Commitments and Contingencies |
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| Commitments and Contingencies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies |
Note 9 — Commitments and Contingencies
The commitments and contingencies of the Company as of June 30, 2026 and December 31, 2025 are described
below.
Legal and Regulatory
From time to time, the Company may be subject to potential liability under laws and government regulations and various claims and legal actions
arising in the ordinary course of business. Liabilities are established for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of resolving legal claims may be
substantially higher or lower than the amounts established for those claims. The Company has established immaterial reserves for these possible matters. Based on information currently available, management is not aware of any legal or regulatory
claims that would have a material effect on the Company’s consolidated financial statements.
Commitments to Purchase/Sell RMBS
As of June 30, 2026 and December 31, 2025, the Company held forward TBA purchase and sale commitments with counterparties, which are forward Agency
RMBS trades, whereby the Company committed to purchasing or selling a pool of securities at a particular interest rate. As of the date of the trade, the mortgage-backed securities underlying the pool that will be delivered to fulfill a TBA trade
are not yet designated. The securities are typically “to be announced” 48 hours prior to the established trade settlement date. See Note 2 — Basis of Presentation and Significant Accounting Policies for details of unsettled RMBS trades, if any, as
of June 30, 2026 and December 31, 2025.
See Note 2 — Basis of Presentation and Significant Accounting Policies for details of unsettled RMBS trades, if any, as of June 30, 2026 and
December 31, 2025.
Acknowledgment Agreements
In connection with the Fannie Mae MSR Financing Facility (as defined below in Note 11), entered into by Aurora and QRS III, those parties also
entered into an acknowledgment agreement with Fannie Mae. Pursuant to that agreement, Fannie Mae consented to the pledge by Aurora and QRS III of their respective interests in MSRs for loans owned or securitized by Fannie Mae, and acknowledged the
security interest of the lender in those MSRs. See Note 11—Notes Payable for a description of the Fannie Mae MSR Financing Facility and the financing facility it replaced.
In connection with the Freddie Mac MSR Revolver (as defined below in Note 11), Aurora, QRS V, and the lender, with a limited joinder by the Company,
entered into an acknowledgement agreement with Freddie Mac pursuant to which Freddie Mac consented to the pledge of the Freddie Mac MSRs securing the Freddie Mac MSR Revolver. Aurora and the lender also entered into a consent agreement with Freddie
Mac pursuant to which Freddie Mac consented to the pledge of Aurora’s rights to reimbursement for advances on the underlying loans. See Note 11—Notes Payable for a description of the Freddie Mac MSR
Revolver.
Operating Lease
The Company’s operating lease relates to its corporate office space and was originally set to expire on August 19, 2026. In June
2026, the Company entered into an amendment to the lease agreement that extended the lease term to November 30, 2026. Operating lease right-of-use (“ROU”) asset represents the right to use an underlying asset for the lease term and lease
liabilities represent obligations to make lease payments arising from the lease. The Company recognizes lease expense on a straight-line basis over the lease term. The lease cost for each of the three-month periods ended June 30, 2026 and June
30, 2025 was approximately $19,000. The lease cost for each of the six-month periods ended June 30, 2026 and June 30, 2025 was
approximately $37,500. Cash used for the operating lease during each of the six-month periods ended June 30, 2026 and June 30,
2025 was approximately $37,500.
The table below summarizes the Company’s future commitments under the operating lease (dollars in thousands):
Other information related to the operating lease is summarized below as of the periods indicated:
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