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Item 7. Management’s Discussion and Analysis

2026-02-20 compared with 2025-02-20 · 152 added, 177 removed, 558 unchanged (37% of the section changed)

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Our residential whole loans include primarily:

(i) loans to finance (or refinance) 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”), (ii) short-term business purpose loans collateralized by residential properties made to non-occupant borrowers that generally intend to rehabilitate or construct residential housing and then refinance or sell the properties (“Single-family transitional loans”), (iii) short-term business purpose loans collateralized by multifamily properties, typically with a loan balance below $10 million, made to non-occupant borrowers that generally intend to rehabilitate or stabilize and then refinance or sell the properties (“Multifamily transitional loans”) (collectively, with Single-family transitional loans, “Transitional loans,” also sometimes referred to as “Rehabilitation loans” or “Fix and Flip loans”), (iv) business purpose loans to finance (or refinance) non-owner occupied one-to-four family residential properties that are rented to one or more tenants (“Single-family rental loans” and, collectively with Transitional loans, “Business purpose loans”), (v) loans primarily secured by residential real estate that were generally either non-performing or re-performing at acquisition (“Legacy RPL/NPL”) and (vi) loans on investor properties that conform to the standards for purchase by a federally chartered corporation, such as the Federal National Mortgage Association (“Fannie Mae”) or the Federal Home Loan Mortgage Corporation (“Freddie Mac”) (“Agency eligible investor loans,” which are included in “Other loans”).

In addition, at December 31, 2024, we had approximately $1.5 billion or 13% of total assets invested in investments in securities, including Agency MBS, Term notes backed by MSR collateral, CRT securities and Non-Agency MBS.

(i) loans to finance (or refinance) 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”), (ii) business purpose loans primarily originated by Lima One, to finance (or refinance) non-owner occupied one-to-four family residential properties that are rented to one or more tenants (“Single-family rental loans”), (iii) short-term business purpose loans primarily originated by Lima One, collateralized by residential properties made to non-occupant borrowers that generally intend to rehabilitate or construct residential housing and then refinance or sell the properties (“Single-family transitional loans”), (iv) short-term business purpose loans primarily originated by Lima One, collateralized by multifamily properties, typically with a loan balance below $10 million, made to non-occupant borrowers that generally intend to rehabilitate or stabilize and then refinance or sell the properties (“Multifamily transitional loans, collectively with Single-family transitional loans, “Transitional loans,” also sometimes referred to as “Rehabilitation loans” or “Fix and Flip loans” and, collectively with Single-family rental loans, “Business purpose loans”), (v) loans primarily secured by residential real estate that were generally either non-performing or re-performing at acquisition (“Legacy RPL/NPL”) and (vi) loans on investor properties that conform to the standards for purchase by a federally chartered corporation, such as the Federal National Mortgage Association (“Fannie Mae”) or the Federal Home Loan Mortgage Corporation (“Freddie Mac”) (“Agency eligible investor loans,” which are included in “Other loans”).

In addition, at December 31, 2025, we had approximately $3.3 billion or 25% of total assets invested in investments in Agency MBS.

The results of our business operations are affected by a number of factors, many of which are beyond our control, and primarily depend on, among other things, the level of our net interest income and the market value of our assets, liabilities and hedges that are accounted for at fair value through earnings, which is driven by numerous factors, including the supply and demand for residential mortgage assets in the marketplace, the terms and availability of adequate financing, general economic and real estate conditions (both on a national and local level), the impact of government actions in the real estate and mortgage sector, and the credit performance of our credit sensitive residential mortgage assets.

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and (v) the value of our derivative hedging instruments, if any, to decrease.

Further, changes in credit spreads will also impact the valuation of our residential whole loans and securitized debt, which could result in volatility in GAAP earnings.

Further, changes in spreads will also impact the valuation of our residential mortgage assets and securitized debt, which could result in volatility in GAAP earnings.

In addition, our borrowing costs and credit lines are further affected by the type of collateral we pledge and general conditions in the credit market.

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Further, we believe the discounted purchase prices paid on Legacy RPL/NPL loans mitigate our risk of loss in the event that we receive less than 100% of the unpaid principal balance of these investments.

Premiums arise when we acquire an MBS or loan at a price in excess of the aggregate principal balance of the mortgages securing the MBS (i.e., par value) or when we acquire residential whole loans at a price in excess of their unpaid principal balance.

Conversely, discounts arise when we acquire an MBS or loan at a price below the aggregate principal balance of the mortgages securing the MBS or when we acquire residential whole loans at a price below their unpaid principal balance.

Premiums arise when we acquire an MBS at a price in excess of the aggregate principal balance of the mortgages securing the MBS (i.e., par value) or when we acquire residential whole loans at a price in excess of their unpaid principal balance.

Conversely, discounts arise when we acquire an MBS at a price below the aggregate principal balance of the mortgages securing the MBS or when we acquire residential whole loans at a price below their unpaid principal balance.

Accretable purchase discounts on these investments are accreted to interest income.

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It is generally our business strategy to hold our residential mortgage assets as long-term investments.

As part of Lima One’s mortgage banking activities, from time to time, we sell certain loans shortly after origination.

On at least a quarterly basis, excluding investments for which the fair value option has been elected or for which specialized loan accounting is otherwise applied, we assess our ability and intent to continue to hold each asset and, as part of this process, we monitor our investments in securities that are designated as AFS for impairment.

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In order to reduce this interest rate risk exposure, we may enter into derivative instruments, which currently include Swaps.

On April 4, 2022, we effected a one-for-four reverse stock split of our issued and outstanding shares of common stock (or the Reverse Stock Split).

Accordingly, all share and per share data included in the consolidated financial statements and applicable disclosures have been adjusted retroactively to reflect the impact of the Reverse Stock Split.

For all periods presented, all share and per share data have been adjusted on a retroactive basis to reflect the effect of the Reverse Stock Split.

Recent Market Conditions and Our Strategy

2024 was another turbulent year with mixed results for fixed income investors, as markets continued to adjust to volatile conditions resulting from a number of challenging macroeconomic conditions, including the start of the Federal Reserve’s easing cycle, ongoing uncertainty as to the timing and extent of future rate cuts, ongoing inflationary pressures, geopolitical uncertainty both in the U.S.

and abroad, and balancing generally resilient macroeconomic data with the potential for recession.

For the year, the Bloomberg US Aggregate Index returned 1.25% - the eighth worst annual return in the nearly 50-year history of the index.

During the year, intermediate and longer-duration Treasury rates moved higher while credit spreads generally tightened.

The yield curve steepened during 2024, ending the multiyear inversion following the Federal Reserve’s decision to cut the target for the Fed Funds rate by 50 basis points on September 18, 2024, followed by further 25 basis point cuts on both November 7, 2024 and December 18, 2024.

Despite these volatile macroeconomic conditions, during the year, we were able to add $3.6 billion of our target assets.

These additions included approximately $1.5 billion of funded originations of Business purpose loans and draws on existing Transitional loans at Lima One, approximately $1.2 billion of Non-QM loans, and $932 million of Agency MBS.

During 2024 we executed eight securitizations and issued $2.1 billion of securitized debt.

We also issued $115 million of 8.875% senior unsecured notes due in February 2029 and $75.0 million of 9.00% senior unsecured notes due in August 2029, and repaid our Convertible Senior Notes which matured in June 2024.

Following years of volatility, 2025 delivered strong fixed income returns as markets benefited from a shift in monetary policy and continued macroeconomic resilience.

Credit spreads tightened and the yield curve steepened over the year, with yields on two-year Treasuries declining by 78 basis points while ten-year Treasuries declined by 43 basis points.

The Bloomberg US Aggregate Index returned 7.3% for the year, marking its strongest annual performance in five years.

We capitalized on these constructive market conditions by accelerating the pace of capital deployment, benefiting from increased price stability and a favorable lending environment.

During 2025, we were able to add $4.8 billion of our target assets at attractive yields.

These additions included $2.1 billion of Agency MBS, $1.8 billion of Non-QM loans, and approximately $900 million of funded originations of Business purpose loans and draws on existing Transitional loans at Lima One.

During 2025, we executed five securitizations and issued $1.7 billion of securitized debt.

During the year, we generated GAAP earnings per share (or EPS) of $1.31 per basic common share and Distributable earnings, a non-GAAP financial measure that excludes the impact of fair value changes and certain other items, of $1.00 per basic common share.

At December 31, 2024, our GAAP book value was $13.39 and our Economic book value, a non-GAAP financial measure of our financial position that adjusts GAAP book value by the amount of unrealized mark-to-market gains or losses on our residential whole loans and securitized debt held at carrying value, was $13.93 per common share, each representing decreases of approximately 4% as compared to December 31, 2023.

During the year we declared dividends of $1.40 per common share.

For the year, our Lima One subsidiary originated Business purpose loans with a maximum unpaid principal balance of $1.4 billion, a decline from the $2.2 billion originated in 2023.

The decline was in large part the result of our decision in the second quarter of 2024 to refocus our resources away from multifamily transitional lending and the resulting friction associated with redeploying our resources to the single-family transitional and single-family rental lending channels.

This decision was made in light of continued softness in multifamily housing in certain markets and several consecutive quarters of declines in origination volumes in our multifamily transitional lending.

Given the current challenging market conditions for multifamily housing, we expect to see heightened levels of delinquency and a commensurate risk of credit losses in our Business purpose loan portfolio during 2025.

As a result of the shift away from multifamily lending, as well as lower single-family real estate transaction volumes generally, we expect origination volumes to remain under pressure in the first half of 2025.

For the year, compensation and benefits and other G&A expenses were $119.4 million, a 9.5% reduction from $131.9 million incurred in 2024 attributable to expense reduction initiatives.

At December 31, 2025, our GAAP book value was $13.20 and our Economic book value, a non-GAAP financial measure of our financial position that adjusts GAAP book value by the amount of unrealized mark-to-market gains or losses on our residential whole loans and securitized debt held at carrying value, was $13.75 per common share, each down approximately 1% compared to December 31, 2024.

During the year, we declared dividends totaling $1.44 per common share.

For the year, our Lima One subsidiary originated Business purpose loans with a maximum unpaid principal balance of $0.9 billion, a decrease from the $1.4 billion originated in 2024.

During the year, we expanded Lima One’s sales force, invested in technology initiatives that we expect to improve the borrower experience, and made key hires to Lima One’s leadership team in strategic growth areas.

In early 2026, we relaunched multifamily lending and began funding loans through our newly established wholesale channel, which represent two key areas of growth for Lima One.

During 2025, Lima One sold $212.9 million of recently originated single-family rental loans to third parties and realized gains of $6.1 million.

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Securities, at fair value 1,538 (288) 2,100 10 3,360 1,822

Totals $ 9,897 $ (2,322) $ 3,566 $ (661) $ 10,480 $ 583

$ 10,480 $ (2,828) $ 4,789 $ (136) $ 12,305 $ 1,825

(1) Primarily includes principal repayments and sales of REO.

(2) Includes draws on previously originated Transitional loans.

(3) Primarily includes sales, changes in fair value and changes in the allowance for credit losses.

(3) Primarily includes sales of residential whole loans and securities, changes in fair value and changes in the allowance for credit losses.

At December 31, 2025, our total recorded investment in residential whole loans and REO was $8.9 billion, or 72.7% of our residential mortgage asset portfolio.

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During 2025, we recognized approximately $605.6 million of residential whole loan interest income on our consolidated statements of operations, representing an effective yield of 6.74%, with Single-family transitional loans generating an effective yield of 9.48%, Multifamily transitional loans generating an effective yield of 8.54%, Single-family rental loans generating an effective yield of 6.43%, Non-QM loans generating an effective yield of 5.87% and Legacy RPL/NPL loans generating an effective yield of 7.92%.

Since the second quarter of 2021 we have elected the fair value option for all loan acquisitions, and 85% our total loan portfolio is measured at fair value through earnings.

Since the second quarter of 2021 we have elected the fair value option for all loan acquisitions, and 88% of our total loan portfolio is measured at fair value through earnings.

Included in earnings in Other Income/(Loss), net are net gains on these loans of $133.7 million for the year ended December 31, 2025.

At December 31, 2025 and 2024, we had REO with an aggregate carrying value of $135.0 million and $130.9 million, respectively, which is included in Other assets on our consolidated balance sheets.

At December 31, 2024, we held $1.5 billion of Securities, at fair value, including $1.4 billion of Agency MBS, $54.6 million of MSR-related assets, $67.6 million of CRT securities and $22.6 million of Non-Agency MBS.

During 2024, we added $0.9 billion of Agency MBS and sold $26.9 million sales of MSR-related assets and an $8.7 million sales of a CRT security.

At December 31, 2025, we held $3.4 billion of Securities, at fair value, including $3.3 billion of Agency MBS, $34.9 million of CRT securities and $22.1 million of Non-Agency MBS.

During 2025, we purchased $2.1 billion of Agency MBS and sold $27.0 million of CRT securities and $17.5 million of Agency MBS.

The net yield on our Securities, at fair value was 5.93% for 2025, compared to 6.59% for 2024.

For the year ended December 31, 2024, we recorded a reversal of provision for credit losses on residential whole loans held at carrying value of $3.1 million.

For the year ended December 31, 2025, we recorded a provision for credit losses on residential whole loans held at carrying value of $0.9 million.

The total allowance for credit losses recorded on residential whole loans held at carrying value at December 31, 2025 was $9.7 million.

During 2024, we completed eight securitizations with unpaid principal balance (or UPB) of loans sold of $2.4 billion.

This included $1.1 billion of Non-QM loans, $599.0 million of Transitional loans and 669.2 million of Legacy RPL/NPL loans.

These securitizations provide longer term, non-recourse, non-mark-to-market financing.

During 2024, heightened interest rate volatility led to significant fluctuations in the fair values of our residential mortgage asset portfolio and associated financing liabilities and hedges, which drove volatility in our quarterly GAAP financial results.

During 2025, we completed five Non-QM loan securitizations with unpaid principal balance (or UPB) of loans sold of $1.8 billion.

These securitizations provide longer term, non-recourse, fixed rate financing.

We continue to closely follow the actions of the Federal Reserve regarding the path and timing of changes in interest rates and the impact such rate changes would be expected to have on levels of inflation, the overall economic environment and our business.

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Book value per common share decreased from $13.39 as of December 31, 2024.

Economic book value per common share, a non-GAAP financial measure of our financial position that adjusts GAAP book value by the amount of unrealized mark-to-market gains or losses on our residential whole loans and securitized debt held at carrying value, was $13.93 as of December 31, 2024, a decrease from $14.57 as of December 31, 2023.

The decrease in GAAP book value during 2024 primarily reflects dividends declared on our common stock in excess of our GAAP earnings.

The decrease in Economic book value during 2024 primarily reflects dividends declared on our common stock in excess of GAAP earnings and a decrease in the fair value of our mortgage loans held at carrying value, partially offset by changes in the estimated fair value of our securities and our securitized debt at carrying value.

Economic book value per common share, a non-GAAP financial measure, was $13.75 as of December 31, 2025, a decrease from $13.93 as of December 31, 2024.

The decrease in GAAP book value and Economic book value during 2025 primarily reflects dividends declared on our common stock in excess of our GAAP earnings.

For additional information regarding the calculation of Economic book value per share, including a reconciliation to GAAP book value per share, refer to “Reconciliation of GAAP and Non-GAAP Financial Measures” below.

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ASSET ALLOCATION

(Dollars in Millions) Business purpose loans

Legacy RPL/NPL loans

Securities, at fair value Other, net (1)

Fair Value/Carrying Value $ 3,394 $ 4,289 $ 1,076 $ 1,538 $ 764 $ 11,061

Receivable/(Payable) for Unsettled Transactions — — — (63) — (63)

(Dollars in Millions) Non-QM loans Single-family rental loans Single-family transitional loans Multifamily transitional loans Legacy RPL/NPL loans Agency MBS Other,

Asset Amount $ 5,345 $ 1,234 $ 717 $ 490 $ 973 $ 3,303 $ 706 $ 12,768

Financing Agreements with Non-mark-to-market Collateral Provisions — (7) (47) (28) — — — (82)

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Securitized Debt (4,204) (788) (367) (159) (812) — (6) (6,336)

— — — — (184) (184)

Senior Notes and Other secured financing — — — — — — (209) (209)

Net Equity Allocated $ 604 $ 176 $ 105 $ 114 $ 82 $ 365 $ 382 $ 1,828

Debt/Net Equity Ratio (2)

5.2 x 8.1 x 8.4 x 6.8 x 5.0 x

(1) Includes $338.9 million of cash and cash equivalents, $262.4 million of restricted cash, $52.1 million of Other loans and $16.8 million of capital contributions made to loan origination partners, as well as other assets and other liabilities.

7.8x 6.0x 5.8x 3.3x 10.9x 8.0x 6.0x

(1) Includes $213.2 million of cash and cash equivalents, $173.5 million of restricted cash, $57.1 million of other securities, $51.0 million of Other loans and $20.2 million of capital contributions made to loan origination partners, as well as other assets and other liabilities.

(2) Total Debt/Net Equity ratio represents the sum of borrowings under our financing agreements as a multiple of net equity allocated.

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Amounts presented do not reflect estimates of prepayments or scheduled amortization.

(In Thousands) Business purpose loans (1)

Non-QM loans (2)

(In Thousands) Non-QM

Business purpose loans (2)

Legacy RPL/NPL loans (3)

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The following table presents, at December 31, 2025, the dollar amount of certain of our residential whole loans, contractually maturing after one year, and indicates whether the loans have fixed interest rates or adjustable interest rates:

(In Thousands) Business purpose loans (1)(2)

Non-QM loans (1)(2)

(In Thousands) Non-QM

loans (1) (2)

Business purpose loans (1) (2)

Legacy RPL/NPL loans (1) (2)

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(2) Excludes an allowance for credit losses.

Our Transitional loans contain various contractual extension features, typically ranging from three to twelve months subject to certain conditions, generally including our consent.

Our Transitional loans contain various contractual extension features, typically ranging from three to twenty-four months subject to certain conditions, generally including our consent.

Transitional loans are generally only extended if the loan is current and in compliance with various other loan terms.

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Fair Value 3,303,204 1,392,635

Amortized Cost 1,405,900 555,624

Amortized Cost Basis

3,257,686 1,405,900

Weighted average yield (1)

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Fair Value — 54,588

Amortized Cost 50,639 74,184

Amortized Cost Basis

Weighted average yield (1)

13.95 % 16.96 %

Weighted average time to maturity 0.8 years 1.8 years

Weighted average time to maturity N/A

CRT securities

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Fair Value 34,945 67,642

Amortized Cost 58,930 68,971

Amortized Cost Basis

30,330 58,930

Weighted average yield (1)

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Fair Value 22,131 22,648

Amortized Cost 22,633 23,482

Amortized Cost Basis

21,750 22,633

Weighted average yield (1)

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Weighted average time to maturity 25.8 years 26.8 years

(1) Weighted average yield is annualized interest income divided by average amortized cost for Securities, at fair value held at December 31, 2024 and December 31, 2023.

(1) Weighted average yield is annualized interest income divided by average amortized cost basis for Securities, at fair value held at December 31, 2025 and December 31, 2024.

Tax Considerations

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b) impairments generally are not recognized by us for income tax purposes until the asset is written-off or sold;

c) capital losses may only be recognized by us to the extent of its capital gains;

c) capital losses may only be recognized by us to the extent of our capital gains;

capital losses in excess of capital gains generally are carried over by us for potential offset against future capital gains;

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Consequently, our REIT taxable income calculated in a given period may differ significantly from our GAAP net income.

Recent tax legislation

On July 4, 2025, the U.S.

government enacted the One Big Beautiful Bill Act (“OBBBA”), which includes several changes to U.S.

federal income tax law, including the temporary and permanent extension of expiring provisions of the Tax Cuts and Jobs Act of 2017.

The Company is still evaluating the potential impacts of the OBBBA;

however, the Company does not anticipate it will have a material impact on the Company’s financial statements.

Results of Operations

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Diluted Earnings/(Loss) per Common Share $ 1.30 $ 0.82 $ 0.48

For 2024, we had net income available to our common stock and participating securities of $86.4 million, or $0.83 per basic common share and $0.82 per diluted common share, compared to net income available to our common stock and participating securities for 2023 of $47.3 million, or $0.46 per basic and diluted common share.

This increase in net income available to common stock and participating securities primarily reflects higher Other Income/(Loss), net of $22.3 million and higher Net Interest Income after Reversal/(Provision) for Credit Losses of $19.3 million.

Higher Other Income/Loss was primarily driven by mark-to-market gains in 2024 compared with losses in 2023 on derivatives used for risk management purposes and lower losses on securitized debt

measured at fair value through earnings, partially offset by lower realized losses and lower unrealized gains on our residential whole loans that are measured at fair value through earnings, realized losses on the unwind of derivatives used for risk management purposes, mark-to-market losses in 2024 compared with gains in 2023 on fair value option securities and lower Lima One mortgage banking income.

Net interest income for 2024 increased by $26.3 million from 2023, primarily due to higher asset yields and average balances on our residential whole loan portfolio and lower average balances of Residential whole loan financing agreements, partially offset by an increase in average balances and financing rates for our securitized debt and higher rates on senior notes issued to replace the maturing convertible senior notes.

2024 also includes a $5.8 million lower net reversal of the Provision for Credit Losses on Residential Whole Loans held at carrying value and a Provision for Credit Losses on Other Assets of $1.1 million.

For 2025, we had net income available to our common stock and participating securities of $136.5 million, or $1.31 per basic common share and $1.30 per diluted common share, compared to net income available to our common stock and participating securities for 2024 of $86.4 million, or $0.83 per basic common share and $0.82 per diluted common share.

The net income available to common stock and participating securities in the current period increased from the prior period primarily as a result of $28.4 million higher net interest income, $15.4 million lower operating and other expenses, and $15.5 million higher Other income/(loss), net, partially offset by a $7.4 million increase in preferred stock dividends paid as a result of the higher floating rate payable on our Series C preferred stock.

Net Interest Income

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The changes in average interest-earning assets and average interest-bearing liabilities and their related yields and costs are discussed in greater detail below under “Interest Income” and “Interest Expense.”

For 2024, our net interest spread and margin (including the impact of swaps) were 2.10% and 2.91%, respectively, compared to a net interest spread and margin (including the impact of swaps) of 2.05% and 2.90%, respectively, for 2023.

Our net interest income, which does not include the benefit of swap carry, increased by $26.3 million, or 14.9%, to $202.7 million from $176.5 million for 2023.

For 2024, net interest income includes higher net interest income from our residential whole loan portfolio of $27.2 million compared to 2023, primarily due to higher asset yields and higher amounts invested in the loan portfolio, partially offset by an increase in average balance and financing rates for our securitized debt.

In addition, net interest income for 2024 includes higher net interest income for our Securities, at fair value portfolio of approximately $0.9 million compared to 2023, primarily due higher amounts invested in the securities portfolio, partially offset by an increase in average balance of financing agreements for our securities.

Net interest income for 2024 also includes approximately $4.0 million of additional interest income from cash and other interest earning assets compared to 2023.

For 2025, our net interest spread and margin (including the impact of net Swap carry) were 1.84% and 2.55%, respectively, compared to a net interest spread and margin (including the impact of net Swap carry) of 2.10% and 2.91%, respectively, for 2024.

Our net interest income, which does not include the benefit of net Swap carry, increased by $28.4 million, or 14.0%, to $231.1 million from $202.7 million for 2024.

Net interest income for 2025 included approximately $23.3 million of higher net interest income for our Securities, at fair value portfolio compared to 2024, primarily due to higher amounts invested in Agency MBS, partially offset by a related increase in average balance of securities financing agreements.

In addition, net interest income for 2025 included $12.7 million higher net interest income from our residential whole loan portfolio compared to 2024, primarily due to a decrease in average balances of, and rates on, residential whole loan financing agreements, partially offset by an increase in average balances of, and rates on, our securitized debt and a decrease in amounts invested in the loan portfolio.

Net interest income for 2025 also had approximately $11.1 million less interest income from cash and other interest earning assets compared to 2024.

Analysis of Net Interest Income

The following table sets forth certain information about the average balances of our assets and liabilities and their related yields and costs for the years ended December 31, 2025 and 2024 .

Average yields are derived by dividing interest income by the average amortized cost of the related assets, and average costs are derived by dividing interest expense by the average balance of the related liabilities, for the periods shown.

Average yields are derived by dividing interest income by the average amortized cost basis of the related assets, and average costs are derived by dividing interest expense by the average balance of the related liabilities, for the periods shown.

The yields and costs may include premium amortization and discount accretion which are considered adjustments to interest income or expense.

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Securities, at fair value 2,046,043 121,258 5.93 927,927 61,110 6.59

927,927 61,110 6.59 559,434 42,376 7.57

Cash and cash equivalents (2)

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Convertible Senior Notes — — — 80,985 5,540 6.84

Other secured financing 3,614 236 6.47 — — —

8.875% Senior Notes 111,621 10,977 9.83 107,914 10,603 9.83

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61,528 0.62 112,771 1.24

Net interest rate spread (including the impact of Swaps) $ 315,502 2.10 % $ 283,633 2.05 %

Net interest rate spread (including the impact of net Swap carry) $ 292,612 1.84 % $ 315,502 2.10 %

Net interest-earning assets/net interest margin (7)

$ 1,776,193 2.55 % $ 1,957,868 2.91 %

(1) Yields presented throughout this Annual Report on Form 10-K are calculated using average amortized cost data for residential whole loans and securities, which excludes unrealized gains and losses.

(1) Yields presented throughout this Annual Report on Form 10-K are calculated using average amortized cost basis data for residential whole loans and securities, which excludes unrealized gains and losses.

For GAAP reporting purposes, securities purchases and sales are reported on the trade date.

Average amortized cost data used to determine yields is calculated based on the settlement date of the associated purchase or sale as interest income is not earned on purchased assets and continues to be earned on sold assets until settlement date.

Average amortized cost basis data used to determine yields is calculated based on the settlement date of the associated purchase or sale as interest income is not earned on purchased assets and continues to be earned on sold assets until settlement date.

(2) Includes average interest-earning cash, cash equivalents and restricted cash.

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(5) Net interest rate spread reflects the difference between the yield on average interest-earning assets and average cost of funds.

(6) Reflects the impact of positive or negative swap carry.

Positive swap carry results when income from the receive leg of a swap is greater than the expense on the pay leg.

Negative swap carry results when income from the receive leg is less than the expense on the pay leg.

(7) Net interest margin reflects net interest income (including net swap income or expense) divided by average interest-earning assets.

(6) Reflects the impact of positive or negative net Swap carry.

Positive net Swap carry results when income from the receive leg of a Swap is greater than the expense on the pay leg.

Negative net Swap carry results when income from the receive leg is less than the expense on the pay leg.

(7) Net interest margin reflects net interest income (including net Swap carry) divided by average interest-earning assets.

Rate/Volume Analysis

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Convertible Senior Notes (5,540) — (5,540)

Other secured financing 236 — 236

8.875% Senior Notes 374 — 374

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March 31, 2024 2.06 2.88

(1) Reflects the difference between the yield on average interest-earning assets and average cost of funds (including net swap income or expense).

(2) Reflects annualized net interest income (including net swap income or expense) divided by average interest-earning assets.

(1) Reflects the difference between the yield on average interest-earning assets and average cost of funds (including net Swap carry).

(2) Reflects annualized net interest income (including net Swap carry) divided by average interest-earning assets.

The following table presents the components of the net interest spread earned on our Residential whole loans for the quarterly periods presented:

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December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024

Business Purpose Loans

Net Yield (1)

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(5.13) % (5.21) % (5.14) % (5.08) % (5.12) % (5.22) % (5.18) % (5.12) %

Impact of net Swap carry (3)

0.49 % 0.62 % 0.70 % 0.77 % 1.36 % 1.75 % 1.63 % 1.68 %

Net Interest Spread 1.32 % 1.36 % 1.35 % 1.47 % 1.87 % 2.00 % 1.94 % 1.95 %

Business Purpose Loans

Net Yield (1)

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(5.82) % (6.03) % (6.07) % (6.15) % (6.39) % (6.66) % (6.72) % (6.66) %

Impact of net Swap carry (3)

0.44 % 0.49 % 0.42 % 0.45 % 0.80 % 1.01 % 0.92 % 0.99 %

Net Interest Spread 2.12 % 2.34 % 2.34 % 2.39 % 2.14 % 2.26 % 2.19 % 1.99 %

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(4.29) % (4.32) % (4.29) % (4.24) % (4.23) % (4.64) % (4.77) % (4.51) %

Impact of net Swap carry (3)

0.48 % 0.52 % 0.40 % 0.31 % 0.19 % 0.56 % 1.07 % 1.07 %

Net Interest Spread 3.61 % 4.75 % 4.80 % 3.08 % 3.48 % 3.67 % 5.02 % 4.18 %

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(5.23) % (5.36) % (5.35) % (5.36) % (5.51) % (5.76) % (5.82) % (5.75) %

Impact of net Swap carry (3)

0.48 % 0.58 % 0.58 % 0.60 % 1.01 % 1.31 % 1.28 % 1.32 %

Net Interest Spread 1.78 % 2.03 % 2.08 % 2.01 % 2.15 % 2.29 % 2.38 % 2.20 %

(1) Reflects annualized interest income on Residential whole loans divided by average amortized cost of Residential whole loans.

Excludes servicing costs.

(2) Reflects annualized interest expense divided by average balance of agreements with mark-to-market collateral provisions (repurchase agreements), agreements with non-mark-to-market collateral provisions, and securitized debt.

Cost of funding shown in the table above includes the impact of the net carry (the difference between swap interest income received and swap interest expense paid) on our Swaps.

While we have not elected hedge accounting treatment for Swaps, and accordingly, net carry is not presented in interest expense in our consolidated statement of operations, we believe it is appropriate to allocate net carry to the cost of funding to reflect the economic impact of our Swaps on the funding costs shown in the table above.

For the quarter ended December 31, 2024, this decreased the overall funding cost by 101 basis points for our Residential whole loans, 80 basis points for our Business purpose loans, 136 basis points for our Non-QM loans, and 19 basis points for our Legacy RPL/NPL loans.

For the quarter ended September 30, 2024, this decreased the overall funding cost by 131 basis points for our Residential whole loans, 101 basis points for our Business purpose loans, 175 basis points for our Non-QM loans, and 56 basis points for our Legacy RPL/NPL loans.

For the quarter ended June 30, 2024, this decreased the overall funding cost by 128 basis points for our Residential whole loans, 92 basis points for our Business purpose loans, 163 basis points for our Non-QM loans, and 107 basis points for our Legacy RPL/NPL loans.

For the quarter ended March 31, 2024, this decreased the overall funding cost by 132 basis points for our Residential whole loans, 99 basis points for our Business purpose loans, 168 basis points for our Non-QM loans, and 107 basis points for our Legacy RPL/NPL loans.

For the quarter ended December 31, 2023, this decreased the overall funding cost by 140 basis points for our Residential whole loans, 105 basis points for our Business purpose loans, 177 basis points for our Non-QM loans, and 112 basis points for our Legacy RPL/NPL loans.

For the quarter ended September 30, 2023, this decreased the overall funding cost by 143 basis points for our Residential whole loans, 113 basis points for our Business purpose loans, 176 basis points for our Non-QM loans, and 111 basis points for our Legacy RPL/NPL loans.

For the quarter ended June 30, 2023, this increased the overall funding cost by 144 basis points for our Residential whole loans, 110 basis points for our Business purpose loans, 175 basis points for our Non-QM loans, and 126 basis points for our Legacy RPL/NPL loans.

For the quarter ended March 31, 2023, this increased the overall funding cost by 127 basis points for our Residential whole loans, 100 basis points for our Business purpose loans, 161 basis points for our Non-QM loans, and 107 basis points for our Legacy RPL/NPL loans.

The following table presents the components of the net interest spread earned on our Securities for the quarterly periods presented:

Securities, at fair value

Quarter Ended Net Yield (1)

Net Yield (1)

5.56 % 5.79 % 6.60 % 6.07 % 6.05 % 6.48 % 7.03 % 7.24 %

Cost of Funding (2)

Net Interest Rate Spread

December 31, 2024 6.05 % 3.34 % 2.71 %

September 30, 2024 6.48 3.94 2.54

June 30, 2024 7.03 3.84 3.19

March 31, 2024 7.24 4.00 3.24

December 31, 2023 7.20 3.75 3.45

September 30, 2023 7.38 3.92 3.46

June 30, 2023 7.67 4.29 3.38

March 31, 2023 8.76 4.52 4.24

(1) Reflects annualized interest income divided by average amortized cost.

(2) Reflects annualized interest expense divided by average balance of repurchase agreements.

Cost of funding shown in the table above includes the impact of the net carry (the difference between swap interest income received and swap interest expense paid) on our Swaps that is allocated to the financing of our Securities, at fair value.

For the quarter ended December 31, 2024, this decreased the overall funding cost by 168 basis points.

For the quarter ended September 30, 2024, this decreased the overall funding cost by 171 basis points.

For the quarter ended June 30, 2024, this decreased the overall funding cost by 190 basis points.

For the quarter ended March 31, 2024, this decreased the overall funding cost by 179 basis points.

For the quarter ended December 31, 2023, this decreased the overall funding cost by 206 basis points.

For the quarter ended September 30, 2023, this decreased the overall funding cost by 191 basis points.

For the quarter ended June 30, 2023, this decreased the overall funding cost by 138 basis points.

For the quarter ended March 31, 2023, this decreased the overall funding cost by 104 basis points.

(4.18) % (4.50) % (4.55) % (4.58) % (5.02) % (5.65) % (5.74) % (5.79) %

Impact of net Swap carry (3)

0.79 % 1.05 % 1.05 % 1.08 % 1.68 % 1.71 % 1.90 % 1.79 %

Net Interest Spread 2.17 % 2.34 % 3.10 % 2.57 % 2.71 % 2.54 % 3.19 % 3.24 %

(1) Reflects annualized interest income on Residential whole loans divided by average amortized cost basis of Residential whole loans.

Excludes servicing costs.

(3) Reflects the difference between Swap interest income received and Swap interest expense paid on our Swaps.

While we have not elected hedge accounting treatment for Swaps and, accordingly, net Swap carry is not presented in interest expense in our consolidated statement of operations, we believe it is appropriate to allocate net Swap carry by asset class to reflect the economic impact of our Swaps on the net interest spread shown in the table above.

Interest Income

Interest income on our residential whole loans for 2024 increased by $95.7 million, or 17.8%, to $633.6 million compared to $537.9 million for 2023.

This increase primarily reflects an increase in the yield to 6.74% for 2024 from 6.15% for 2023 and a $0.7 billion increase in the average balance of this portfolio to $9.4 billion for 2024 from $8.7 billion for 2023.

Interest income on our Securities, at fair value portfolio for 2025 increased $60.1 million to $121.3 million from $61.1 million for 2024.

This increase primarily reflects an increase in the average amortized cost of the portfolio of $368.5 million due to purchases of Agency MBS, partially offset by a decrease in the net yield on our Securities, at fair value portfolio to 6.59% for 2024, compared to 7.57% for 2023.

This increase primarily reflects a higher average amortized cost basis of the portfolio of $1.1 billion due to purchases of Agency MBS, partially offset by a decrease in the net yield on our Securities, at fair value portfolio to 5.93% for 2025, compared to 6.59% for 2024.

Interest income on our residential whole loans for 2025 decreased by $27.9 million, or 4.4%, to $605.6 million compared to $633.6 million for 2024.

This decrease is primarily due to a $0.4 billion lower average balance of this portfolio to $9.0 billion for 2025 from $9.4 billion for 2024.

Interest income on our cash and other interest earning assets for 2025 decreased by $11.1 million to $18.2 million, compared to $29.3 million for 2024.

This decrease primarily reflects a $28.7 million lower average balance of other interest earning assets as well as a lower yield earned on our cash and cash equivalents to 3.32% for 2025 from 4.12% for 2024.

Interest Expense

Our interest expense for 2024 increased by $92.1 million, or 21.5%, to $521.2 million, from $429.1 million for 2023.

This increase primarily reflects the higher overall average balances and financing rates of our securitized debt, higher average balances for securities repurchase agreements and $10.6 million and $5.1 million of interest expense related to our 8.875% Senior Notes issued in January 2024 and 9.00% Senior Notes that were issued in April 2024, respectively.

These increases were partially offset by the impact of lower average balances for residential whole loan financing agreements and lower interest expense for convertible senior notes as these notes matured in June 2024 and were repaid in full.

Our interest expense for 2025 decreased by $7.3 million, or 1.4%, to $514.0 million, from $521.2 million for 2024.

This decrease primarily reflects the lower overall average balances of, and rates on, our residential whole loan financing agreements, lower rates on our securities repurchase agreements, as well as lower expense for convertible senior notes as these notes matured in June 2024 and were repaid in full.

These decreases were partially offset by the impact of higher average balances of, and rates on, our securitized debt, higher average balances of our securities repurchase agreements, and $2.2 million and $0.4 million of higher interest expense related to our 9.00% and 8.875% senior notes issued in April and January 2024, respectively.

Provision for Credit Losses on Residential Whole Loans Held at Carrying Value

For 2024, we recorded a reversal of provision for credit losses on residential whole loans held at carrying value of $3.1 million compared to a reversal of provision of $8.9 million for 2023.

For 2025, we recorded a provision for credit losses on residential whole loans held at carrying value of $0.9 million compared to a reversal of provision of $3.1 million for 2024.

The provision for the current period primarily reflects minor changes to modeling assumptions, partially offset by the run-off of loans held at carrying value.

The reversal of provision recorded in 2024 primarily reflects the run-off of loans held at carrying value and minor changes to modeling assumptions.

The prior period reversal primarily reflects updated modeling assumptions, as well as the run-off of loans held at carrying value, partially offset by the impact of loan charge-offs.

Provision for Credit Losses on Other Assets

For 2025, we had no provision for credit losses on Other Assets.

For 2024, we recorded a provision for credit losses on Other Assets of $1.1 million, related to an uncollectible receivable from an unrelated third-party servicer.

No such provision was recorded for 2023.

Other Income/(Loss), net

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Other Income/(Loss), net $ 100,955 $ 85,428

(1) Includes realized credit losses, net of recoveries, on liquidated residential whole loans or residential whole loans that were transferred to REO of $(26.6) million and $(11.5) million in 2025 and 2024, respectively .

During the past two years we have seen an increase in realized credit losses on our residential whole loans at fair value, as we have worked to accelerate the resolution of certain non-performing loans.

While we cannot predict the timing or amount of future credit losses, we expect that credit losses may remain heightened relative to historical levels in the short term as we continue to work to accelerate the resolution of certain non-performing loans.

Credit losses are generally initially recognized in “Net gain/(loss) on residential whole loans measured at fair value through earnings” as unrealized losses and are later reclassified to “Other Income/(Loss), net” when the credit loss is realized.

Operating and Other Expense

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Compensation and benefits expenses are composed of salaries, annual bonus, stock-based awards, long-term incentives, Lima One origination related commissions, related payroll taxes, medical insurance, 401(k) matching and other benefits expenses.

Compensation and benefits expense increased $1.9 million to $87.7 million for 2024, compared to $85.8 million for 2023 primarily driven by separation, retirement, and severance related costs, partially offset by reduction in origination related commission expenses and lower stock-based compensation expense.

Compensation and benefits expense decreased $10.0 million to $77.7 million for 2025, compared to $87.7 million for 2024, primarily driven by lower expense recognition from cash bonus and stock-based awards, lower accrual of severance costs, and a reduction in Lima One salary expenses from reduced headcount.

Other general and administrative expenses are comprised of leasing and other office expenses, professional fees, insurance costs, board of directors fees, and miscellaneous expenses.

Other general and administrative expenses increased by $0.4 million to $44.3 million for 2024 compared to $43.9 million for 2023, primarily as a result of accelerated depreciation of a software asset at Lima One, higher costs associated with IT infrastructure at our corporate offices and tax related accounting fees, partially offset by lower depreciation at our corporate offices, and lower professional fees and miscellaneous expenses at Lima One.

Other general and administrative expenses decreased by $2.5 million to $41.7 million for 2025 compared to $44.3 million for 2024, primarily as a result of lower expense recognized on the disposal of fixed assets at Lima One, as well as lower costs associated with IT infrastructure, industry conferences and related travel expenses, and lower professional fees, partially offset by higher rental expense for the new Lima One headquarters.

Loan servicing and other related operating expenses are composed of non-recoverable advances, upfront costs on securitization and other fees related to our residential whole loan activities.

These expenses increased compared to 2023 by approximately $1.2 million, or 3.4%, primarily due to higher non-recoverable advances and upfront costs on securitization.

These expenses decreased in 2025 compared to 2024 by approximately $1.9 million, or 5.3%, primarily due to lower expenses recognized on upfront costs on securitizations, with five securitizations in 2025 compared to eight in 2024, partially offset by higher expenses recognized related to property preservation, taxes, insurance, and certain other non-recoverable carrying costs on our residential whole loan and REO portfolios.

Selected Financial Ratios

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Dividend Payout Ratio (3)

Total Average Stockholders’ Equity to Total Average Assets (4)

Leverage Multiple (5) Recourse Leverage Multiple (6)

Total Average Stockholders’ Equity to Total Average Assets (4) Leverage Multiple (5)

Recourse Leverage Multiple (6)

December 31, 2025 1.69 % 11.84 % 0.86 14.31 % 6.0 2.5

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(1) Reflects annualized net income divided by average total assets.

For the quarters ended September 30, 2023, and June 30, 2023, the amounts calculated reflect the quarterly net income divided by average total assets.

(2) Reflects annualized net income divided by average total stockholders’ equity.

For the quarters ended September 30, 2023, and June 30, 2023, the amounts calculated reflect the quarterly net income divided by average total stockholders’ equity.

(3) Reflects dividends declared per share of common stock divided by earnings per share.

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Recurring expenses, such as servicing fees, custodial fees, trustee fees and other similar ongoing fees are not excluded from Distributable earnings.

During the third quarter of 2024, the Company changed the determination of Distributable earnings to exclude depreciation, for consistency with the reporting of similar non-cash expenses;

this change has been reflected in all periods presented.

Management believes that the adjustments made to GAAP earnings result in the removal of (i) income or expenses that are not reflective of the longer term performance of our investment portfolio, (ii) certain non-cash expenses, and (iii) expense items required to be recognized solely due to the election of the fair value option on certain related residential mortgage assets and associated liabilities.

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Residential whole loans and securities at carrying value (1,399) (668) 343 305 — (7,324) (2,668) (418)

Interest rate swaps (46,632) 84,629 10,237 (23,182) 97,400 (9,433) (37,018) 40,747

Interest rate swaps and ERIS swap futures 657 14,826 32,565 44,842 (46,632) 84,629 10,237 (23,182)

Securitized debt held at fair value (1,586) 21,303 3,712 18,575 (47,267) 71,475 7,597 20,169

Other portfolio investments (3) (26) (2,637) (744) (94) 1,503 1,484 —

(94) 1,503 1,484 — 254 722 872 —

Expense items:

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Securitization-related transaction costs 2,188 3,550 1,753 1,696 5,252 3,485 3,009 1,340

Depreciation 938 2,604 822 889 869 841 704 1,866

1,045 1,328 1,087 879 938 2,604 822 889

Total adjustments (15,636) (16,129) 2,277 (2,176) 43,246 (1,247) 12,776 22,130

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GAAP earnings/(loss) per basic common share $ 0.42 $ 0.36 $ 0.22 $ 0.32 $ (0.02) $ 0.38 $ 0.32 $ 0.14

$ (0.02) $ 0.38 $ 0.32 $ 0.14 $ 0.80 $ (0.64) $ (0.34) $ 0.63

Distributable earnings per basic common share $ 0.27 $ 0.20 $ 0.24 $ 0.29 $ 0.39 $ 0.37 $ 0.45 $ 0.36

Weighted average common shares for basic earnings per share 103,061 103,683 103,705 103,777 103,675 103,647 103,446 103,175

103,675 103,647 103,446 103,175 102,266 102,255 102,186 102,155

Selected Financial Ratios (using Distributable earnings)

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March 31, 2024 1.66 9.12 0.97

(1) Reflects annualized Distributable earnings divided by average total assets.

(1) Reflects annualized Distributable earnings before preferred dividends divided by average total assets.

(2) Reflects annualized Distributable earnings before preferred dividends divided by average total stockholders’ equity.

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Fair value adjustment to Securitized debt, at carrying value 45.7 48.5 57.1 63.1 70.3 64.3 82.3 88.4

70.3 64.3 82.3 88.4 95.6 122.5 129.8 122.4

Stockholders’ Equity including fair value adjustments to Residential whole loans and Securitized debt held at carrying value (Economic book value) $ 1,398.2 $ 1,398.8 $ 1,406.0 $ 1,420.2 $ 1,421.8 $ 1,476.5 $ 1,463.7 $ 1,462.2

$ 1,421.8 $ 1,476.5 $ 1,463.7 $ 1,462.2 $ 1,484.9 $ 1,410.7 $ 1,541.3 $ 1,632.1

GAAP book value per common share $ 13.20 $ 13.13 $ 13.12 $ 13.28 $ 13.39 $ 13.77 $ 13.80 $ 13.80

Economic book value per common share $ 13.75 $ 13.69 $ 13.69 $ 13.84 $ 13.93 $ 14.46 $ 14.34 $ 14.32

$ 13.93 $ 14.46 $ 14.34 $ 14.32 $ 14.57 $ 13.84 $ 15.12 $ 16.02

Number of shares of common stock outstanding 101.7 102.2 102.7 102.7 102.1 102.1 102.1 102.1

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For performing loans, estimates of fair value are derived using a discounted cash flow approach, where estimates of cash flows are determined from the scheduled payments, adjusted using forecasted prepayment, default and loss given default rates.

For non-performing loans, asset liquidation cash flows are derived based on the estimated time to liquidate the loan, the estimated value of the collateral, expected costs and

estimated home price levels.

For non-performing loans, asset liquidation cash flows are derived based on the estimated time to liquidate the loan, the estimated value of the collateral, expected costs and estimated home price levels.

Estimated cash flows for both performing and non-performing loans are discounted at yields considered appropriate to arrive at a reasonable exit price for the asset.

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Recent Accounting Standards to Be Adopted in Future Periods

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures (or ASU 2023-09).

The amendments in ASU 2023-09 primarily require entities to disclose more details about their income tax rate, expense and payments.

ASU 2023-09 is effective for public business entities for fiscal years beginning after December 15, 2024.

Early adoption is permitted.

We do not expect that the adoption of ASU 2023-09 will have a significant impact on our financial statement disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

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There can be no assurance, however, that we will be able to access the capital markets at any particular time or on any particular terms.

We have available for issuance an unlimited amount (subject to the terms and limitations of our charter) of common stock, preferred stock, depository shares representing preferred stock, warrants, debt securities, rights and/or units pursuant to our universal shelf registration statement and, at December 31, 2024, we had approximately 2.0 million shares of common stock available for issuance pursuant to our DRSPP shelf registration statement.

The Company did not issue any shares pursuant to its DRSPP during 2024.

In January 2024, we completed the issuance of $115.0 million in aggregate principal amount of its 8.875% Senior Notes in an underwritten public offering.

We have available for issuance an unlimited amount (subject to the terms and limitations of our charter) of common stock, preferred stock, depository shares representing preferred stock, warrants, debt securities, rights and/or units pursuant to our universal shelf registration statement and, until September 27, 2025, we had approximately 2.0 million shares of common stock available for issuance pursuant to our DRSPP shelf registration statement.

The DRSPP shelf registration statement expired by its terms on September 27, 2025.

We did not issue any shares pursuant to the DRSPP during 2025.

In January 2024, we completed the issuance of $115.0 million in aggregate principal amount of our 8.875% Senior Notes due 2029 (or the 8.875% Senior Notes) in an underwritten public offering.

The 8.875% Senior Notes are our senior unsecured obligations and bear interest at a rate equal to 8.875% per year, payable in cash quarterly in arrears on February 15, May 15, August 15, and November 15 of each year, beginning on May 15, 2024, and are expected to mature on February 15, 2029, unless earlier redeemed.

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The 8.875% Senior Notes have an effective interest rate, including the impact of amortization to interest expense of debt issuance costs, of 9.83%.

On February 29, 2024, we entered into a distribution agreement pursuant to which we may offer and sell shares of our common stock having an aggregate gross sales price of up to $300 million, from time to time, through various sales agents in transactions deemed to be “at-the-market” offerings under federal securities laws (or the ATM Program).

During 2024, we did not sell any shares of common stock through the ATM Program.

At December 31, 2024, $300 million remained available under the distribution agreement.

On February 29, 2024, we announced our Board had authorized a new $200 million stock repurchase program with respect to our common stock, which will be in effect through the end of 2025.

The new stock repurchase program supersedes the prior stock repurchase program in its entirety.

On August 15, 2025, we entered into a distribution agreement pursuant to the terms of which we may, from time to time, offer and sell shares of our Series B Preferred Stock and/or our Series C Preferred Stock having an aggregate gross sales price of up to $100.0 million, through various sales agents in transactions deemed to be “at-the-market” offerings under federal securities laws (or the Preferred Stock ATM Program).

We sold an aggregate of approximately 411,000 shares of preferred stock through the Preferred Stock ATM Program during 2025 for gross sales proceeds of approximately $9.5 million.

As of December 31, 2025, approximately $90.5 million remained available under the current authorization for the Preferred Stock ATM Program.

On August 15, 2025, this agreement was terminated and a new distribution agreement with substantially the same terms was executed.

During 2025, we did not sell any shares of common stock through the Common Stock ATM Program.

At December 31, 2025, $300 million remained available under the Common Stock ATM Program.

In February 2024, we announced our Board had authorized a $200 million stock repurchase program with respect to our common stock, which was in effect through the end of 2025.

Approximately $190 million remained available for repurchase under the stock repurchase program upon its expiration.

Refer to Part II, Item 5 for further information about the stock repurchase program.

During 2024, we did not repurchase any shares of our common stock through the stock repurchase program.

At December 31, 2024, $200.0 million remained available under the current Board authorization for the purchase of common stock under our stock repurchase program.

In April 2024, we completed the issuance of $75.0 million in aggregate principal amount of its 9.00% Senior Notes in an underwritten public offering.

During 2025, we repurchased 1,026,117 shares of our common stock through the stock repurchase program at an average cost of $9.76 per share and a total cost of approximately $10.0 million, net of fees and commissions paid to the sales agent of approximately $10,000.

In February 2026, our Board authorized a new $200 million stock repurchase program with respect to the Company’s common stock, which will be in effect through December 31, 2028.

In April 2024, we completed the issuance of $75.0 million in aggregate principal amount of our 9.00% Senior Notes due 2029 (or the 9.00% Senior Notes) in an underwritten public offering.

The 9.00% Senior Notes are our senior unsecured obligations and bear interest at a rate equal to 9.00% per year, payable in cash quarterly in arrears on February 15, May 15, August 15, and November 15 of each year, beginning on August 15, 2024, and are expected to mature on August 15, 2029, unless earlier redeemed.

We may redeem the 9.00% Senior Notes in whole or in part at any time at our option on or after August 15, 2026, at a redemption price equal to 100% of the outstanding principal amount of the 9.00% Senior Notes to be redeemed plus accrued and unpaid interest to, but excluding, the redemption date.

The total net proceeds to us from the offering of the 9.00% Senior Notes, after deducting the underwriter’s discount and commissions and offering expenses, were approximately $72.0 million.

The total net proceeds to us from the offering of the 9.00% Senior Notes, after deducting the

underwriter’s discount and commissions and offering expenses, were approximately $72.0 million.

The 9.00% Senior Notes have an effective interest rate, including the impact of amortization to interest expense of debt issuance costs, of 9.94%.

In February 2023, our Board authorized a repurchase program for its Convertible Senior Notes pursuant to which it could have repurchased up to $100 million of our Convertible Senior Notes.

In February 2023, our Board authorized a repurchase program for our 6.25% Convertible Senior Notes due 2024 (or the Convertible Senior Notes) pursuant to which we could have repurchased up to $100 million of the Convertible Senior Notes.

During the three months ended March 31, 2024, we repurchased $39.9 million principal amount of our Convertible Senior Notes for $39.8 million and recorded a loss of $0.1 million to Other Income/(Loss), net on the consolidated statement of operations.

During the year ended December 31, 2023, we repurchased $20.4 million principal amount of the Convertible Senior Notes for $20.2 million and recorded a gain of $0.1 million to Other Income/(Loss), net on the consolidated statement of operations.

During the three months ended June 30, 2024, the Convertible Senior Notes matured and we repaid the amount in full.

In June 2024, the Convertible Senior Notes matured and we repaid the amount in full.

Financing Agreements

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In addition, each lender typically requires that we include supplemental terms and conditions to the standard master repurchase agreement.

Typical supplemental terms and conditions, which differ by lender, may include changes to the margin maintenance requirements, required haircuts (or the percentage amount by which the collateral value is contractually required to exceed the loan amount), purchase price maintenance requirements, requirements that all controversies related to the repurchase agreement be litigated in a particular jurisdiction and cross default and setoff provisions.

Other non-repurchase

agreement financing arrangements also contain provisions governing collateral maintenance.

Typical supplemental terms and conditions, which differ by lender, may include changes to the margin maintenance requirements, required haircuts (or the percentage amount by which the collateral value is contractually required to exceed the amount borrowed), purchase price maintenance requirements, requirements that all controversies related to the repurchase agreement be litigated in a particular jurisdiction and cross default and setoff provisions.

Other non-repurchase agreement financing arrangements also contain provisions governing collateral maintenance.

At December 31, 2025, we had unused financing capacity of approximately $3.4 billion across our financing arrangements for all collateral types.

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March 31, 2024 3,645,218 3,611,212 3,686,018 4,792,515 4,794,400 4,812,304

(1) The information presented in the table above excludes Senior notes (Note 6).

(1) The information presented in the table above excludes Senior notes and Other secured financing (Note 6).

Cash Flows and Liquidity for the Year Ended December 31, 2025

Our cash, cash equivalents and restricted cash increased by $113.1 million during 2024, reflecting:

$424.6 million used in our investing activities, $337.6 million provided by our financing activities and $200.1 million provided by our operating activities.

Our cash, cash equivalents and restricted cash decreased by $214.6 million during 2025, reflecting:

$1.8 billion used in our investing activities, $1.5 billion provided by our financing activities and $76.2 million provided by our operating activities.

At December 31, 2025, our debt-to-equity multiple was 6.0 times compared to 5.0 times at December 31, 2024.

Our recourse leverage multiple at December 31, 2024 and December 31, 2023 was 1.7 times.

Our recourse leverage multiple at December 31, 2025 was 2.5 times compared to 1.7 times at December 31, 2024.

At December 31, 2025, we had borrowings under asset-backed financing agreements of $4.4 billion, of which $1.4 billion were secured by residential whole loans, $3.0 billion were secured by securities and $23.3 million were secured by REO.

In addition, at December 31, 2025, we had securitized debt of $6.3 billion in connection with our loan securitization transactions.

At December 31, 2023, we had borrowings under asset-backed financing agreements of $3.6 billion, of which $2.9 billion were secured by residential whole loans, $622.6 million were secured by securities and $25.2 million were secured by REO.

At December 31, 2024, we had borrowings under asset-backed financing agreements of $3.2 billion, of which $1.9 billion were secured by residential whole loans, $1.3 billion were secured by securities and $25.4 million were secured by REO.

In addition, at December 31, 2024, we had securitized debt of $5.8 billion in connection with our loan securitization transactions.

2 unchanged sentences

During 2025, we received $2.4 billion of principal payments on residential whole loans and loan related investments, $274.9 million of proceeds from the sale of residential whole loans, and $96.4 million of proceeds on sales of REO.

In addition, during 2024, we utilized $869.1 million for acquisitions of securities and received cash proceeds of $45.6 million from sales of securities and other assets and $84.0 million from principal payments on our securities.

In addition, during 2025, we utilized $2.2 billion for acquisitions of securities and received $289.6 million from principal payments on our securities and cash proceeds of $46.8 million from sales of securities and other assets.

In connection with our repurchase agreement financings and Swaps, we routinely receive margin calls from our counterparties and make margin calls (“reverse margin calls”) to our counterparties.

7 unchanged sentences

Collateral Pledged for Margin Activity

Cash and Securities Received for Reverse Margin

Net Assets Received/(Pledged) for Margin Activity

Cash and Securities

Received for Reverse Margin Net Assets Received/

(Pledged) for Margin Activity

For the Quarter Ended (1)

Fair Value of Securities Pledged

Aggregate Assets Pledged for Margin

Fair Value of Securities Pledged Cash Pledged Aggregate Assets

Pledged for Margin

(In Thousands)

14 unchanged sentences

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-K

Item 7. Management’s Discussion and Analysis