v3.26.1
Secured Financing Agreements
 6 Months Ended
Jun. 30, 2026
Debt Disclosure [Abstract]  
Secured Financing Agreements Secured Financing Agreements
To finance its loans held-for-investment, loans held-for-sale and REO, the Company has a variety of secured financing arrangements with several counterparties, including repurchase facilities, a secured credit facility and a mortgage loan payable.
The Company’s repurchase facilities are typically collateralized by loans held-for-investment, loans held-for-sale, REO assets and certain cash balances. Although the transactions under the Company’s existing repurchase facilities represent committed borrowings until maturity of each facility, the facility lenders retain the right to mark the underlying collateral to fair value. A reduction in the value of pledged assets due to collateral-specific credit events, or, with respect to a limited number of the Company’s repurchase facilities, capital market events, would require the Company to fund margin calls. The Company does not typically retain similar rights for the Company to make margin calls on its underlying borrowers as a result of a determination by the Company and/or its financing counterparty that there has been a decrease in the market value of the underlying pledged collateral.
The Company’s secured credit facility is typically collateralized by loans held-for-investment, loans held-for-sale, REO assets and certain cash balances and is non-mark-to-market.
The Company’s mortgage loan payable is typically collateralized by REO assets and certain cash balances and is non-mark-to-market.
The following tables summarize details of the Company’s borrowings outstanding on its secured financing arrangements as of June 30, 2026, and December 31, 2025:
June 30, 2026
(dollars in thousands)
Maturity Date(1)
Amount Outstanding
Unused Capacity(2)
Total CapacityCarrying Value of CollateralWeighted Average Borrowing Rate
Repurchase facilities:
Morgan Stanley Bank(3)
June 28, 2027$52,151 $197,849 $250,000 $110,532 6.4%
JPMorgan Chase Bank(4)
July 28, 2026189,083 235,917 425,000 304,947 6.2%
CitibankApril 26, 202772,487 177,513 250,000 103,432 5.3%
Total$313,721 $611,279 $925,000 $518,911 
Secured credit facility December 21, 2027$71,774 $28,226 $100,000 $75,969 9.1%
Mortgage loan payable(5)
October 3, 2030$18,000 $— $18,000 $35,780 6.7%
December 31, 2025
(dollars in thousands)
Maturity Date(1)
Amount Outstanding
Unused Capacity(2)
Total CapacityCarrying Value of CollateralWeighted Average Borrowing Rate
Repurchase facilities:
Morgan Stanley Bank(3)
June 28, 2026$52,444 $197,556 $250,000 $119,715 6.5%
JPMorgan Chase Bank(4)
July 28, 2026314,242 147,574 461,816 446,849 7.2%
CitibankApril 27, 202672,487 177,513 250,000 102,471 5.4%
Total$439,173 $522,643 $961,816 $669,035 
Secured credit facility December 21, 2026$71,774 $28,226 $100,000 $98,772 9.5 %
Mortgage loan payable(5)
October 3, 2030$18,000 $— $18,000 $35,060 6.8 %
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(1)The facilities are set to mature on the stated maturity date, unless extended pursuant to their terms.
(2)Unused capacity is not committed as of June 30, 2026, and December 31, 2025.
(3)Collateral value includes REO, held-for-sale with a carrying value of $54.9 million as of June 30, 2026, and REO held-for-investment, net with a carrying value of $62.9 million as of December 31, 2025.
(4)Subsequent to June 30, 2026, the Company entered into modifications of the facility to extend the maturity date to July 28, 2028, and increase the maximum facility capacity to $651.0 million.
(5)Mortgage loan payable balance net of unamortized debt issuance costs is $17.6 million as of June 30, 2026, and $17.5 million as of December 31, 2025.
The following table summarizes certain characteristics of the Company’s repurchase facilities and counterparty concentration at June 30, 2026, and December 31, 2025:
June 30, 2026December 31, 2025
(dollars in thousands)Amount Outstanding
Net Counterparty Exposure(1)
Percent of EquityWeighted Average Years to MaturityAmount Outstanding
Net Counterparty Exposure(1)
Percent of EquityWeighted Average Years to Maturity
Morgan Stanley Bank$52,151 $59,325 12%0.99$52,444 $69,097 12%0.49
JPMorgan Chase Bank189,083 129,018 27%0.08314,242 149,946 27%0.57
Citibank72,487 32,618 7%0.8272,487 32,657 6%0.32
Total$313,721 $220,961 $439,173 $251,700 
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(1)Represents the excess of the carrying amount or market value of the loans held-for-investment pledged as collateral for repurchase facilities, including accrued interest plus any cash on deposit to secure the repurchase obligation, less the amount of the repurchase liability, including accrued interest.
The Company does not anticipate any defaults by its financing counterparties, although there can be no assurance that one or more defaults will not occur.
Loan Participations Sold
During the three months ended June 30, 2026, the Company sold two participation interests with an aggregate principal balance of $30.5 million in a loan with a total outstanding principal balance of $73.1 million to an unaffiliated third party for net proceeds of $27.2 million. Because the transfer did not qualify for sale accounting under ASC 860, the Company continues to recognize the underlying loan in its entirety and records a corresponding loan participations sold liability.
Financial Covenants
The Company is subject to a variety of financial covenants under its secured financing arrangements. The following represent the most restrictive financial covenants to which the Company is subject across its secured financing arrangements:
•Unrestricted cash cannot be less than the greater of $30.0 million and 5.0% of recourse indebtedness. As of June 30, 2026, the Company’s unrestricted cash was $58.5 million, while 5.0% of the Company’s recourse indebtedness was $4.5 million.
•Tangible net worth must be greater than the sum of (i) $600.0 million and (ii) 75.0% of net cash proceeds of the Company’s equity issuances after September 30, 2024. As the Company has not had any equity issuances after September 30, 2024, tangible net worth must be greater than $600.0 million. As of June 30, 2026, the Company’s tangible net worth was $646.1 million.
•Target asset leverage ratio cannot exceed 77.5% and total leverage ratio cannot exceed 80.0%. As of June 30, 2026, the Company’s target asset leverage ratio was 63.8% and the Company’s total leverage ratio was 60.3%.
•Minimum interest coverage of no less than 1.3:1.0. As of June 30, 2026, the Company’s interest coverage ratio was 1.4:1.0.
As of June 30, 2026, and December 31, 2025, the Company was in compliance with its financial covenants. Subsequent to June 30, 2026, the Company extended and amended certain financing arrangements that reduced the most restrictive minimum unrestricted cash covenant from the greater of $30.0 million and 5.0% of recourse indebtedness to the greater of $20.0 million and 5.0% of recourse indebtedness, and reduced the tangible net worth covenant from the greater of the sum of (i) $600.0 million and (ii) 75.0% of net cash proceeds of the Company’s equity issuances to the greater of the sum of (i) $500.0 million and (ii) 75.0% of net cash proceeds of the Company’s equity issuances. However, based on management's revised rolling 12-month financial forecast and absent mitigating actions, the Company could temporarily fall below its minimum unrestricted cash covenant between the third quarter of 2026 through the fourth quarter of 2026.
Management has developed a plan to mitigate the impact of the conditions causing its projections to temporarily fall below its minimum unrestricted cash covenant, which includes resolving a certain asset that has an executed Purchase and Sale Agreement to increase unrestricted cash, and, if needed, temporarily reducing or suspending the common and preferred dividends to preserve unrestricted cash. Management believes that it is probable that its plan will be effectively implemented and will allow it to meet the Company's financial obligations and comply with its financial covenants under its secured financing arrangements.
In addition to the plan described above, Management intends to actively engage with its financing counterparties regarding the reallocation of collateral to optimize financing arrangements, and, where necessary, obtain temporary covenant amendments or waivers. Management believes, particularly in light of the Company’s track record and strong relationships with its financing counterparties, that it will be successful.