What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-07-31 compared with 2026-05-08 · 222 added, 110 removed, 280 unchanged (54% of the section changed)

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Loans that do not perform in accordance with their terms may have a negative impact on earnings and liquidity.

Significant Developments During the First Quarter of 2026

Significant Developments During the Second Quarter of 2026

Financing and Capital Markets Activity

• Closed a collateralized securitization vehicle (CLO 21) totaling $762.6 million, of which $674.0 million consisted of investment grade notes and $88.6 million of below investment grade notes were retained by us;

• We repurchased 4,117,901 shares of our common stock under our share repurchase program at a total cost of $30.7 million and an average cost of $7.46 per share.

• Unwound CLO 17, redeeming the remaining outstanding notes totaling $787.0 million, which were repaid from the availability in our credit and repurchase facilities;

• We repurchased 3,550,691 shares of our common stock under our share repurchase program at a cost of $20.8 million, excluding broker commission fees, representing an average cost of $5.85 per share.

Structured Business Activity

• Balance sheet portfolio of $12.00 billion, as loan runoff totaling $861.0 million outpaced loan originations of $767.6 million;

• Balance sheet portfolio of $12.11 billion;

loan originations of $689.0 million outpaced loan runoff totaling $539.7 million;

• We modified 7 loans with a total UPB of $386.9 million (see Note 3 for details);

• We foreclosed on and took back the underlying collateral on three loans with an aggregate net carrying value of $58.8 million and recorded a loss of $1.8 million through provision for credit losses.

We sold one of those foreclosed properties, along with an existing REO asset, for $33.0 million and recognized an aggregate loss of $2.1 million through loss on real estate.

• We foreclosed on and took back the underlying collateral on five loans with an aggregate net carrying value of $110.1 million and recorded a loss of $2.5 million through provision for credit losses.

We sold two foreclosed properties, along with three existing REO assets for $79.8 million and recognized an aggregate gain of $0.1 million through gain (loss) on real estate.

See Notes 3 and 9 for details.

Agency Business Activity.

Servicing portfolio of $36.31 billion (up $107.3 million) with loan originations totaling $707.6 million, which includes $218.5 million of new Agency loans that were recaptured from our Structured Business runoff.

We declared a cash dividend of $0.17 per share, a reduction from our previous quarterly dividend of $0.30 per share.

Servicing portfolio of $36.70 billion (up $393.3 million) with loan originations totaling $1.08 billion.

Subsequent Event.

In July 2026, we issued $375.0 million of 6.25% Convertible Notes due July 2029.

We used the net proceeds to repurchase 2,140,300 shares of our common stock for $11.6 million, repurchase $102.7 million of our common stock pursuant to a prepaid forward transaction and used the remaining net proceeds, together with cash on hand, to redeem, in full, our outstanding $270.0 million 4.50% senior unsecured notes due in September 2026.

See Note 10 for further details.

Current Market Conditions, Risks and Recent Trends

During 2025, the Federal Reserve lowered the federal funds rate three times for an aggregate 75-basis point reduction.

Current market expectations generally contemplate the potential for an additional rate cut in the fourth quarter of 2026, but those expectations may abate if impacts from recent geopolitical events have a longer lasting effect on the economic environment and inflationary measurements.

However, the elevated rate environment has persisted longer than anticipated and could persist even longer if inflation and other key economic indicators do not align with the Federal Reserve’s expectations.

While short-term rates have declined, long-term rates remain volatile following the current administration’s adoption of increased tariffs, related litigation, geopolitical developments, including the conflict involving Iran, and broader macroeconomic uncertainty.

During the first half of 2026, the Federal Reserve maintained the target range for the federal funds rate at 3.50% to 3.75%.

Current market expectations remain uncertain and have shifted during 2026, with the timing and direction of any additional monetary policy actions dependent on inflation, labor market conditions, economic growth and financial market conditions.

Although short-term rates have declined from their peaks, the rate environment remains elevated, has remained elevated longer than anticipated and could persist even longer if inflation and other key economic indicators do not align with the Federal Reserve’s expectations.

Additionally, long-term rates remain volatile following the current administration’s adoption of increased tariffs, related litigation, geopolitical developments, including the conflict involving Iran and related energy market volatility, and broader macroeconomic uncertainty.

Expectations for long-term rates in 2026 remain mixed, reflecting uncertainty around long-term inflation, fiscal policy, increased federal spending and larger deficits, including the effects of the July 2025 enactment of the OBBBA, as described below.

Accordingly, it remains difficult to predict where short- and long-term rates will settle during 2026.

This prolonged rate environment has resulted, and may continue to result, in higher payment delinquencies and defaults, more loan modifications and foreclosures and declines in real estate values in certain asset classes, which have adversely affected, and may continue to adversely affect, our results of operations, financial condition, business prospects, liquidity and ability to make distributions to stockholders.

Accordingly, it remains difficult to predict where short- and long-term rates will settle during the remainder of 2026.

This prolonged rate environment has resulted in, and may continue to result in, higher payment delinquencies and defaults, more loan modifications and foreclosures and declines in real estate values in certain asset classes, which have adversely affected, and may continue to adversely affect, our results of operations, financial condition, business prospects, liquidity and ability to make distributions to stockholders.

It has also made it more difficult to resolve delinquent loans, contributing to additional foreclosures and REO assets on our balance sheet.

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We continue to apply disciplined underwriting and risk management practices and work closely with borrowers to protect portfolio quality and mitigate potential losses, including, where appropriate, modifying loan terms.

However, given the current interest rate environment, we cannot assure that our loan portfolio will continue to perform in accordance with current contractual terms.

However, given the current interest rate environment and inflationary pressures, we cannot assure that our loan portfolio will continue to perform in accordance with current contractual terms.

An elevated rate environment generally benefits our net interest income because our structured loan portfolio exceeds our corresponding debt balances, the substantial majority of our loan portfolio is floating rate based on SOFR and a meaningful portion of our debt, including senior unsecured notes, is fixed rate.

As a result, increases in interest income generally tends to outpace increases in interest expense, and earnings on our cash and escrow balances also benefit from higher rates.

As a result, increases in interest income generally tend to outpace increases in interest expense, and earnings on our cash and escrow balances also benefit from higher rates.

These benefits, however, have been increasingly offset by the adverse effects of a prolonged elevated rate environment, including higher delinquencies, more loan modifications and foreclosures, lower loan originations, reduced cash and escrow balances and pressure on certain commercial real estate values, which can result in higher reserves when collateral values are considered insufficient to fully repay loans.

The recent reductions in short-term interest rates have reduced, and are expected to continue to reduce, net interest income on our floating rate loan portfolio and earnings on our cash and escrow balances.

The reductions in short-term interest rates have reduced, and are expected to continue to reduce, net interest income on our floating rate loan portfolio and earnings on our cash and escrow balances.

In addition, if short-term interest rates decline further, our interest income and earnings on cash and escrow balances could decline further, while the benefit to our interest expense may be limited to the extent our debt is fixed rate or does not reprice at the same pace.

Conversely, if short-term or long-term rates increase, or remain elevated for an extended period, borrower performance, collateral values, loan origination volumes, transaction activity and our ability to resolve delinquent loans could be further adversely affected.

For additional information, see “Quantitative and Qualitative Disclosures about Market Risk” below.

Elevated and volatile interest rates, together with geopolitical uncertainty, including the conflict involving Iran, have also disrupted portions of the financial services, real estate and credit markets.

These conditions have contributed to weaker performance in certain of

our legacy assets, leading to increased defaults and delinquencies.

These conditions have contributed to weaker performance in certain of our legacy assets, leading to increased defaults and delinquencies.

If these conditions continue to affect our borrowers and their tenants, or if other risks described in our SEC filings materialize, our liquidity and capital resources could be further adversely affected.

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Changes in Financial Condition

Assets — Comparison of balances at March 31, 2026 to December 31, 2025:

Our Structured loan and investment portfolio balance was $12.00 billion and $12.11 billion at March 31, 2026 and December 31, 2025, respectively.

This decrease was primarily due to loan runoff exceeding loan originations by $93.4 million (see below for details) and by loans we foreclosed on and received ownership of the underlying collateral as REO assets.

The portfolio had a weighted average current interest pay rate of 6.49% at both March 31, 2026 and December 31, 2025.

Including certain fees earned and costs, the weighted average current interest rate was 7.03% and 7.08% at March 31, 2026 and December 31, 2025, respectively.

Our debt that finances our Structured loan and investment portfolio totaled $10.71 billion and $10.46 billion at March 31, 2026 and December 31, 2025, respectively, with a weighted average funding cost of 6.13% and 6.16%, respectively, which excludes financing costs.

Including financing costs, the weighted average funding rate was 6.40% and 6.45%, at March 31, 2026 and December 31, 2025.

Assets — Comparison of balances at June 30, 2026 to December 31, 2025:

Our Structured loan and investment portfolio balance was approximately $12.11 billion at both June 30, 2026 and December 31, 2025.

There was a slight decrease from December 31, 2025, which was primarily due to loans we foreclosed on and received ownership of the underlying collateral as REO assets, substantially offset by loan originations exceeding loan runoff by $55.8 million (see below for details).

The portfolio had a weighted average current interest pay rate of 6.50% and 6.49% at June 30, 2026 and December 31, 2025, respectively.

Including certain fees earned and costs, the weighted average current interest rate was 6.95% and 7.08% at June 30, 2026 and December 31, 2025, respectively.

Our debt that finances our Structured loan and investment portfolio totaled $10.48 billion and $10.46 billion at June 30, 2026 and December 31, 2025, respectively, with a weighted average funding cost of 6.10% and 6.16%, respectively, which excludes financing costs.

Including financing costs, the weighted average funding rate was 6.38% and 6.45%, at June 30, 2026 and December 31, 2025.

respectively.

Activity from our Structured Business portfolio is comprised of the following ($ in thousands):

Three Months Ended March 31, 2026

Three Months Ended June 30, 2026 Six Months Ended June 30, 2026

Loans originated $ 688,977 $ 1,456,569

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Number of loans 45 116

Loans held-for-sale from the Agency Business increased $34.1 million, primarily from loan originations exceeding sales by $36.6 million as noted in the following table ($ in thousands):

Three Months Ended March 31, 2026

Loan Originations Loan Sales

Loans held-for-sale from the Agency Business decreased $33.3 million, primarily from loan sales exceeding originations by $30.1 million as noted in the following table ($ in thousands):

Three Months Ended June 30, 2026 Six Months Ended June 30, 2026

Loan Originations Loan Sales Loan Originations Loan Sales

Fannie Mae $ 619,130 $ 740,728 $ 1,189,945 $ 1,312,307

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FHA 8,083 45,507 53,590 67,897

SFR - Fixed Rate 21,272 21,272 21,272 21,272

Total $ 1,076,763 $ 1,143,438 $ 1,784,340 $ 1,814,410

Real estate owned increased $21.8 million, primarily due to the foreclosure of two multifamily bridge loans totaling $34.0 million, through which we took back the underlying collateral, partially offset by the sale of one multifamily property.

Due from related party increased $28.7 million, primarily due to funds from payoffs to be remitted by our affiliated servicing operations related to real estate transactions at the end of the reporting period.

These amounts were remitted to us in April 2026.

Other assets decreased $27.5 million, primarily due to the payoff of an unsecured line of credit loan.

Liabilities – Comparison of balances at March 31, 2026 to December 31, 2025:

Credit and repurchase facilities decreased $181.7 million, primarily due to the transfer of loans into a CLO and loan runoff in our Structured Business portfolio, partially offset by loan originations exceeding sales in our Agency Business.

Securitized debt increased $463.2 million, primarily due to the closing of CLO 21 where we issued $674.0 million of notes to third-party investors, partially offset by paydowns on our existing securitizations of $248.4 million.

Notes payable — real estate owned increased $30.2 million, due to the addition of notes payable on a new REO asset and financing received on two existing REO assets.

Other liabilities decreased $35.1 million, primarily due to payments of accrued incentive compensation and commissions during the first quarter of 2026, related to 2025 performance.

See Note 16 for details of our issuances of common stock, dividends declared and deferred compensation transactions.

Investments in equity affiliates increased $24.8 million, primarily due to a $25.0 million investment in a multifamily property in the second quarter.

Real estate owned increased $47.0 million, primarily due to the foreclosure of eight multifamily bridge loans totaling $171.6 million, through which we took back the underlying collateral, partially offset by the sale of seven multifamily properties for $112.8 million.

Other assets decreased $20.6 million, primarily due to the payoff of unsecured line of credit loans and a decrease in interest receivable mainly due to the collection of deferred interest on modified/delinquent loans.

Liabilities – Comparison of balances at June 30, 2026 to December 31, 2025:

Credit and repurchase facilities increased $662.6 million, primarily due to the transfer of loans into repurchase facilities from the unwind of CLO 17.

Securitized debt decreased $496.0 million, primarily due to the unwind of CLO 17 totaling $1.06 billion and paydowns on our existing securitizations totaling $182.7 million, partially offset by the issuance of CLO 21 where we issued $674.0 million of notes to third-party investors.

Senior unsecured notes decreased $171.3 million, primarily due to the redemption of our $175.0 million 5.00% senior unsecured notes in April 2026.

Notes payable — real estate owned increased $47.4 million, primarily due to the addition of notes payable on three new REO assets and additional financing received on two existing REO assets.

Other liabilities decreased $14.5 million, primarily due to payments of accrued incentive compensation and commissions during the first half of 2026, related to 2025 performance.

See Note 16 for details of our common stock, dividends declared and deferred compensation transactions.

Agency Servicing Portfolio

The following table sets forth the characteristics of our loan servicing portfolio collateralizing our mortgage servicing rights and servicing revenue ($ in thousands):

March 31, 2026

June 30, 2026

Product Portfolio UPB Loan Count Wtd.

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(2) Delinquent loans reflect loans that are contractually 60 days or more past due.

At March 31, 2026 and December 31, 2025, delinquent loans totaled $975.4 million and $959.0 million, respectively.

At March 31, 2026, there were five loans totaling $56.0 million in bankruptcy and twenty-five loans totaling $313.5 million were foreclosed.

At June 30, 2026 and December 31, 2025, delinquent loans totaled $1.12 billion and $959.0 million, respectively.

At June 30, 2026, there were four loans totaling $22.6 million in bankruptcy and forty-two loans totaling $422.2 million were foreclosed.

At December 31, 2025, there were five loans totaling $56.0 million in bankruptcy and nineteen loans totaling $176.5 million were foreclosed.

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In addition, we are generally required to share in the risk of any losses associated with loans sold under the Fannie Mae DUS program, see Note 11.

Comparison of Results of Operations for the Three Months Ended March 31, 2026 and 2025

Comparison of Results of Operations for the Three Months Ended June 30, 2026 and 2025

The following table provides our consolidated operating results ($ in thousands):

Three Months Ended March 31, Increase / (Decrease)

Three Months Ended June 30, Increase / (Decrease)

2026 2025 Amount Percent

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Property operating income 8,313 5,452 2,861 52 %

(Loss) gain on derivative instruments, net (493) 3,400 (3,893) nm

Gain on derivative instruments, net 1,041 219 822 nm

Other income, net 2,260 3,989 (1,729) (43) %

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Selling and administrative 15,868 14,859 1,009 7 %

Property operating expenses 11,964 3,474 8,490 nm

Property operating expenses 12,670 6,802 5,868 86 %

Depreciation and amortization 5,929 5,848 81 1 %

Impairment loss on real estate owned 13,650 — 13,650 nm

Provision for loss sharing, net 4,537 1,786 2,751 154 %

Provision for loss sharing, net 13,472 4,215 9,257 nm

Provision for credit losses, net 38,163 19,004 19,159 101 %

Total other expenses 144,848 91,909 52,939 58 %

Income before extinguishment of debt, loss on real estate, income (loss) from equity affiliates and income taxes 10,833 53,736 (42,903) (80) %

(Loss) income before gain (loss) on real estate, income from equity affiliates and income taxes (28,972) 38,501 (67,473) nm

Gain (loss) on real estate 64 (1,448) 1,512 nm

Income from equity affiliates 1,893 2,654 (761) (29) %

Provision for income taxes (3,150) (3,398) 248 (7) %

Net (loss) income (30,165) 36,309 (66,474) nm

Preferred stock dividends 10,342 10,342 — —

Net (loss) income attributable to noncontrolling interest (3,165) 2,015 (5,180) nm

Net (loss) income attributable to common stockholders $ (37,342) $ 23,952 $ (61,294) nm

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nm — not meaningful

The following table presents the average balance of our Structured Business interest-earning assets and interest-bearing liabilities, associated interest income (expense) and the corresponding weighted average yields ($ in thousands):

Three Months Ended June 30,

Value (1) Interest

Expense W/A Yield /

Cost (2) Average

Value (1) Interest

Expense W/A Yield /

Structured Business interest-earning assets:

Bridge loans $ 11,290,771 $ 197,897 7.03 % $ 11,061,695 $ 216,637 7.86 %

Mezzanine 299,133 6,290 8.43 % 256,527 6,276 9.81 %

Construction - Multifamily 290,404 7,432 10.26 % 57,524 1,785 12.45 %

Preferred equity investments 202,118 5,515 10.94 % 150,047 3,657 9.78 %

Other — — — 3,071 73 9.53 %

Core interest-earning assets 12,082,426 217,134 7.21 % 11,528,864 228,428 7.95 %

Cash equivalents 238,780 2,077 3.49 % 189,090 1,552 3.29 %

Total interest-earning assets $ 12,321,206 $ 219,211 7.14 % $ 11,717,954 $ 229,980 7.87 %

Structured Business interest-bearing liabilities:

Credit and repurchase facilities $ 5,014,562 $ 83,879 6.71 % $ 4,499,752 $ 83,459 7.44 %

CLO 3,413,150 50,833 5.97 % 3,296,933 53,793 6.54 %

Unsecured debt 1,930,769 34,690 7.21 % 1,532,500 24,954 6.53 %

Trust preferred 154,336 2,664 6.92 % 154,336 2,959 7.69 %

Q Series securitization — — — 37,950 693 7.32 %

Total interest-bearing liabilities $ 10,512,817 172,066 6.56 % $ 9,521,471 165,858 6.99 %

Net interest income $ 47,145 $ 64,122

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(1) Based on UPB for loans, amortized cost for securities and principal amount of debt.

(2) Weighted average yield calculated based on annualized interest income or expense divided by average carrying value .

Net Interest Income

The decrease in interest income was mainly due to a $10.8 million decrease from our Structured Business.

The decline was primarily due to a decrease in the average yield on core interest-earning assets, partially offset by an increase in the average balance of our core interest-earning assets (loan originations exceeded runoff) and, to a lesser extent, higher average bank balances.

The decrease in the average yield was mainly from a decrease in SOFR and an increase in new delinquencies and modified loans at lower rates.

The increase in interest expense was mainly due to a $6.2 million increase from our Structured Business, primarily due to an increase in the average balance of our interest-bearing liabilities from an increase in the average loan portfolio and the issuance of senior unsecured notes.

This was partially offset by the payoff of our 7.50% convertible senior notes and a reduction in the average cost of interest-bearing liabilities (mainly from a decrease in SOFR).

Agency Business Revenue

The increase in gain on sales, including fee-based services, net was primarily due to a 42% increase in loan sales volume ($336.4 million), partially offset by a 21% decrease in the sales margin from 1.69% to 1.33%.

The decrease in the sales margin was mainly due to a decrease in the Fannie Mae sales margin, which includes the impact of larger portfolio deals in 2026 that produce lower margins.

The increase in income from MSRs was primarily due to a 42% increase in loan commitment volume ($359.1 million), partially offset by 22% decrease in the MSR rate from 1.28% to 1.00%.

The decrease in the MSR rate was mainly due to a higher concentration of Freddie Mac loan commitment volume, which generate lower servicing fees.

The decrease in servicing revenue, net was primarily due to a decrease in earnings on escrow balances from lower average balances and a decrease in the applicable interest rate, partially offset by an increase in servicing fees due to growth in our servicing portfolio.

Other Income (Loss)

The increases in property operating income and expenses were due to the addition of several new REO assets.

The gains on derivative instruments in 2026 and 2025 were related to changes in the fair values of our forward sale commitments and swaps held by our Agency Business as a result of changes in market interest rates.

The decrease in other income, net was primarily due to increases in the fair value of our Private Label loans from our Agency Business recognized in 2025, as well as a decrease in loan modification fees.

Other Expenses

The increase in employee compensation and benefits expense was primarily due to higher salaries and incentive compensation associated with executive-level hires, merit-based compensation increases for existing employees and higher commissions resulting from increased GSE/Agency loan sales volume.

These increases were partially offset by a reduction in overall headcount.

In 2026, we recorded a $13.7 million impairment loss related to certain REO assets that we acquired through foreclosure in prior periods, which represents the extent to which the carrying value exceeded its estimated fair value at the current period end.

The increase in the provision for loss sharing, net primarily reflects larger specific loan impairment reserves taken in 2026, compared to 2025.

The increase in the provision for credit losses, net primarily reflects larger specific loan impairment reserves taken in 2026, in addition to a softer outlook for commercial real estate in 2026, compared to 2025.

Gain (Loss) on Real Estate

The gain on real estate in 2026 represents an aggregate gain recognized on the sale of two foreclosed properties, partially offset by an aggregate loss recognized on the sale of three existing REO assets;

while the loss on real estate in 2025 is substantially comprised of losses on below market debt totaling $1.5 million related to financing on the sale of several REO assets.

Income from Equity Affiliates

Income from equity affiliates in 2026 primarily reflects $3.0 million of income recognized related to a cash distribution received from our Lexford joint venture, partially offset by losses from other investments;

while income from equity affiliates in 2025 primarily reflects a $3.4 million distribution received from our Lexford joint venture, partially offset by a $1.0 million loss from our AMAC III investment.

Provision for Income Taxes

In the three months ended June 30, 2026, we recorded a tax provision of $3.2 million, which consisted of a current tax provision of $5.4 million and a deferred tax benefit of $2.2 million.

In the three months ended June 30, 2025, we recorded a tax provision of $3.4 million, which consisted of a current tax provision of $5.0 million and a deferred tax benefit of $1.6 million.

Net (Loss) Income Attributable to Noncontrolling Interest

The noncontrolling interest relates to the outstanding OP Units (see Note 16).

At June 30, 2026 and 2025, there were 16,170,218 and 16,173,761 OP Units outstanding, respectively, which represented 7.9% and 7.8%, respectively, of our outstanding stock.

Comparison of Results of Operations for the Six Months Ended June 30, 2026 and 2025

The following table provides our consolidated operating results ($ in thousands):

Six Months Ended June 30, Increase / (Decrease)

2026 2025 Amount Percent

Interest income $ 465,905 $ 480,997 $ (15,092) (3) %

Interest expense 352,963 336,829 16,134 5 %

Net interest income 112,942 144,168 (31,226) (22) %

Other revenue:

Gain on sales, including fee-based services, net 27,681 26,439 1,242 5 %

Mortgage servicing rights 21,770 19,061 2,709 14 %

Servicing revenue, net 49,619 53,040 (3,421) (6) %

Property operating income 16,373 9,839 6,534 66 %

Gain on derivative instruments, net 548 3,619 (3,071) (85) %

Other income, net 4,336 8,407 (4,071) (48) %

Total other revenue 120,327 120,405 (78) 0 %

Other expenses:

Employee compensation and benefits 92,779 87,217 5,562 6 %

Selling and administrative 32,821 31,171 1,650 5 %

Property operating expenses 24,635 10,276 14,359 140 %

Depreciation and amortization 13,033 9,592 3,441 36 %

Impairment loss on real estate owned 26,150 — 26,150 nm

Provision for loss sharing, net 18,009 6,002 12,007 nm

Provision for credit losses, net 43,979 28,079 15,900 57 %

Total other expenses 251,406 172,337 79,069 46 %

(Loss) income before extinguishment of debt, loss on real estate, income from equity affiliates and income taxes (18,137) 92,236 (110,373) nm

Loss on extinguishment of debt — (2,319) 2,319 nm

Loss on real estate (2,073) (4,258) 2,185 (51) %

Income (loss) from equity affiliates 4,411 (1,634) 6,045 nm

Income from equity affiliates 6,304 1,020 5,284 nm

Provision for income taxes (5,235) (6,989) 1,754 (25) %

Net income 11,023 43,382 (32,359) (75) %

Net (loss) income (19,141) 79,690 (98,831) nm

Preferred stock dividends 20,684 20,684 — —

Net income attributable to noncontrolling interest 52 2,602 (2,550) (98) %

Net income attributable to common stockholders $ 629 $ 30,438 $ (29,809) (98) %

Net (loss) income attributable to noncontrolling interest (3,112) 4,617 (7,729) nm

Net (loss) income attributable to common stockholders $ (36,713) $ 54,389 $ (91,102) nm

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Three Months Ended March 31,

Six Months Ended June 30,

Value (1) Interest

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Mezzanine 296,723 12,591 8.56 % 256,809 12,463 9.79 %

Construction - Multifamily 267,024 6,758 10.26 % 8,115 144 7.20 %

Preferred equity investments 202,118 11,003 10.98 % 149,449 7,325 9.88 %

Construction - Multifamily 278,778 14,190 10.26 % 32,956 1,929 11.80 %

Other — — — 3,075 146 9.57 %

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The decrease in interest income was mainly due to a $16.5 million decrease from our Structured Business.

The decline was primarily due to a decrease in the average yield on core interest-earning assets, partially offset by an increase in the average balance of our core interest-earning assets (loan originations exceeded runoff in 2025) and, to a lesser extent, higher average bank balances.

The decrease in the average yield was mainly from a decrease in SOFR, a reduction in back interest earned on delinquent and modified loans and an increase in new delinquencies and modified loans at lower rates.

The increase in interest expense was mainly due to a $9.2 million increase from our Structured Business, primarily due an increase in the average balance of our interest-bearing liabilities from an increase in the average loan portfolio and the issuance of senior unsecured notes.

This was partially offset by note paydowns in our securitizations, the payoff of our 7.50% convertible senior notes and a reduction in the average cost of interest-bearing liabilities (mainly from a decrease in SOFR).

The increase in interest expense was mainly due to a $15.4 million increase from our Structured Business, primarily due to an increase in the average balance of our interest-bearing liabilities from an increase in the average loan portfolio and the issuance of senior unsecured notes.

This was partially offset by the payoff of our 7.50% convertible senior notes and a reduction in the average cost of interest-bearing liabilities (mainly from a decrease in SOFR).

Agency Business Revenue

The decrease in gain on sales, including fee-based services, net was primarily due to a 8% decrease in loan sales volume ($59.9 million), partially offset by a 6% increase in the sales margin from 1.75% to 1.86%.

The increase in the sales margin was mainly due to the portfolio mix in 2026 that produced higher margins.

The increase in income from MSRs was primarily due to a 14% increase in loan commitment volume ($88.5 million).

The increase in gain on sales, including fee-based services, net was primarily due to an 18% increase in loan sales volume ($276.5 million), partially offset by an 11% decrease in the sales margin from 1.72% to 1.53%.

The decrease in the sales margin was mainly due to a decrease in the Fannie Mae sales margin, which includes the impact of larger portfolio deals in 2026 that produce lower margins.

The increase in income from MSRs was primarily due to a 30% increase in loan commitment volume ($447.6 million), partially offset by a 12% decrease in the MSR rate from 1.27% to 1.12%.

The decrease in the MSR rate was mainly due to a higher concentration of Freddie Mac loan commitment volume, which generate lower servicing fees.

Other Income (Loss)

The increases in property operating income and expenses were due to the addition of several new REO assets.

This is also the reason for the increase in depreciation and amortization.

The gains and losses on derivative instruments in 2026 and 2025 were related to changes in the fair values of our forward sale commitments and swaps held by our Agency Business as a result of changes in market interest rates.

The increases in property operating income and expenses were due to the addition of several new REO assets, which also resulted in an increase in depreciation and amortization.

The decrease in other income, net was primarily due to increases in the fair value of our Private Label loans from our Agency Business recognized in 2025.

Other Expenses

The increase in employee compensation and benefits expense was primarily due to higher salaries and incentive compensation associated with executive-level hires and merit-based compensation increases for existing employees.

These increases were partially offset by a reduction in overall headcount.

In 2026, we recorded a $26.2 million impairment loss related to certain REO assets that we acquired through foreclosure in prior periods, which represents the extent to which the carrying value exceeded its estimated fair value at the current period end.

The increase in the provision for loss sharing, net primarily reflects larger specific loan impairment reserves taken in 2026, partially offset by an improved positive outlook for commercial real estate in 2026, compared to 2025.

The decrease in the provision for credit losses, net primarily reflects lower specific loan impairment reserves taken in 2026, partially offset by higher general reserves as a result of an increase in our historical loss and a loss provision recorded upon sale, or expected sale, of an REO asset in 2026.

The increase in the provision for loss sharing, net primarily reflects larger specific loan impairment reserves taken in 2026, compared to 2025.

Loss on Extinguishment of Debt

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Loss on Real Estate

The loss on real estate in 2026 represents a loss incurred on the sale of an existing REO asset;

while the loss on real estate in 2025 is comprised of a $1.8 million loss on the foreclosure of loans we took back as REO and a $2.8 million loss on below market debt on the sale of two existing REOs, partially offset by a $1.9 million gain on the REO sales.

Income (loss) from Equity Affiliates

Income from equity affiliates in 2026 primarily reflects $5.8 million of income recognized related to a cash distribution received from our Lexford joint venture, partially offset by losses from other investments;

while loss from equity affiliates in 2025 primarily reflects losses from our investments in a residential mortgage banking business and our AMAC III investment totaling $2.3 million, partially offset by income from several of our other investments.

The loss on real estate in 2026 primarily reflects a loss recognized on the sale of an existing REO asset during the first quarter of 2026.

The loss on real estate in 2025 is comprised of $4.3 million in loss on below market debt related to financing on the sale of several existing REO assets and a $1.8 million loss on the foreclosure of loans we took back as REO assets, partially offset by a $1.9 million gain on the REO sales.

Income from Equity Affiliates

Income from equity affiliates in 2026 primarily reflects $8.8 million of income recognized related to cash distributions received from our Lexford joint venture, partially offset by losses from other investments;

while income from equity affiliates in 2025 primarily reflects a $3.4 million distribution received from our Lexford joint venture and income of $0.8 million from our Fifth Wall investment, partially offset by losses from our investments in a residential mortgage banking business and AMAC III totaling $3.3 million.

Provision for Income Taxes

In the three months ended March 31, 2026, we recorded a tax provision of $2.1 million, which consisted of a current tax provision of $4.7 million and a deferred tax benefit of $2.6 million.

In the three months ended March 31, 2025, we recorded a tax provision of $3.6 million, which consisted of a current tax provision of $3.7 million and a deferred tax benefit of $0.1 million.

Net Income Attributable to Noncontrolling Interest

In the six months ended June 30, 2026, we recorded a tax provision of $5.2 million, which consisted of a current tax provision of $10.0 million and a deferred tax benefit of $4.8 million.

In the six months ended June 30, 2025, we recorded a tax provision of $7.0 million, which consisted of a current tax provision of $8.7 million and a deferred tax benefit of $1.7 million.

Net (Loss) Income Attributable to Noncontrolling Interest

The noncontrolling interest relates to the outstanding OP Units (see Note 16).

There were 16,170,218 and 16,173,761 OP Units outstanding at March 31, 2026 and 2025, respectively, which represented 7.8% of our outstanding stock at both March 31, 2026 and 2025.

At June 30, 2026 and 2025, there were 16,170,218 and 16,173,761 OP Units outstanding, respectively, which represented 7.9% and 7.8%, respectively, of our outstanding stock.

Liquidity and Capital Resources

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Liquidity is a measure of our ability to meet our potential cash requirements, including ongoing commitments to repay borrowings, satisfaction of collateral requirements under the Fannie Mae DUS risk-sharing agreement and, as an approved designated seller/servicer of Freddie Mac’s SBL program, operational liquidity requirements of the GSE agencies, fund new loans and investments, fund operating costs and distributions to our stockholders, fund capital expenditures and other property level costs associated with REO assets (including tenant improvements and rehabilitation/ renovation costs) and to fund draws due under unfunded loan commitments, as well as other general business needs.

Our primary sources of funds for liquidity consist of proceeds from equity and debt offerings, proceeds from CLOs and securitizations, debt facilities and cash flows from operations.

Our primary sources of funds for liquidity consist of proceeds from equity and debt

offerings, proceeds from CLOs and securitizations, debt facilities and cash flows from operations.

We closely monitor our liquidity position and believe our existing sources of funds and access to additional liquidity will be adequate to meet our liquidity needs.

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As described in Note 10, certain of our repurchase facilities include margin call provisions associated with changes in interest spreads which are designed to limit the lenders credit exposure.

If we experience significant decreases in the value of the properties serving as

collateral under these repurchase agreements, which is set by the lenders based on current market conditions, the lenders have the right to require us to repay all, or a portion, of the funds advanced, or provide additional collateral.

If we experience significant decreases in the value of the properties serving as collateral under these repurchase agreements, which is set by the lenders based on current market conditions, the lenders have the right to require us to repay all, or a portion, of the funds advanced, or provide additional collateral.

While we expect to extend or renew all of our facilities as they mature, we cannot provide assurance that they will be extended or renewed on as favorable terms.

We had $10.96 billion in total structured debt outstanding at March 31, 2026.

We had $10.75 billion in total structured debt outstanding at June 30, 2026.

Of this total, $5.02 billion, or 47%, does not contain mark-to-market provisions and is comprised of non-recourse securitized debt, senior unsecured debt and junior subordinated notes.

The remaining $5.73 billion of debt is in credit and repurchase facilities with several different banks that we have long-standing relationships with.

At March 31, 2026, we had $2.66 billion of debt from credit and repurchase facilities that were subject to margin calls related to changes in interest spreads.

In addition to our ability to extend our credit and repurchase facilities and raise funds from equity and debt offerings, we also have a $36.31 billion agency servicing portfolio at March 31, 2026, which is mostly prepayment protected, and escrow/cash balances that generates approximately $129 million per year in recurring gross cash flow.

At June 30, 2026, we had $2.22 billion of debt from credit and repurchase facilities that were subject to margin calls related to changes in interest spreads.

In addition to our ability to extend our credit and repurchase facilities and raise funds from equity and debt offerings, we also have a $36.70 billion agency servicing portfolio at June 30, 2026, which is mostly prepayment protected, and escrow/cash balances that generates approximately $184 million per year in recurring gross cash flow.

To maintain our status as a REIT under the Internal Revenue Code, we must distribute annually at least 90% of our REIT-taxable income.

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However, we believe that our capital resources and access to financing will provide us with financial flexibility and market responsiveness at levels sufficient to meet current and anticipated capital and liquidity requirements.

Cash flows used in operating activities totaled $8.3 million during the three months ended March 31, 2026 and consisted primarily of net cash outflows of $36.6 million from loan originations exceeding loan sales in our Agency Business, partially offset by net income (adjusted for the impairment on REO of $12.5 million and an increase in CECL reserves of $10.4 million) of $33.9 million.

Cash flows provided by investing activities totaled $58.3 million during the three months ended March 31, 2026.

Loan and investment activity (originations and payoffs/paydowns) comprise the majority of our investing activities.

Loan paydowns/payoffs from our Structured Business totaling $894.0 million and originations of $826.1 million, net of payoffs, resulted in net cash inflows of $67.9 million.

Cash flows provided by financing activities totaled $200.4 million during the three months ended March 31, 2026 and consisted primarily of $467.4 million of net securitized debt activity (proceeds exceeded payoffs and paydowns), partially offset by net cash outflows of $171.0 million from debt facility activities (facility paydowns were greater than financed loan originations), $73.3 million of distributions to our stockholders and OP Unit holders and $30.7 million of repurchase of common stock.

Cash flows provided by operating activities totaled $150.0 million during the six months ended June 30, 2026 and consisted primarily of the benefit of non-cash expenses included in our net loss, principally provisions for credit losses and loss-sharing obligations of $62.0 million, depreciation and amortization of $56.0 million and impairment losses on REO assets of $26.2 million, along with net cash inflows of $30.1 million from loan sales exceeding loan originations in our Agency Business.

Cash flows used in investing activities totaled $128.4 million during the six months ended June 30, 2026 and consisted primarily of $83.9 million of net cash outflows in connection with loan and investment activity (Structured Business loan originations of $1.58 billion exceeded payoffs and paydowns/payoffs totaling $1.49 billion), net cash outflows of $27.9 million related to REO activity and a $25.0 million investment made for an interest in a multifamily property.

Cash flows used in financing activities totaled $145.9 million during the six months ended June 30, 2026 and consisted primarily of $493.7 million of net securitized debt activity (payoffs and paydowns exceeded proceeds), $175.0 million payoff of our senior notes, $118.8 million of distributions to our stockholders and OP Unit holders and $51.6 million of common stock repurchases;

partially offset by net cash inflows of $690.4 million from debt facility activities (financed loan originations were greater than facility paydowns).

Unencumbered Assets.

At March 31, 2026, we had total unencumbered assets with a carrying value of $3.23 billion, consisting of cash and cash equivalents of $407.1 million, loans of $792.4 million, securitization investments of $1.28 billion, MSRs of $331.9 million and $423.2 million of other assets not encumbered by any portion of secured indebtedness.

Our unencumbered assets to unsecured debt ratio was 1.58x at March 31, 2026, compared to the required minimum of 1.20x.

At June 30, 2026, we had total unencumbered assets with a carrying value of $2.62 billion, consisting of cash and cash equivalents of $287.5 million, loans of $699.0 million, securitization investments of $879.1 million, MSRs of $323.9 million and $431.7 million of other assets not encumbered by any portion of secured indebtedness.

Our unencumbered assets to unsecured debt ratio was 1.40x at June 30, 2026, compared to the minimum of 1.20x required by our outstanding $400.0 million 8.50% senior unsecured notes due in December 2028 and our outstanding $500.0 million 7.875% senior unsecured notes due in July 2030.

Agency Business Requirements.

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Among other things, these agencies require us to meet certain minimum net worth, operational liquidity and restricted liquidity collateral requirements, purchase and loss obligations and compliance with reporting requirements.

Our adjusted net worth and operational liquidity exceeded the agencies’ requirements at March 31, 2026.

Our adjusted net worth and operational liquidity exceeded the agencies’ requirements at June 30, 2026.

Our restricted liquidity and purchase and loss obligations were satisfied with letters of credit totaling $75.0 million and cash.

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The following is a summary of our debt facilities ($ in thousands):

Debt Instruments March 31, 2026

Debt Instruments June 30, 2026

Commitment UPB (1) Available Maturity Dates (2)

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These maturity dates exclude extension options.

(3) Commitment totals include available overadvances.

(4) Maturity dates represent the weighted average remaining maturity based on the underlying collateral at March 31, 2026.

(3) Commitment totals excludes available overadvances.

(4) Maturity dates represent the weighted average remaining maturity based on the underlying collateral at June 30, 2026.

(5) The $750 million As Soon as Pooled ® Plus (“ASAP”) agreement we have with Fannie Mae has no expiration date.

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Quarter Ended Quarterly Average UPB End of Period UPB Maximum UPB at Any Month End

June 30, 2026 $ 5,399,362 $ 5,821,983 $ 5,904,505

March 31, 2026 5,005,616 4,977,857 5,319,936

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June 30, 2025 4,846,239 4,730,120 4,922,270

March 31, 2025 3,609,646 4,791,967 4,803,572

Our debt facilities, including their restrictive covenants, are described in Note 10.

Off-Balance Sheet Arrangements.

At March 31, 2026, we had no off-balance sheet arrangements.

At June 30, 2026, we had no off-balance sheet arrangements.

During 2025, the Federal Reserve lowered the federal funds rate three times for an aggregate 75-basis point reduction.

During the first half of 2026, the Federal Reserve maintained the target range for the federal funds rate at 3.50% to 3.75%.

Accordingly, it remains difficult to predict where short- and long-term rates will settle during 2026.

Accordingly, it remains difficult to predict where short- and long-term rates will settle during the remainder of 2026.

It has also made it more difficult to resolve delinquent loans, contributing to additional foreclosures and REO assets on our balance sheet, all of which could have a further material adverse effect on our business.

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Contractual Obligations.

During the three months ended March 31, 2026, the following significant changes were made to our contractual obligations disclosed in our 2025 Annual Report:

During the six months ended June 30, 2026, the following significant changes were made to our contractual obligations disclosed in our 2025 Annual Report:

• Unwound CLO 17, repaying $787.0 million of outstanding notes;

• Closed CLO 21 totaling $762.6 million of notes issued, of which $88.6 million of notes were retained by us;

• Modified existing debt facilities resulting in an increase in the committed amount by approximately $590.0 million;

• Entered into a new $300.0 million credit facility;

• Paid down outstanding notes on existing securitizations totaling $182.7 million;

• In April 2026, we redeemed our 5.00% senior notes totaling $175.0 million at maturity.

Refer to Note 14 for a description of our debt maturities by year and unfunded commitments at March 31, 2026.

• Redeemed our 5.00% senior notes totaling $175.0 million at maturity.

Refer to Note 14 for a description of our debt maturities by year and unfunded commitments at June 30, 2026.

Additionally, in July 2026, we issued $375.0 million of 6.25% Convertible Notes and used the net proceeds to repurchase 2,140,300 shares of our common stock for $11.6 million, repurchase $102.7 million of our common stock pursuant to a prepaid forward transaction and used the remaining proceeds, together with cash on hand, to redeem, in full, our outstanding $270.0 million 4.50% senior unsecured notes that were due in September 2026.

Derivative Financial Instruments

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Refer to Note 2 of the Notes to Consolidated Financial Statements in our 2025 Annual Report for a discussion of our critical accounting policies.

During the three months ended March 31, 2026, there were no material changes to these policies.

During the six months ended June 30, 2026, there were no material changes to these policies.

Non-GAAP Financial Measures

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We consider distributable earnings in determining our quarterly dividend and believe that, over time, distributable earnings is a useful indicator of our dividends per share.

We define distributable earnings as net income (loss) attributable to common stockholders computed in accordance with GAAP, adjusted for accounting items such as depreciation and amortization (adjusted for unconsolidated joint ventures), non-cash stock-based compensation expense, income from MSRs, amortization and write-offs of MSRs, gains/losses on derivative instruments primarily associated with Private Label loans not yet sold and securitized, changes in fair value of GSE-related derivatives that temporarily flow through earnings, deferred tax provision (benefit), CECL provisions for credit losses (adjusted for realized losses as described below), and gains/losses on the receipt of real estate from the settlement of loans (prior to the sale of the real estate).

We define distributable earnings as net income (loss) attributable to common stockholders computed in accordance with GAAP, adjusted for accounting items such as depreciation and amortization (adjusted for unconsolidated joint ventures), non-cash stock-based compensation expense, income from MSRs, amortization and write-offs of MSRs, gains/losses on derivative instruments primarily associated with Private Label loans not yet sold and securitized, changes in fair value of GSE-related derivatives that temporarily flow through earnings, deferred tax provision (benefit), CECL provisions for credit losses (adjusted for realized losses as described below), gains/losses on the receipt of real estate from the settlement of loans and subsequent impairment losses on real estate owned prior to the sale of the real estate.

We also add back one-time charges such as acquisition costs and one-time gains/losses on the early extinguishment of debt and redemption of preferred stock.

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Loans are deemed nonrecoverable upon the earlier of:

(1) when the loan receivable is settled (i.e., when the loan is repaid, or in the case of foreclosure, when the underlying asset is sold);

(1) when the loan receivable is repaid, or in the case of foreclosure, when the underlying asset is sold at which time any impairments and/or cumulative depreciation expense are realized;

or (2) when we determine that it is nearly certain that all amounts due will not be collected.

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Distributable earnings are as follows ($ in thousands, except share and per share data):

Three Months Ended March 31,

Net income attributable to common stockholders $ 629 $ 30,438

Net income attributable to noncontrolling interest 52 2,602

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Net (loss) income attributable to common stockholders $ (37,342) $ 23,952 $ (36,713) $ 54,389

Net (loss) income attributable to noncontrolling interest (3,165) 2,015 (3,112) 4,617

Income from mortgage servicing rights (12,110) (10,930) (21,770) (19,061)

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Provision for credit losses, net 40,532 8,435 19,654 9,192

Loss (gain) on derivative instruments, net 1,298 (4,697)

(Gain) loss on derivative instruments, net (477) (674) 821 (5,371)

Loss on real estate 5,388 1,857 17,917 4,667

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Distributable earnings (1) $ 21,709 $ 52,069 $ 36,160 $ 109,394

Diluted weighted average shares outstanding (1)(2) 211,735,731 206,862,320

Diluted weighted average shares outstanding - GAAP (2)(3) 190,806,800 209,003,002 192,491,494 207,938,574

Dilutive effect of OP Units and RSUs (1)(3) 16,854,295 — 17,195,663 —

Diluted weighted average shares outstanding - Non-GAAP (1)(2)(3) 207,661,095 209,003,002 209,687,157 207,938,574

Diluted distributable earnings per share (1)(3) $ 0.10 $ 0.25 $ 0.17 $ 0.53

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(2) The diluted weighted average shares outstanding are adjusted to exclude the potential shares issuable upon conversion and settlement of our convertible senior notes principal balance, which were fully settled in the third quarter of 2025.

No adjustment was necessary for the three months ended March 31, 2025, as their effect was anti-dilutive and not reflected in the diluted weighted average shares outstanding.

No adjustment was necessary for the three and six months ended June 30, 2025, as their effect was anti-dilutive and not reflected in the diluted weighted average shares outstanding.

(3) For purposes of calculating diluted distributable earnings per share, diluted weighted average shares outstanding include the effect of potentially dilutive securities to the extent such securities are dilutive to distributable earnings, notwithstanding that such securities are excluded from diluted GAAP earnings per common share for the three and six months ended June 30, 2026 because their effect would be anti-dilutive due to the GAAP net loss incurred during those periods.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis