Note 3 - Residential Mortgage Loans - at Fair Value |
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3. Residential Mortgage Loans and Mortgage Servicing Rights Investments - at Fair Value
Residential Mortgage Loans - at Fair Value
Residential mortgage loans are measured at fair value. The Company’s residential mortgage loans are primarily acquired loans on 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”), a portion of which are performing or re-performing scratch and dent (S&D) mortgage loans. S&D mortgage loans are loans that contain imperfections, such as underwriting errors, incomplete documentation, or minor compliance issues identified after the loan was closed and funded. These flaws do not necessarily mean the borrower is in default; many S&D loans are still performing, meaning payments are being made on time.
The following table sets forth the cost, unpaid principal balance, net discount on mortgage loans purchased, fair value, weighted average interest rate and weighted average remaining contractual maturity of the Company’s residential mortgage loan portfolio as of June 30, 2026:
The following table sets forth data regarding the number of residential mortgage loans secured by residential real property which are 90 or more days past due and the recorded investment and unpaid principal balance of such loans as of June 30, 2026.
No residential mortgage loans as of June 30, 2026 are in foreclosure proceedings.
Mortgage Servicing Rights Investments - at Fair Value
During 2026, the Company invested $6,749,861 in two special-purpose entities managed by Bungalow Residential, LLC or Bungalow Funding, LLC that acquire MSR participation interests for Federal Home Loan Mortgage Corporation mortgage loans for specified Servicing Concentration Risk (“SCR”) pools in exchange for an upfront cash payment. During 2026, RCRED NES acquired $2,473,784 in MSR participation interests for Federal Home Loan Mortgage Corporation mortgage loans for specified SCR pools in exchange for an upfront cash payment. Bungalow Residential, LLC and Bungalow Funding, LLC are affiliates of Balbec. |
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