ARBOR REALTY TRUST INC
For the period ended Jun 30, 2026. Filed Jul 31, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Jul 31, 2026
ABR$1.61-3.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-08.
0001253986-26-000036
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-07-31.
0001253986-26-000048
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 125 previous paragraphs and 162 current paragraphs.
69 unchanged; 46 reworded; 31 added; 10 removed; 0 previous and 16 current paragraphs rearranged.
Tables are not compared: 8 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (31)
Current report
•Unwound CLO 17, redeeming the remaining outstanding notes totaling $787.0 million, which were repaid from the availability in our credit and repurchase facilities; and
Current report
Subsequent Event. In July 2026, we issued $375.0 million of 6.25% Convertible Notes due July 2029. We used the net proceeds to repurchase 2,140,300 shares of our common stock for $11.6 million, repurchase $102.7 million of our common stock pursuant to a prepaid forward transaction and used the remaining net proceeds, together with cash on hand, to redeem, in full, our outstanding $270.0 million 4.50% senior unsecured notes due in September 2026. See Note 10 for further details.
Current report
Investments in equity affiliates increased $24.8 million, primarily due to a $25.0 million investment in a multifamily property in the second quarter.
Current report
Other assets decreased $20.6 million, primarily due to the payoff of unsecured line of credit loans and a decrease in interest receivable mainly due to the collection of deferred interest on modified/delinquent loans.
Current report
Credit and repurchase facilities increased $662.6 million, primarily due to the transfer of loans into repurchase facilities from the unwind of CLO 17.
Current report
Senior unsecured notes decreased $171.3 million, primarily due to the redemption of our $175.0 million 5.00% senior unsecured notes in April 2026.
Current report
The decrease in servicing revenue, net was primarily due to a decrease in earnings on escrow balances from lower average balances and a decrease in the applicable interest rate, partially offset by an increase in servicing fees due to growth in our servicing portfolio.
Current report
The increase in employee compensation and benefits expense was primarily due to higher salaries and incentive compensation associated with executive-level hires, merit-based compensation increases for existing employees and higher commissions resulting from increased GSE/Agency loan sales volume. These increases were partially offset by a reduction in overall headcount.
Current report
The increase in the provision for credit losses, net primarily reflects larger specific loan impairment reserves taken in 2026, in addition to a softer outlook for commercial real estate in 2026, compared to 2025.
Current report
Gain (Loss) on Real Estate
Current report
The gain on real estate in 2026 represents an aggregate gain recognized on the sale of two foreclosed properties, partially offset by an aggregate loss recognized on the sale of three existing REO assets; while the loss on real estate in 2025 is substantially comprised of losses on below market debt totaling $1.5 million related to financing on the sale of several REO assets.
Current report
Income from Equity Affiliates
Current report
nm — not meaningful
Current report
Net Interest Income
Current report
Agency Business Revenue
Current report
The increase in gain on sales, including fee-based services, net was primarily due to an 18% increase in loan sales volume ($276.5 million), partially offset by an 11% decrease in the sales margin from 1.72% to 1.53%. The decrease in the sales margin was mainly due to a decrease in the Fannie Mae sales margin, which includes the impact of larger portfolio deals in 2026 that produce lower margins.
Current report
The increase in income from MSRs was primarily due to a 30% increase in loan commitment volume ($447.6 million), partially offset by a 12% decrease in the MSR rate from 1.27% to 1.12%. The decrease in the MSR rate was mainly due to a higher concentration of Freddie Mac loan commitment volume, which generate lower servicing fees.
Current report
The decrease in servicing revenue, net was primarily due to a decrease in earnings on escrow balances from lower average balances and a decrease in the applicable interest rate, partially offset by an increase in servicing fees due to growth in our servicing portfolio.
Current report
Other Income (Loss)
Current report
Other Expenses
Current report
The increase in employee compensation and benefits expense was primarily due to higher salaries and incentive compensation associated with executive-level hires and merit-based compensation increases for existing employees. These increases were partially offset by a reduction in overall headcount.
Current report
The increase in the provision for credit losses, net primarily reflects larger specific loan impairment reserves taken in 2026, in addition to a softer outlook for commercial real estate in 2026, compared to 2025.
Current report
Income from Equity Affiliates
Current report
Provision for Income Taxes
Current report
Cash Flows. Cash flows provided by operating activities totaled $150.0 million during the six months ended June 30, 2026 and consisted primarily of the benefit of non-cash expenses included in our net loss, principally provisions for credit losses and loss-sharing obligations of $62.0 million, depreciation and amortization of $56.0 million and impairment losses on REO assets of $26.2 million, along with net cash inflows of $30.1 million from loan sales exceeding loan originations in our Agency Business.
Current report
Cash flows used in investing activities totaled $128.4 million during the six months ended June 30, 2026 and consisted primarily of $83.9 million of net cash outflows in connection with loan and investment activity (Structured Business loan originations of $1.58 billion exceeded payoffs and paydowns/payoffs totaling $1.49 billion), net cash outflows of $27.9 million related to REO activity and a $25.0 million investment made for an interest in a multifamily property.
Current report
(3)Commitment totals excludes available overadvances.
Current report
•Unwound CLO 17, repaying $787.0 million of outstanding notes;
Current report
•Modified existing debt facilities resulting in an increase in the committed amount by approximately $590.0 million;
Current report
Additionally, in July 2026, we issued $375.0 million of 6.25% Convertible Notes and used the net proceeds to repurchase 2,140,300 shares of our common stock for $11.6 million, repurchase $102.7 million of our common stock pursuant to a prepaid forward transaction and used the remaining proceeds, together with cash on hand, to redeem, in full, our outstanding $270.0 million 4.50% senior unsecured notes that were due in September 2026.
Current report
(3)For purposes of calculating diluted distributable earnings per share, diluted weighted average shares outstanding include the effect of potentially dilutive securities to the extent such securities are dilutive to distributable earnings, notwithstanding that such securities are excluded from diluted GAAP earnings per common share for the three and six months ended June 30, 2026 because their effect would be anti-dilutive due to the GAAP net loss incurred during those periods.
Removed paragraphs (10)
Previous report
•Closed a collateralized securitization vehicle (CLO 21) totaling $762.6 million, of which $674.0 million consisted of investment grade notes and $88.6 million of below investment grade notes were retained by us; and
Previous report
Dividend. We declared a cash dividend of $0.17 per share, a reduction from our previous quarterly dividend of $0.30 per share.
Previous report
Due from related party increased $28.7 million, primarily due to funds from payoffs to be remitted by our affiliated servicing operations related to real estate transactions at the end of the reporting period. These amounts were remitted to us in April 2026.
Previous report
Other assets decreased $27.5 million, primarily due to the payoff of an unsecured line of credit loan.
Previous report
Credit and repurchase facilities decreased $181.7 million, primarily due to the transfer of loans into a CLO and loan runoff in our Structured Business portfolio, partially offset by loan originations exceeding sales in our Agency Business.
Previous report
The decrease in the provision for credit losses, net primarily reflects lower specific loan impairment reserves taken in 2026, partially offset by higher general reserves as a result of an increase in our historical loss and a loss provision recorded upon sale, or expected sale, of an REO asset in 2026.
Previous report
Income (loss) from Equity Affiliates
Previous report
Cash Flows. Cash flows used in operating activities totaled $8.3 million during the three months ended March 31, 2026 and consisted primarily of net cash outflows of $36.6 million from loan originations exceeding loan sales in our Agency Business, partially offset by net income (adjusted for the impairment on REO of $12.5 million and an increase in CECL reserves of $10.4 million) of $33.9 million.
Previous report
Cash flows provided by investing activities totaled $58.3 million during the three months ended March 31, 2026. Loan and investment activity (originations and payoffs/paydowns) comprise the majority of our investing activities. Loan paydowns/payoffs from our Structured Business totaling $894.0 million and originations of $826.1 million, net of payoffs, resulted in net cash inflows of $67.9 million.
Previous report
(3)Commitment totals include available overadvances.
Reworded paragraphs (46)
Previous wording
Significant Developments During the First Quarter of 2026
Current wording
Significant Developments During the Second Quarter of 2026
Previous wording
•We repurchased 4,117,901 shares of our common stock under our share repurchase program at a total cost of $30.7 million and an average cost of $7.46 per share.
Current wording
•We repurchased 3,550,691 shares of our common stock under our share repurchase program at a cost of $20.8 million, excluding broker commission fees, representing an average cost of $5.85 per share.
Previous wording
•Balance sheet portfolio of $12.00 billion, as loan runoff totaling $861.0 million outpaced loan originations of $767.6 million;
Current wording
•Balance sheet portfolio of $12.11 billion; loan originations of $689.0 million outpaced loan runoff totaling $539.7 million;
Previous wording
•We modified 13 loans with a total UPB of $478.8 million (see Note 3 for details); and
Current wording
•We modified 7 loans with a total UPB of $386.9 million (see Note 3 for details); and
Previous wording
•We foreclosed on and took back the underlying collateral on three loans with an aggregate net carrying value of $58.8 million and recorded a loss of $1.8 million through provision for credit losses. We sold one of those foreclosed properties, along with an existing REO asset, for $33.0 million and recognized an aggregate loss of $2.1 million through loss on real estate. See Notes 3 and 9 for details.
Current wording
•We foreclosed on and took back the underlying collateral on five loans with an aggregate net carrying value of $110.1 million and recorded a loss of $2.5 million through provision for credit losses. We sold two foreclosed properties, along with three existing REO assets for $79.8 million and recognized an aggregate gain of $0.1 million through gain (loss) on real estate. See Notes 3 and 9 for details.
Previous wording
Agency Business Activity. Servicing portfolio of $36.31 billion (up $107.3 million) with loan originations totaling $707.6 million, which includes $218.5 million of new Agency loans that were recaptured from our Structured Business runoff.
Current wording
Agency Business Activity. Servicing portfolio of $36.70 billion (up $393.3 million) with loan originations totaling $1.08 billion.
Previous wording
During 2025, the Federal Reserve lowered the federal funds rate three times for an aggregate 75-basis point reduction. Current market expectations generally contemplate the potential for an additional rate cut in the fourth quarter of 2026, but those expectations may abate if impacts from recent geopolitical events have a longer lasting effect on the economic environment and inflationary measurements. However, the elevated rate environment has persisted longer than anticipated and could persist even longer if inflation and other key economic indicators do not align with the Federal Reserve’s expectations. While short-term rates have declined, long-term rates remain volatile following the current administration’s adoption of increased tariffs, related litigation, geopolitical developments, including the conflict involving Iran, and broader macroeconomic uncertainty. Expectations for long-term rates in 2026 remain mixed, reflecting uncertainty around long-term inflation, fiscal policy, increased federal spending and larger deficits, including the effects of the July 2025 enactment of the OBBBA, as described below. Accordingly, it remains difficult to predict where short- and long-term rates will settle during 2026.
Current wording
During 2025, the Federal Reserve lowered the federal funds rate three times for an aggregate 75-basis point reduction. During the first half of 2026, the Federal Reserve maintained the target range for the federal funds rate at 3.50% to 3.75%. Current market expectations remain uncertain and have shifted during 2026, with the timing and direction of any additional monetary policy actions dependent on inflation, labor market conditions, economic growth and financial market conditions. Although short-term rates have declined from their peaks, the rate environment remains elevated, has remained elevated longer than anticipated and could persist even longer if inflation and other key economic indicators do not align with the Federal Reserve’s expectations. Additionally, long-term rates remain volatile following the current administration’s adoption of increased tariffs, related litigation, geopolitical developments, including the conflict involving Iran and related energy market volatility, and broader macroeconomic uncertainty. Expectations for long-term rates in 2026 remain mixed, reflecting uncertainty around long-term inflation, fiscal policy, increased federal spending and larger deficits, including the effects of the July 2025 enactment of the OBBBA, as described below. Accordingly, it remains difficult to predict where short- and long-term rates will settle during the remainder of 2026.
Previous wording
This prolonged rate environment has resulted, and may continue to result, in higher payment delinquencies and defaults, more loan modifications and foreclosures and declines in real estate values in certain asset classes, which have adversely affected, and may continue to adversely affect, our results of operations, financial condition, business prospects, liquidity and ability to make distributions to stockholders. It has also made it more difficult to resolve delinquent loans, contributing to additional foreclosures and REO assets on our balance sheet. When we take title to assets through foreclosure, we generally seek to dispose of these assets through third-party sales. However, depending on market conditions and asset-specific factors, we may evaluate other alternatives, such as recapitalizations and joint venture structures, intended to optimize recoveries and reduce our REO exposure. These efforts may include enhanced property management, capital improvements and deferred maintenance, re-leasing vacant space, renewing or restructuring leases and other stabilization initiatives designed to improve occupancy, cash flow and marketability.
Current wording
This prolonged rate environment has resulted in, and may continue to result in, higher payment delinquencies and defaults, more loan modifications and foreclosures and declines in real estate values in certain asset classes, which have adversely affected, and may continue to adversely affect, our results of operations, financial condition, business prospects, liquidity and ability to make distributions to stockholders. It has also made it more difficult to resolve delinquent loans, contributing to additional foreclosures and REO assets on our balance sheet. When we take title to assets through foreclosure, we generally seek to dispose of these assets through third-party sales. However, depending on market conditions and asset-specific factors, we may evaluate other alternatives, such as recapitalizations and joint venture structures, intended to optimize recoveries and reduce our REO exposure. These efforts may include enhanced property management, capital improvements and deferred maintenance, re-leasing vacant space, renewing or restructuring leases and other stabilization initiatives designed to improve occupancy, cash flow and marketability.
Previous wording
We continue to apply disciplined underwriting and risk management practices and work closely with borrowers to protect portfolio quality and mitigate potential losses, including, where appropriate, modifying loan terms. However, given the current interest rate environment, we cannot assure that our loan portfolio will continue to perform in accordance with current contractual terms.
Current wording
We continue to apply disciplined underwriting and risk management practices and work closely with borrowers to protect portfolio quality and mitigate potential losses, including, where appropriate, modifying loan terms. However, given the current interest rate environment and inflationary pressures, we cannot assure that our loan portfolio will continue to perform in accordance with current contractual terms.
Previous wording
An elevated rate environment generally benefits our net interest income because our structured loan portfolio exceeds our corresponding debt balances, the substantial majority of our loan portfolio is floating rate based on SOFR and a meaningful portion of our debt, including senior unsecured notes, is fixed rate. As a result, increases in interest income generally tends to outpace increases in interest expense, and earnings on our cash and escrow balances also benefit from higher rates. These benefits, however, have been increasingly offset by the adverse effects of a prolonged elevated rate environment, including higher delinquencies, more loan modifications and foreclosures, lower loan originations, reduced cash and escrow balances and pressure on certain commercial real estate values, which can result in higher reserves when collateral values are considered insufficient to fully repay loans.
Current wording
An elevated rate environment generally benefits our net interest income because our structured loan portfolio exceeds our corresponding debt balances, the substantial majority of our loan portfolio is floating rate based on SOFR and a meaningful portion of our debt, including senior unsecured notes, is fixed rate. As a result, increases in interest income generally tend to outpace increases in interest expense, and earnings on our cash and escrow balances also benefit from higher rates. These benefits, however, have been increasingly offset by the adverse effects of a prolonged elevated rate environment, including higher delinquencies, more loan modifications and foreclosures, lower loan originations, reduced cash and escrow balances and pressure on certain commercial real estate values, which can result in higher reserves when collateral values are considered insufficient to fully repay loans.
Previous wording
The recent reductions in short-term interest rates have reduced, and are expected to continue to reduce, net interest income on our floating rate loan portfolio and earnings on our cash and escrow balances. For additional information, see “Quantitative and Qualitative Disclosures about Market Risk” below.
Current wording
The reductions in short-term interest rates have reduced, and are expected to continue to reduce, net interest income on our floating rate loan portfolio and earnings on our cash and escrow balances. In addition, if short-term interest rates decline further, our interest income and earnings on cash and escrow balances could decline further, while the benefit to our interest expense may be limited to the extent our debt is fixed rate or does not reprice at the same pace. Conversely, if short-term or long-term rates increase, or remain elevated for an extended period, borrower performance, collateral values, loan origination volumes, transaction activity and our ability to resolve delinquent loans could be further adversely affected. For additional information, see “Quantitative and Qualitative Disclosures about Market Risk” below.
Previous wording
Our Structured loan and investment portfolio balance was $12.00 billion and $12.11 billion at March 31, 2026 and December 31, 2025, respectively. This decrease was primarily due to loan runoff exceeding loan originations by $93.4 million (see below for details) and by loans we foreclosed on and received ownership of the underlying collateral as REO assets.
Current wording
Our Structured loan and investment portfolio balance was approximately $12.11 billion at both June 30, 2026 and December 31, 2025. There was a slight decrease from December 31, 2025, which was primarily due to loans we foreclosed on and received ownership of the underlying collateral as REO assets, substantially offset by loan originations exceeding loan runoff by $55.8 million (see below for details).
Previous wording
The portfolio had a weighted average current interest pay rate of 6.49% at both March 31, 2026 and December 31, 2025. Including certain fees earned and costs, the weighted average current interest rate was 7.03% and 7.08% at March 31, 2026 and December 31, 2025, respectively. Our debt that finances our Structured loan and investment portfolio totaled $10.71 billion and $10.46 billion at March 31, 2026 and December 31, 2025, respectively, with a weighted average funding cost of 6.13% and 6.16%, respectively, which excludes financing costs. Including financing costs, the weighted average funding rate was 6.40% and 6.45%, at March 31, 2026 and December 31, 2025. respectively.
Current wording
The portfolio had a weighted average current interest pay rate of 6.50% and 6.49% at June 30, 2026 and December 31, 2025, respectively. Including certain fees earned and costs, the weighted average current interest rate was 6.95% and 7.08% at June 30, 2026 and December 31, 2025, respectively. Our debt that finances our Structured loan and investment portfolio totaled $10.48 billion and $10.46 billion at June 30, 2026 and December 31, 2025, respectively, with a weighted average funding cost of 6.10% and 6.16%, respectively, which excludes financing costs. Including financing costs, the weighted average funding rate was 6.38% and 6.45%, at June 30, 2026 and December 31, 2025. respectively.
Previous wording
Loans held-for-sale from the Agency Business increased $34.1 million, primarily from loan originations exceeding sales by $36.6 million as noted in the following table ($ in thousands):
Current wording
Loans held-for-sale from the Agency Business decreased $33.3 million, primarily from loan sales exceeding originations by $30.1 million as noted in the following table ($ in thousands):
Previous wording
Real estate owned increased $21.8 million, primarily due to the foreclosure of two multifamily bridge loans totaling $34.0 million, through which we took back the underlying collateral, partially offset by the sale of one multifamily property.
Current wording
Real estate owned increased $47.0 million, primarily due to the foreclosure of eight multifamily bridge loans totaling $171.6 million, through which we took back the underlying collateral, partially offset by the sale of seven multifamily properties for $112.8 million.
Previous wording
Securitized debt increased $463.2 million, primarily due to the closing of CLO 21 where we issued $674.0 million of notes to third-party investors, partially offset by paydowns on our existing securitizations of $248.4 million.
Current wording
Securitized debt decreased $496.0 million, primarily due to the unwind of CLO 17 totaling $1.06 billion and paydowns on our existing securitizations totaling $182.7 million, partially offset by the issuance of CLO 21 where we issued $674.0 million of notes to third-party investors.
Previous wording
Notes payable — real estate owned increased $30.2 million, due to the addition of notes payable on a new REO asset and financing received on two existing REO assets.
Current wording
Notes payable — real estate owned increased $47.4 million, primarily due to the addition of notes payable on three new REO assets and additional financing received on two existing REO assets.
Previous wording
Other liabilities decreased $35.1 million, primarily due to payments of accrued incentive compensation and commissions during the first quarter of 2026, related to 2025 performance.
Current wording
Other liabilities decreased $14.5 million, primarily due to payments of accrued incentive compensation and commissions during the first half of 2026, related to 2025 performance.
Previous wording
See Note 16 for details of our issuances of common stock, dividends declared and deferred compensation transactions.
Current wording
See Note 16 for details of our common stock, dividends declared and deferred compensation transactions.
Previous wording
(2)Delinquent loans reflect loans that are contractually 60 days or more past due. At March 31, 2026 and December 31, 2025, delinquent loans totaled $975.4 million and $959.0 million, respectively. At March 31, 2026, there were five loans totaling $56.0 million in bankruptcy and twenty-five loans totaling $313.5 million were foreclosed. At December 31, 2025, there were five loans totaling $56.0 million in bankruptcy and nineteen loans totaling $176.5 million were foreclosed.
Current wording
(2)Delinquent loans reflect loans that are contractually 60 days or more past due. At June 30, 2026 and December 31, 2025, delinquent loans totaled $1.12 billion and $959.0 million, respectively. At June 30, 2026, there were four loans totaling $22.6 million in bankruptcy and forty-two loans totaling $422.2 million were foreclosed. At December 31, 2025, there were five loans totaling $56.0 million in bankruptcy and nineteen loans totaling $176.5 million were foreclosed.
Previous wording
The increase in interest expense was mainly due to a $9.2 million increase from our Structured Business, primarily due an increase in the average balance of our interest-bearing liabilities from an increase in the average loan portfolio and the issuance of senior unsecured notes. This was partially offset by note paydowns in our securitizations, the payoff of our 7.50% convertible senior notes and a reduction in the average cost of interest-bearing liabilities (mainly from a decrease in SOFR).
Current wording
The increase in interest expense was mainly due to a $6.2 million increase from our Structured Business, primarily due to an increase in the average balance of our interest-bearing liabilities from an increase in the average loan portfolio and the issuance of senior unsecured notes. This was partially offset by the payoff of our 7.50% convertible senior notes and a reduction in the average cost of interest-bearing liabilities (mainly from a decrease in SOFR).
Previous wording
The decrease in gain on sales, including fee-based services, net was primarily due to a 8% decrease in loan sales volume ($59.9 million), partially offset by a 6% increase in the sales margin from 1.75% to 1.86%. The increase in the sales margin was mainly due to the portfolio mix in 2026 that produced higher margins.
Current wording
The increase in gain on sales, including fee-based services, net was primarily due to a 42% increase in loan sales volume ($336.4 million), partially offset by a 21% decrease in the sales margin from 1.69% to 1.33%. The decrease in the sales margin was mainly due to a decrease in the Fannie Mae sales margin, which includes the impact of larger portfolio deals in 2026 that produce lower margins.
Previous wording
The increase in income from MSRs was primarily due to a 14% increase in loan commitment volume ($88.5 million).
Current wording
The increase in income from MSRs was primarily due to a 42% increase in loan commitment volume ($359.1 million), partially offset by 22% decrease in the MSR rate from 1.28% to 1.00%. The decrease in the MSR rate was mainly due to a higher concentration of Freddie Mac loan commitment volume, which generate lower servicing fees.
Previous wording
The gains and losses on derivative instruments in 2026 and 2025 were related to changes in the fair values of our forward sale commitments and swaps held by our Agency Business as a result of changes in market interest rates.
Current wording
The gains on derivative instruments in 2026 and 2025 were related to changes in the fair values of our forward sale commitments and swaps held by our Agency Business as a result of changes in market interest rates.
Previous wording
In 2026, we recorded a $12.5 million impairment loss related to certain REO assets that we acquired through foreclosure in prior periods, which represents the extent to which the carrying value exceeded its estimated fair value at the current period end.
Current wording
In 2026, we recorded a $13.7 million impairment loss related to certain REO assets that we acquired through foreclosure in prior periods, which represents the extent to which the carrying value exceeded its estimated fair value at the current period end.
Previous wording
The increase in the provision for loss sharing, net primarily reflects larger specific loan impairment reserves taken in 2026, partially offset by an improved positive outlook for commercial real estate in 2026, compared to 2025.
Current wording
The increase in the provision for loss sharing, net primarily reflects larger specific loan impairment reserves taken in 2026, compared to 2025.
Previous wording
In the three months ended March 31, 2026, we recorded a tax provision of $2.1 million, which consisted of a current tax provision of $4.7 million and a deferred tax benefit of $2.6 million. In the three months ended March 31, 2025, we recorded a tax provision of $3.6 million, which consisted of a current tax provision of $3.7 million and a deferred tax benefit of $0.1 million.
Current wording
In the three months ended June 30, 2026, we recorded a tax provision of $3.2 million, which consisted of a current tax provision of $5.4 million and a deferred tax benefit of $2.2 million. In the three months ended June 30, 2025, we recorded a tax provision of $3.4 million, which consisted of a current tax provision of $5.0 million and a deferred tax benefit of $1.6 million.
Previous wording
Net Income Attributable to Noncontrolling Interest
Current wording
Net (Loss) Income Attributable to Noncontrolling Interest
Previous wording
The noncontrolling interest relates to the outstanding OP Units (see Note 16). There were 16,170,218 and 16,173,761 OP Units outstanding at March 31, 2026 and 2025, respectively, which represented 7.8% of our outstanding stock at both March 31, 2026 and 2025.
Current wording
The noncontrolling interest relates to the outstanding OP Units (see Note 16). At June 30, 2026 and 2025, there were 16,170,218 and 16,173,761 OP Units outstanding, respectively, which represented 7.9% and 7.8%, respectively, of our outstanding stock.
Previous wording
The decrease in interest income was mainly due to a $5.7 million decrease from our Structured Business. The decline was primarily due to a decrease in the average yield on core interest-earning assets, partially offset by an increase in the average balance of our core interest-earning assets (loan originations exceeded runoff in 2025) and, to a lesser extent, higher average bank balances. The decrease in the average yield was mainly from a decrease in SOFR, a reduction in back interest earned on delinquent and modified loans and an increase in new delinquencies and modified loans at lower rates.
Current wording
The decrease in interest income was mainly due to a $16.5 million decrease from our Structured Business. The decline was primarily due to a decrease in the average yield on core interest-earning assets, partially offset by an increase in the average balance of our core interest-earning assets (loan originations exceeded runoff) and, to a lesser extent, higher average bank balances. The decrease in the average yield was mainly from a decrease in SOFR, a reduction in back interest earned on delinquent and modified loans and an increase in new delinquencies and modified loans at lower rates.
Previous wording
The increases in property operating income and expenses were due to the addition of several new REO assets. This is also the reason for the increase in depreciation and amortization.
Current wording
The increases in property operating income and expenses were due to the addition of several new REO assets, which also resulted in an increase in depreciation and amortization.
Previous wording
The loss on real estate in 2026 represents a loss incurred on the sale of an existing REO asset; while the loss on real estate in 2025 is comprised of a $1.8 million loss on the foreclosure of loans we took back as REO and a $2.8 million loss on below market debt on the sale of two existing REOs, partially offset by a $1.9 million gain on the REO sales.
Current wording
The loss on real estate in 2026 primarily reflects a loss recognized on the sale of an existing REO asset during the first quarter of 2026. The loss on real estate in 2025 is comprised of $4.3 million in loss on below market debt related to financing on the sale of several existing REO assets and a $1.8 million loss on the foreclosure of loans we took back as REO assets, partially offset by a $1.9 million gain on the REO sales.
Previous wording
Income from equity affiliates in 2026 primarily reflects $5.8 million of income recognized related to a cash distribution received from our Lexford joint venture, partially offset by losses from other investments; while loss from equity affiliates in 2025 primarily reflects losses from our investments in a residential mortgage banking business and our AMAC III investment totaling $2.3 million, partially offset by income from several of our other investments.
Current wording
Income from equity affiliates in 2026 primarily reflects $8.8 million of income recognized related to cash distributions received from our Lexford joint venture, partially offset by losses from other investments; while income from equity affiliates in 2025 primarily reflects a $3.4 million distribution received from our Lexford joint venture and income of $0.8 million from our Fifth Wall investment, partially offset by losses from our investments in a residential mortgage banking business and AMAC III totaling $3.3 million.
Previous wording
We had $10.96 billion in total structured debt outstanding at March 31, 2026. Of this total, $6.16 billion, or 56%, does not contain mark-to-market provisions and is comprised of non-recourse securitized debt, senior unsecured debt and junior subordinated notes. The remaining $4.81 billion of debt is in credit and repurchase facilities with several different banks that we have long-standing relationships with. At March 31, 2026, we had $2.66 billion of debt from credit and repurchase facilities that were subject to margin calls related to changes in interest spreads.
Current wording
We had $10.75 billion in total structured debt outstanding at June 30, 2026. Of this total, $5.02 billion, or 47%, does not contain mark-to-market provisions and is comprised of non-recourse securitized debt, senior unsecured debt and junior subordinated notes. The remaining $5.73 billion of debt is in credit and repurchase facilities with several different banks that we have long-standing relationships with. At June 30, 2026, we had $2.22 billion of debt from credit and repurchase facilities that were subject to margin calls related to changes in interest spreads.
Previous wording
In addition to our ability to extend our credit and repurchase facilities and raise funds from equity and debt offerings, we also have a $36.31 billion agency servicing portfolio at March 31, 2026, which is mostly prepayment protected, and escrow/cash balances that generates approximately $129 million per year in recurring gross cash flow.
Current wording
In addition to our ability to extend our credit and repurchase facilities and raise funds from equity and debt offerings, we also have a $36.70 billion agency servicing portfolio at June 30, 2026, which is mostly prepayment protected, and escrow/cash balances that generates approximately $184 million per year in recurring gross cash flow.
Previous wording
Cash flows provided by financing activities totaled $200.4 million during the three months ended March 31, 2026 and consisted primarily of $467.4 million of net securitized debt activity (proceeds exceeded payoffs and paydowns), partially offset by net cash outflows of $171.0 million from debt facility activities (facility paydowns were greater than financed loan originations), $73.3 million of distributions to our stockholders and OP Unit holders and $30.7 million of repurchase of common stock.
Current wording
Cash flows used in financing activities totaled $145.9 million during the six months ended June 30, 2026 and consisted primarily of $493.7 million of net securitized debt activity (payoffs and paydowns exceeded proceeds), $175.0 million payoff of our senior notes, $118.8 million of distributions to our stockholders and OP Unit holders and $51.6 million of common stock repurchases; partially offset by net cash inflows of $690.4 million from debt facility activities (financed loan originations were greater than facility paydowns).
Previous wording
Unencumbered Assets. At March 31, 2026, we had total unencumbered assets with a carrying value of $3.23 billion, consisting of cash and cash equivalents of $407.1 million, loans of $792.4 million, securitization investments of $1.28 billion, MSRs of $331.9 million and $423.2 million of other assets not encumbered by any portion of secured indebtedness. Our unencumbered assets to unsecured debt ratio was 1.58x at March 31, 2026, compared to the required minimum of 1.20x.
Current wording
Unencumbered Assets. At June 30, 2026, we had total unencumbered assets with a carrying value of $2.62 billion, consisting of cash and cash equivalents of $287.5 million, loans of $699.0 million, securitization investments of $879.1 million, MSRs of $323.9 million and $431.7 million of other assets not encumbered by any portion of secured indebtedness. Our unencumbered assets to unsecured debt ratio was 1.40x at June 30, 2026, compared to the minimum of 1.20x required by our outstanding $400.0 million 8.50% senior unsecured notes due in December 2028 and our outstanding $500.0 million 7.875% senior unsecured notes due in July 2030.
Previous wording
Inflation. During 2025, the Federal Reserve lowered the federal funds rate three times for an aggregate 75-basis point reduction. Current market expectations generally contemplate the potential for an additional rate cut in the fourth quarter of 2026, but those expectations may abate if impacts from recent geopolitical events have a longer lasting effect on the economic environment and inflationary measurements. However, the elevated rate environment has persisted longer than anticipated and could persist even longer if inflation and other key economic indicators do not align with the Federal Reserve’s expectations. While short-term rates have declined, long-term rates remain volatile following the current administration’s adoption of increased tariffs, related litigation, geopolitical developments, including the conflict in Iran, and broader macroeconomic uncertainty. Expectations for long-term rates in 2026 remain mixed, reflecting uncertainty around long-term inflation, fiscal policy, increased federal spending and larger deficits, including the effects of the OBBBA. Accordingly, it remains difficult to predict where short- and long-term rates will settle during 2026.
Current wording
Inflation. During 2025, the Federal Reserve lowered the federal funds rate three times for an aggregate 75-basis point reduction. During the first half of 2026, the Federal Reserve maintained the target range for the federal funds rate at 3.50% to 3.75%. Current market expectations remain uncertain and have shifted during 2026, with the timing and direction of any additional monetary policy actions dependent on inflation, labor market conditions, economic growth and financial market conditions. Although short-term rates have declined from their peaks, the rate environment remains elevated, has remained elevated longer than anticipated and could persist even longer if inflation and other key economic indicators do not align with the Federal Reserve’s expectations. Additionally, long-term rates remain volatile following the current administration’s adoption of increased tariffs, related litigation, geopolitical developments, including the conflict involving Iran and related energy market volatility, and broader macroeconomic uncertainty. Expectations for long-term rates in 2026 remain mixed, reflecting uncertainty around long-term inflation, fiscal policy, increased federal spending and larger deficits, including the effects of the OBBBA. Accordingly, it remains difficult to predict where short- and long-term rates will settle during the remainder of 2026.
Previous wording
This prolonged rate environment has resulted, and may continue to result, in higher payment delinquencies and defaults, more loan modifications and foreclosures and declines in real estate values in certain asset classes, which have adversely affected, and may continue to adversely affect, our results of operations, financial condition, business prospects, liquidity and ability to make distributions to stockholders. It has also made it more difficult to resolve delinquent loans, contributing to additional foreclosures and REO assets on our balance sheet, all of which could have a further material adverse effect on our business.
Current wording
This prolonged rate environment has resulted in, and may continue to result in, higher payment delinquencies and defaults, more loan modifications and foreclosures and declines in real estate values in certain asset classes, which have adversely affected, and may continue to adversely affect, our results of operations, financial condition, business prospects, liquidity and ability to make distributions to stockholders. It has also made it more difficult to resolve delinquent loans, contributing to additional foreclosures and REO assets on our balance sheet, all of which could have a further material adverse effect on our business.
Previous wording
Contractual Obligations. During the three months ended March 31, 2026, the following significant changes were made to our contractual obligations disclosed in our 2025 Annual Report:
Current wording
Contractual Obligations. During the six months ended June 30, 2026, the following significant changes were made to our contractual obligations disclosed in our 2025 Annual Report:
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Rearranged current paragraphs (16)
Current report — wording carried from elsewhere
The decrease in interest income was mainly due to a $10.8 million decrease from our Structured Business. The decline was primarily due to a decrease in the average yield on core interest-earning assets, partially offset by an increase in the average balance of our core interest-earning assets (loan originations exceeded runoff) and, to a lesser extent, higher average bank balances. The decrease in the average yield was mainly from a decrease in SOFR and an increase in new delinquencies and modified loans at lower rates.
Current report — wording carried from elsewhere
The increases in property operating income and expenses were due to the addition of several new REO assets.
Current report — wording carried from elsewhere
The decrease in other income, net was primarily due to increases in the fair value of our Private Label loans from our Agency Business recognized in 2025, as well as a decrease in loan modification fees.
Current report — wording carried from elsewhere
Income from equity affiliates in 2026 primarily reflects $3.0 million of income recognized related to a cash distribution received from our Lexford joint venture, partially offset by losses from other investments; while income from equity affiliates in 2025 primarily reflects a $3.4 million distribution received from our Lexford joint venture, partially offset by a $1.0 million loss from our AMAC III investment.
Current report — wording carried from elsewhere
Comparison of Results of Operations for the Six Months Ended June 30, 2026 and 2025
Current report — wording carried from elsewhere
The following table provides our consolidated operating results ($ in thousands):
Current report — wording carried from elsewhere
The following table presents the average balance of our Structured Business interest-earning assets and interest-bearing liabilities, associated interest income (expense) and the corresponding weighted average yields ($ in thousands):
Current report — wording carried from elsewhere
(1)Based on UPB for loans, amortized cost for securities and principal amount of debt.
Current report — wording carried from elsewhere
(2)Weighted average yield calculated based on annualized interest income or expense divided by average carrying value.
Current report — wording carried from elsewhere
The increase in interest expense was mainly due to a $15.4 million increase from our Structured Business, primarily due to an increase in the average balance of our interest-bearing liabilities from an increase in the average loan portfolio and the issuance of senior unsecured notes. This was partially offset by the payoff of our 7.50% convertible senior notes and a reduction in the average cost of interest-bearing liabilities (mainly from a decrease in SOFR).
Current report — wording carried from elsewhere
The gains on derivative instruments in 2026 and 2025 were related to changes in the fair values of our forward sale commitments and swaps held by our Agency Business as a result of changes in market interest rates.
Current report — wording carried from elsewhere
In 2026, we recorded a $26.2 million impairment loss related to certain REO assets that we acquired through foreclosure in prior periods, which represents the extent to which the carrying value exceeded its estimated fair value at the current period end.
Current report — wording carried from elsewhere
The increase in the provision for loss sharing, net primarily reflects larger specific loan impairment reserves taken in 2026, compared to 2025.
Current report — wording carried from elsewhere
In the six months ended June 30, 2026, we recorded a tax provision of $5.2 million, which consisted of a current tax provision of $10.0 million and a deferred tax benefit of $4.8 million. In the six months ended June 30, 2025, we recorded a tax provision of $7.0 million, which consisted of a current tax provision of $8.7 million and a deferred tax benefit of $1.7 million.
Current report — wording carried from elsewhere
Net (Loss) Income Attributable to Noncontrolling Interest
Current report — wording carried from elsewhere
The noncontrolling interest relates to the outstanding OP Units (see Note 16). At June 30, 2026 and 2025, there were 16,170,218 and 16,173,761 OP Units outstanding, respectively, which represented 7.9% and 7.8%, respectively, of our outstanding stock.