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changes in rates of default and/or recovery rates on our non-Agency assets;
−Removed: our ability to borrow to finance our assets;
+Added: our ability to borrow to finance our assets and the available terms for such borrowings;
changes in government regulations affecting our business;
1 unchanged sentence
our ability to maintain our qualification as a real estate investment trust, or "REIT";
−Removed: and risks associated with investing in real estate assets, including changes in business conditions and the general economy , such as those resulting from the economic effects related to the novel coronavirus (“COVID-19”) pandemic .
+Added: and risks associated with investing in real estate assets, including changes in business conditions and the general economy such as changes to fiscal or monetary policy, heightened inflation, slower growth or recession, and currency fluctuations.
These and other risks, uncertainties and factors, including the risk factors described under Item 1A of this Annual Report on Form 10-K, could cause our actual results to differ materially from those projected or implied in any forward-looking statements we make.
25 unchanged sentences
Daniel Margolis, General Counsel of Ellington, who serves as our General Counsel;
−Removed: Vincent Ambrico, who serves as our Controller;
−Removed: and Jason Frank, Associate General Counsel of Ellington, who serves as our Deputy General Counsel and Secretary.
+Added: and Vincent Ambrico, who serves as our Controller.
Each of these individuals is an officer of our Manager.
37 unchanged sentences
Ellington's continued emphasis on and development of proprietary MBS, interest rate, prepayment, and credit models, as well as other proprietary research and analytics, underscores the importance it places on a disciplined and analytical approach to fixed income investing, especially in MBS.
−Removed: Our Manager uses Ellington's proprietary models to identify attractive assets, value these assets, monitor and forecast the performance of these assets, and (subject to maintaining our qualification as a REIT) opportunistically hedge our interest rate risk, hedge our prepayment risk, and hedge our credit risk.
+Added: Our Manager uses Ellington's proprietary models to identify attractive assets, value these assets, monitor and forecast the performance of these assets, and (subject to maintaining our qualification as a REIT) opportunistically hedge our interest rate risk and yield spread risk, hedge our prepayment risk, and hedge our credit risk.
We leverage these skills and resources for purposes of attaining our objectives.
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We benefit from Ellington's comprehensive risk management infrastructure and ongoing assessment of both portfolio and operational risks.
−Removed: In addition, we utilize derivatives and other hedging instruments to opportunistically manage our interest rate risk.
+Added: In addition, we utilize derivatives and other hedging instruments to opportunistically manage our interest rate and yield spread risk.
Interest Rate Hedging
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We pay all of our direct operating expenses, except those specifically required to be borne by our Manager under the management agreement.
−Removed: Our Manager is responsible for all costs incident to the performance of its duties under the management agreement, including compensation of Ellington's employees and other related expenses, other than our allocable portion of the costs incurred by our Manager for certain dedicated or partially dedicated employees, including a Chief Financial Officer, one or more controllers, an in-house legal counsel, an investor relations professional, certain internal audit staff in connection with Sarbanes-Oxley compliance initiatives and certain other personnel performing duties for us, based on the portion of their working time and efforts spent on our matters and subject to approval of the reimbursed amounts by the Compensation Committee of our Board of Trustees.
+Added: Our Manager is responsible for all costs incident to the performance of its duties under the management agreement, including compensation of Ellington's employees and other related expenses, other than our allocable portion of the costs incurred by our Manager for certain dedicated or partially dedicated employees, including a Chief Financial Officer, one or more controllers, an in-house legal counsel, an investor relations professional, and certain other personnel performing duties for us, based on the portion of their working time and efforts spent on our matters and subject to approval of the reimbursed amounts by the Compensation Committee of our Board of Trustees.
In addition, other than as expressly described in the management agreement, we are not required to pay any portion of rent, telephone, utilities, office furniture, equipment, machinery, and other office, internal and overhead expenses of our Manager and its affiliates.
2 unchanged sentences
Either we or our Manager may elect not to renew the management agreement upon expiration of any renewal term by providing written notice of non-renewal at least 180 days, but not more than 270 days, before expiration.
−Removed: In the event we elect not to renew the term, we will be required to pay our Manager a termination fee equal to 5% of our Shareholders' Equity, as defined in the management agreement, as of the end of the month preceding the date of the notice of termination or non-renewal
−Removed: of the management agreement.
+Added: In the event we elect not to renew the term, we will be required to pay our Manager a termination fee equal to 5% of our Shareholders' Equity, as defined in the management agreement, as of the end of the month preceding the date of the notice of termination or non-renewal of the management agreement.
No termination fee will be due to the Manager if the Manager decides not to renew the management agreement.
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Subject to our Board of Trustees authorizing such action and upon written notice to our Manager, we may at any time revoke our consent to our Manager's executing cross transactions.
−Removed: Additionally, unless approved in advance by a majority of our independent trustees or pursuant to and in accordance with a policy that has been approved by a majority of our independent trustees, all cross transactions must be effected at the then-prevailing market prices.
+Added: Additionally, unless approved in advance by a majority of our independent trustees or pursuant to and in accordance with a policy that has been approved by a majority of our
+Added: independent trustees, all cross transactions must be effected at the then-prevailing market prices.
Pursuant to our Manager's current policies and procedures, assets for which there are no readily observable market prices may be purchased or sold in cross transactions (i) at prices based upon third-party bids received through auction, (ii) at the average of the highest bid and lowest offer quoted by third-party dealers, or (iii) according to another pricing methodology approved by our Manager's Chief Compliance Officer.
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Many of our competitors are significantly larger than us, have greater access to capital and other resources, and may have other advantages over us.
−Removed: Our competitors may include other investment vehicles managed by Ellington or its affiliates, including Ellington Financial Inc.
+Added: Some competitors may have a lower cost of funds and access to funding sources that may not be available to us, such as funding from the government.
+Added: Additionally, many of our competitors are not subject to REIT tax compliance or required to maintain an exclusion from the Investment Company Act.
+Added: Our competitors may
+Added: include other investment vehicles managed by Ellington or its affiliates, including Ellington Financial Inc.
In addition to existing companies, other companies may be organized for similar purposes in the future, including companies focused on purchasing mortgage assets.
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Our Operating Partnership's direct and indirect subsidiaries, through which we operate our business, rely upon certain exclusions from the definition of investment company under the Investment Company Act including, in the case of our Operating Partnership's wholly-owned subsidiary, EARN Mortgage LLC, Section 3(c)(5)(C) of the Investment Company Act.
−Removed: Section 3(c)(5)(C), as interpreted by the staff of the SEC, requires an entity to invest at least 55% of its assets in "mortgages and
−Removed: other liens on and interests in real estate," which we refer to as "qualifying real estate interests," and at least 80% of its assets in qualifying real estate interests plus "real estate-related assets." In satisfying the 55% requirement, the entity may treat agency securities issued with respect to an underlying pool of mortgage loans in which it holds all of the certificates issued by the pool as qualifying real estate interests.
+Added: Section 3(c)(5)(C), as interpreted by the staff of the SEC, requires an entity to invest at least 55% of its assets in "mortgages and other liens on and interests in real estate," which we refer to as "qualifying real estate interests," and at least 80% of its assets in qualifying real estate interests plus "real estate-related assets." In satisfying the 55% requirement, the entity may treat agency securities issued with respect to an underlying pool of mortgage loans in which it holds all of the certificates issued by the pool as qualifying real estate interests.
The CMOs we acquire will not be treated as qualifying real estate interests for purposes of the 55% requirement.
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See "Risk Factors—Risks Related to Our Organization and Structure—Maintenance of our exclusion from registration as an investment company under the Investment Company Act imposes significant limitations on our operations.
+Added: If we were required to register as an investment company under the Investment Company Act, we would be subject to the restrictions imposed by the Investment Company Act, which would require us to make material changes to our strategy.
Investment Advisers Act of 1940
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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.