Maturity (Months)UPB 60+ Days DelinquentWeighted Average LTV Ratio
Commercial Loans - June 30, 2025$7,435 $9,385 11.26 %0$9,385 98 %
Commercial Loans - December 31, 2024$7,435 $9,385 11.48 %0$4,875 82 %
(e) Derivative Instruments
 
Swaps

The Company’s derivative instruments include both interest rate swap agreements and ERIS swap futures, which are used to economically hedge the interest rate risk associated with certain borrowings. Pursuant to these arrangements, the Company agreed to pay a fixed rate of interest and receive a variable interest rate, generally based on the Secured Overnight Financing Rate (“SOFR”), on the notional amount of the Swap. At June 30, 2025, none of the Company’s Swaps were designated as hedges for accounting purposes.

Variation margin payments on the Company’s Swaps are treated as a legal settlement of the exposure under the related Swap contract, the effect of which reduces what would have otherwise been reported as the fair value of the Swap, generally to zero.
The following table presents the assets pledged as collateral against the Company’s Swaps:
(In Thousands)June 30,
2025		December 31,
2024
Agency MBS, at fair value
$42,693 $44,411 
Restricted Cash27,158 16,567 
 
As of June 30, 2025, the Company had Swaps with an aggregate notional amount of $3.5 billion and an average maturity of approximately 44 months with a maximum term of approximately 111 months. The following table presents information about the Company’s Swaps at June 30, 2025 and December 31, 2024:
 June 30, 2025December 31, 2024
Maturity (1)
 Notional Amount (2)
Weighted Average Fixed-Pay Interest Rate
Weighted Average Variable Interest Rate (3)
Notional Amount (2)
Weighted Average Fixed-Pay Interest Rate
 Weighted Average Variable Interest Rate (3)
(Dollars in Thousands)      
Within 30 days$— — %— %$450,000 1.16 %4.49 %
Over 30 days to 3 months— — — 100,000 1.65 4.49 
Over 3 months to 6 months— — — 125,000 2.69 4.49 
Over 6 months to 12 months— — — — — — 
Over 12 months to 24 months1,531,000 1.68 4.45 450,000 1.12 4.49 
Over 24 months to 36 months454,000 3.51 4.45 1,045,000 1.84 4.49 
Over 36 months to 48 months310,000 2.95 4.45 24,600 4.28 4.49 
Over 48 months to 60 months508,500 3.47 4.45 574,000 3.28 4.49 
Over 60 months to 72 months— — — — — — 
Over 72 months686,000 3.36 4.45 545,150 3.42 4.49 
Total Swaps$3,489,500 2.62 %4.45 %$3,313,750 2.20 %4.49 %
(1)Each maturity category reflects contractual amortization and/or maturity of notional amounts.
(2)As of June 30, 2025, the aggregate notional amounts of Swaps include $3.2 billion of interest rate swap agreements and $0.3 billion of ERIS swap futures. As of December 31, 2024, all aggregate notional amounts of Swaps were from interest rate swap agreements.
(3)Reflects the benchmark variable rate due from the counterparty at the date presented. This rate adjusts daily based on SOFR. 
Impact of Derivative Instruments on Earnings

The following table present the components of Net gain/(loss) on derivatives used for risk management purposes, which is presented in Other Income/(Loss), net in the consolidated statements of operations:
Three Months Ended June 30,Six Months Ended June 30,
 (In Thousands)2025202420252024
Income on Swaps variable receive leg$36,850 $44,132 $70,927 $88,309 
Expense on Swaps fixed pay leg(21,367)(15,199)(40,191)(30,284)
Unrealized mark-to-market gain/(loss)(15,391)(10,237)(60,233)12,945 
Net price alignment expense on margin collateral received(1,169)(2,609)(2,635)(4,942)
Realized gain/(loss) on terminated Swaps(17,174)— (17,174)— 
Total Net gain/(loss) on derivatives used for risk management purposes$(18,251)$16,087 $(49,306)$66,028