ARBOR REALTY TRUST INC
For the period ended Sep 30, 2026. Filed Oct 30, 2026.
View on SEC.govAbout this filing
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.
Sep 30, 2026 · Filed Oct 30, 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 2026-06-30; filed 2026-07-31.
0001253986-26-000048
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-10-30.
0001253986-26-000063
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 162 previous paragraphs and 166 current paragraphs.
83 unchanged; 69 reworded; 11 added; 7 removed; 3 previous and 3 current paragraphs rearranged.
Tables are not compared: 10 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 (11)
Current report
•Closed a collateralized securitization vehicle (CLO 22) totaling $825.0 million, of which $730.1 million consisted of investment grade notes and $112.4 million of subordinate interests, including $17.5 million of the investment grade notes were retained by us; and
Current report
Suspension of Common Stock Dividend. In October 2026, our Board of Directors elected to suspend the quarterly common stock dividend effective immediately as part of our strategy to preserve capital and maintain financial flexibility to address upcoming debt maturities and support the resolution of legacy assets.
Current report
Allowance for loss sharing obligations increased $26.6 million, primarily due to specific and general CECL reserves taken in 2026 as a result of a softer outlook for commercial real estate during 2026.
Current report
The decrease in interest income was mainly due to a $3.5 million decrease in our Agency Business, partially offset by a $2.5 million increase from our Structured Business. The decrease in our Agency Business was primarily due to lower average loan balances resulting from reduced loan volume and lower interest earned on cash balances, partially offset by higher average yields. The increase in our Structured Business was primarily due to higher average loan balances, as loan originations exceeded runoff, partially offset by a decrease in average yields resulting mainly from an increase in non-performing loans and loan modifications.
Current report
The increase in selling and administrative expenses was primarily due to increases in professional and legal fees related to elevated delinquent loan and foreclosure activity.
Current report
The gain on real estate in 2026 represents an aggregate gain recognized on the sale of five REO properties; while in 2025, we sold an REO asset for $10.1 million and recognized a $0.6 million loss.
Current report
(Loss) Income from Equity Affiliates
Current report
The decrease in gain on sales, including fee-based services, net was primarily due to a 22% decrease in loan sales volume ($772.1 million).
Current report
The increase in selling and administrative expenses was primarily due to increases in professional and legal fees related to elevated delinquent loan and foreclosure activity.
Current report
In October 2026, our Board of Directors elected to suspend the quarterly common stock dividend effective immediately. This decision was made to preserve capital and maintaining financial flexibility to address upcoming debt maturities and support the resolution of legacy assets.
Current report
(3)Commitment totals exclude available overadvances.
Removed paragraphs (7)
Previous 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
Previous report
•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 report
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 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.
Previous report
Income from Equity Affiliates
Previous report
Provision for Income Taxes
Previous report
(3)Commitment totals excludes available overadvances.
Reworded paragraphs (69)
Previous wording
Significant Developments During the Second Quarter of 2026
Current wording
Significant Developments During the Third Quarter of 2026
Previous wording
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 wording
•Issued $375.0 million of 6.25% Convertible Notes due in 2029 and used the net proceeds to repurchase $114.3 million of our common stock, including $102.7 million through a prepaid forward transaction, and used the remaining proceeds, together with cash on hand, to redeem our outstanding $270.0 million 4.50% senior unsecured notes.
Previous wording
•Balance sheet portfolio of $12.11 billion; loan originations of $689.0 million outpaced loan runoff totaling $539.7 million;
Current wording
•Balance sheet portfolio of $12.00 billion; loan runoff totaling $574.0 million outpaced loan originations of $459.2 million;
Previous wording
•We modified 7 loans with a total UPB of $386.9 million (see Note 3 for details); and
Current wording
•We modified 6 loans with a total UPB of $192.1 million; and
Previous 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.
Current wording
•We sold five existing REO properties for $40.2 million and recognized an aggregate gain of $1.6 million and foreclosed on and took back the underlying collateral on one loan with a net carrying value of $13.0 million.
Previous wording
Agency Business Activity. Servicing portfolio of $36.70 billion (up $393.3 million) with loan originations totaling $1.08 billion.
Current wording
Agency Business Activity. Servicing portfolio of $36.80 billion (up $99.0 million) with loan originations totaling $907.0 million.
Previous 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.
Current wording
Interest rates remain elevated and continue to present significant challenges to the commercial real estate market. In September 2026, the Federal Reserve increased the federal funds rate by 25 basis points, bringing the target range for the federal funds rate to 3.75% to 4.00%. Market expectations suggest the possibility of additional rate increases during the remainder of 2026, although the timing and direction of future monetary policy actions remain uncertain. Despite relatively limited changes in short-term benchmark rates during 2026, longer-term treasury yields have increased significantly, resulting in higher borrowing costs, increased required investment returns, downward pressure on commercial real estate valuations and reduced transaction activity, particularly in the multifamily sector. These conditions have also extended the time required to resolve certain delinquent loans and REO assets. 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 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. 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 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.
Current wording
This prolonged rate environment, which has seen a recent significant increase, 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. These conditions have 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. Higher financing costs and lower property valuations have further constrained refinancing and disposition alternatives, extending the resolution of certain legacy loans and REO assets and contributing to increased specific credit loss reserves and REO impairments. These conditions could continue to delay recoveries and result in additional reserves or impairments. The continued challenging market environment and extended timeframe for resolving certain legacy assets have also increased our focus on preserving capital and maintaining adequate liquidity. Accordingly, we have taken additional measures to strengthen our liquidity position, including the suspension of our quarterly common stock dividend.
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 and inflationary pressures, 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. Additionally, we have experienced occupancy pressures in certain markets at some underlying multifamily properties associated with heightened immigration enforcement activity, which has adversely affected property cash flows and borrower payment performance. We continue to assess the extent and duration of these property specific effects.
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 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.
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. More recently, the increase in non-accruing loans and related reversals of previously accrued interest, together with additional borrowing costs associated with our financing activities, has adversely affected net interest income notwithstanding higher benchmark rates on performing floating rate loans. New delinquencies and the placement of loans on non-accrual status have reduced interest income and, in certain cases, resulted in the reversal of previously accrued interest. In addition, incremental borrowings and increased leverage used to support liquidity may increase interest expense, placing further pressure on net interest income until non-performing assets are resolved or returned to performing status.
Previous 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.
Current wording
The overall 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, 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 continue to 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
Elevated and volatile interest rates, together with geopolitical uncertainty, including the conflict involving Iran, have also disrupted portions of the financial services, real estate and credit markets. These conditions have contributed to weaker performance in certain of our legacy assets, leading to increased defaults and delinquencies. If these conditions continue to affect our borrowers and their tenants, or if other risks described in our SEC filings materialize, our liquidity and capital resources could be further adversely affected. Notwithstanding these conditions, we have continued to access capital through a variety of financing vehicles to support our operations and strengthen our business. In addition, while a majority of our cash is held at major financial institutions and balances frequently exceed insured limits, we mitigate this exposure by diversifying deposits across counterparties. Because these deposits are generally demand deposits maintained with institutions with reputable credit, we believe we bear minimal credit risk.
Current wording
Elevated and volatile interest rates, together with geopolitical uncertainty, including the conflict involving Iran, have also disrupted portions of the financial services, real estate and credit markets. These conditions have contributed to weaker performance in certain of our legacy assets, leading to increased defaults and delinquencies. If these conditions continue to affect our borrowers and their tenants, or if other risks described in our SEC filings materialize, our liquidity and capital resources could be further adversely affected. These continued challenging market conditions may also have an impact on the fair value of reporting units used in our annual goodwill assessment resulting in the possible recognition of a future goodwill impairment charge. Notwithstanding these conditions, we have continued to access capital through a variety of financing vehicles to support our operations and strengthen our business. In addition, while a majority of our cash is held at major financial institutions and balances frequently exceed insured limits, we mitigate this exposure by diversifying deposits across counterparties. Because these deposits are generally demand deposits maintained with institutions with reputable credit, we believe we bear minimal credit risk. Higher long-term borrowing rates have also reduced borrower refinancing alternatives and delayed certain Agency Business loan originations and closings, including transactions in our pipeline. These conditions have adversely affected transaction volumes and gain-on-sale opportunities and may continue to affect the timing and amount of related fee and mortgage servicing rights income.
Previous 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).
Current wording
Our Structured loan and investment portfolio balance was $12.00 billion and $12.11 billion at September 30, 2026 and December 31, 2025, respectively. 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 and loan runoff exceeding loan originations by $59.0 million (see below for details).
Previous 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.
Current wording
The portfolio had a weighted average current interest pay rate of 6.54% and 6.49% at September 30, 2026 and December 31, 2025, respectively. Including certain fees earned and costs, the weighted average current interest rate was 6.97% and 7.08% at September 30, 2026 and December 31, 2025, respectively. Our debt that finances our Structured loan and investment portfolio totaled $10.75 billion and $10.46 billion at September 30, 2026 and December 31, 2025, respectively, with a weighted average funding cost of 6.40% and 6.16%, respectively, which excludes financing costs. Including financing costs, the weighted average funding rate was 6.69% and 6.45%, at September 30, 2026 and December 31, 2025, respectively.
Previous 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):
Current wording
Loans held-for-sale from the Agency Business decreased $172.3 million, primarily from loan sales exceeding originations by $101.2 million as noted in the following table ($ in thousands):
Previous wording
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 wording
Investments in equity affiliates increased $14.1 million, primarily due to an investment in a multifamily property in the second quarter of 2026.
Previous 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.
Current wording
Real estate owned decreased $7.8 million, primarily due to the sale of eleven multifamily properties for $153.0 million and $60.2 million of impairment charges recorded in 2026, partially offset by the foreclosure of nine multifamily bridge loans totaling $184.6 million, through which we took back the underlying collateral, and $37.0 million of capital expenditures.
Previous wording
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 wording
Other assets decreased $35.8 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.
Previous wording
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 wording
Credit and repurchase facilities increased $27.2 million, primarily due to the transfer of loans into repurchase facilities from the unwind of CLO 17, partially offset by loans transferring into newly issued CLOs (CLO 21 and CLO 22).
Previous 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.
Current wording
Securitized debt increased $162.0 million, primarily due to the issuance of CLO 21 and CLO 22, partially offset by the unwind of CLO 17 and paydowns on our existing securitizations.
Previous wording
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 wording
Senior unsecured notes decreased $439.6 million, primarily due to the redemptions of our $270.0 million 4.50% senior notes and our $175.0 million 5.00% senior notes.
Previous wording
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 wording
In July 2026, we issued $375.0 million of our 6.25% Convertible Notes.
Previous 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.
Current wording
Notes payable — real estate owned increased $32.0 million, primarily due to the addition of notes payable on three new REO assets and additional financing received on two existing REO assets, partially offset by payoffs in connection with REO sales.
Previous wording
See Note 16 for details of our common stock, dividends declared and deferred compensation transactions.
Current wording
See Note 16 for details of our stock transactions, dividends declared and deferred compensation transactions.
Previous 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.
Current wording
(2)Delinquent loans reflect loans that are contractually 60 days or more past due. At September 30, 2026 and December 31, 2025, delinquent loans totaled $1.38 billion and $959.0 million, respectively. At September 30, 2026, there were three loans totaling $21.1 million in bankruptcy and forty-four loans totaling $475.4 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 $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 wording
The decrease in interest expense was mainly due to a $4.0 million decrease in our Agency Business, partially offset by a $3.6 million increase from our Structured Business. The decrease in our Agency Business was primarily due to lower average debt balances resulting from a decrease in our average loans held-for-sale. The increase in our Structured Business was 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 convertible senior unsecured notes, partially offset by CLO debt paydowns and a reduction in the average cost of interest-bearing liabilities (mainly from a decrease in SOFR).
Previous 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.
Current wording
The decrease in gain on sales, including fee-based services, net was primarily due to a 52% decrease in loan sales volume ($1.05 billion) and by a 3% decrease in the sales margin from 1.15% to 1.12%. 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 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.
Current wording
The decrease in income from MSRs was primarily due to a 59% decrease in loan commitment volume ($1.18 billion), partially offset by a 73% increase in the MSR rate from 0.78% to 1.35%. The increase in the MSR rate was mainly due to a higher concentration of Fannie Mae loan commitment volume, which generate higher servicing fees.
Previous wording
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 wording
The decrease in servicing revenue, net was primarily due to a decrease in earnings on escrow balances from lower average balances.
Previous 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.
Current wording
The gain (loss) 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 $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.
Current wording
In 2026, we recorded a $34.1 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, compared to 2025.
Current wording
The increase in the provision for loss sharing, 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.
Previous wording
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 wording
Loss from equity affiliates in 2026 primarily reflects losses from several investments totaling $3.8 million, partially offset by income from other investments totaling $2.3 million, including $1.6 million related to a cash distribution received from our Lexford joint venture; while income from equity affiliates in 2025 primarily reflects $48.0 million of income recognized related to the cash distribution from Lexford.
Previous 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.
Current wording
In 2026, we recorded a tax benefit of $1.2 million, which consisted of a current tax provision of $1.0 million and a deferred tax benefit of $2.2 million. In 2025, we recorded a tax provision of $7.6 million, which consisted of a current tax provision of $9.4 million and a deferred tax benefit of $1.8 million.
Previous 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.
Current wording
The noncontrolling interest relates to the outstanding OP Units (see Note 16). At September 30, 2026 and 2025, there were 16,165,771 and 16,173,761 OP Units outstanding, respectively, which represented 8.0% and 7.6%, respectively, of our outstanding stock.
Previous wording
Comparison of Results of Operations for the Six Months Ended June 30, 2026 and 2025
Current wording
Comparison of Results of Operations for the Nine Months Ended September 30, 2026 and 2025
Previous wording
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 wording
The decrease in interest income was mainly due to a $14.0 million decrease in our Structured Business. The decline was primarily due to a decrease in the average yield on our 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 decline in SOFR, the reversal of interest income on non-performing loans and loan modifications at lower rates.
Previous 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).
Current wording
The increase in interest expense was mainly due to a $19.0 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 CLO debt paydowns and a reduction in the average cost of interest-bearing liabilities (mainly from a decrease in SOFR).
Previous wording
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 wording
The decrease in income from MSRs was primarily due to a 21% decrease in loan commitment volume ($736.7 million), partially offset by a 20% increase in the MSR rate from 0.99% to 1.19%. The increase in the MSR rate was mainly due to a higher concentration of Fannie Mae loan commitment volume, which generate higher servicing fees.
Previous wording
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.
Current wording
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.
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Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
The decrease in employee compensation and benefits expense was primarily due to a decrease in commissions from lower GSE/Agency loan sales volume and lower compensation due to a reduction in overall headcount.
Current report — wording carried from elsewhere
Benefit from (Provision for) Income Taxes
Current report — wording carried from elsewhere
•Issued $375.0 million of 6.25% Convertible Notes;
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
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.
Previous report — wording carried elsewhere
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.