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Other Assets | 6 Months Ended
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Jun. 30, 2026
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] |
Other Assets | Other Assets The following table presents the components of the Company’s Other assets at June 30, 2026 and December 31, 2025:
(In Thousands) |  | June 30, 2026 |  | December 31, 2025
REO |  | $ | 128,090 |  |  | $ | 135,035 |
Commercial REO |  | 12,762 |  |  | 19,885 |
Goodwill |  | 61,076 |  |  | 61,076 |
Intangibles, net (1) |  | 2,000 |  |  | 2,600 |
Capital contributions made to loan origination partners |  | 21,088 |  |  | 20,182 |
Commercial loans |  | 4,510 |  |  | 6,079 |
Interest receivable |  | 108,840 |  |  | 111,118 |
Other loan related receivables |  | 7,054 |  |  | 8,874 |
Lease right-of-use asset (2) |  | 9,358 |  |  | 42,810 |
Other |  | 73,630 |  |  | 81,488 |
Total Other Assets |  | $ | 428,408 |  |  | $ | 489,147 |
(1)Net of aggregate accumulated amortization of $26.0 million and $25.4 million as of June 30, 2026 and December 31, 2025, respectively. (2)An estimated incremental borrowing rate of 7.5% was used in connection with the Company’s primary operating lease as of December 31, 2025, and an estimated incremental borrowing rate of 8.0% was used in connection with Lima One’s headquarters lease (see Notes 2 and 9). (a) Real Estate Owned and Commercial REO The following table summarizes the aggregate carrying value of REO properties by loan source prior to foreclosure proceeding or from completion of a deed-in-lieu of foreclosure or similar legal agreement.
(Dollars In Thousands) |  | June 30, 2026 |  | December 31, 2025
Non-QM loans |  | $ | 13,003 |  |  | $ | 12,066 |
Business purpose loans |  | 73,454 |  |  | 80,822 |
Seasoned RPL/NPL loans |  | 41,633 |  |  | 42,147 |
Total |  | $ | 128,090 |  |  | $ | 135,035 |
Number of properties |  | 298 |  |  | 322 |
At June 30, 2026, $128.1 million of residential real estate property was held by the Company that was acquired either through a completed foreclosure proceeding or from completion of a deed-in-lieu of foreclosure or a similar legal agreement. In addition, formal foreclosure proceedings were in process with respect to $40.7 million of residential whole loans held at carrying value and $228.1 million of residential whole loans held at fair value at June 30, 2026. The following table presents the activity in the Company’s REO for the three and six months ended June 30, 2026 and 2025:
|  | Three Months Ended June 30, |  | Six Months Ended June 30,
(Dollars In Thousands) |  | 2026 |  | 2025 |  | 2026 |  | 2025
Balance at beginning of period |  | $ | 138,651 |  |  | $ | 130,634 |  |  | $ | 135,035 |  |  | $ | 130,854 |
Adjustments to record at lower of cost or fair value |  | (3,060) |  |  | (3,565) |  |  | (7,078) |  |  | (6,777) |
Transfer from residential whole loans (1) |  | 21,735 |  |  | 30,286 |  |  | 46,988 |  |  | 55,734 |
Purchases and capital improvements, net |  | 9 |  |  | 182 |  |  | 34 |  |  | 317 |
Disposals and other (2) |  | (29,245) |  |  | (21,713) |  |  | (46,889) |  |  | (44,304) |
Balance at end of period |  | $ | 128,090 |  |  | $ | 135,824 |  |  | $ | 128,090 |  |  | $ | 135,824 |
Number of properties |  | 298 |  |  | 377 |  |  | 298 |  |  | 377 |
(1)During the three and six months ended June 30, 2026, the Company recognized $(10.5) million and $(10.7) million of gains/(losses), respectively, on Residential whole loans in Other Income/(Loss), net associated with the transfer of loans to REO. During the three and six months ended June 30, 2025, the Company recognized $(4.4) million and $(4.4) million of gains/(losses), respectively, on Residential whole loans in Other Income/(Loss), net associated with the transfer of loans to REO. (2)During the three and six months ended June 30, 2026, the Company sold 76 and 144 REO properties for consideration of $30.7 million and $48.8 million, realizing net gains of approximately $1.6 million and $2.1 million, respectively. During the three and six months ended June 30, 2025, the Company sold 107 and 201 REO properties for consideration of $21.8 million and $46.0 million, realizing net gains of approximately $0.6 million and $2.3 million, respectively. These amounts are included in Other Income/(Loss), net on the Company’s consolidated statements of operations. Commercial REO In the third quarter of 2024, the Company received 75% and 49% interests, respectively, in two VIEs through foreclosure of a multifamily property and a senior living facility underlying delinquent commercial mortgage loans. Each of these entities was determined to be a VIE but the Company was not determined to be the primary beneficiary; as a result, the investments in the entities are considered equity method investments. Each entity accounts for its respective commercial REO property (the “Commercial REO”) similarly to the manner in which the Company accounts for its residential REO. The entities generally do not own any other significant assets or carry any significant liabilities, except that the two entities contain properties encumbered by third-party financing. As of December 31, 2025, one property was considered held-for-investment and one property was considered held-for-sale. During the quarter ended June 30, 2026, the property that was held-for-investment was transferred to held-for-sale status. During the six months ended June 30, 2026, the senior living facility property considered held-for-sale was sold for net proceeds of $17.4 million, with the Company’s share of the net realized gain totaling $0.4 million. (b) Goodwill and Intangible Assets On July 1, 2021, the Company completed the acquisition of Lima One. In connection with the acquisition of Lima One, the Company identified and recorded goodwill of $61.1 million and finite-lived intangible assets totaling $28.0 million. For the Lima One reporting unit, through the most recent testing date (October 1, 2025), no impairment has been recorded since the goodwill was initially recognized as the estimated fair value of the reporting unit has consistently exceeded its carrying value. Key assumptions used in the valuation included loan origination volume, expense levels, discount rates and capitalization multiples, all of which are subject to variability in the current market. The amortization period for each of the finite lived intangible assets and the activity for the six months ended June 30, 2026 are summarized in the table below:
(Dollars in Thousands) |  | Carrying Value at December 31, 2025 |  | Amortization Six months ended June 30, 2026 |  | Carrying Value at June 30, 2026 |  | Amortization Period (Years) (1)
Trademarks / Trade Names |  | $ | 2,200 |  |  | $ | (200) |  |  | $ | 2,000 |  |  | 10
Internally Developed Software |  | 400 |  |  | (400) |  |  | — |  |  | 5
Total Identified Intangibles |  | $ | 2,600 |  |  | $ | (600) |  |  | $ | 2,000 |  |  |
(1)Amortization is calculated on a straight-line basis over the amortization period. (c) Capital Contributions Made to Loan Origination Partners The Company has made investments in several loan originators as part of its strategy to be a reliable source of capital to select partners from whom the Company sources residential mortgage loans through both flow arrangements and bulk purchases. At June 30, 2026, the carrying value of these investments (including adjustments for impairments or mark-to-market changes) was $21.1 million, including $6.0 million of common equity (including partnership interests) and $15.1 million of preferred equity. During the six months ended June 30, 2026 and 2025, there were no impairment charges recorded by the Company on its investments in loan origination partners. Prior to December 31, 2024, the Company had elected to account for certain of these investments pursuant to the fair value option, where changes in estimated fair value were recorded in the statement of operations. Such changes in estimated fair value resulted in gains (losses) being recorded of $0.5 million and $0.9 million during the three and six months ended June 30, 2026, respectively, and $2.6 million and $3.4 million during the three and six months ended June 30, 2025, respectively. For certain of the Company’s investments, the interests acquired to date by the Company generally do not have a readily determinable fair value. Consequently, the Company accounts for these interests (including any acquired options and warrants) in loan originators initially at cost. The carrying value of these investments will be adjusted if it is determined that an impairment has occurred or if there has been a subsequent observable transaction in either the investee company’s equity securities or a similar security that provides evidence to support an adjustment to the carrying value. In addition, for certain partners, options or warrants have also been acquired that provide the Company with the ability to increase the level of its investment if certain conditions are met. At the end of each reporting period, or earlier if circumstances warrant, the Company evaluates whether the nature of its interests and other involvement with the investee entity requires the Company to apply equity method accounting or consolidate the results of the investee entity with the Company’s financial results. (d) Commercial Mortgage Loans As of December 31, 2025, the Company owned two participations in commercial mortgage bridge loans, which are accounted for at fair value under the fair value option, and are classified as Level 3 fair value measurements in the fair value hierarchy. Each of the participations is 75% of the total UPB of the related loans and the remaining interest in each loan was retained by the originator of such loan. The commercial mortgage loans are collateralized by one multifamily property and one office property. The commercial mortgage loans are first liens and bear variable interest rates. During the six months ended June 30, 2026, the commercial mortgage loan secured by the office property was sold for $1.6 million, realizing losses, before the impact of the reversal of previously recognized unrealized losses, of $2.8 million. Upon sale, the Company reversed $3.0 million of previously recognized unrealized losses, resulting in a net gain on sale of $0.2 million. Only the commercial mortgage loan secured by the multifamily property remains as of June 30, 2026. The following table presents certain additional information about the Company’s commercial mortgage loans as of June 30, 2026 and December 31, 2025:
(Dollars In Thousands) |  | Fair Value / Carrying Value |  | UPB |  | Weighted Average Coupon (1) |  | Weighted Average Term to Maturity (Months) |  | UPB 60+ Days Delinquent | Weighted Average LTV Ratio
Commercial Loans - June 30, 2026 |  | $ | 4,510 |  |  | $ | 4,510 |  |  | 10.58 | % |  | 0 |  | $ | 4,510 |  | 80 | %
Commercial Loans - December 31, 2025 |  | $ | 6,079 |  |  | $ | 9,385 |  |  | 10.60 | % |  | 0 |  | $ | 9,385 |  | 189 | %
(1)Commercial Loans contain contractual features which increase the loan’s interest rate following an event of default. The weighted average coupon presented is calculated based on each loan’s coupon rate without regard to post-default rate adjustments. (e) Derivative Instruments Swaps The Company’s derivative instruments include both interest rate swap agreements and ERIS swap futures, which are used to economically hedge the interest rate risk associated with certain borrowings. Pursuant to these arrangements, the Company agreed to pay a fixed rate of interest and receive a variable interest rate, generally based on the Secured Overnight Financing Rate (“SOFR”), on the notional amount of the interest rate swap, or entered into futures contracts designed to replicate the economics of such an arrangement. At June 30, 2026, none of the Company’s Swaps were designated as hedges for accounting purposes. Variation margin payments on the Company’s Swaps are treated as a legal settlement of the exposure under the related Swap contract, the effect of which reduces what would have otherwise been reported as the fair value of the Swap, generally to zero. The following table presents the assets pledged as collateral against the Company’s Swaps:
(In Thousands) |  | June 30, 2026 |  | December 31, 2025 |  |
Agency MBS, at fair value |  | $ | 29,404 |  |  | $ | 32,015 |  |  |
Restricted Cash |  | 38,141 |  |  | 24,317 |  |  |
As of June 30, 2026, the Company had Swaps with an aggregate notional amount of $5.7 billion and an average maturity of approximately 52 months with a maximum term of approximately 123 months. The following table presents information about the Company’s Swaps at June 30, 2026 and December 31, 2025:
|  | June 30, 2026 |  | December 31, 2025 |  |  |  |
Maturity (1) |  | Notional Amount (2) |  | Weighted Average Fixed-Pay Interest Rate |  | Weighted Average Variable Interest Rate (3) |  | Notional Amount (2) |  | Weighted Average Fixed-Pay Interest Rate |  | Weighted Average Variable Interest Rate (3) |  |  |  |
(Dollars in Thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Within 30 days |  | $ | — |  |  | — | % |  | — | % |  | $ | — |  |  | — | % |  | — | % |  |  |  |
Over 30 days to 3 months |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  |
Over 3 months to 6 months |  | 450,000 |  |  | 1.12 |  |  | 3.68 |  |  | — |  |  | — |  |  | — |  |  |  |  |
Over 6 months to 12 months |  | 975,000 |  |  | 1.73 |  |  | 3.68 |  |  | 450,000 |  |  | 1.12 |  |  | 3.87 |  |  |  |  |
Over 12 months to 24 months |  | 90,000 |  |  | 3.25 |  |  | 3.68 |  |  | 1,065,000 |  |  | 1.85 |  |  | 3.87 |  |  |  |  |
Over 24 months to 36 months |  | 733,000 |  |  | 3.13 |  |  | 3.68 |  |  | 341,500 |  |  | 3.23 |  |  | 3.87 |  |  |  |  |
Over 36 months to 48 months |  | 22,800 |  |  | 3.17 |  |  | 3.68 |  |  | 332,800 |  |  | 2.96 |  |  | 3.87 |  |  |  |  |
Over 48 months to 60 months |  | 1,849,700 |  |  | 3.35 |  |  | 3.68 |  |  | 1,463,900 |  |  | 3.36 |  |  | 3.87 |  |  |  |  |
Over 60 months to 72 months |  | 29,000 |  |  | 3.99 |  |  | 3.68 |  |  | — |  |  | — |  |  | — |  |  |  |  |
Over 72 months |  | 1,554,200 |  |  | 3.60 |  |  | 3.68 |  |  | 827,300 |  |  | 3.36 |  |  | 3.87 |  |  |  |  |
Total Swaps |  | $ | 5,703,700 |  |  | 2.94 | % |  | 3.68 | % |  | $ | 4,480,500 |  |  | 2.74 | % |  | 3.87 | % |  |  |  |
(1)Each maturity category reflects contractual amortization and/or maturity of notional amounts. (2)As of June 30, 2026, the aggregate notional amounts of Swaps include $2.1 billion of interest rate swap agreements and $3.6 billion of ERIS swap futures. As of December 31, 2025, the aggregate notional amounts of Swaps include $2.1 billion of interest rate swap agreements and $2.4 billion of ERIS swap futures. (3)Reflects the benchmark variable rate due from the counterparty at the date presented. This rate adjusts daily based on SOFR. Impact of Derivative Instruments on Earnings The following table presents the components of Net gain/(loss) on derivatives, which is presented in Other Income/(Loss), net in the consolidated statements of operations:
|  | Three Months Ended June 30, |  | Six Months Ended June 30,
(In Thousands) |  | 2026 |  | 2025 |  | 2026 |  | 2025
Income on Swaps variable receive leg |  | $ | 48,777 |  |  | $ | 36,850 |  |  | $ | 92,187 |  |  | $ | 70,927 |
Expense on Swaps fixed pay leg |  | (37,946) |  |  | (21,367) |  |  | (70,311) |  |  | (40,191) |
Unrealized mark-to-market gain/(loss) |  | 33,155 |  |  | (15,391) |  |  | 59,921 |  |  | (60,233) |
Net price alignment expense on margin collateral received |  | (714) |  |  | (1,169) |  |  | (1,041) |  |  | (2,635) |
Realized gain/(loss) on terminated Swaps |  | 536 |  |  | (17,174) |  |  | (6,223) |  |  | (17,174) |
Net gain/(loss) on TBA long positions |  | (168) |  |  | — |  |  | 1,168 |  |  | — |
TBA dollar roll income |  | 985 |  |  | — |  |  | 985 |  |  | — |
Total Net gain/(loss) on derivatives |  | $ | 44,625 |  |  | $ | (18,251) |  |  | $ | 76,686 |  |  | $ | (49,306) |
TBA Securities The Company entered into long positions in certain TBA securities in order to acquire Agency MBS. The table below summarizes open long positions in TBA securities as of June 30, 2026, which had an aggregate value of $2.7 million and were included in Other assets on the Company’s consolidated balance sheets. The Company did not have any open positions in TBA securities at December 31, 2025.
|  | June 30, 2026 |  | December 31, 2025
(Dollars in thousands) |  | Notional Amount |  | Settlement Date |  | Notional Amount |  | Settlement Date
TBA Security |  |  |  |  |  |  |  |
MBS 30 year 5.0% coupon |  | $ | 128,000 |  |  | 7/13/2026 |  | $ | — |  |  | — |
MBS 30 year 5.5% coupon |  | $ | 350,000 |  |  | 7/13/2026 |  | $ | — |  |  | — |

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