Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 14, 2018 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | Hunt Companies Finance Trust, Inc. | |
Entity Central Index Key | 1,547,546 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Small Business | true | |
Trading Symbol | HCFT | |
Entity Common Stock, Shares Outstanding | 23,687,664 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | |
ASSETS | |||
Cash and cash equivalents | $ 9,912,051 | $ 34,347,339 | |
Restricted cash | 77,694,265 | 11,275,263 | |
Available-for-sale securities, at fair value (includes pledged securities of $0 for September 30, 2018 and $1,295,225,428 for December 31, 2017, respectively) | 0 | 1,290,825,648 | |
Commercial mortgage loans held-for-investment, at amortized cost | 544,586,537 | 0 | |
Multi-family loans held in securitization trusts, at fair value | [1] | 24,787,988 | 1,130,874,274 |
Residential loans held in securitization trusts, at fair value | [1] | 0 | 119,756,455 |
Mortgage servicing rights, at fair value | 4,209,124 | 2,963,861 | |
Deferred offering costs | 122,233 | 179,382 | |
Accrued interest receivable | 2,542,868 | 8,852,036 | |
Investment related receivable | 16,242,900 | 7,461,128 | |
Derivative assets, at fair value | 0 | 5,349,613 | |
Other assets | 713,762 | 656,117 | |
Total Assets | 680,811,728 | 2,612,541,116 | |
Repurchase agreements: | |||
Available-for-sale securities | 0 | 1,234,522,000 | |
Collateralized loan obligation (net of discount of $2,716,862 and deferred financing costs of $3,977,017 for September 30, 2018) | 503,487,121 | ||
Multi-family securitized debt obligations | [1] | 19,462,838 | 1,109,204,743 |
Residential securitized debt obligations | [1] | 0 | 114,418,318 |
Accrued interest payable | 854,060 | 6,194,464 | |
Dividends payable | 1,450,609 | 39,132 | |
Deferred income | 397,203 | 222,518 | |
Due to broker | 0 | 1,123,463 | |
Fees and expenses payable to Manager | 3,001,338 | 752,000 | |
Other accounts payable and accrued expenses | 96,293 | 273,201 | |
Total Liabilities | 528,749,462 | 2,466,749,839 | |
Commitments and contingencies | |||
STOCKHOLDERS' EQUITY: | |||
Preferred Stock: par value $0.01 per share; 50,000,000 shares authorized, 8.75% Series A cumulative redeemable, $25 liquidation preference, 1,610,000 and 1,610,000 issued and outstanding at September 30, 2018 and December 31, 2017, respectively | 37,156,972 | 37,156,972 | |
Common Stock: par value $0.01 per share; 450,000,000 shares authorized, 23,687,664 and 22,143,758 shares issued and outstanding, at September 30, 2018 and December 31, 2017, respectively | 236,787 | 221,393 | |
Additional paid-in capital | 231,296,687 | 224,048,169 | |
Accumulated other comprehensive income (loss) | 0 | (12,617,794) | |
Cumulative distributions to stockholders | (112,438,915) | (104,650,235) | |
Accumulated earnings (deficit) | (4,189,265) | 1,632,772 | |
Total stockholders' equity | 152,062,266 | 145,791,277 | |
Total liabilities and stockholders' equity | 680,811,728 | 2,612,541,116 | |
Variable Interest Entities, Assets | 24,898,204 | 1,255,404,335 | |
Variable Interest Entities, Liabilities | $ 19,566,273 | $ 1,228,295,517 | |
[1] | Our consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs") as the Company is the primary beneficiary of these VIEs. As of September 30, 2018 and December 31, 2017, assets of consolidated VIEs totaled $24,898,204 and $1,255,404,335 respectively, and the liabilities of consolidated VIEs totaled $19,566,273 and $1,228,295,517 respectively |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Statement of Financial Position [Abstract] | ||
Available-for-sale securities, pledged securities | $ 0 | $ 1,295,225,428 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, dividend rate, percentage | 8.75% | |
Preferred stock, liquidation preference | $ 25 | $ 25 |
Preferred stock, shares issued | 1,610,000 | 1,610,000 |
Preferred stock, shares outstanding | 1,610,000 | 1,610,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 450,000,000 | 450,000,000 |
Common stock, shares issued | 23,687,664 | 22,143,758 |
Common stock, shares outstanding | 23,687,664 | 22,143,758 |
Discount | $ 2,716,862 | |
Deferred financing cost | $ 3,977,017 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Interest income: | ||||
Available-for-sale securities | $ 0 | $ 7,827,281 | $ 10,748,966 | $ 21,308,582 |
Residential mortgage loans held-for-sale | 0 | 12,082 | 0 | 69,416 |
Commercial mortgage loans held-for-investment | 9,365,400 | 0 | 15,259,400 | 0 |
Multi-family loans held in securitization trusts | 336,824 | 13,473,913 | 20,540,942 | 40,992,241 |
Residential loans held in securitization trusts | 0 | 1,249,966 | 2,102,352 | 3,903,924 |
Cash and cash equivalents | 17,024 | 63,264 | 134,002 | 138,745 |
Interest expense: | ||||
Repurchase agreements - available-for-sale securities | 0 | (4,118,639) | (7,637,242) | (9,087,956) |
Collateralized loan obligations | (4,366,632) | 0 | (7,255,799) | 0 |
Multi-family securitized debt obligations | (237,980) | (12,766,808) | (19,404,532) | (38,866,888) |
Residential securitized debt obligations | 0 | (995,293) | (1,685,971) | (3,100,616) |
Net interest income | 5,114,636 | 4,745,766 | 12,802,118 | 15,357,448 |
Other income: | ||||
Realized gain (loss) on sale of investments, net | (13,617) | (5,148,445) | (33,358,905) | (14,616,997) |
Change in unrealized gain (loss) on fair value option securities | 0 | 0 | 0 | 9,448,270 |
Realized gain (loss) on derivative contracts, net | 0 | (1,636,725) | 25,984,870 | 2,049,400 |
Change in unrealized gain (loss) on derivative contracts, net | 0 | 307,263 | (5,349,613) | (8,583,100) |
Realized gain (loss) on mortgage loans held-for-sale | 0 | (221,197) | 0 | (221,620) |
Change in unrealized gain (loss) on mortgage loans held-for-sale | 0 | 28,794 | 0 | 17,727 |
Change in unrealized gain (loss) on mortgage servicing rights | 103,512 | (102,945) | 1,245,264 | (457,720) |
Change in unrealized gain (loss) on multi-family loans held in securitization trusts | 957,549 | 694,730 | (5,861,373) | 2,797,566 |
Change in unrealized gain (loss) on residential loans held in securitization trusts | 0 | (155,252) | 5,650,199 | (773,674) |
Other interest expense | 0 | 0 | 0 | (152,322) |
Servicing income | 285,745 | 276,211 | 702,127 | 721,468 |
Other income | 27,942 | 8,369 | 88,434 | 33,275 |
Total other income (loss) | 1,361,131 | (5,949,197) | (10,898,997) | (9,737,727) |
Expenses: | ||||
Management fee | 586,926 | 573,412 | 1,767,252 | 1,670,804 |
General and administrative expenses | 796,600 | 1,288,978 | 3,148,945 | 4,120,807 |
Operating expenses reimbursable to Manager | 548,132 | 915,452 | 1,865,057 | 3,086,304 |
Other operating expenses | 136,400 | 225,502 | 742,059 | 770,189 |
Compensation expense | 54,683 | 49,562 | 201,845 | 155,384 |
Total expenses | 2,122,741 | 3,052,906 | 7,725,158 | 9,803,488 |
Net income (loss) | 4,353,026 | (4,256,337) | (5,822,037) | (4,183,767) |
Dividends to preferred stockholders | (880,509) | (880,509) | (2,631,744) | (2,631,744) |
Net income (loss) attributable to common stockholders (basic and diluted) | 3,472,517 | (5,136,846) | (8,453,781) | (6,815,511) |
Earnings (deficit) per share: | ||||
Net income (loss) attributable to common stockholders (basic and diluted) | $ 3,472,517 | $ (5,136,846) | $ (8,453,781) | $ (6,815,511) |
Weighted average number of shares of common stock outstanding (in shares) | 23,687,273 | 22,139,258 | 23,588,688 | 19,342,188 |
Basic and diluted income (loss) per share (in dollars per share) | $ 0.15 | $ (0.23) | $ (0.36) | $ (0.35) |
Dividends declared per share of common stock (in dollars per share) | $ 0.06 | $ 0.15 | $ 0.22 | $ 0.45 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 4,353,026 | $ (4,256,337) | $ (5,822,037) | $ (4,183,767) |
Other comprehensive income (loss): | ||||
Increase (decrease) in unrealized gain (loss) on available-for-sale securities, net | 0 | (4,175,111) | 0 | (2,954,193) |
Reclassification adjustment for net gain (loss) included in net income (loss) | 0 | 6,362,159 | 12,617,794 | 6,579,724 |
Total other comprehensive income (loss) | 0 | 2,187,048 | 12,617,794 | 3,625,531 |
Less: Dividends to preferred stockholders | (880,509) | (880,509) | (2,631,744) | (2,631,744) |
Comprehensive income (loss) attributable to common stockholders | $ 3,472,517 | $ (2,949,798) | $ 4,164,013 | $ (3,189,980) |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Stockholders' Equity - 9 months ended Sep. 30, 2018 - USD ($) | Total | Preferred Stock | Common Stock | Additional Paid in Capital | Accumulated Other Comprehensive Income (Loss) | Cumulative Distributions to Stockholders | Accumulated Earnings (Deficit) |
Balance (in shares) at Dec. 31, 2017 | 1,610,000 | 22,143,758 | |||||
Balance at Dec. 31, 2017 | $ 145,791,277 | $ 37,156,972 | $ 221,393 | $ 224,048,169 | $ (12,617,794) | $ (104,650,235) | $ 1,632,772 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of common stock, net (in shares) | 1,543,906 | ||||||
Issuance of common stock, net | 7,342,967 | $ 15,394 | 7,327,573 | ||||
Cost of issuing common stock | (97,150) | (97,150) | |||||
Restricted stock compensation expense | 18,095 | 18,095 | |||||
Net income (loss) | (5,822,037) | (5,822,037) | |||||
Reclassification adjustment for net gain (loss) included in net income (loss) | 12,617,794 | 12,617,794 | |||||
Common dividends declared | (5,156,936) | (5,156,936) | |||||
Preferred dividends declared | (2,631,744) | (2,631,744) | |||||
Balance (in shares) at Sep. 30, 2018 | 1,610,000 | 23,687,664 | |||||
Balance at Sep. 30, 2018 | $ 152,062,266 | $ 37,156,972 | $ 236,787 | $ 231,296,687 | $ 0 | $ (112,438,915) | $ (4,189,265) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (5,822,037) | $ (4,183,767) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Amortization/accretion of available-for-sale securities premiums and discounts, net | 1,403,431 | (1,653,155) |
Amortization of collateralized loan obligations discounts, net | 462,318 | 0 |
Amortization of deferred financing costs | 98,429 | 0 |
Realized (gain) loss on sale of investments, net | 33,358,905 | 14,616,997 |
Realized (gain) loss on derivative contracts, net | (25,984,870) | (2,049,400) |
Realized (gain) loss on mortgage loans held-for-sale | 0 | 221,620 |
Unrealized (gain) loss on fair value option securities | 0 | (9,448,270) |
Unrealized (gain) loss on derivative contracts | 5,349,613 | 8,583,100 |
Unrealized (gain) loss on mortgage loans held-for-sale | 0 | (17,727) |
Unrealized (gain) loss on mortgage servicing rights | (1,245,264) | 457,720 |
Unrealized (gain) loss on multi-family loans held in securitization trusts | 5,861,373 | (2,797,566) |
Unrealized (gain) loss on residential loans held in securitization trusts | (5,650,199) | 773,674 |
Restricted stock compensation expense | 18,095 | 16,634 |
Net change in: | ||
Accrued interest receivable | 1,645,778 | (1,400,041) |
Deferred offering costs | 57,149 | 18,057 |
Other assets | 49,804 | (137,688) |
Accrued interest payable | (771,386) | 13,743 |
Deferred income | 174,685 | (847) |
Fees and expenses payable to Manager | 2,249,338 | (293,000) |
Other accounts payable and accrued expenses | (176,907) | (1,784,111) |
Net cash provided by operating activities | 11,078,255 | 935,973 |
Cash flows from investing activities: | ||
Purchase of available-for-sale securities | 0 | (1,000,558,281) |
Purchase of commercial mortgage loans held-for-investment | (323,416,036) | 0 |
Purchase of mortgage servicing rights | 0 | (10,910) |
Proceeds from sales of available-for-sale securities | 1,227,314,578 | 469,004,262 |
Proceeds from sales of residential mortgage loans held-for-sale | 0 | 2,098,010 |
Net proceeds from (payments for) derivative contracts | 25,984,870 | 2,049,188 |
Principal payments from available-for-sale securities | 62,932,244 | 98,107,847 |
Principal payments from residential mortgage loans held-for-sale | 0 | 52,146 |
Principal payments from commercial mortgage loans held-for-investment | 124,493,511 | 0 |
Investment related receivable | (8,780,121) | (784,563) |
Purchase of Hunt CMT Equity LLC (net of $9,829,774 in restricted cash) | (58,220,292) | 0 |
Due from broker | (1,123,463) | (4,244,678) |
Net cash provided by (used in) investing activities | 1,049,185,291 | (434,286,979) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock | 7,245,817 | 19,827,811 |
Dividends paid on common stock | (3,735,676) | (8,582,666) |
Dividends paid on preferred stock | (2,641,527) | (2,641,527) |
Proceeds from repurchase agreements - available-for-sale securities | 6,017,838,000 | 10,247,863,000 |
Proceeds from collateralized loan obligations | 219,449,000 | 0 |
Payment of deferred financing costs | (4,075,446) | 0 |
Principal repayments of repurchase agreements - available-for-sale securities | (7,252,360,000) | (9,815,013,000) |
Net cash (used in) provided by financing activities | (1,018,279,832) | 441,453,618 |
Net increase in cash, cash equivalents and restricted cash | 41,983,714 | 8,102,612 |
Cash, cash equivalents and restricted cash, beginning of period | 45,622,602 | 37,889,596 |
Cash, cash equivalents and restricted cash, end of period | 87,606,316 | 45,992,208 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 14,332,294 | 11,086,534 |
Non-cash investing and financing activities information | ||
Dividends declared but not paid at end of period | 1,450,609 | 29,349 |
Net change in unrealized gain (loss) on available-for-sale securities | 12,617,794 | 3,625,531 |
Consolidation of multi-family loans held in securitization trusts | 24,908,204 | 1,154,277,919 |
Consolidation of residential loans held in securitization trusts | 0 | 125,815,955 |
Consolidation of multi-family securitized debt obligations | 19,566,273 | 1,133,138,620 |
Consolidation of residential securitized debt obligations | 0 | 120,214,808 |
Commercial mortgage loans acquired, Hunt CMT Equity LLC acquisition | 345,664,012 | 0 |
Restricted cash acquired, Hunt CMT Equity LLC acquisition | 9,829,774 | 0 |
Other assets acquired, Hunt CMT Equity LLC acquisition | 109,100 | 0 |
Collateralized loan obligations assumed, Hunt CMT Equity LLC acquisition | $ (287,552,820) | $ 0 |
ORGANIZATION AND BUSINESS OPERA
ORGANIZATION AND BUSINESS OPERATIONS | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BUSINESS OPERATIONS | ORGANIZATION AND BUSINESS OPERATIONS Hunt Companies Finance Trust, Inc. (the "Company"), formerly Five Oaks Investment Corp., is a Maryland corporation that focuses primarily on investing in, financing and managing transitional multi-family and other commercial real estate loans. Historically, the Company primarily invested in, financed and managed residential mortgage-backed securities ("RMBS"), multi-family mortgage backed securities ("Multi-Family MBS", and together with RMBS, "MBS"), mortgage servicing rights and other mortgage-related investments. As of January 18, 2018, the Company is externally managed by Hunt Investment Management, LLC (the "Manager"), an affiliate of Hunt Companies, Inc. ("Hunt"). On May 29, 2018, the Company changed its name from Five Oaks Investment Corp. to Hunt Companies Finance Trust, Inc., its common stock began trading on the NYSE under the symbol "HCFT" and its Series A Preferred Stock began trading on the NYSE under the symbol "HCFT PR A." Previously, the Company's common stock was listed on the NYSE under the symbol "OAKS" and its Series A Preferred Stock was listed on the NYSE under the symbol "OAKS_PRA." The Company was incorporated on March 28, 2012 and commenced operations on May 16, 2012 . The Company began trading as a publicly traded company on March 22, 2013. The Company has elected to be taxed as a real estate investment trust ("REIT") and to comply with Sections 856 through 859 of the Internal Revenue Code of 1986, as amended (the "Code"). Accordingly, the Company generally will not be subject to U.S. federal income tax to the extent of its distributions to stockholders and as long as certain asset, income and share ownership tests are met. The Company has historically invested in Agency RMBS, which are RMBS for which the principal and interest payments are guaranteed by a U.S. Government agency such as the Government National Mortgage Association or a U.S. Government-sponsored entity such as the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation. The Company has also historically invested in Non-Agency RMBS, which are RMBS that are not guaranteed by a U.S. Government agency or a U.S. Government-sponsored entity. Additionally, the Company invests in Multi-Family MBS, which are MBS for which the principal and interest may be sponsored by a U.S. Government agency such as the Government National Mortgage Association or a U.S. Government-sponsored entity such as the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, or may not be sponsored by a U.S. Government agency or a U.S. Government-sponsored entity. The Company also invests in mortgage servicing rights, may also invest in other mortgage-related investments and historically has invested in residential mortgage loans. Following the Company's previously announced change in strategic direction through the reallocation of capital into investment opportunities in the commercial mortgage space, the Company is now focused primarily on investing in transitional multifamily and other commercial real estate loans, which are floating rate first mortgage whole loans secured by multifamily and other commercial real estate properties that are not guaranteed by a U.S. government-sponsored entity. On June 10, 2013, the Company established Five Oaks Acquisition Corp. ("FOAC") as a wholly owned taxable REIT subsidiary ("TRS"), for the acquisition and disposition of residential mortgage loans and certain other loan-related activities. The Company consolidates this subsidiary under generally accepted accounting principles in the United States of America ("GAAP"). In September 2014, and October 2014, respectively, the Company acquired first loss tranches issued or backed by two Freddie Mac-sponsored Multi-Family MBS K series securitizations (the "FREMF 2011-K13 Trust" and the "FREMF 2012-KF01 Trust"). The Company determined that each of the trusts was a variable interest entity ("VIE") and that in each case the Company was the primary beneficiary, and accordingly consolidated the assets, liabilities, income and expenses of the trusts into the Company’s financial statements in accordance with GAAP. On April 21, 2016, and April 26, 2016, respectively, the Company completed two re-securitization transactions (the "Re-REMIC transactions"). The Company previously consolidated the assets, liabilities, income and expenses of the newly established trusts, in each case based upon the Company’s purchase of first-loss securities of the Re-REMIC transactions. During the second quarter of 2018, the Company sold the first-loss tranche of the Re-REMIC related to the FREMF 2011-K13 Trust, and as a result having determined it is no longer the primary beneficiary of the trust, no longer consolidates the assets,liabilities, income and expenses of that trust. The Company has determined that it remains the primary beneficiary of the FREMF 2012-KF01 Trust, and accordingly continues to consolidate the assets, liabilities, income and expenses of this underlying trust. In December 2014, the Company acquired first loss and subordinated tranches issued by a residential mortgage-backed securitization (the "CSMC 2014-OAK1 Trust"). The Company determined this trust was a VIE and that the Company was the primary beneficiary, and accordingly consolidated the assets,liabilities, income and expenses of the trust into the Company's financial statements in accordance with GAAP. During the second quarter of 2018, the Company sold the first loss and subordinated tranches issued by the CSMC 2014-OAK1 Trust, and as a result, having determined it is no longer the primary beneficiary of the trust, no longer consolidates the assets,liabilities, income and expenes of the underlying trust. On March 23, 2015, the Company established Oaks Funding LLC as a wholly owned subsidiary of FOAC, to fulfill certain functions as depositor in respect of residential mortgage loan securitization transactions. The Company consolidates this subsidiary under GAAP. As of September 30, 2018 , this subsidiary has no assets or liabilities. On April 20, 2016, the Company established Oaks Funding II LLC as a wholly owned subsidiary of FOAC, to fulfill certain functions as depositor in respect of certain Re-REMIC transactions. The Company consolidates this subsidiary under GAAP. As of September 30, 2018 , this subsidiary has no assets or liabilities. On April 20, 2016, the Company established Oaks Holding I LLC as a wholly owned subsidiary to hold certain investment securities. The Company consolidates this subsidiary under GAAP. On January 18, 2018, the Company announced a new strategic direction, and the entry into a new external management agreement with the Manager and the concurrent mutual termination of the prior management agreement with Oak Circle Capital Partners, LLC ("Oak Circle"). Following the change in management, the Company has substantially completed the reallocation of capital into investment opportunities focused in the commercial real estate mortgage space taking advantage of Hunt's pipeline of transitional floating-rate multi-family and commercial real estate loans. Hunt and its affiliates are experienced in the origination, servicing, risk management and financing of this asset class and the floating-rate nature of the loans has eliminated the need for complex interest-rate hedging. The new management agreement better aligns the Company's interests with those of its new manager through an incentive fee arrangement and agreed upon limitations on manager expense reimbursements from the Company, as further described below. Pursuant to the terms of the termination agreement between the Company and Oak Circle, the termination of the prior management agreement did not trigger, and Oak Circle was not paid, a termination fee by the Company. Hunt separately agreed to pay Oak Circle a negotiated payment in connection with the termination agreement. In connection with the aforementioned transaction, an affiliate of Hunt purchased 1,539,406 shares of the Company's common stock in a private placement, at a purchase price of $4.77 per share resulting in an aggregate capital raise of $7,342,967 . In addition, such Hunt affiliate also purchased 710,495 of the Company's shares from the Company's largest shareholder, XL Investments Ltd. ("XL Investments"), for the same price per share. The purchase price per share represented a 56.9% premium over the Company's common stock price as of the closing on January 17, 2018. In connection with the acquisition of shares from XL Investments, XL Investments agreed to terminate all of its previously held Five Oaks warrants. After completion of these share purchases, Hunt and its affiliates own approximately 9.5% of the Company's outstanding common shares. Also in connection with the transaction, and as further described in Section 10 of the Company's 2017 10-K/A filed with the Securities and Exchange Commission filed on November 13, 2018 and in the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 18, 2018, David Carroll resigned as a director, Chairman and CEO of the Company and the Company's board appointed James C. ("Chris") Hunt as a director and Chairman of the board and named James P. Flynn as CEO of the Company and Michael P. Larsen as President of the Company. On April 30, 2018, as more particularly described in our current Report on Form 8-K filed on April 30, 2018, the Company acquired Hunt CMT Equity LLC for an aggregate purchase price of approximately $68 million , which comprised of commercial mortgage loans financed through a collateralized loan obligation ("Hunt CRE 2017-FL1, Ltd."), a licensed commercial mortgage lender ("Hunt CMT Finance, LLC) and eight loan participations from a Hunt affiliate. The assets of Hunt CRE 2017-Fl1, Ltd. were comprised of performing floating-rate commercial mortgage loans with a portfolio balance of $339.4 million at acquisition date and $9.8 million in cash available for reinvestment. The securitization pool was financed by investment-grade notes with a notional principal balance of $290.7 million and a net carrying value of $287.6 million after accounting for unamortized discount. Additionally the Company paid $0.1 million for the assets acquired with the licensed lender and $6.2 million for the loan participations. The Company determined Hunt CRE 2017-FL1, Ltd. was a VIE and that the Company was the primary beneficiary of the issuing entity, and accordingly consolidated its assets,liabilities, income and expenses into the Company's financial statements in accordance with GAAP. On August 20, 2018, the Company closed Hunt CRE 2018-FL2, Ltd., a $285 million commercial real estate Collateralized Loan Obligation, which financed 20 first lien floating-rate commercial real estate mortgage assets acquired from Hunt Finance Company, LLC, an affiliate of the Company's Manager. The assets of the Hunt CRE 2018-FL2, Ltd. were comprised of performing floating-rate commercial mortgage loans with a portfolio balance of $225.3 million at execution date and $59.7 million in cash available for reinvestment. The securitization pool was financed by investment-grade notes with a notional principal balance of $219.4 million and a net carrying value of $215.4 million after accounting for deferred financing costs. The Company determined Hunt CRE 2018-FL2, Ltd. was a VIE and the Company was the primary beneficiary of the issuing entity, and accordingly consolidated its assets,liabilities, income and expenses into the Company's financial statements as of September 30, 2018 in accordance with GAAP. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The consolidated balance sheet as of December 31, 2017 has been derived from audited financial statements. The condensed consolidated balance sheet as of September 30, 2018 , the condensed consolidated statements of operations and the condensed consolidated statements of comprehensive income (loss), for the three and nine months ended September 30, 2018 and for the three and nine months ended September 30, 2017 , the condensed consolidated statement of stockholders’ equity for the nine months ended September 30, 2018 , and the condensed consolidated statements of cash flows for the nine months ended September 30, 2018 , and the nine months ended September 30, 2017 , are unaudited. The unaudited condensed consolidated financial statements and related notes have been prepared in accordance with GAAP for interim financial reporting and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and note disclosures normally included in the financial statements prepared under GAAP have been condensed or omitted. In the opinion of management, all adjustments considered necessary for a fair presentation of the Company’s financial position, results of operations and cash flows have been included and are of a normal and recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These condensed consolidated financial statements should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 , which was filed with the Securities and Exchange Commission (“SEC”) on March 16, 2018. Reclassifications Certain prior year amounts have been reclassified to conform to current year presentation. Principles of Consolidation The accompanying condensed consolidated financial statements of the Company include the accounts of the Company and all its subsidiaries which are majority-owned, controlled by the Company or a variable interest entity where the Company is the primary beneficiary. All significant intercompany transactions have been eliminated on consolidation. VIEs An entity is referred to as a VIE if it lacks one or more of the following characteristics: (1) sufficient equity at risk to finance its activities without additional subordinated financial support provided by any parties, including the equity holders; (2) as a group the holders of the equity investment at risk have (a) the power, through voting rights or similar rights, to direct the activities of a legal entity that most significantly impacts the entity's economic performance, (b) the obligation to absorb the expected losses of the legal entity and (c) the right to receive the expected residual returns of the legal entity; and (3) the voting rights of these investors are proportional to their obligations to absorb the expected losses of the entity, their rights to receive the expected returns of their equity, or both, and whether substantially all of the entity's activities involve or are conducted on behalf of an investor that has disproportionately fewer voting rights. An investment that lacks one or more of the above three characteristics is considered to be a VIE. The Company reassesses its initial evaluation of an entity as a VIE based upon changes in the facts and circumstances pertaining to the VIE. VIEs are required to be consolidated by their primary beneficiary. The primary beneficiary of a VIE is determined to be the party that has both the power to direct the activities that most significantly impact the VIE's economic performance and the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE. This determination may involve complex and subjective analyses. In general, the obligation to absorb losses is a function of holding a majority of the first loss tranche, while the ability to direct the activities that most significantly impact the VIEs economic performance will be determined based upon the rights associated with acting as the directing certificate holder, or equivalent, in a given transaction. The Company is required to reconsider its evaluation of whether to consolidate a VIE each reporting period based upon changes in the facts and circumstances pertaining to the VIE. During the second quarter of 2018, the Company sold the first-loss securities of the Re-REMIC related to the FREMF 2011-K13 Trust, and as a result having determined it is no longer the primary beneficiary of the trust, no longer consolidates the assets and liabilities of that trust. Additionally, during the second quarter of 2018, the Company sold the first-loss and subordinated tranches issued by the CSMC 2014-OAK1 Trust, and as a result, having determined it is no longer the primary beneficiary of the trust, no longer consolidates the assets and liabilities of the underlying trust. The Company has evaluated its remaining Multi-Family MBS investment to determine if it represents a variable interest in a VIE. The Company monitors this investment and analyzes it for potential consolidation. At September 30, 2018 , the Company determined that it continues to be the primary beneficiary of one Multi-Family MBS transaction (FREMF 2012-KF01) based on its power to direct the trust’s activities and its obligations to absorb losses derived from the ownership of the first-loss tranche. In the case of the FREMF 2012-KF01 trust, the Company determined that it is the primary beneficiary of a certain intermediate trust that has the power to direct the activities and the obligations to absorb losses of the underlying trust. Accordingly, the Company consolidated the assets, liabilities, income and expenses of the underlying trust, and has elected the fair value option in respect of the assets and liabilities of the trust. As a result of the sales of the first-loss and subordinated tranches of the FREMF 2011-K13 and CSMC 2014-OAK1 Trusts, the income and expenses of these trusts were consolidated through the date of their sale. The Company's maximum exposure to loss from consolidated trusts was $5,331,931 and $27,108,818 , respectively, at September 30, 2018 and December 31, 2017 . At September 30, 2018 , with the exception of the listed transactions, the Company did not have any exposure to VIEs. During the first quarter of 2018, the Company sold its remaining investment in Multi-Family MBS. As of December 31, 2017 , with the exception of the listed transactions, the maximum exposure of the Company to VIEs was limited to the fair value of its investment in Multi-Family MBS, $5,742,000 , as disclosed in Note 4. Additionally, the Company has evaluated its junior retained notes and preferred shares of Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. for potential consolidation. At September 30, 2018 , the Company determined it was the primary beneficiary of Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. based on its obligation to absorb losses derived from ownership of its preferred shares. Accordingly, the Company consolidated the assets, liabilities, income and expenses of the underlying issuing entities. The Company's maximum exposure to loss from collateralized loan obligations was $124,046,671 at September 30, 2018 . Use of Estimates The financial statements have been prepared on the accrual basis of accounting in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires the Company to make a number of significant estimates. These include estimates of fair value of certain assets and liabilities, amount and timing of credit losses, prepayment rates, and other estimates that affect the reported amounts of certain assets and liabilities as of the date of the financial statements and the reported amounts of certain revenues and expenses during the reported period. It is likely that changes in these estimates (e.g. valuation changes due to supply and demand, credit performance, prepayments, interest rates, or other reasons) will occur in the near term. The Company’s estimates are inherently subjective in nature and actual results could differ from its estimates and the differences may be material. Cash and Cash Equivalents and Restricted Cash Cash and cash equivalents include cash held in bank accounts on an overnight basis and other short term deposit accounts with banks having original maturities of 90 days or less. The Company maintains its cash and cash equivalents in highly rated financial institutions, and at times these balances exceed insurable amounts. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same amounts shown in the statements of cash flows. September 30, 2018 December 31, 2017 Cash and cash equivalents $ 9,912,051 $ 34,347,339 Repurchase counterparties as restricted collateral — 11,275,263 Restricted cash CRE 2017-FL1, Ltd. 41,864,739 — Restricted cash CRE 2018-FL2, Ltd. $ 35,829,526 $ — Total cash, cash equivalents and restricted cash $ 87,606,316 $ 45,622,602 Restricted cash includes cash held within Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. for purposes of reinvestment in qualifying commercial mortgage loans. Previously, restricted cash represented the Company’s cash held by counterparties as collateral against the Company’s securities, derivatives and/or repurchase agreements. Cash previously held by counterparties as collateral was not available to the Company for general corporate purposes, but may have been applied against amounts due to securities, derivatives or repurchase counterparties or returned to the Company when the collateral requirements were exceeded, or at the maturity of the derivative or repurchase agreement. Deferred Income Certain service revenues received in the period are recorded as a liability in the Company’s consolidated balance sheets in the line item “Deferred income”, for subsequent recognition as income in the Company’s consolidated statements of operations. Deferred Offering Costs In accordance with ASC Subtopic 505-10, the direct costs incurred to issue shares classified as equity, such as legal and accounting fees, should be deducted from the related proceeds and the net amount recorded as stockholders’ equity. Accordingly, payments made by the Company in respect of such costs related to the issuance of shares are recorded as an asset in the accompanying consolidated balance sheets in the line item “Deferred offering costs”, for subsequent deduction from the related proceeds upon closing of the offering. To the extent that certain costs, in particular legal fees, are known to have been accrued but have not yet been invoiced and paid, they are included in “Other accounts payable and accrued expenses” on the accompanying consolidated balance sheets. Available-for-Sale Securities, at Fair Value Interest income on the Company’s Available-for-Sale ("AFS") securities portfolio, with the exception of Non-Agency RMBS IOs (as further described below), is accrued based on the actual coupon rate and the outstanding principal balance of such securities. The Company recognizes interest income using the effective interest method for all AFS securities. As such, premiums and discounts are amortized or accreted into interest income over the lives of the securities in accordance with ASC 310-20, “Nonrefundable Fees and Other Costs”, ASC 320-10, “Investments Debt and Equity Securities” or ASC 325-40, “Beneficial Interests in Securitized Financial Assets”, as applicable. Total interest income is recorded in the “Interest Income” line item on the condensed consolidated statements of operations. On at least a quarterly basis for securities accounted for under ASC 320-10 and ASC 310-20 (generally Agency RMBS), prepayments of the underlying collateral must be estimated, which directly affect the speed at which the Company amortizes such securities. If actual and anticipated cash flows differ from previous estimates; the Company recognizes a “catch-up” adjustment in the current period to the amortization of premiums for the impact of the cumulative change in the effective yield through the reporting date. Similarly, the Company also reassesses the cash flows on at least a quarterly basis for securities accounted for under ASC 325-40 and ASC 310-30 (generally Non-Agency RMBS and Multi-Family MBS). In estimating these cash flows, there are a number of assumptions that are subject to uncertainties and contingencies. These include the rate and timing of principal and interest receipts (including assumptions of prepayments, repurchases, defaults and liquidations), the pass-through or coupon rate and interest rate fluctuations. In addition, interest payment shortfalls due to delinquencies on the underlying mortgage loans have to be judgmentally estimated. Differences between previously estimated cash flows and current actual and anticipated cash flows are recognized prospectively through an adjustment of the yield over the remaining life of the security based on the current amortized cost of the investment as adjusted for credit impairment, if any. For investments purchased with evidence of deterioration of credit quality for which it is probable, at acquisition, that the Company will be unable to collect all contractually required payments receivable, the Company applies the provisions of ASC 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality.” ASC 310-30 addresses accounting for differences between contractual cash flows and cash flows expected to be collected from an investor’s initial investment in loans or debt securities acquired in a transfer if those differences are attributable, at least in part, to credit quality. ASC 310-30 limits the yield that may be accreted (accretable yield) to the excess of the investor’s estimate of undiscounted expected principal, interest and other cash flows (cash flows expected at acquisition to be collected) over the investor’s initial investment in the loan. ASC 310-30 requires that the excess of contractual cash flows over cash flows expected to be collected (nonaccretable difference) not be recognized as an adjustment of yield, loss accrual or valuation allowance. Subsequent increases in cash flows expected to be collected are generally recognized prospectively through adjustment of the investment’s yield over its remaining life. Decreases in cash flows expected to be collected are recognized as impairment to the extent that such decreases are due, at least in part, to an increase in credit loss expectations (“credit impairment”). To the extent that decreases in cash flows expected to be collected are the result of factors other than credit impairment, for example a change in rate of prepayments, such changes are generally recognized prospectively through adjustment of the investment’s yield over its remaining life. The Company’s accrual of interest, discount and premium for U.S. federal and other tax purposes is likely to differ from the financial accounting treatment of these items as described above. Gains and losses from the sale of AFS securities are recorded within "realized gain (loss) on sale of investments, net" in the Company's condensed consolidated statements of operations. Upon the sale of a security, the Company will determine the cost of the security and the amount of unrealized gains or losses to reclassify out of accumulated other comprehensive income (loss) into earnings based on the specific identification method. Unrealized gains and losses on the Company’s AFS securities are recorded as "unrealized gain (loss) on available-for-sale securities, net" in the Company's condensed consolidated statements of comprehensive income (loss). The Company evaluates its MBS, on a quarterly basis, to assess whether a decline, if any, in the fair value of an AFS security below the Company's amortized cost basis is an other-than-temporary impairment (“OTTI”). The presence of OTTI is based upon a fair value decline below a security's amortized cost basis and a corresponding adverse change in expected cash flows due to credit related factors as well as non-credit factors, such as changes in interest rates and market spreads. Impairment is considered other-than-temporary if an entity (i) intends to sell the security, (ii) will more likely than not be required to sell the security before it recovers in value or (iii) does not expect to recover the security's amortized cost basis, even if the entity does not intend to sell the security. Under these scenarios, the impairment is other-than-temporary and the full amount of impairment should be recognized currently in earnings and the cost basis of the investment security is adjusted. However, if an entity does not intend to sell the impaired debt security and it is more likely than not that it will not be required to sell before recovery, OTTI should be recognized to the extent that a decrease in future cash flows expected to be collected is due, at least in part, to an increase in credit impairment. A decrease in future cash flows due to factors other than credit, for example a change in the rate of prepayments, is considered a non-credit impairment. The full amount of the difference between the security’s previous and new cost basis resulting from credit impairment is recognized currently in earnings, and the difference between the new amortized cost basis and the cash flows expected to be collected is accreted as interest income in accordance with the effective interest method. Decreases in cash flows expected to be collected resulting from non-credit impairment are generally recognized prospectively through adjustment of the investment’s yield over its remaining life. As of September 30, 2018 , the Company no longer held any AFS securities. Residential Mortgage Loans Held-for-Sale, at Fair Value Residential mortgage loans held-for-sale are reported at fair value as a result of a fair value option election. See Note 3 - Fair Value Measurements for details on fair value measurement. Residential mortgage loans are classified as held-for-sale based upon the Company’s intent to sell them in the secondary whole loan market. Interest income on residential mortgage loans held-for-sale is recognized at the loan coupon rate. Interest income recognition is suspended when residential mortgage loans are placed on non-accrual status. The accrual of interest on loans is discontinued when, in management’s opinion, the interest is considered non-collectible, and in all cases when payment becomes greater than 90 days past due. Loans return to accrual status when principal and interest become current and are anticipated to be fully collectible. As of September 30, 2018 , the Company no longer held any residential mortgage loans. Commercial Mortgage Loans Held-for-Investment Commercial mortgage loans held-for-investment represent floating-rate transitional loans and other commercial mortgage loans purchased by the Company. These loans include loans sold into securitizations that the Company consolidates. Commercial mortgage loans held-for-investment are intended to be held-to-maturity and, accordingly, are carried at their unpaid principal balances, adjusted for net unamortized loan fees and costs (in respect of originated loans), premiums and discounts (in respect of purchased loans) and impairment, if any. Interest income is recognized as revenue using the effective interest method and is recorded on the accrual basis according to the terms of the underlying loan agreement. Any fees, premiums and discounts associated with these loan investments are recorded over the term of the loan using the effective interest method, or on a straight line basis when it approximates the effective interest method. Income accrual is generally suspended and loans are placed on non-accrual status on the earlier of the date at which payment has become 90 days past due or when full and timely collection of interest and principal is considered not probable. The Company may return a loan to accrual status when repayment of principal and interest is reasonably assured under the terms of the underlying loan agreement. As of September 30, 2018 , the Company did not hold any loans placed on non-accrual status. Quarterly, the Company assesses the risk factors of each loan classified as held-for-investment and assigns a risk rating based on a variety of factors, including, without limitation, debt-service coverage ratios ("DSCR"), loan-to-value ratio ("LTV"), property type, geographic and local market dynamics, physical condition, leasing and tenant profile, adherence to business plan and exit plan, maturity default risk and project sponsorship. Based on a 5-point scale, our loans are rated "1" through "5", from least risk to greatest risk, respectively, which ratings are described as follows: 1. Very Low Risk: exceeds expectations, outperforming underwriting 2. Low Risk: meeting expectations 3. Moderate Risk: a loss unlikely due to value and other indicators 4. High Risk: potential risk of default, a loss may occur in the event of default 5. Default Risk: imminent risk of default, a loss is likely in the event of default The Company evaluates each loan classified as held-for-investment which has High Risk or above rating for impairment on a quarterly basis. Impairment occurs when the Company determines that the facts and circumstances of the loan deem it probable that the Company will not be able to collect all amounts due in accordance with the contractual terms of the loan. If a loan is considered to be impaired, an allowance is recorded to reduce the carrying value of the loan through a charge to the provision for loan losses. Impairment of these loans, which are collateral dependent, is measured by comparing the estimated fair value of the underlying collateral, less costs to sell, to the book value of the respective loan. These valuations require significant judgments, which include assumptions regarding capitalization rates, leasing, creditworthiness of major tenants, occupancy rates, availability of financing, exit plan, actions of other lenders, and other factors deemed necessary by the Manager. Actual losses, if any, could ultimately differ from estimated losses. In addition, the Company evaluates the entire portfolio to determine whether the portfolio has any impairment that requires a valuation allowance on the remainder of the loan portfolio. As of September 30, 2018 , the Company has not recognized any impairments on its loans held-for-investment and therefore has not recorded any allowance for loan losses. Multi-Family and Residential Mortgage Loans Held in Securitization Trusts Multi-family and residential mortgage loans held in consolidated securitization trusts are comprised of multi-family mortgage loans held in the FREMF 2012-KF01Trust as of September 30, 2018 . Based on a number of factors, the Company determined that it was the primary beneficiary of the VIE underlying the trust, met the criteria for consolidation and, accordingly, has consolidated the trust, including its assets, liabilities, income and expenses in its financial statements. The Company has elected the fair value option on each of the assets and liabilities held within the trusts. See Note 3 - Fair Value Measurement below for additional detail. The Company previously consolidated an additional Multi-Family MBS securitization trust, and one residential mortgage loan securitization trust, but following the sale of the subordinated securities in each trust on May 18, 2018 and June 18, 2018, respectively, the Company determined that it was no longer the primary beneficiary of either trust as of that date , and accordingly no longer consolidates either trust as of that date. Interest income on multi-family mortgage loans held in securitization trusts is recognized at the loan coupon rate. Interest income recognition is suspended when mortgage loans are placed on non-accrual status. The accrual of interest on loans is discontinued when, in management’s opinion, the interest is considered non-collectible, and in all cases when payment becomes greater than 90 days past due. Loans return to accrual status when principal and interest become current and are anticipated to be fully collectible. Mortgage Servicing Rights and Excess Servicing Rights, at Fair Value Mortgage servicing rights (“MSRs”) are associated with residential mortgage loans that the Company has historically purchased and subsequently sold or securitized. MSRs are held and managed at the Company’s TRS. As the owner of MSRs, the Company is entitled to receive a portion of the interest payments from the associated residential mortgage loan, and is obligated to service, directly or through a subservicer, the associated loan. MSRs are reported at fair value as a result of a fair value option election. See Note 3 - Fair Value Measurement below for additional detail. Residential mortgage loans for which the Company owns the MSRs are directly serviced by one or more sub-servicers retained by the Company, since the Company does not directly service any residential mortgage loans. MSR income is recognized at the contractually agreed rate, net of the costs of sub-servicers retained by the Company. If a sub-servicer with which the Company contracts were to default, an evaluation of MSR assets for impairment would be undertaken at that time. To the extent that the Company determines it is the primary beneficiary of a residential mortgage loan securitization trust into which it has sold loans, any associated MSRs are eliminated on the consolidation of the trust. The trust is contractually obligated to pay a portion of the interest payments from the associated residential mortgage loans for the direct servicing of the loans, and after deduction of sub-servicing fees payable to contracted sub-servicers, the net amount, excess servicing rights, represents a liability of the trust. See Note 3 - Fair Value Measurement below for additional detail. Non-Agency RMBS IOs, at Fair Value Non-Agency RMBS IOs that the Company previously owned are associated with residential mortgage loan securitizations that the Company had previously sponsored and are reported at fair value as a result of a fair value option election. See Note 3 - Fair Value Measurements for details on fair value measurement. Interest income on IOs was recognized at the contractually agreed rate, and changes in fair value were recognized in the Company’s condensed consolidated statement of operations. As of September 30, 2018 , the Company no longer owned any Non-Agency RMBS IOs. Repurchase Agreements The Company previously financed the acquisition of certain of its mortgage-backed securities through the use of repurchase agreements. The repurchase agreements are generally short-term debt, which expire within one year. Borrowings under repurchase agreements generally bear interest rates at a specified margin over LIBOR and are generally uncommitted. In accordance with ASC 860 “Transfers and Servicing” the Company accounts for the repurchase agreements as collateralized financing transactions and they are carried at their contractual amounts, as specified in the respective agreements. The contractual amounts approximate fair value due to their short-term nature. As of September 30, 2018 , the Company no longer had any repurchase agreements outstanding. Collateralized Loan Obligations Collateralized loan obligations represent third-party liabilities of Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. (the "CLOs"). The CLOs are VIEs of which the Company has determined it is the primary beneficiary and accordingly they are consolidated in the Company's financial statements, excluding liabilities of the CLOs acquired by the Company that are eliminated on consolidation. The third-party obligations of the CLOs do not have any recourse to the Company as the consolidator of the CLOs. Collateralized loan obligations are carried at their outstanding unpaid principal balances, net of any unamortized discounts or deferred financing costs. Any premiums and discounts or deferred financing costs associated with these liabilities are amortized to interest expense using the effective interest method over the expected average life of the related obligations, or on a straight line basis when it approximates the effective interest method. Multi-Family and Residential Securitized Debt Obligations Multi-family and residential securitized debt obligations represent third-party liabilities of the FREMF 2012-KF01 Trust and excludes liabilities of the trust acquired by the Company that are eliminated on consolidation. The third-party obligations of each trust do not have any recourse to the Company as the consolidator of each trust. Backstop Guarantees The Company, through FOAC and in return for fees, provides seller eligibility and backstop guarantee services in respect of residential mortgage loans that are traded through one or more loan exchanges operated by MAXEX LLC (“MAXEX”). On June 27, 2018, FOAC entered into an amendment with MAXEX pursuant to which, amongst other things, FOAC's obligations to provide such seller eligibility and backstop guarantee services will terminate at 11:59 p.m. (Eastern Standard Time) on December 31, 2018 or sooner, at MAXEX's option. See Note 14 and Note 15 for additional information regarding MAXEX. To the extent that a loan seller approved by FOAC fails to honor its obligations to repurchase one or more loans based on an arbitration finding that such seller has breached its representations and warranties, FOAC provides a backstop guarantee of the repurchase obligation. The Company has evaluated its backstop guarantees pursuant to ASC 460, Guarantees, and has determined them to be performance guarantees, for which ASC 460 contains initial recognition and measurement requirements, and related disclosure requirements. FOAC is obligated in two respects: (i) a noncontingent liability, which represents FOAC's obligation to stand ready to perform under the terms of the guarantee in the event that the specified triggering event(s) occur; and (ii) the contingent liability, which represents FOAC’s obligation to make future payments if those triggering events occur. FOAC recognizes the noncontingent liability at the inception of the guarantee at the fair value, which is the fee received or receivable, and is recorded on the Company’s consolidated balance sheet as a liability in the line item “Deferred income.” The Company amortizes these fees into income on a straight-line basis over five years , based on an assumed constant prepayment rate of 15% for residential mortgage loans and other observable data. The Company’s contingent liability is accounted for pursuant to ASC 450, Contingencies, pursuant to which the contingent liability must be recognized when its payment becomes probable and reasonably estimable. Common Stock At September 30, 2018 , and December 31, 2017 , the Company was authorized to issue up to 450,000,000 shares of common stock, par value $0.01 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s Board of Directors. The Company had 23,687,664 shares of common stock issued and outstanding at September 30, 2018 and 22,143,758 at December 31, 2017 . Stock Repurchase Program On December 15, 2015, the Company’s Board of Directors authorized a stock repurchase program (“Repurchase Program”), to repurchase up to $10 million of the Company’s outstanding common stock. Subject to applicable securities laws, repurchase of common stock under the Repurchase Program may be made at times and in amounts as the Company deems appropriate, using available cash resources. Shares of common stock repurchased by the Company under the Repurchase Program, if any, will be canceled and, until reissued by the Company, will be deemed to be authorized but unissued shares of common stock. The Repurchase Program may be suspended or discontinued by the Company at any time and without prior notice. As of December 31, 2017, the Company had repurchased 126,856 shares of common stock at a weighted average share price of $5.09 . There has been no common stock repurchase activity in 2018. As of September 30, 2018 , $9.4 million of common stock remained authorized for future share repurc |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The Company discloses the fair value of its financial instruments according to a fair value hierarchy (Levels 1, 2 and 3, as defined). In accordance with GAAP, the Company is required to provide enhanced disclosures regarding instruments in the Level 3 category (which require significant management judgment), including a separate reconciliation of the beginning and ending balances for each major category of assets and liabilities. Additionally, GAAP permits entities to choose to measure many financial instruments and certain other items at fair value (the “fair value option”), and the election of such choice is irrevocable. Unrealized gains and losses on items for which the fair value option has been elected are irrevocably recognized in earnings at each subsequent reporting date. Available-for-sale Securities The Company previously invested in Agency RMBS, Multi-Family MBS and Non-Agency RMBS. Designation The Company classified its MBS securities as AFS investments. Although the Company generally intended to hold most of its investment securities until maturity, however, as a result of its change in investment strategy, the Company had sold all of these securities as of September 30, 2018 . All assets classified as AFS, except Non-Agency RMBS IOs, were reported at estimated fair value, with unrealized gains and losses, excluding other than temporary impairments, included in accumulated other comprehensive income, a separate component of shareholders' equity. As the result of a fair value election, unrealized gains and losses on Non-Agency RMBS IOs were recorded in the Company’s consolidated statement of operations. Determination of MBS Fair Value The Company determines the fair values for the Agency RMBS, Multi-Family MBS and Non-Agency RMBS in its portfolio based on obtaining a valuation for each such security from third-party pricing services, and may also obtain dealer quotes, as described below. The third-party pricing services use common market pricing methods that may include pricing models that may incorporate such factors as coupons, prepayment speeds, spread to the Treasury curves and interest rate swap curves, duration, periodic and life caps and credit enhancement, as applicable. The dealers incorporate common market pricing methods, including a spread measurement to the Treasury curve or interest rate swap curve as well as underlying characteristics of the particular security, including coupon, periodic and life caps, collateral type, rate reset period and seasoning or age of the security, as applicable. The Company obtains pricing data from a primary third-party pricing service for each Agency RMBS, Multi-Family MBS and Non-Agency RMBS. If other available market data indicates that the pricing data from the primary third-party service is materially inaccurate, or pricing data is unavailable from the primary third-party pricing service, the Company undertakes a review of other available prices and takes additional steps to determine fair value. In all cases, the Company validates its understanding of methodology and assumptions underlying the fair value used. The Company determines that the pricing data from the primary third-party service is materially inaccurate if it is not materially representative of where a specific security can be traded in the normal course of business. In making such determination, the Company follows a series of steps, including review of collateral marks from margin departments of repurchase agreement counterparties, utilization of bid list, inventory list and extensive unofficial market color, review of other third-party pricing service data and a yield analysis of each Multi-Family MBS and Non-Agency RMBS based on the pricing data from the primary third-party pricing service and the Company’s cash flow assumptions. The Company reviews all pricing of Agency and Non-Agency RMBS and Multi-Family MBS used to ensure that current market conditions are properly represented. This review includes, but is not limited to, comparisons of similar market transactions or alternative third-party pricing services, dealer quotes and comparisons to a pricing model. Values obtained from the third-party pricing service for similar instruments are classified as Level 2 securities if the pricing methods used are consistent with the Level 2 definition. If quoted prices for a security are not reasonably and readily available from the pricing service, but dealer quotes are, the Company classifies the security as a Level 2 security. If neither is available, the Company determines the fair value based on characteristics of the security that are received from the issuer and based on available market information received from dealers and classifies it as a Level 3 security. Commercial Mortgage Loans Held-for-Investment Designation The Company classifies its commercial mortgage loans as held-for-investment. Determination of Commercial Mortgage Loans Held-for-Investment Fair Value Loans that the Company has the intent and ability to hold for the foreseeable future, or until maturity or repayment, are reported at their unpaid principal balances, adjusted for net unamortized loan origination fees, premiums and discounts and an allowance for loan losses, if applicable. Loan origination fees and direct loan origination costs are deferred and recognized in interest income over the estimated life of the loans using the interest method, or on a straight line basis when it approximates the interest method, adjusted for actual prepayments. The Company may record fair value adjustments on a non-recurring basis when it has determined that it is necessary to record a specific impairment reserve against a loan and the Company measures such specific reserve using the fair value of the loan's collateral. To determine the fair value of loan collateral, the Company employs different approaches depending upon the nature of such collateral and other relevant market factors. Commercial mortgage loans held-for-investment are considered Level 3 fair value measurements that are not measured at fair value on a recurring basis. Residential Mortgage Loans Held-for-Sale Designation The Company classified its residential mortgage loans as held-for-sale (“HFS”) investments. The Company elected the fair value option for residential mortgage loans it acquired and classified as HFS. The fair value option was elected to help mitigate earnings volatility by better matching the asset accounting with any related hedges. The Company’s policy is to record separately interest income on these fair value elected loans. Additionally, upfront costs related to these loans are not deferred or capitalized. Fair value adjustments are reported in "unrealized gain (loss) on mortgage loans held-for-sale" on the condensed consolidated statements of operations. The fair value option is irrevocable once the loan is acquired. Determination of Residential Mortgage Loan Fair Value The Company determines the fair values of the mortgage loans in its portfolio from third-party pricing services. The third-party pricing services use common market pricing methods which may include pricing models that may incorporate such factors as coupons, prepayment speeds, spread to the Treasury curves and interest rate swap curves, duration, periodic and life caps, as applicable. In addition, the third-party pricing services benchmark their pricing models against observable pricing levels being quoted by a range of market participants active in the purchase and sale of residential mortgage loans. The Company obtains pricing data from a primary third-party pricing service for each mortgage loan. If other available market data indicates that the pricing data from the primary third-party service is materially inaccurate, or pricing data is unavailable from the primary third-party pricing service, the Company undertakes a review of other available prices and takes additional steps to determine fair value. In all cases, the Company validates its understanding of methodology and assumptions underlying the fair value used. The Company determines that the pricing data from the primary third-party service is materially inaccurate if it is not materially representative of the price at which a specific loan can be traded in the normal course of business. The Company reviews all pricing of mortgage loans used to ensure that current market conditions are properly represented. This review includes, but is not limited to, comparisons of similar market transactions or alternative third-party pricing services, dealer quotes and comparisons to a pricing model. Values obtained from the third-party pricing service for similar instruments are classified as Level 2 assets if the pricing methods used are consistent with the Level 2 definition. If quoted prices for a loan are not reasonably available from the pricing service, but alternative quotes are, the Company classifies the loan as a Level 2 asset. If neither is available, the Company determines the fair value based on characteristics of the loan and based on other available market information and classifies it as a Level 3 asset. MSRs and Excess Servicing Rights Designation MSRs are associated with residential mortgage loans that the Company previously purchased and subsequently sold or securitized, and were typically acquired directly from loan originators and recognized at the time that loans were transferred to a third party or a securitization, in each case providing such transfer met the GAAP criteria for sale. The Company retains the rights to service certain loans that it has sold or securitized, but employs one or more sub-servicers to perform the servicing activities. To the extent that the Company determines it is the primary beneficiary of a residential mortgage loan securitization trust into which it has sold loans, any associated MSRs are eliminated on the consolidation of the trust. The trust is contractually obligated to pay a portion of the interest payments from the associated residential mortgage loans for the direct servicing of the loans, and after deduction of sub-servicing fees payable to contracted sub-servicers, the net amount, excess servicing rights, represents a liability of the trust. Upon consolidation of the trust, the fair value of the excess servicing rights is equal to the related MSRs held at the Company’s TRS. The Company has elected the fair value option in respect of MSRs and excess servicing rights. Determination of Fair Value The Company determines the fair value of its MSRs and excess servicing rights from third-party pricing services. The third-party pricing services use common market pricing methods that include market discount rates, prepayment speeds of serviced loans, the market cost of servicing, and observed market pricing for MSR purchase and sale transactions. Changes in the fair value of MSRs occur primarily as a result of the collection and realization of expected cash flows, as well as changes in valuation inputs and assumptions. The Company obtains MSR pricing data from a primary third-party pricing service, and validates its understanding of methodology and assumptions underlying the fair value used. Fair values are estimated based on applying inputs to generate the net present value of estimated net servicing income, and as a consequence of the fact that these discounted cash flow models utilize certain significant unobservable inputs and observable MSR purchase and sale transactions are relatively infrequent, the Company classifies MSRs as a Level 3 asset. See Note 12 for a further presentation on MSRs. Collateralized Loan Obligations Designation Collateralized loan obligations are carried at their outstanding unpaid principal balances, net of any unamortized discounts or deferred financing costs. Determination of Fair Value The Company determines the fair value of collateralized loan obligations by utilizing a third-party pricing service. As such, the Company has determined that collateralized loan obligations should be classified as Level 2. Multi-Family Mortgage Loans Held in Securitization Trusts and Multi-Family Securitized Debt Obligations Designation Multi-family mortgage loans held in consolidated securitization trusts are comprised of multi-family mortgage loans held in the FREMF 2011-K13 Trust and the FREMF 2012-KF01 Trust. Based on a number of factors, the Company previously determined that it was the primary beneficiary of the VIEs underlying the trusts, met the criteria for consolidation and, accordingly, consolidated the FREMF 2011-K13 Trust and the FREMF 2012-KF01 Trust, including its assets, liabilities, income and expenses in its financial statements. The Company has elected the fair value option on each of the assets and liabilities held within the trust. Following the sale during the second quarter of 2018 of the first-loss tranche of the FREMF 2011-K13 Trust previously held by the Company, the Company determined it was no longer the primary beneficiary of the trust, and accordingly no longer consolidates the underlying trust as of September 30, 2018 . Determination of Fair Value In accordance with ASU 2014-13, the Company has elected the fair value option in respect of the assets and liabilities of the FREMF 2012-KF01 Trust. The trust is “static”, that is no reinvestment is permitted and there is very limited active management of the underlying assets. Under the ASU, the Company is required to determine whether the fair value of the financial assets or the fair value of the financial liabilities of the trust is more observable, but in either case, the methodology results in the fair value of the assets of each of the trusts being equal to the fair value of their liabilities. The Company has determined that the fair value of the liabilities of the trust is more observable, since in all cases prices for the liabilities are available from the primary third-party pricing service utilized for Multi-Family MBS, while the individual assets of each of the trusts are inherently incapable of precise measurement given their illiquid nature and the limitations on available information related to these assets. Given that the Company’s methodology for valuing the assets of the trusts is an aggregate value derived from the fair value of the trust liabilities, the Company has determined that the valuation of the trust assets in their entirety should be classified as Level 2 valuations. Residential Mortgage Loans Held in Securitization Trusts and Residential Securitized Debt Obligations Designation Residential mortgage loans held in consolidated securitization trusts are comprised of residential mortgage loans held in the CSMC 2014-OAK1 Trust. Based on a number of factors, the Company previously determined that it was the primary beneficiary of the VIE underlying the trust, met the criteria for consolidation and, accordingly, consolidated the CSMC 2014-OAK1 Trust including its assets, liabilities, income and expenses in its financial statements. Following the sale during the second quarter of 2018 of the subordinated securities previously held by the Company, the Company determined that it was no longer the primary beneficiary of the trust as of September 30, 2018 , and accordingly no longer consolidates the underlying trust as of sale date. The Company previously elected the fair value option on each of the assets and liabilities held within the trust. Determination of Fair Value In accordance with ASU 2014-13, the Company previously elected the fair value option in respect of the assets and liabilities of the CSMC 2014-OAK1 Trust. The trust is “static”, that is no reinvestment is permitted and there is very limited active management of the underlying assets. Under the ASU, the Company was required to determine whether the fair value of the financial assets or the fair value of the financial liabilities of the trust was more observable, but in either case, the methodology results in the fair value of the assets of the trust being equal to the fair value of its liabilities. The Company determined that the fair value of the liabilities of the trust was more observable, since in all cases prices for the liabilities were available from the primary third-party pricing service utilized for Non-Agency RMBS, with the exception of the excess servicing rights, which are available from an alternative third-party pricing service. While the individual assets of the trust, i.e. the underlying residential mortgage loans, are capable of being priced, the Company has determined that the pricing of the liabilities was more easily and readily determined. Given that the Company’s methodology for valuing the assets of the trust was an aggregate value derived from the fair value of the trust’s liabilities, the Company has determined that the valuation of the trust assets in their entirety should be classified as Level 2 valuations. Accounting for Derivative Financial Instruments In accordance with FASB guidance ASC 815 “Derivatives and Hedging”, all derivative financial instruments, whether designated for hedging relationships or not, are recorded at fair value on the consolidated balance sheet as assets or liabilities. The Company obtains valuation information for each derivative financial instrument from the related derivative counterparty. If other available market data indicates that the valuation information from the counterparty is materially inaccurate, or pricing data is unavailable from the counterparty, the Company shall undertake a review of other available valuation information, including third party pricing services and/or dealers, and shall take additional steps to determine fair value. The Company reviews all valuations of derivative financial instruments used to ensure that current market conditions are properly represented. This review includes, but is not limited to, comparisons of similar market transactions or alternative third-party pricing services, dealer quotes and comparisons to a pricing model. Values based on quoted prices for similar instruments in active markets, including exchange-traded instruments, are classified as Level 1 valuations. Values obtained from the derivative counterparty, the third-party pricing service or dealers, as appropriate, for similar instruments are classified as Level 2 valuations if the pricing methods used are consistent with the Level 2 definition. If none of these sources is available, the Company determines the fair value based on characteristics of the instrument and based on available market information received from dealers and classifies it as a Level 3 valuation. At the inception of a derivative contract, the Company determines whether or not the instrument will be part of a qualifying hedge accounting relationship. Due to the volatility of the credit markets and difficulty in effectively matching pricing or cash flows, the Company has elected to treat all current derivative contracts as trading instruments. The changes in fair value of derivatives accounted for as trading instruments are reported in the consolidated statement of operations as unrealized gain (loss) on derivative contracts, net. The Company enters into interest rate derivative contracts for a variety of reasons, including minimizing significant fluctuations in earnings or market values on certain assets or liabilities that may be caused by changes in interest rates. The Company may, at times, enter into various forward contracts, including short securities, Agency to-be-announced securities (“TBAs”), options, futures, swaps and caps. Due to the nature of these instruments, they may be in a receivable/asset position or a payable/liability position at the end of an accounting period. Amounts payable to, and receivable from, the same party under contracts may be offset as long as the following conditions are met: (a) each of the two parties owes the other determinable amounts; (b) the reporting party has the right to offset the amount owed with the amount owed by the other party; (c) the reporting party intends to offset; and (d) the right of offset is enforceable by law. If the aforementioned conditions are not met, amounts payable to and receivable from are presented by the Company on a gross basis in the consolidated balance sheet. Other Financial Instruments The carrying value of short term instruments, including cash and cash equivalents, receivables and repurchase agreements whose term is less than twelve months, generally approximates fair value due to the short-term nature of the instruments. |
AVAILABLE-FOR-SALE SECURITIES
AVAILABLE-FOR-SALE SECURITIES | 9 Months Ended |
Sep. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
AVAILABLE-FOR-SALE SECURITIES | AVAILABLE-FOR-SALE SECURITIES The following table presents the Company’s AFS investment securities by collateral type at fair value as of December 31, 2017 . As of September 30, 2018 , the Company no longer held any AFS securities: December 31, 2017 Available-for-sale securities: Agency Federal Home Loan Mortgage Corporation $ 530,640,091 Federal National Mortgage Association 754,443,557 Multi-Family 5,742,000 Total available-for-sale securities $ 1,290,825,648 The following table presents the amortized cost and fair value of the Company’s AFS investment securities by collateral type as of December 31, 2017 . As of September 30, 2018 , the Company no longer held any AFS securities. December 31, 2017 Agency Multi - Family Total Face Value $ 1,274,329,317 $ 7,500,000 $ 1,281,829,317 Unamortized premium 23,818,687 — 23,818,687 Unamortized discount (491,020 ) (1,713,542 ) (2,204,562 ) Amortized Cost 1,297,656,984 5,786,458 1,303,443,442 Gross unrealized gain 751,458 — 751,458 Gross unrealized (loss) (13,324,794 ) (44,458 ) (13,369,252 ) Fair Value $ 1,285,083,648 $ 5,742,000 $ 1,290,825,648 At September 30, 2018 the Company had sold all of its AFS securities. At December 31, 2017 , the Company did not intend to sell any of its MBS that were in an unrealized loss position, and it was not "more likely than not" that the Company would be required to sell these AFS securities before recovery of their amortized cost basis, which may be their maturity. The Company did not recognize credit-related OTTI losses through earnings during the nine months ended September 30, 2018 and September 30, 2017 . The following table presents the components comprising the carrying value of AFS securities not deemed to be other than temporarily impaired by length of time the securities had an unrealized loss position as of December 31, 2017 . At September 30, 2018 , the Company did not hold any AFS securities. At December 31, 2017 , the Company held 59 AFS securities, of which 49 were in an unrealized loss position for less than twelve consecutive months and five were in an unrealized loss position for more than twelve months: Less than 12 months Greater than 12 months Total Estimated Fair Value Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses December 31, 2017 $ 1,084,010,586 $ (11,135,736 ) $ 95,024,791 $ (2,233,516 ) $ 1,179,035,377 $ (13,369,252 ) To the extent the Company determines there are likely to be decreases in cash flows expected to be collected, and as a result of non-credit impairment, such changes are generally recognized prospectively through adjustment of the security’s yield over its remaining life. The following tables present a summary of the Company’s net realized gain (loss) from the sale of AFS securities for the three and nine months ended September 30, 2018 , and September 30, 2017 : Three Months Ended Three Months Ended AFS securities sold, at cost $ — $ 421,186,153 Proceeds from AFS securities sold $ — $ 416,037,708 Net realized gain (loss) on sale of AFS securities $ — $ (5,148,445 ) Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 AFS securities sold, at cost $ 1,260,655,162 $ 483,621,259 Proceeds from AFS securities sold $ 1,227,314,578 $ 469,004,262 Net realized gain (loss) on sale of AFS securities $ (33,340,584 ) $ (14,616,997 ) The following table presents the fair value of AFS investment securities by rate type as of December 31, 2017 . As of September 30, 2018 , the Company no longer held any AFS securities: December 31, 2017 Agency Multi- Family Total Adjustable rate $ 1,284,237,670 $ — $ 1,284,237,670 Fixed rate 845,978 5,742,000 6,587,978 Total $ 1,285,083,648 $ 5,742,000 $ 1,290,825,648 The following table presents the fair value of AFS investment securities by maturity date as of December 31, 2017 . As of September 30, 2018 , the Company no longer held any AFS securities: December 31, 2017 Greater than or equal to one year and less than five years $ 1,187,909,353 Greater than or equal to five years 102,916,295 Total $ 1,290,825,648 As described in Note 2, when the Company purchases a credit-sensitive AFS security at a significant discount to its face value, the Company generally does not amortize into income a significant portion of this discount that the Company is entitled to earn because it does not expect to collect it due to the inherent credit risk of the security. The Company may also record an OTTI for a portion of its investment in the security to the extent the Company believes that the amortized cost will exceed the present value of expected future cash flows. The amount of principal that the Company does not amortize into income is designated as an off-balance sheet credit reserve on the security, with unamortized net discounts or premiums amortized into income over time to the extent realizable. Actual maturities of AFS securities are affected by the contractual lives of the associated mortgage collateral, periodic payments of principal, and prepayments of principal. Therefore, actual maturities of available-for-sale securities are generally shorter than stated contractual maturities. Stated contractual maturities are generally greater than ten years . The following tables present the changes for the nine months ended September 30, 2018 and the year ended December 31, 2017 of the unamortized net discount and designated credit reserves on the Company’s AFS securities: September 30, 2018 Designated credit reserve Unamortized net discount Total Beginning Balance as of January 1, 2018 $ — $ (2,204,562 ) $ (2,204,562 ) Dispositions — 2,042,842 2,042,842 Accretion of net discount — 161,720 161,720 Ending Balance at September 30, 2018 $ — $ — $ — December 31, 2017 Designated credit reserve Unamortized net discount Total Beginning Balance as of January 1, 2017 $ (1,929,833 ) $ (27,841,262 ) $ (29,771,095 ) Dispositions 1,929,833 22,685,756 24,615,589 Accretion of net discount — 2,950,944 2,950,944 Ending Balance at December 31, 2017 $ — $ (2,204,562 ) $ (2,204,562 ) Gains and losses from the sale of AFS securities are recorded within "realized gain (loss) on sale of investments, net" in the Company's condensed consolidated statements of operations. Unrealized gains and losses on the Company’s AFS securities are recorded as "unrealized gain (loss) on available-for-sale securities, net" in the Company's condensed consolidated statement of comprehensive income (loss). At September 30, 2018 , the Company did not have any unrealized gains (losses) on AFS securities and for the nine months ended September 30, 2017 , the Company had unrealized gains (losses) on AFS securities of $(2,954,193) . The following tables present components of interest income on the Company’s AFS securities for the three and nine months ended September 30, 2018 and September 30, 2017 : Three Months Ended September 30, 2018 Three Months Ended September 30, 2017 Coupon interest Net (premium amortization)/ discount accretion Interest income Coupon interest Net (premium amortization)/ discount accretion Interest income Agency $ — $ — $ — $ 7,870,458 $ (514,600 ) $ 7,355,858 Non-Agency — — — — — — Multi-Family — — — — 471,423 471,423 Total $ — $ — $ — $ 7,870,458 $ (43,177 ) $ 7,827,281 Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 Coupon Net (premium Interest Coupon Net (premium Interest Agency $ 12,152,397 $ (1,435,534 ) $ 10,716,863 $ 19,613,173 $ (263,230 ) $ 19,349,943 Non-Agency — — — 42,254 9,946 52,200 Multi-Family — 32,103 32,103 — 1,906,439 1,906,439 Total $ 12,152,397 $ (1,403,431 ) $ 10,748,966 $ 19,655,427 $ 1,653,155 $ 21,308,582 |
COMMERCIAL MORTGAGE LOANS HELD-
COMMERCIAL MORTGAGE LOANS HELD-FOR-INVESTMENT (Notes) | 9 Months Ended |
Sep. 30, 2018 | |
Receivables [Abstract] | |
COMMERCIAL MORTGAGE LOANS HELD-FOR-INVESTMENT | COMMERCIAL MORTGAGE LOANS HELD-FOR-INVESTMENT The following table summarizes certain characteristics of the Company's investments in commercial mortgage loans as of September 30, 2018 ; the Company had no such investments as of December 31, 2017: Weighted Average Loan Type Unpaid Principal Balance Carrying Value Loan Count Floating Rate Loan % Coupon (1) Life (Years) (2) September 30, 2018 Loans held-for-investment Senior secured loans (3) $ 544,586,537 $ 544,586,537 43 100.0 % 6.5 % 3.9 544,586,537 544,586,537 43 100.0 % 6.5 % 3.9 (1) Average weighted by unpaid principal balance of loan. Weighted average coupon assumes applicable one-month LIBOR rate as of September 30, 2018 (2) The weighted average life of each loan is based on the expected timing of the receipt of contractual cash flows assuming all extension options are exercised by the borrower (3) As of September 30, 2018 , $540,531,960 of the outstanding senior secured loans are held in VIEs and $4,054,577 of the outstanding senior secured loans are loan participations Activity: For the nine months ended September 30, 2018 , the loan portfolio activity was as follows: Commercial Mortgage Loans Held-for-Investment Balance at December 31, 2017 $ — Purchases, net 669,080,048 Proceeds from principal repayments (124,493,511 ) Balance at September 30, 2018 $ 544,586,537 Loan Risk Ratings: As further described in Note 2, the Company evaluates the commercial mortgage loan portfolio on a quarterly basis. In conjunction with the quarterly commercial mortgage loan portfolio review, the Company assesses the risk factors of each loan, and assigns a risk rating based on a variety of factors. Loans are rated "1" (very low risk) through "5" (default risk), which are described in Note 2. The following table presents the principal balance and net book value of the loan portfolio based on the Company's internal risk ratings: September 30, 2018 Risk Rating Number of Loans Unpaid Principal Balance Net Carrying Value 1 — $ — — 2 9 105,814,995 105,814,995 3 30 393,620,797 393,620,797 4 4 45,150,745 45,150,745 5 — — — 43 $ 544,586,537 544,586,537 As of September 30, 2018 , the average risk rating of the commercial mortgage loan portfolio was 2.9 (Moderate Risk), weighted by investment carrying value, with 91.7% of commercial loans held-for-investment rated 3 (Moderate Risk) or better by the Company's Manager. Concentration of Credit Risk: The following tables present the geographic and property types of collateral underlying the Company's commercial mortgage loans as a percentage of the loans' carrying value: Loans Held-for-Investment September 30, 2018 September 30, 2018 Geography Collateral Property Type Southwest 41.3 % Multi-Family 80.4 % South 20.9 Office 6.8 Midwest 20.0 Retail 5.6 Mid-Atlantic 9.9 Student Housing 3.2 West 7.9 Mixed-Use 3.0 Total 100.0 % Self-Storage 1.0 Total 100.0 % The table below sets forth additional information relating to the Company's portfolio as of September 30, 2018 : Loan # Investment Origination Date Total Loan Commitment Outstanding Face Amount Location Property Type Coupon Max Remaining Term (Years) LTV (1) 1 Senior Loan 12-Jun-17 4,675,000 4,675,000 Winston-Salem, NC Multi-Family 1mL + 6.0% 1.8 83.5 % 2 Senior Loan 30-Jan-17 3,743,000 3,743,000 Tyler, TX Multi-Family 1mL + 5.5% 1.4 66.8 % 3 Senior Loan 5-Nov-15 6,035,000 6,035,000 Pascagoula, MS Multi-Family 1mL + 4.5% 2.2 72.9 % 4 Senior Loan 15-Jan-16 13,500,000 12,226,811 Akron, OH Mixed Use 1mL + 5.3% 2.4 56.7 % 5 Senior Loan 11-Oct-17 6,370,000 6,370,000 New Orleans, LA Multi-Family 1mL + 4.1% 4.2 75.5 % 6 Senior Loan 13-Oct-17 14,715,000 14,715,000 Hattiesburg, MS Multi-Family 1mL + 4.8% 4.2 81.5 % 7 Senior Loan 9-Jan-18 10,317,000 9,295,085 North Highlands, CA Multi-Family 1mL + 4.0% 4.4 79.0 % 8 Senior Loan 16-Jun-17 5,810,000 5,653,628 Dallas, TX Multi-Family 1mL + 4.8% 3.8 79.3 % 9 Senior Loan 15-Nov-17 30,505,000 30,505,000 Phoenix, AZ Multi-Family 1mL + 3.8% 4.3 75.5 % 10 Senior Loan 30-Nov-16 5,000,000 4,618,553 Stafford, TX Office 1mL + 5.5% 3.3 56.4 % 11 Senior Loan 16-Aug-17 24,000,000 24,000,000 League City, TX Multi-Family 1mL + 4.5% 2.0 76.4 % 12 Senior Loan 29-Sep-17 12,364,000 11,720,232 Austell, GA Multi-Family 1mL + 4.2% 4.1 80.4 % 13 Senior Loan 4-Nov-16 10,250,000 10,250,000 Greensboro, NC Multi-Family 1mL + 5.3% 1.2 88.7 % 14 Senior Loan 6-Sep-17 15,250,000 15,250,000 Seattle, WA Multi-Family 1mL + 4.5% 1.0 54.1 % 15 Senior Loan 9-May-17 16,500,000 15,050,568 Austin, TX Retail 1mL + 7.3% 3.8 70.8 % 16 Senior Loan 29-Jun-16 23,145,934 23,145,934 Various, TX Multi-Family 1mL + 5.5% 0.8 76.0 % 17 Senior Loan 1-Dec-17 19,110,000 19,110,000 Tuscon, AZ Multi-Family 1mL + 4.5% 4.3 81.0 % 18 Senior Loan 19-Apr-17 11,200,000 8,824,763 Austin, TX Retail 1mL + 5.2% 3.7 32.2 % 19 Senior Loan 8-Aug-18 35,000,000 31,678,000 Dallas, TX Multi-Family 1mL + 3.7% 4.9 81.2 % 20 Senior Loan 25-Oct-17 6,360,000 6,360,000 Tulsa, OK Multi-Family 1mL + 4.5% 4.2 76.6 % 21 Senior Loan 27-Dec-17 7,600,000 7,600,000 Philadelphia, PA Multi-Family 1mL + 4.1% 4.3 79.8 % 22 Senior Loan 9-Jul-18 33,830,000 28,476,000 Baltimore, MD Multi-Family 1mL + 3.1% 4.9 77.6 % 23 Senior Loan 5-Jun-18 51,971,621 31,690,000 Palatine, IL Multi-Family 1mL + 4.3% 4.8 70.9 % 24 Senior Loan 18-May-18 28,000,000 24,521,093 Woodridge, IL Multi-Family 1mL + 3.8% 4.8 77.8 % 25 Senior Loan 29-Nov-17 22,500,000 22,500,000 Richmond, TX Multi-Family 1mL + 3.9% 2.3 73.5 % 26 Senior Loan 31-May-18 24,700,000 19,430,000 Omaha, NE Multi-Family 1mL + 3.7% 4.8 77.3 % 27 Senior Loan 28-Jun-18 17,000,000 14,800,000 Greenville, SC Multi-Family 1mL + 3.9% 4.8 76.3 % 28 Senior Loan 26-Mar-18 19,235,000 13,600,000 Rochelle Park, NJ Office 1mL + 4.0% 4.6 76.8 % 29 Senior Loan 1-Feb-18 14,320,000 12,920,000 Fresno, CA Multi-Family 1mL + 3.9% 4.4 82.3 % 30 Senior Loan 23-Jul-18 16,200,000 12,075,000 Chicago, IL Office 1mL + 3.8% 4.9 72.7 % 31 Senior Loan 24-May-18 12,720,000 11,070,000 Austin, TX Multi-Family 1mL + 3.6% 4.8 80.2 % 32 Senior Loan 25-May-18 11,000,000 9,440,000 Phoenix, AZ Multi-Family 1mL + 3.9% 4.8 69.4 % 33 Senior Loan 12-Mar-18 9,112,000 9,112,000 Waco, TX Student Housing 1mL + 4.8% 4.6 72.9 % 34 Senior Loan 15-Feb-18 10,500,000 8,262,000 Atlanta, GA Multi-Family 1mL + 4.3% 4.5 80.2 % 35 Senior Loan 23-Feb-18 8,070,000 8,070,000 Little Rock, AR Multi-Family 1mL + 4.3% 4.5 86.8 % 36 Senior Loan 4-Apr-18 7,332,000 6,874,000 Little Rock, AR Office 1mL + 4.9% 4.6 72.4 % 37 Senior Loan 9-Nov-17 6,647,000 5,547,000 Las Vegas, NV Self-Storage 1mL + 4.3% 4.3 86.0 % 38 Senior Loan 22-Jun-18 6,200,000 5,322,870 Chicago, IL Multi-Family 1mL + 4.1% 4.8 80.5 % 39 Senior Loan 29-Jun-18 4,525,000 4,325,000 Washington, D.C. Mixed Use 1mL + 4.7% 4.8 73.3 % 40 Senior Loan 30-Apr-18 4,080,000 3,580,000 Wichita, KS Multi-Family 1mL + 5.0% 4.7 69.0 % 41 Senior Loan 30-Aug-18 9,034,000 8,000,000 Blacksburg, VA Student Housing 1mL + 3.9% 5.0 72.7 % 42 Senior Loan 7-Aug-18 9,000,000 7,645,000 Birmingham, AL Multi-Family 1mL + 3.5% 5.0 78.0 % 43 Senior Loan 2-Aug-18 10,000,000 6,500,000 Goldsboro, NC Retail 1mL + 4.0% 4.9 56.5 % (1) LTV as of such date the loan was originated by a Hunt affiliate. LTV has not been updated for any subsequent draws or loan modifications and is not reflective of any changes in value which may have occurred subsequent to the origination date. |
THE FREMF TRUSTS
THE FREMF TRUSTS | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
THE FREMF TRUSTS | THE FREMF TRUSTS The Company elected the fair value option on the assets and liabilities of the FREMF 2011-K13 Trust and the FREMF 2012-KF01 Trust, which requires that changes in valuations of the trusts be reflected in the Company’s statements of operations. The Company’s net investment in the trusts is limited to the Multi-Family MBS comprised of first loss PO securities and IO securities acquired by the Company in 2014 with an aggregate net carrying value of $5,331,931 at September 30, 2018 and $21,695,098 at December 31, 2017 . The Company sold the underlying Multi-Family MBS of the FREMF 2011-K13 trust effective May 18, 2018. The condensed consolidated balance sheets of the FREMF trusts at September 30, 2018 and December 31, 2017 are set out below: Balance Sheets September 30, 2018 December 31, 2017 Assets Multi-family mortgage loans held in securitization trusts $ 24,787,988 $ 1,130,874,274 Receivables 110,216 4,377,606 Total assets $ 24,898,204 $ 1,135,251,880 Liabilities and Equity Multi-family securitized debt obligations $ 19,462,838 $ 1,109,204,743 Payables 103,435 4,352,039 Total liabilities $ 19,566,273 $ 1,113,556,782 Equity 5,331,931 21,695,098 Total liabilities and equity $ 24,898,204 $ 1,135,251,880 The multi-family mortgage loans held in securitization trusts had an unpaid principal balance of $27,410,393 at September 30, 2018 and $1,078,622,737 at December 31, 2017 . The multi-family securitized debt obligations had an unpaid principal balance of $27,410,393 at September 30, 2018 and $1,078,622,737 at December 31, 2017 . The condensed consolidated statements of operations of the FREMF trusts for the three and nine months ended September 30, 2018 and September 30, 2017 are as follows: Statements of Operations Three Months Ended Three Months Ended Interest income $ 336,824 $ 13,473,913 Interest expense 237,980 12,766,808 Net interest income $ 98,844 $ 707,105 General and administrative fees (56,186 ) (634,222 ) Unrealized gain (loss) on multi-family loans held in securitization trusts 957,549 694,730 Net income (loss) $ 1,000,207 $ 767,613 Statements of Operations Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 Interest income $ 20,540,942 $ 40,992,241 Interest expense 19,404,532 38,866,888 Net interest income $ 1,136,410 $ 2,125,353 General and administrative fees (934,496 ) (1,922,771 ) Unrealized gain (loss) on multi-family loans held in securitization trusts (5,861,373 ) 2,797,566 Net income (loss) $ (5,659,459 ) $ 3,000,148 During the three and nine months ended September 30, 2018 , the consolidated trust incurred realized losses of $13,617 and $18,325 . The geographic concentrations of credit risk exceeding 5% of the total loan balances related to the FREMF trusts as of September 30, 2018 and December 31, 2017 are as follows: September 30, 2018 December 31, 2017 Texas 71.4 % New York 16.5 % Connecticut 28.6 % Texas 14.2 % Washington 8.7 % Colorado 7.8 % Georgia 5.7 % |
RESIDENTIAL MORTGAGE LOAN SECUR
RESIDENTIAL MORTGAGE LOAN SECURITIZATION TRUSTS | 9 Months Ended |
Sep. 30, 2018 | |
Variable Interest Entity [Line Items] | |
RESIDENTIAL MORTGAGE LOAN SECURITIZATION TRUSTS | THE FREMF TRUSTS The Company elected the fair value option on the assets and liabilities of the FREMF 2011-K13 Trust and the FREMF 2012-KF01 Trust, which requires that changes in valuations of the trusts be reflected in the Company’s statements of operations. The Company’s net investment in the trusts is limited to the Multi-Family MBS comprised of first loss PO securities and IO securities acquired by the Company in 2014 with an aggregate net carrying value of $5,331,931 at September 30, 2018 and $21,695,098 at December 31, 2017 . The Company sold the underlying Multi-Family MBS of the FREMF 2011-K13 trust effective May 18, 2018. The condensed consolidated balance sheets of the FREMF trusts at September 30, 2018 and December 31, 2017 are set out below: Balance Sheets September 30, 2018 December 31, 2017 Assets Multi-family mortgage loans held in securitization trusts $ 24,787,988 $ 1,130,874,274 Receivables 110,216 4,377,606 Total assets $ 24,898,204 $ 1,135,251,880 Liabilities and Equity Multi-family securitized debt obligations $ 19,462,838 $ 1,109,204,743 Payables 103,435 4,352,039 Total liabilities $ 19,566,273 $ 1,113,556,782 Equity 5,331,931 21,695,098 Total liabilities and equity $ 24,898,204 $ 1,135,251,880 The multi-family mortgage loans held in securitization trusts had an unpaid principal balance of $27,410,393 at September 30, 2018 and $1,078,622,737 at December 31, 2017 . The multi-family securitized debt obligations had an unpaid principal balance of $27,410,393 at September 30, 2018 and $1,078,622,737 at December 31, 2017 . The condensed consolidated statements of operations of the FREMF trusts for the three and nine months ended September 30, 2018 and September 30, 2017 are as follows: Statements of Operations Three Months Ended Three Months Ended Interest income $ 336,824 $ 13,473,913 Interest expense 237,980 12,766,808 Net interest income $ 98,844 $ 707,105 General and administrative fees (56,186 ) (634,222 ) Unrealized gain (loss) on multi-family loans held in securitization trusts 957,549 694,730 Net income (loss) $ 1,000,207 $ 767,613 Statements of Operations Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 Interest income $ 20,540,942 $ 40,992,241 Interest expense 19,404,532 38,866,888 Net interest income $ 1,136,410 $ 2,125,353 General and administrative fees (934,496 ) (1,922,771 ) Unrealized gain (loss) on multi-family loans held in securitization trusts (5,861,373 ) 2,797,566 Net income (loss) $ (5,659,459 ) $ 3,000,148 During the three and nine months ended September 30, 2018 , the consolidated trust incurred realized losses of $13,617 and $18,325 . The geographic concentrations of credit risk exceeding 5% of the total loan balances related to the FREMF trusts as of September 30, 2018 and December 31, 2017 are as follows: September 30, 2018 December 31, 2017 Texas 71.4 % New York 16.5 % Connecticut 28.6 % Texas 14.2 % Washington 8.7 % Colorado 7.8 % Georgia 5.7 % |
Residential mortgage loans | |
Variable Interest Entity [Line Items] | |
RESIDENTIAL MORTGAGE LOAN SECURITIZATION TRUSTS | RESIDENTIAL MORTGAGE LOAN SECURITIZATION TRUSTS The Company previously elected the fair value option on the assets and liabilities of the CSMC 2014-OAK1 Trust, which requires that changes in valuations of the trust be reflected in the Company’s statements of operations. The Company’s net investment in the trust is limited to the Non-Agency RMBS comprised of subordinated and first loss securities, IO securities and excess servicing rights acquired by the Company in 2014 with an aggregate net carrying value of $0 at September 30, 2018 and $5,413,720 at December 31, 2017 . The Company sold all underlying Non-Agency RMBS of the trust effective June 18, 2018. The condensed consolidated balance sheet of the residential mortgage loan securitization trust at December 31, 2017 is set out below: Balance Sheets December 31, 2017 Assets Residential mortgage loans held in securitization trusts $ 119,756,455 Receivables 396,000 Total assets $ 120,152,455 Liabilities and Equity Residential securitized debt obligations $ 114,418,318 Payables 320,417 Total liabilities $ 114,738,735 Equity 5,413,720 Total liabilities and equity $ 120,152,455 The residential mortgage loans held in securitization trusts had an unpaid principal balance of $118,884,113 at December 31, 2017 . The residential mortgage loan securitized debt obligations had an unpaid principal balance of $118,884,113 at December 31, 2017 . The condensed consolidated statements of operations of the residential mortgage loan securitization trusts for the three and nine months ended September 30, 2018 and September 30, 2017 are as follows: Statements of Operations Three Months Ended Three Months Ended Interest income $ — $ 1,249,966 Interest expense — 995,293 Net interest income $ — $ 254,673 General and administrative fees — (11,003 ) Unrealized gain (loss) on residential loans held in securitization trusts — (155,252 ) Net income (loss) $ — $ 88,418 Statements of Operations Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 Interest income $ 2,102,352 $ 3,903,924 Interest expense 1,685,971 3,100,616 Net interest income $ 416,381 $ 803,308 General and administrative fees (20,886 ) (34,227 ) Unrealized gain (loss) on residential loans held in securitization trusts 5,650,199 (773,674 ) Net income (loss) $ 6,045,694 $ (4,593 ) The geographic concentrations of credit risk exceeding 5% of the total loan balances related to the residential mortgage loan securitization trusts as of September 30, 2018 and December 31, 2017 are as follows: September 30, 2018 December 31, 2017 California N/A 37.0 % Washington N/A 15.3 % Massachusetts N/A 8.1 % Florida N/A 6.4 % |
USE OF SPECIAL PURPOSE ENTITIES
USE OF SPECIAL PURPOSE ENTITIES AND VARIABLE INTEREST ENTITIES | 9 Months Ended |
Sep. 30, 2018 | |
Hunt CRE 2017-FL1, Ltd. | |
Variable Interest Entity [Line Items] | |
USE OF SPECIAL PURPOSE ENTITIES AND VARIABLE INTEREST ENTITIES | USE OF SPECIAL PURPOSE ENTITIES AND VARIABLE INTEREST ENTITIES A Special Purpose Entity (“SPE”) is an entity designed to fulfill a specific limited purpose of the company that organized it, and a SPE is frequently used for the purpose of securitizing, or re-securitizing, financial assets. SPEs are typically structured as pass through entities that receive principal and interest on the underlying collateral and distribute those payments to certificate holders. As a consequence of their purpose and design, SPEs are typically VIEs. As further discussed in Notes 2, 6 and 7, the Company has evaluated its investments in Multi-Family MBS and Non-Agency RMBS and has determined that they are VIEs. The Company then undertook an analysis of whether it is the primary beneficiary of any of these VIEs, and determined that it was the primary beneficiary of the FREMF 2011-K13 Trust, FREMF 2012-KF01 Trust and CSMC 2014-OAK1 Trust as of December 31, 2017 and the FREMF 2012-KF01 Trust as of September 30, 2018 . Accordingly, the Company consolidated the assets, liabilities, income and expenses of these trusts in its financial statements as of and for the periods ending September 30, 2018 and December 31, 2017 . However, the assets of each of the trusts are restricted, and can only be used to fulfill the obligations of the respective trusts. Additionally, the obligations of each of the trusts do not have any recourse to the Company as the consolidator of the trusts. The Company has elected the fair value option in respect of the assets and liabilities of the trusts. As noted in Notes 6 and 7, the Company sold the underlying securities of the FREMF 2011-K13 and CSMC 2014-OAK1 trusts effective May 18, 2018 and June 18, 2018, respectively, and henceforth no longer consolidates these two trusts. On April 30, 2018, the Company acquired Hunt CMT Equity LLC, which comprised of commercial mortgage loans financed through collateralized loan obligations ("Hunt CRE 2017-FL1, Ltd."), a licensed commercial mortgage lender and eight loan participations. The Company determined Hunt CRE 2017-FL1, Ltd. was a VIE and that the Company was the primary beneficiary of the issuing entity, and accordingly consolidated its assets and liabilities into the Company's financial statements in accordance with GAAP. On August 20, 2018, the Company closed a collateral loan obligation ("Hunt CRE 2018-FL2, Ltd."). The Company determined Hunt CRE 2018-FL2, Ltd. was a VIE and the Company was the primary beneficiary of the issuing entity, and accordingly consolidated its assets and liabilities into the Company's financial statements in accordance with GAAP. However, the assets of each of the trusts are restricted, and can only be used to fulfill the obligations of the respective trusts. Additionally, the obligations of each of the trusts do not have any recourse to the Company as the consolidator of the trusts. The carrying values of the Company's total assets and liabilities related to Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. at September 30, 2018 included the following VIE assets and liabilities: ASSETS September 30, 2018 Cash, cash equivalents and restricted cash $ 77,694,265 Accrued interest receivable 2,403,506 Investment related receivable 16,242,900 Loans held for investment 540,531,960 Total Assets $ 636,872,631 LIABILITIES Accrued interest payable $ 750,625 Collateralized loan obligations (1) 503,487,121 Fees and expenses payable to Manager $ 1,816,338 Total Liabilities $ 506,054,084 (1) The stated maturity of the collateral loan obligations per the terms of the underlying collateralized loan obligation agreement is August 15, 2034 for Hunt CRE 2017-FL1, Ltd. and August 15, 2028 for Hunt CRE 2018-FL2, Ltd. The following table presents certain loan and borrowing characteristics of Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd.: As of September 30, 2018 Collateral (loan investments) Debt (notes issued) Unpaid Principal Balance Carrying Value Face Value Carrying Value $ 540,531,960 $ 540,531,960 $ 510,181,000 $ 503,487,121 |
RESTRICTED CASH AND DUE TO BROK
RESTRICTED CASH AND DUE TO BROKER | 9 Months Ended |
Sep. 30, 2018 | |
Cash and Cash Equivalents [Abstract] | |
RESTRICTED CASH AND DUE TO BROKER | RESTRICTED CASH AND DUE TO BROKER Previously, the Company was required to maintain certain cash balances with counterparties for broker activity and collateral for the Company's repurchase agreements in non-interest bearing accounts. Additionally, Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. are actively managed with initial reinvestment periods of 30 and 36 months, respectively. As loans payoff or mature, as applicable, during this reinvestment period, cash received is restricted and intended to be reinvested within Hunt CRE 2017-FL1, Ltd. or Hunt CRE 2018-FL2, Ltd. in accordance with the terms and conditions of their respective governing agreements. The following table presents the Company's restricted cash and due to broker balances as of September 30, 2018 and December 31, 2017 : September 30, 2018 December 31, 2017 Restricted cash balance held by: Broker counterparties for derivatives trading $ — $ (1,123,463 ) Repurchase counterparties as restricted collateral — 11,275,263 Hunt CRE 2017-FL1, Ltd. reinvestment principal proceeds $ 41,864,739 $ — Hunt CRE 2018-FL2, Ltd. reinvestment principal proceeds $ 35,829,526 $ — Total $ 77,694,265 $ 10,151,800 |
BORROWINGS
BORROWINGS | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
BORROWINGS | Repurchase Agreements The Company previously entered into repurchase agreements to finance its portfolio of investments. The repurchase agreements bore interest at a contractually agreed rate. The repurchase obligations matured and typically reinvested every 30 days to one year. Repurchase agreements were accounted for as secured borrowings since the Company maintained effective control of the financed assets. The following table summarizes certain characteristics of the Company’s repurchase agreements at December 31, 2017 . The Company was not party to any repurchase agreements at September 30, 2018 : December 31, 2017 Amount outstanding Weighted average interest rate Market value of collateral held Agency $ 1,228,349,000 1.55 % $ 1,285,083,649 Non-Agency 2,555,000 3.38 % 4,399,779 Multi-Family 3,618,000 3.16 % 5,742,000 Total $ 1,234,522,000 1.56 % $ 1,295,225,428 At December 31, 2017 , the repurchase agreements had the following remaining maturities. The Company did not hold any repurchase agreements at September 30, 2018 : December 31, 2017 < or equal to 30 days $ 1,175,407,000 31 to 60 days 56,560,000 61 to 90 days 2,555,000 Total $ 1,234,522,000 Under the repurchase agreements, the respective lender retained the right to mark the underlying collateral to fair value. A reduction in the value of pledged assets would require the Company to provide additional collateral or fund margin calls. In addition, the repurchase agreements were subject to certain financial covenants, the most restrictive of these covenants required that, on the last day of any fiscal quarter, our total stockholders’ equity shall not be less than the greater of (1) $75,000,000 or (2) 50% of the highest stockholders’ equity on the last day of the preceding eight fiscal quarters. The Company was in compliance with these covenants as of September 30, 2018 and December 31, 2017 . The following tables summarize certain characteristics of the Company’s repurchase agreements at December 31, 2017 . The Company did not hold any repurchase agreements at September 30, 2018 . December 31, 2017 Repurchase Agreement Counterparties Amount Outstanding Percent of total amount outstanding Weighted days to maturity Market Value of collateral held North America 939,438,000 76.10 % 13 985,672,703 Asia (1) 292,529,000 23.70 % 14 305,152,946 Europe (1) 2,555,000 0.20 % 78 4,399,779 Total $ 1,234,522,000 100.00 % 13 $ 1,295,225,428 (1) Counterparties domiciled in Europe and Asia, or their U.S. subsidiaries. |
DERIVATIVE INSTRUMENTS HEDGING
DERIVATIVE INSTRUMENTS HEDGING AND NON-HEDGING ACTIVITIES | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instrument Detail [Abstract] | |
DERIVATIVE INSTRUMENTS HEDGING AND NON-HEDGING ACTIVITIES | DERIVATIVE INSTRUMENTS HEDGING AND NON-HEDGING INSTRUMENTS The Company previously entered into a variety of derivative instruments in connection with its risk management activities. The Company's primary objective for executing these derivatives was to mitigate the Company's economic exposure to future events that are outside its control. The Company's derivative financial instruments were utilized principally to manage market risk and cash flow volatility associated with interest rate risk (including associated prepayment risk) related to certain assets and liabilities. As part of its risk management activities, the Company entered into various forward contracts, including short securities, Agency to-be-announced securities, or TBAs, options, futures, swaps, swaptions and caps and may do so again in the future. In executing on the Company's former risk management strategy, the Company previously entered into interest rate swaps, swaption agreements, TBA’s and futures contracts. Amounts receivable and payable under interest rate swap agreements are accounted for as unrealized gain (loss) on derivative contracts, net in the consolidated statement of operations. Premiums on swaptions are amortized on a straight line basis between trade date and expiration date and are recognized in the consolidated statement of operations as a realized loss on derivative contracts. The following summarizes the Company's significant asset and liability derivatives, the risk exposure for these derivatives and the Company's risk management activities used to mitigate certain of these risks. Balance Sheet Presentation The following table presents the gross fair value and notional amounts of the Company’s derivative financial instruments as of December 31, 2017 . The Company did not hold any derivative financial instruments at September 30, 2018 : December 31, 2017 Derivative Assets Derivative Liabilities Contracts Fair value Notional Contracts Fair value Notional Eurodollar Futures (Short positions) 14,355 $ 5,349,613 $ 14,355,000,000 — $ — $ — Total 14,355 $ 5,349,613 $ 14,355,000,000 — $ — $ — Offsetting of Financial Assets and Liabilities The Company’s repurchase agreements were governed by underlying agreements that provide for a right of setoff in the event of default of either counterparty to the agreement. The Company also had in place with its counterparties ISDA Master Agreements (“Master Agreements”) for its derivative contracts. In accordance with the Master Agreements with each counterparty, if on any date amounts would otherwise be payable in the same currency and in respect of the same transaction by each party to the other, then, on such date, each party’s obligation to make payment of any such amount would automatically be satisfied and discharged and, if the aggregate amount that would otherwise have been payable by one party exceeds the aggregate amount that would otherwise have been payable by the other party, is replaced by an obligation upon the party by whom the larger aggregate amount would have been payable to pay to the other party the excess of the larger aggregate amount over the smaller aggregate amount. The Company previously pledged financial collateral as restricted cash to its counterparties for its derivative contracts and repurchase agreements. See Note 2 for specific details on the terms of restricted cash with counterparties and Note 9 for the amounts of restricted cash outstanding. Under GAAP, if the Company has a valid right of setoff, it may offset the related asset and liability and report the net amount. The Company presents repurchase agreements subject to Master Agreements or similar agreements on a gross basis, and derivative assets and liabilities subject to such arrangements on a net basis, based on derivative type and counterparty, in its condensed consolidated balance sheets. Separately, the company presents cash collateral subject to such arrangements on a net basis, based on counterparty, in its condensed c onsolidated balance sheets. However, the Company does not offset financial assets and liabilities with the associated cash collateral on its condensed consolidated balance sheets. The below tables provide a reconciliation of these assets and liabilities that were subject to Master Agreements or similar agreements and can be potentially offset on the Company’s condensed consolidated balance sheets as of December 31, 2017 . The Company did not hold any such assets or liabilities at September 30, 2018 : December 31, 2017 Gross amounts not offset in the Balance Sheet Description Gross amounts of recognized assets Gross amounts offset in the Balance Sheet Net amounts of assets presented in the Balance Sheet Financial instruments Cash collateral (Received)/ Pledged Net amount Futures (Short positions) $ 5,349,613 $ — $ 5,349,613 $ — $ (1,123,463 ) $ 4,226,150 Total $ 5,349,613 $ — $ 5,349,613 $ — $ (1,123,463 ) $ 4,226,150 December 31, 2017 Gross amounts not offset in the Balance Sheet Description Gross amounts of recognized liabilities Gross amounts offset in the Balance Sheet Net amounts of liabilities presented in the Balance Sheet Financial instruments Cash collateral (Received)/ Pledged Net Amount Repurchase agreements $ (1,234,522,000 ) $ — $ (1,234,522,000 ) $ 1,234,522,000 $ — $ — Total $ (1,234,522,000 ) $ — $ (1,234,522,000 ) $ 1,234,522,000 $ — $ — Income Statement Presentation The Company has not applied hedge accounting to its derivative portfolio held to mitigate the interest rate risk associated with its debt portfolio. As a result, the Company was previously subject to volatility in its earnings due to movement in the unrealized gains and losses associated with its futures, interest rate swaps, swaptions and any other derivative instruments. The following table summarizes the underlying hedged risks and the amount of gains and losses on derivative instruments reported net in the condensed consolidated statement of operations as realized gain (loss) on derivative contracts, net and unrealized gain (loss) on derivative contracts, net for the three and nine months ended September 30, 2018 , and September 30, 2017 : Three Months Ended September 30, 2018 Primary underlying risk Amount of realized gain (loss) Amount of unrealized appreciation (depreciation) Total Interest rate: Futures $ — $ — $ — Total $ — $ — $ — Three Months Ended September 30, 2017 Primary underlying risk Amount of realized gain (loss) Amount of unrealized appreciation (depreciation) Total Interest rate: Futures $ (1,636,725 ) $ 307,263 $ (1,329,462 ) Total $ (1,636,725 ) $ 307,263 $ (1,329,462 ) Nine Months Ended September 30, 2018 Primary underlying risk Amount of Amount of Total Interest rate: Futures 25,984,870 (5,349,613 ) 20,635,257 Total $ 25,984,870 $ (5,349,613 ) $ 20,635,257 Nine Months Ended September 30, 2017 Primary underlying risk Amount of Amount of Total Interest rate: Futures 2,049,400 (8,583,100 ) (6,533,700 ) Total $ 2,049,400 $ (8,583,100 ) $ (6,533,700 ) |
MSRs
MSRs | 9 Months Ended |
Sep. 30, 2018 | |
Mortgage Servicing Rights MSR Disclosure [Abstract] | |
MSRs | MSRs During the nine months ended September 30, 2018 , the Company retained the servicing rights associated with an aggregate principal balance of $415,564,795 of residential mortgage loans that the Company had previously transferred to four residential mortgage loan securitization trusts. The Company’s MSRs are held and managed at the Company’s TRS, and the Company employs one or more licensed sub-servicers to perform the related servicing activities. To the extent that the Company determines it is the primary beneficiary of a residential mortgage loan securitization trust into which it has sold loans, any associated MSRs are eliminated on the consolidation of the trust. The trust is contractually obligated to pay a portion of the interest payments from the associated residential mortgage loans for the direct servicing of the loans, and after deduction of sub-servicing fees payable to contracted sub-servicers, the net amount, excess servicing rights, represents a liability of the trust. Upon consolidation of the trust, the fair value of the excess servicing rights is equal to the related MSRs held at the Company’s TRS. In addition, the Company previously consolidated the assets and liabilities of the CSMC 2014-OAK1 Trust, but following the sale of subordinated and first loss securities during the second quarter of 2018, the Company has determined that it is no longer the primary beneficiary of the trust, and accordingly no longer consolidates its assets and liabilities. As a consequence, MSRs associated with this trust are also recorded on the Company's condensed consolidated balance sheet at September 30, 2018 . The following table presents the Company’s MSR activity for the period ended September 30, 2018 and the year ended December 31, 2017 : September 30, 2018 December 31, 2017 Balance at beginning of year $ 2,963,861 $ 3,440,809 MSRs relating to sales to securitizations — 10,910 MSRs related to deconsolidation of securitization trust 1,025,129 — Changes in fair value due to: Changes in valuation inputs or assumptions used in valuation model 513,807 39,688 Other changes to fair value (1) (293,673 ) (527,546 ) Balance at end of period $ 4,209,124 $ 2,963,861 Loans associated with MSRs (2) $ 415,564,795 $ 338,167,569 MSR values as percent of loans (3) 1.01 % 0.88 % (1) Amounts represent changes due to realization of expected cash flows. (2) Amounts represent the unpaid principal balance of loans associated with MSRs outstanding at September 30, 2018 and December 31, 2017 , respectively. (3) Amounts represent the carrying value of MSRs at September 30, 2018 and December 31, 2017 , respectively divided by the outstanding balance of the loans associated with these MSRs. The following table presents the servicing income recorded on the Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2018 , and September 30, 2017 : Three Months Ended Three Months Ended Servicing income $ 285,745 $ 276,211 Total servicing income $ 285,745 $ 276,211 Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 Servicing income $ 702,127 $ 721,468 Total servicing income $ 702,127 $ 721,468 |
FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
FINANCIAL INSTRUMENTS | FINANCIAL INSTRUMENTS GAAP defines fair value and provides a consistent framework for measuring fair value under GAAP. ASC 820 “Fair Value Measurement” expands fair value financial statement disclosure requirements. ASC 820 does not require any new fair value measurements and only applies to accounting pronouncements that already require or permit fair value measures, except for standards that relate to share-based payments. Valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect the Company’s market assumptions. The three levels are defined as follows: • Level 1 Inputs – Quoted prices for identical instruments in active markets. • Level 2 Inputs – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. • Level 3 Inputs – Instruments with primarily unobservable value drivers. The following tables summarize the valuation of the Company’s assets and liabilities carried at fair value within the fair value hierarchy levels as of September 30, 2018 and December 31, 2017 : September 30, 2018 Quoted prices in active markets for identical assets Level 1 Significant other observable inputs Level 2 Unobservable inputs Level 3 Balance as of September 30, 2018 Assets: Multi-family mortgage loans held in securitization trusts — 24,787,988 — 24,787,988 Mortgage servicing rights — — 4,209,124 4,209,124 Total $ — $ 24,787,988 $ 4,209,124 $ 28,997,112 Liabilities: Multi-family securitized debt obligations $ — $ 19,462,838 $ — $ 19,462,838 Total $ — $ 19,462,838 $ — $ 19,462,838 December 31, 2017 Quoted prices in active markets for identical assets Level 1 Significant other observable inputs Level 2 Unobservable inputs Level 3 Balance as of December 31, 2017 Assets: Residential mortgage-backed securities (1) $ — $ 1,290,825,648 $ — $ 1,290,825,648 Multi-family mortgage loans held in securitization trusts — 1,130,874,274 — 1,130,874,274 Residential mortgage loans held in securitization trusts — 119,756,455 — 119,756,455 Mortgage servicing rights — — 2,963,861 2,963,861 Futures (Short positions) 5,349,613 — — 5,349,613 Total $ 5,349,613 $ 2,541,456,377 $ 2,963,861 $ 2,549,769,851 Liabilities: Multi-family securitized debt obligations $ — $ (1,109,204,743 ) $ — $ (1,109,204,743 ) Residential securitized debt obligations — (114,418,318 ) — (114,418,318 ) Total $ — $ (1,223,623,061 ) $ — $ (1,223,623,061 ) (1) For more detail about the fair value of the Company’s MBS and type of securities, see Note 3 and Note 4. As of September 30, 2018 and December 31, 2017 , the Company had $4,209,124 and $2,963,861 , respectively, in Level 3 assets. The Company’s Level 3 assets are comprised of MSRs. Accordingly, for more detail about Level 3 assets, also see Notes 3 and 12. The following table provides quantitative information about the significant unobservable inputs used in the fair value measurement of the Company’s MSRs classified as Level 3 fair value assets at September 30, 2018 and December 31, 2017 : As of September 30, 2018 Valuation Technique Unobservable Input Range Weighted Average Discounted cash flow Constant prepayment rate 7.0 - 19.3% 10.1 % Discount rate 12.0 % 12.0 % As of December 31, 2017 Valuation Technique Unobservable Input Range Weighted Average Discounted cash flow Constant prepayment rate 8.0 - 25.4% 12.8 % Discount rate 12.0 % 12.0 % As discussed in Note 3, GAAP requires disclosure of fair value information about financial instruments, whether or not recognized in the statement of financial position, for which it is practicable to estimate that value. The following table details the carrying amount, face amount and fair value of the financial instruments described in Note 3: September 30, 2018 Carrying Value Face Amount Fair Value Assets: Cash and cash equivalents $ 9,912,051 $ 9,912,051 $ 9,912,051 Restricted cash 77,694,265 77,694,265 77,694,265 Commercial mortgage loans held-for-investment 544,586,537 544,586,537 544,586,537 Total $ 632,192,853 $ 632,192,853 $ 632,192,853 Liabilities Collateralized loan obligations $ 503,487,121 $ 510,181,000 $ 512,428,916 Total $ 503,487,121 $ 510,181,000 $ 512,428,916 December 31, 2017 Carrying Value Face Amount Fair Value Assets: Cash and cash equivalents $ 34,347,339 $ 34,347,339 $ 34,347,339 Restricted cash 11,275,263 11,275,263 11,275,263 Total $ 45,622,602 $ 45,622,602 $ 45,622,602 Liabilities: Repurchase agreements $ 1,234,522,000 $ 1,234,522,000 $ 1,234,522,000 Total $ 1,234,522,000 $ 1,234,522,000 $ 1,234,522,000 Estimates of cash and cash equivalents and restricted cash are measured using quoted market prices, or Level 1 inputs. Estimates of the fair value of collateralized loan obligations are measured using observable, quoted market prices, in inactive markets, or Level 2 inputs. All other fair value significant estimates are measured using unobservable inputs, or Level 3 inputs. See Note 3 for further discussion regarding fair value measurement of certain of our assets and liabilities. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS Management Fee The Company is externally managed and advised by the Manager. Pursuant to the terms of the prior management agreement in effect for the year ended December 31, 2017, the Company paid the prior manager a management fee equal to 1.5% per annum, calculated and payable monthly in arrears. For purposes of calculating the management fee, the Company’s stockholders’ equity meant the sum of the net proceeds from all issuances of the Company’s equity securities since inception (allocated on a pro rata daily basis for such issuances during the fiscal quarter of any such issuance), plus the Company’s retained earnings at the end of the most recently completed calendar quarter (without taking into account any non-cash equity compensation expense incurred in current or prior periods), less any amount that the Company paid for repurchases of the Company’s common stock since inception, and excluding any unrealized gains, losses or other items that did not affect realized net income (regardless of whether such items were included in other comprehensive income or loss, or in net income). This amount was adjusted to exclude one-time events pursuant to changes in GAAP and certain non-cash items after discussions between the manager and the Company’s independent directors and approval by a majority of the Company’s independent directors. To the extent asset impairment reduced the Company’s retained earnings at the end of any completed calendar quarter, it would reduce the management fee for such quarter. The Company’s stockholders’ equity for the purposes of calculating the management fee could be greater than the amount of stockholders’ equity shown on the financial statements. On January 18, 2018, the management agreement in effect for the year ended December 31, 2017 was terminated, and a new management agreement with the Manager became effective. Pursuant to the terms of the new management contract, the Company is required to pay the Manager an annual base management fee of 1.50% of Stockholders' Equity (as defined in the management agreement), payable quarterly ( 0.375% per quarter) in arrears. The definition of stockholders' equity in the new management agreement is materially unchanged from the definition in the prior management agreement. Additionally, starting in the first full calendar quarter following January 18, 2019, the Company is also required to pay the Manager a quarterly incentive fee equal to 20% of the excess of Core Earnings (as defined in the management agreement) over the product of (i) the Stockholders' Equity as of the end of such fiscal quarter, and (ii) 8% per annum. On June 7, 2017, the prior manager agreed to waive a portion equal to 0.75% of its 1.50% management fee on the net proceeds of the June 16, 2017 common stock offering, for the next twelve monthly payments, beginning with the payment due for the month of June 2017. Due to the termination of the previous management agreement with Oak Circle, the fee waiver terminated on January 18, 2018. The net amount of management fee waived from January 1, 2018 to January 18, 2018 was $6,959 (2017: $79,415 ). For the three months ended September 30, 2018 , the Company incurred management fees of $586,926 ( September 30, 2017 : $573,412 ), recorded as "Management Fee" in the condensed consolidated statement of operations, of which $592,500 ( September 30, 2017 : $187,000 ) was accrued but had not been paid, included in "fees and expenses payable to Manager" in the condensed consolidated balance sheets. For the nine months ended September 30, 2018 , the Company incurred management fees of $1,767,252 , net of $6,959 in management fees waived ( September 30, 2017 : $1,670,804 ), recorded as "Management Fee" in the condensed consolidated statements of operations, of which $592,500 ( September 30, 2017 : $ 187,000 ) was accrued but had not been paid, included in "fees and expenses payable to Manager" in the condensed consolidated balance sheets. Expense Reimbursement Pursuant to the management agreement, the Company is required to reimburse the Manager for operating expenses related to the Company incurred by the Manager, including accounting, auditing and tax services, technology and office facilities, operations, compliance, legal and filing fees, and miscellaneous general and administrative costs, including the cost of non-investment management personnel of the Manager who spend all or a portion of their time managing the Company’s affairs. On January 18, 2018, the management agreement in effect for the year ended December 31, 2017 was terminated, and a new management agreement with the Manager became effective. Pursuant to the terms of the new management agreement, the Manager agreed to certain limitations on manager expense reimbursement from the Company. For the three months ended September 30, 2018 , the Company incurred reimbursable expenses of $548,132 ( September 30, 2017 : $915,452 ), recorded as "operating expenses reimbursable to Manager" in the condensed consolidated statement of operations, of which $592,500 ( September 30, 2017 : $400,000 ) was accrued but had not yet been paid, included in "fees and expenses payable to Manager" in the condensed consolidated balance sheets. For the nine months ended September 30, 2018 , the Company incurred reimbursable expenses of $1,865,057 ( September 30, 2017 : $3,086,304 ), recorded as "operating expenses reimbursable to Manager" in the condensed consolidated statement of operations, of which $592,500 ( September 30, 2017 : $400,000 ) was accrued but had not yet been paid, included in "fees and expenses payable to Manager" in the condensed consolidated balance sheets. On August 20, 2018, the Company incurred $4.1 million in deferred financing costs in connection with the closing of Hunt CRE 2018-FL2 of which $2.3 million was paid directly by the Company and $1.8 million was paid by the Manager but is subject to reimbursement by the Company under the management agreement. Pursuant to the management agreement, the Company is required to reimburse the Manager for costs and expenses associated with, among other things, the acquisition, issuance, financing and structuring of the Company's and any Subsidiary's assets or investments. Manager Equity Plan The Company has in place a Manager Equity Plan under which the Company may compensate the Manager and the Company’s independent directors or consultants, or officers whom it may employ in the future. In turn, the Manager, in its sole discretion, grants such awards to its directors, officers, employees or consultants. The Company is able to issue under the Manager Equity Plan up to 3.0% of the total number of issued and outstanding shares of common stock (on a fully diluted basis) at the time of each award. Stock based compensation arrangements may include incentive stock options and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock awards and other awards based on the Company’s common stock. The following table summarizes the activity related to restricted common stock for the nine months ended September 30, 2018 and September 30, 2017 : Nine Months Ended September 30, 2018 2017 Shares Weighted Average Grant Date Fair Market Value Shares Weighted Average Grant Date Fair Market Value Outstanding Unvested Shares at Beginning of Period 4,500 $ 4.33 4,500 $ 5.97 Granted 4,500 3.40 — — Vested — — — — Outstanding Unvested Shares at End of Period 9,000 $ 3.87 4,500 $ 5.97 For the period ended September 30, 2018 , the Company recognized compensation expense related to restricted common stock of $ 18,095 (2017: $16,634 ). The Company has unrecognized compensation expense of $ 12,740 as of September 30, 2018 (2017: $0 ) for unvested shares of restricted common stock. As of September 30, 2018 , the weighted average period for which the unrecognized compensation expense will be recognized is 8.7 months. MAXEX LLC The Company’s lead independent director is also an independent director of an entity, MAXEX LLC (“ MAXEX ”), with which the Company has a commercial business relationship. The objective of MAXEX, together with its subsidiaries, is to create a whole loan mortgage trading platform which encompasses a centralized counterparty with a standardized purchase and sale contract and an independent dispute resolution process. As of December 31, 2017 , the Company had sold $24.6 million of residential mortgage loans to a third party buyer that were effected through MAXEX, for which the Company did not receive compensation other than receipt of loan sale proceeds from the third party; the Company has not sold any loans through MAXEX in 2018. As of September 30, 2018 , the Company has received $263,117 ( September 30, 2017 : $241,455 ) in fees, net of $61,373 ( September 30, 2017 : $51,904 ) in marketing fees paid to MAXEX, relating to its provision to MAXEX of seller eligibility review and backstop services. On June 27, 2018, FOAC entered into an amendment with MAXEX pursuant to which, amongst other things, FOAC and MAXEX agreed that FOAC's obligations to provide seller eligibility and backstop guarantee services will terminate at 11:59 p.m. (Eastern Standard Time) on December 31, 2018, or sooner, at MAXEX's option, MAXEX agreed to pay to FOAC a monthly expense reimbursement in an amount equal to $20,000 commencing in April, 2018, and MAXEX issued a warrant to FOAC to purchase 35,658 class A-4 warrants of MAXEX. The fees received related to seller eligibility review and backstop services are recorded on the Company's condensed consolidated balance sheet as a liability in the line item "Deferred Income". See Note 15 for additional disclosure relating to the backstop services. Hunt Financial Securities LLC During the second quarter of 2018, the Company sold four AFS securities with a total notional of $82.9 million to Hunt Financial Services, LLC, an affiliate of the Manager. Additionally, Hunt Financial Services, LLC acted as a placement agent related to Hunt CRE 2018-FL2, Ltd in the third quarter and earned fees of $208,477 in this capacity. Hunt Finance Company, LLC During the third quarter of 2018, Hunt CRE 2017-Fl1, Ltd. purchased 4 loans with unpaid principal balance of $73,114,000 at par and Hunt CRE 2018-FL2 purchased 21 loans with unpaid principal balance of $245,115,093 at par from Hunt Finance Company, LLC, an affiliate of our Manager. Hunt Servicing Company, LC Hunt Servicing Company, LLC, an affiliate of the Manager, was appointed as the sub-servicer to the servicer with respect to mortgage assets for Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. by KeyBank in its capacity as servicer of both CLOs. Additionally, Hunt Servicing Company, LLC was appointed by KeyBank as servicer to act as special servicer of any serviced mortgage loan that becomes a specially serviced mortgage loan. |
GUARANTEES
GUARANTEES | 9 Months Ended |
Sep. 30, 2018 | |
Guarantees [Abstract] | |
GUARANTEES | GUARANTEES The Company, through FOAC, is party to customary and standard loan repurchase obligations in respect of residential mortgage loans that it has sold into securitizations or to third parties, to the extent it is determined that there has been a breach of standard seller representations and warranties in respect of such loans. To date, the Company has not been required to repurchase any loan due to a claim of breached seller representations and warranties. In July 2016, the Company announced that it would no longer aggregate and securitize residential mortgage loans; however, the Company sought to capitalize on its infrastructure and knowledge to become the provider of seller eligibility review and backstop services to MAXEX. See Note 14 for a further description of MAXEX. MAXEX's wholly owned clearinghouse subsidiary, MAXEX Clearing LLC, formerly known as Central Clearing and Settlement LLC ("CCAS"), functions as the central counterparty with which buyers and sellers transact, and acts as the buyer's counterparty for each transaction. Pursuant to a Master Agreement dated June 15, 2016, as amended August 29, 2016, January 30, 2017 and June 27, 2018, among MAXEX, CCAS and FOAC, FOAC provides seller eligibility review services under which it reviews, approves and monitors sellers that are to sell loans via CCAS. Once approved, and having signed the standardized loan sale contract, the seller then sells loan(s) to CCAS, and CCAS simultaneously sells loan(s) to the buyer on substantially the same terms including representations and warranties. To the extent that a seller approved by FOAC fails to honor its obligations to repurchase a loan based on an arbitration finding that it breached its representations and warranties, FOAC is obligated to backstop the seller's repurchase obligation. The term of the backstop guarantee is the earlier of the contractual maturity of the underlying mortgage, or its earlier repayment in full; however, the incidence of claims for breaches of representations and warranties over time is considered unlikely to occur more than five years from the sale of a mortgage. FOAC's obligations to provide such seller eligibility review and backstop guarantee services will terminate at 11:59 p.m. (Eastern Standard Time) on December 31, 2018, or sooner, at MAXEX's option. MAXEX has also covenanted to FOAC to use its commercially reasonable efforts to enter into a transaction with a replacement backstop provider pursuant to which such replacement backstop provider would assume all of FOAC's backstop guarantee obligations and FOAC will pay such replacement backstop provider a fee equal to the lesser of (i) the unamortized guarantee fees and (ii) 3.25 basis points ( 0.0325% ) of the scheduled unpaid principal balances of the loans for which the backstop guarantee obligation is assumed. The maximum potential amount of future payments that the Company could be required to make under the outstanding backstop guarantees, which represents the outstanding balance of all underlying mortgage loans sold by approved sellers to CCAS, was estimated to be $1,178,799,051 as of September 30, 2018 and $629,278,629 as of December 31, 2017 , although the Company believes this amount is not indicative of the Company's actual potential losses. Amounts payable in excess of the outstanding principal balance of the related mortgage, for example any premium paid by the loan buyer or costs associated with collecting mortgage payments, are not currently estimable. Amounts that may become payable under the backstop guarantee are normally recoverable from the related seller, as well as from any payments received on (or from sale of property securing) the mortgage loan repurchased. Pursuant to the Master Agreement, FOAC is required to maintain minimum available liquidity equal to the greater of (i) $5.0 million or (ii) 0.10% of the aggregate unpaid principal balance of loans backstopped by FOAC, either directly or through a credit support agreement acceptable to MAXEX. As of September 30, 2018 , the Company was not aware of any circumstances expected to lead to the triggering of a backstop guarantee obligation. The Company assessed its backstop guarantee obligation as of September 30, 2018 in accordance with ASC 460, "Guarantees", and the carrying value of the liability was the unamortized portion of fees receivable in respect of the issuance of the guarantees. See Note 2 for information on the Company's accounting policy with respect to guarantee fees receivable. In addition, the Company enters into certain contracts that contain a variety of indemnification obligations, principally with the Manager, brokers and counterparties to repurchase agreements. The maximum potential future payment amount the Company could be required to pay under these indemnification obligations is unlimited. The Company has not incurred any costs to defend lawsuits or settle claims related to the indemnification obligations. As a result, the estimated fair value of these agreements is minimal. Accordingly, the Company recorded no liabilities for these agreements as of September 30, 2018 . |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Notes) | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Unfunded Commitments As of September 30, 2018 , the Company had $16.0 million of unfunded commitments related to Hunt CRE 2017-FL1, Ltd. and $56.9 million of unfunded commitments related to Hunt CRE 2018-FL2, Ltd. The Hunt CRE 2018-FL2 unfunded commitments are not commitments of the Company, but are obligations of HFC. These commitments are not reflected on the Company's condensed consolidated balance sheets. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | and Warrants Pursuant to the terms of the May 2012 private offering, the Company agreed to issue to XL Investments Ltd warrants to purchase the Company’s common stock. The warrants were subsequently issued, effective as of September 29, 2012, and following adjustment in December 2016, entitled XL Investments Ltd, to purchase an aggregate of 3,753,492 shares of the Company’s common stock at a per share exercise price equal to $13.11 . XL Global, Inc., a subsidiary of XL Group Ltd, held a minority stake in the previous manager. Pursuant to an agreement dated January 18, 2018, XL Investments agreed to terminate all of its previously held warrants to purchase 3,753,492 shares of common stock held by it. Common Stock The Company has 450,000,000 authorized shares of common stock, par value $0.01 per share, with 23,687,664 and 22,143,758 shares issued and outstanding as of September 30, 2018 and December 31, 2017 , respectively. On June 16, 2017, the Company issued 4,600,000 shares of common stock, including the concurrent exercise of the underwriters' overallotment option, for $4.60 per share. Net proceeds to the Company were $19.8 million . On January 18, 2018, the Company issued 1,539,406 shares of common stock to an affiliate of the Manager in a private placement at a purchase price of $4.77 per share resulting in aggregate net proceeds of $7.3 million . Stock Repurchase Program On December 15, 2015, the Company’s board of directors authorized a stock repurchase program (or the “Repurchase Program”), to repurchase up to $10 million of the Company’s outstanding common stock. Shares of the Company’s common stock may be purchased in the open market, including through block purchases, or through privately negotiated transactions, or pursuant to any trading plan that may be adopted in accordance with Rule 10b 18(b)(1) of the Securities Exchange Act of 1934, as amended. The timing, manner, price and amount of any repurchases will be determined at the Company’s discretion and the program may be suspended, terminated or modified at any time for any reason. Among other factors, the Company intends to only consider repurchasing shares of the Company’s common stock when the purchase price is less than the Company’s estimate of the Company’s current net asset value per common share. Shares of common stock repurchased by the Company under the Repurchase Program, if any, will be canceled and, until reissued by the Company, will be deemed to be authorized but unissued shares of the Company’s common stock. As of December 31, 2017 , the Company had repurchased 126,856 shares of common stock at a weighted average share price of $5.09 . No share repurchases were made during the nine months ended September 30, 2018 . As of September 30, 2018 , $9.4 million of common stock remained authorized for future share repurchase under the Repurchase Program. Preferred Stock The Company has 50,000,000 authorized shares of preferred stock, par value $0.01 per share, with 1,610,000 shares of 8.75% Series A Cumulative Redeemable Preferred Stock (“Series A Preferred Stock”), par value of $0.01 per share and liquidation preference of $25.00 per share, issued and outstanding as of both September 30, 2018 and December 31, 2017 . The Series A Preferred Stock is entitled to receive a dividend rate of 8.75% per year on the $25 liquidation preference and is senior to the common stock with respect to distributions upon liquidation, dissolution or winding up. The Company declares quarterly and pays monthly dividends on the shares of the Series A Preferred Stock, in arrears, on the 27th day of each month to holders of record at the close of business on the 15th day of each month. No dividends may be paid on the Company's common stock unless full cumulative dividends have been paid on the preferred stock. The Company has paid full cumulative dividends on its preferred stock on a monthly basis since it was first issued in December 2013. Distributions to stockholders For the 2018 taxable year to date, the Company has declared dividends to common stockholders totaling $5,156,936 , or $0.22 per share. The following table presents cash dividends declared by the Company on its common stock during the nine months ended September 30, 2018 : Declaration Date Record Date Payment Date Dividend Amount Cash Dividend Per Weighted Average Share January 5, 2018 January 16, 2018 January 30, 2018 $ 737,388 $ 0.03126 January 5, 2018 February 15, 2018 February 27, 2018 $ 788,649 $ 0.03343 January 5, 2018 March 15, 2018 March 29, 2018 $ 788,649 $ 0.03343 March 16, 2018 April 16, 2018 April 27, 2018 $ 473,663 $ 0.02008 March 16, 2018 May 15, 2018 May 30, 2018 $ 473,663 $ 0.02008 March 16, 2018 June 15, 2018 June 29, 2018 $ 473,663 $ 0.02008 September 10, 2018 September 28, 2018 October 15, 2018 $ 1,421,260 $ 0.06025 The following table presents cash dividends declared by the Company on its Series A Preferred Stock for the nine months ended September 30, 2018 : Declaration Date Record Date Payment Date Dividend Amount Cash Dividend Per Weighted Average Share January 5, 2018 January 16, 2018 January 30, 2018 $ 293,503 $ 0.18230 January 5, 2018 February 15, 2018 February 27, 2018 $ 293,503 $ 0.18230 January 5, 2018 March 15, 2018 March 29, 2018 $ 293,503 $ 0.18230 March 16, 2018 April 16, 2018 April 27, 2018 $ 293,503 $ 0.18230 March 16, 2018 May 15, 2018 May 30, 2018 $ 293,503 $ 0.18230 March 16, 2018 June 15, 2018 June 29, 2018 $ 293,503 $ 0.18230 July 3, 2018 July 16, 2018 July 27, 2018 $ 293,503 $ 0.18230 July 3, 2018 August 15, 2018 August 27, 2018 $ 293,503 $ 0.18230 July 3, 2018 September 17, 2018 September 27, 2018 $ 293,503 $ 0.18230 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE In accordance with ASC 260, outstanding instruments that contain rights to non-forfeitable dividends are considered participating securities. The Company is required to apply the two-class method or the treasury stock method of computing basic and diluted earnings per share when there are participating securities outstanding. The Company has determined that outstanding unvested restricted shares issued under the Manager Equity Plan are participating securities, and they are therefore included in the computation of basic and diluted earnings per share. The following tables provide additional disclosure regarding the computation for the three and nine months ended September 30, 2018 and September 30, 2017 : Three Months Ended September 30, 2018 Three Months Ended September 30, 2017 Net income (loss) $ 4,353,026 $ (4,256,337 ) Less dividends paid: Common stock $ 1,421,260 $ 3,320,889 Preferred stock 880,509 880,509 2,301,769 4,201,398 Undistributed earnings (deficit) $ 2,051,257 $ (8,457,735 ) Unvested Share-Based Payment Awards Common Stock Unvested Share-Based Payment Awards Common Stock Distributed earnings $ 0.06 $ 0.06 $ 0.15 $ 0.15 Undistributed earnings (deficit) 0.09 0.09 (0.38 ) (0.38 ) Total $ 0.15 $ 0.15 $ (0.23 ) $ (0.23 ) Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 Net income (loss) $ (5,822,037 ) $ (4,183,767 ) Less dividends paid: Common stock $ 5,156,936 $ 8,582,666 Preferred stock 2,631,744 2,631,744 7,788,680 11,214,410 Undistributed earnings (deficit) $ (13,610,717 ) $ (15,398,177 ) Unvested Share-Based Common Stock Unvested Share-Based Common Stock Distributed earnings $ 0.22 $ 0.22 $ 0.45 $ 0.45 Undistributed earnings (deficit) (0.58 ) (0.58 ) (0.80 ) (0.80 ) Total $ (0.36 ) $ (0.36 ) $ (0.35 ) $ (0.35 ) Pursuant to an agreement dated January 18, 2018, XL investments agreed to terminate all of its previously held warrants to purchase 3,753,492 shares of common stock held by it, and therefore no adjustment was needed for the calculation of diluted earnings per share for the three months and nine months ended September 30, 2018 . No adjustment was required for the calculation of diluted earnings per share for the three months and nine months ended September 30, 2017 , for the warrants described in Note 17 because the warrants’ exercise price was greater than the average market price of the common shares for the period, and thereby anti-dilutive. For the three months ended September 30, 2018 the weighted average number of shares of common stock outstanding to calculate the basic and diluted earnings per share was 23,687,273 and for the three months ended September 30, 2017 , the weighted average number of shares of common stock outstanding to calculate the basic and diluted earnings per share was 22,139,258 . For the nine months ended September 30, 2018 , the weighted average number of shares of common stock outstanding to calculate the basic and diluted earnings per share was 23,588,688 and for the nine months ended September 30, 2017 , the weighted average number of shares of common stock outstanding to calculate the basic and diluted earnings per share was 19,342,188 . |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Certain activities of the Company are conducted through a TRS, FOAC, and FOAC is therefore subject to tax as a U.S. C-Corporation. Pursuant to ASC 740, deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not (a likelihood of more than 50%) that some portion or all of the deferred tax assets will not be realized. Impacts of tax reform On December 22, 2017, the Tax Cut and Jobs Act (H.R. 1) (the "Tax Act") was signed into law. The Tax Act contains significant changes to corporate taxation, including the reduction of the corporate income tax rate to 21%. The Company has substantially completed our assessment of the effects of the Tax Act and were able to determine reasonable estimates for the impacts of the items specified below. The Company continues to monitor and analyze the application of the "Tax Act" to its business and continue to assess our provision for income taxes as future guidance is issued. The key impacts of the Tax Act on the Company's financial statements for the year ended December 31, 2017 were: (1) the federal statutory tax rate was reduced to 21%. In prior years, the Company valued its deferred tax asset at 34%. The related re-measurement of the deferred tax asset resulted in a reduction of $364,000 as of December 31, 2017. This amount is fully offset by a corresponding reduction to the valuation allowance as discussed in the paragraph below, (2) taxpayers that have existing AMT credit from previously paid AMT tax will be allowed to offset their regular tax liability for any future taxable year. Additionally, the AMT credit will be refundable for any taxable year beginning after December 31, 2017 and before January 1, 2022 in an amount equal to 50% of the excess AMT credit for the taxable year over the amount of the credit allowable for the year against regular tax liability. In tax year 2021, 100% of any remaining excess AMT credit will be refunded. As a result, the valuation allowance attributable to prior years AMT credit in the amount of $19,000 is released and AMT credit accrued for the current year is recognized in the deferred tax asset. The following table reconciles the Company’s TRS GAAP net income (loss) to taxable income (in thousands): Nine Months Ended September 30, 2018 As of December 31, 2017 GAAP consolidated net income (loss) attributable to Hunt Companies Finance Trust, Inc. (5,822 ) $ 4,707 GAAP net loss (income) from REIT operations 6,830 (4,645 ) GAAP net income (loss) of taxable subsidiary 1,008 62 Capitalized transaction fees (31 ) (41 ) Unrealized gain (loss) (231 ) 639 Deferred income 176 19 Tax income of taxable subsidiary before utilization of net operating losses 922 679 Utilization of net operating losses (922 ) (679 ) Net tax income of taxable subsidiary — $ — The TRS has a deferred tax asset on which the Company has a 100% valuation allowance, comprised of the following (in thousands): As of September 30, 2018 As of December 31, 2017 Accumulated net operating losses of TRS 99 337 Unrealized gain 191 251 Capitalized transaction costs 114 122 Deferred income 103 57 AMT Credit 19 19 Deferred tax asset (liability) 526 786 Valuation allowance (507 ) (767 ) Net non-current deferred tax asset (liability) 19 19 The Company has provided a valuation allowance against its deferred tax asset that results in no deferred tax asset at September 30, 2018 , and December 31, 2017 except for the refundable AMT credits as discussed above. The Company recorded a 100% valuation allowance related to the TRS net deferred tax asset because it believes it is more likely than not that the deferred tax asset will not be fully realized. The valuation allowance decreased by $ 260,000 as a result of the net utilization of deferred tax assets. The realization of the deferred tax asset associated with net operating losses is dependent on projections of future taxable income, for which there is uncertainty when considering historic results and the nature of the business. Accordingly, no provision or benefit (current or deferred tax expense) for income taxes has been reflected in the accompanying financial statements. At September 30, 2018 , the TRS had net operating loss carryforwards for federal income tax purposes of $ 0.4 million , which are available to offset future taxable income and begin expiring in 2034. As of September 30, 2018 , the Company is not aware of any material uncertain tax positions, but the Company could be subject to federal and state tax audits for its tax years of 2015, 2016 and 2017. The Company declared and paid in the fourth quarter of 2016 a deficiency dividend relating to a determination of an inability to offset certain net gains on hedging transactions in 2013 against capital losses on the sale of certain mortgage-backed securities. In connection with this declaration, the Company provisioned an amount of $1.86 million in 2016 for interest charges expected to be paid to the IRS following the payment of the dividend. On March 8, 2017, the Company paid an amount of $2.01 million to the IRS for interest charges related to the fourth quarter 2016 deficiency dividend payment. The amount paid exceeded the provision of $1.86 million taken in 2016 due to the timing of the payment and accordingly the Company recorded additional interest expense of $0.15 million , which is included in "Other interest expense" in the Company's condensed consolidated statements of operations. The first quarter 2017 payment of $2.01 million is included in "cash paid for interest" in the Company's condensed consolidated statements of cash flows. |
SEGMENT REPORTING
SEGMENT REPORTING | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | SEGMENT REPORTING The Company invests in a portfolio comprised of commercial mortgage loans, MBS and other mortgage-related investments, and operates as a single reporting segment. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS We have reviewed subsequent events occurring through the date that these condensed consolidated financial statements were issued, and determined that no subsequent events occurred that would require accrual or additional disclosure. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The consolidated balance sheet as of December 31, 2017 has been derived from audited financial statements. The condensed consolidated balance sheet as of September 30, 2018 , the condensed consolidated statements of operations and the condensed consolidated statements of comprehensive income (loss), for the three and nine months ended September 30, 2018 and for the three and nine months ended September 30, 2017 , the condensed consolidated statement of stockholders’ equity for the nine months ended September 30, 2018 , and the condensed consolidated statements of cash flows for the nine months ended September 30, 2018 , and the nine months ended September 30, 2017 , are unaudited. The unaudited condensed consolidated financial statements and related notes have been prepared in accordance with GAAP for interim financial reporting and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and note disclosures normally included in the financial statements prepared under GAAP have been condensed or omitted. In the opinion of management, all adjustments considered necessary for a fair presentation of the Company’s financial position, results of operations and cash flows have been included and are of a normal and recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These condensed consolidated financial statements should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 , which was filed with the Securities and Exchange Commission (“SEC”) on March 16, 2018. |
Reclassifications | Reclassifications |
Principles of Consolidation | Principles of Consolidation The accompanying condensed consolidated financial statements of the Company include the accounts of the Company and all its subsidiaries which are majority-owned, controlled by the Company or a variable interest entity where the Company is the primary beneficiary. All significant intercompany transactions have been eliminated on consolidation. |
VIEs | VIEs An entity is referred to as a VIE if it lacks one or more of the following characteristics: (1) sufficient equity at risk to finance its activities without additional subordinated financial support provided by any parties, including the equity holders; (2) as a group the holders of the equity investment at risk have (a) the power, through voting rights or similar rights, to direct the activities of a legal entity that most significantly impacts the entity's economic performance, (b) the obligation to absorb the expected losses of the legal entity and (c) the right to receive the expected residual returns of the legal entity; and (3) the voting rights of these investors are proportional to their obligations to absorb the expected losses of the entity, their rights to receive the expected returns of their equity, or both, and whether substantially all of the entity's activities involve or are conducted on behalf of an investor that has disproportionately fewer voting rights. An investment that lacks one or more of the above three characteristics is considered to be a VIE. The Company reassesses its initial evaluation of an entity as a VIE based upon changes in the facts and circumstances pertaining to the VIE. VIEs are required to be consolidated by their primary beneficiary. The primary beneficiary of a VIE is determined to be the party that has both the power to direct the activities that most significantly impact the VIE's economic performance and the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE. This determination may involve complex and subjective analyses. In general, the obligation to absorb losses is a function of holding a majority of the first loss tranche, while the ability to direct the activities that most significantly impact the VIEs economic performance will be determined based upon the rights associated with acting as the directing certificate holder, or equivalent, in a given transaction. The Company is required to reconsider its evaluation of whether to consolidate a VIE each reporting period based upon changes in the facts and circumstances pertaining to the VIE. During the second quarter of 2018, the Company sold the first-loss securities of the Re-REMIC related to the FREMF 2011-K13 Trust, and as a result having determined it is no longer the primary beneficiary of the trust, no longer consolidates the assets and liabilities of that trust. Additionally, during the second quarter of 2018, the Company sold the first-loss and subordinated tranches issued by the CSMC 2014-OAK1 Trust, and as a result, having determined it is no longer the primary beneficiary of the trust, no longer consolidates the assets and liabilities of the underlying trust. The Company has evaluated its remaining Multi-Family MBS investment to determine if it represents a variable interest in a VIE. The Company monitors this investment and analyzes it for potential consolidation. At September 30, 2018 , the Company determined that it continues to be the primary beneficiary of one Multi-Family MBS transaction (FREMF 2012-KF01) based on its power to direct the trust’s activities and its obligations to absorb losses derived from the ownership of the first-loss tranche. In the case of the FREMF 2012-KF01 trust, the Company determined that it is the primary beneficiary of a certain intermediate trust that has the power to direct the activities and the obligations to absorb losses of the underlying trust. Accordingly, the Company consolidated the assets, liabilities, income and expenses of the underlying trust, and has elected the fair value option in respect of the assets and liabilities of the trust. |
Use of Estimates | Use of Estimates The financial statements have been prepared on the accrual basis of accounting in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires the Company to make a number of significant estimates. These include estimates of fair value of certain assets and liabilities, amount and timing of credit losses, prepayment rates, and other estimates that affect the reported amounts of certain assets and liabilities as of the date of the financial statements and the reported amounts of certain revenues and expenses during the reported period. It is likely that changes in these estimates (e.g. valuation changes due to supply and demand, credit performance, prepayments, interest rates, or other reasons) will occur in the near term. The Company’s estimates are inherently subjective in nature and actual results could differ from its estimates and the differences may be material. |
Cash and Cash Equivalents and Restricted Cash | Cash and Cash Equivalents and Restricted Cash Cash and cash equivalents include cash held in bank accounts on an overnight basis and other short term deposit accounts with banks having original maturities of 90 days or less. The Company maintains its cash and cash equivalents in highly rated financial institutions, and at times these balances exceed insurable amounts. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same amounts shown in the statements of cash flows. September 30, 2018 December 31, 2017 Cash and cash equivalents $ 9,912,051 $ 34,347,339 Repurchase counterparties as restricted collateral — 11,275,263 Restricted cash CRE 2017-FL1, Ltd. 41,864,739 — Restricted cash CRE 2018-FL2, Ltd. $ 35,829,526 $ — Total cash, cash equivalents and restricted cash $ 87,606,316 $ 45,622,602 Restricted cash includes cash held within Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. for purposes of reinvestment in qualifying commercial mortgage loans. Previously, restricted cash represented the Company’s cash held by counterparties as collateral against the Company’s securities, derivatives and/or repurchase agreements. Cash previously held by counterparties as collateral was not available to the Company for general corporate purposes, but may have been applied against amounts due to securities, derivatives or repurchase counterparties or returned to the Company when the collateral requirements were exceeded, or at the maturity of the derivative or repurchase agreement. |
Deferred Income | Deferred Income Certain service revenues received in the period are recorded as a liability in the Company’s consolidated balance sheets in the line item “Deferred income”, for subsequent recognition as income in the Company’s consolidated statements of operations. |
Deferred Offering Costs | Deferred Offering Costs In accordance with ASC Subtopic 505-10, the direct costs incurred to issue shares classified as equity, such as legal and accounting fees, should be deducted from the related proceeds and the net amount recorded as stockholders’ equity. Accordingly, payments made by the Company in respect of such costs related to the issuance of shares are recorded as an asset in the accompanying consolidated balance sheets in the line item “Deferred offering costs”, for subsequent deduction from the related proceeds upon closing of the offering. To the extent that certain costs, in particular legal fees, are known to have been accrued but have not yet been invoiced and paid, they are included in “Other accounts payable and accrued expenses” on the accompanying consolidated balance sheets. |
Available-for-Sale Securities, at Fair Value | Available-for-Sale Securities, at Fair Value Interest income on the Company’s Available-for-Sale ("AFS") securities portfolio, with the exception of Non-Agency RMBS IOs (as further described below), is accrued based on the actual coupon rate and the outstanding principal balance of such securities. The Company recognizes interest income using the effective interest method for all AFS securities. As such, premiums and discounts are amortized or accreted into interest income over the lives of the securities in accordance with ASC 310-20, “Nonrefundable Fees and Other Costs”, ASC 320-10, “Investments Debt and Equity Securities” or ASC 325-40, “Beneficial Interests in Securitized Financial Assets”, as applicable. Total interest income is recorded in the “Interest Income” line item on the condensed consolidated statements of operations. On at least a quarterly basis for securities accounted for under ASC 320-10 and ASC 310-20 (generally Agency RMBS), prepayments of the underlying collateral must be estimated, which directly affect the speed at which the Company amortizes such securities. If actual and anticipated cash flows differ from previous estimates; the Company recognizes a “catch-up” adjustment in the current period to the amortization of premiums for the impact of the cumulative change in the effective yield through the reporting date. Similarly, the Company also reassesses the cash flows on at least a quarterly basis for securities accounted for under ASC 325-40 and ASC 310-30 (generally Non-Agency RMBS and Multi-Family MBS). In estimating these cash flows, there are a number of assumptions that are subject to uncertainties and contingencies. These include the rate and timing of principal and interest receipts (including assumptions of prepayments, repurchases, defaults and liquidations), the pass-through or coupon rate and interest rate fluctuations. In addition, interest payment shortfalls due to delinquencies on the underlying mortgage loans have to be judgmentally estimated. Differences between previously estimated cash flows and current actual and anticipated cash flows are recognized prospectively through an adjustment of the yield over the remaining life of the security based on the current amortized cost of the investment as adjusted for credit impairment, if any. For investments purchased with evidence of deterioration of credit quality for which it is probable, at acquisition, that the Company will be unable to collect all contractually required payments receivable, the Company applies the provisions of ASC 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality.” ASC 310-30 addresses accounting for differences between contractual cash flows and cash flows expected to be collected from an investor’s initial investment in loans or debt securities acquired in a transfer if those differences are attributable, at least in part, to credit quality. ASC 310-30 limits the yield that may be accreted (accretable yield) to the excess of the investor’s estimate of undiscounted expected principal, interest and other cash flows (cash flows expected at acquisition to be collected) over the investor’s initial investment in the loan. ASC 310-30 requires that the excess of contractual cash flows over cash flows expected to be collected (nonaccretable difference) not be recognized as an adjustment of yield, loss accrual or valuation allowance. Subsequent increases in cash flows expected to be collected are generally recognized prospectively through adjustment of the investment’s yield over its remaining life. Decreases in cash flows expected to be collected are recognized as impairment to the extent that such decreases are due, at least in part, to an increase in credit loss expectations (“credit impairment”). To the extent that decreases in cash flows expected to be collected are the result of factors other than credit impairment, for example a change in rate of prepayments, such changes are generally recognized prospectively through adjustment of the investment’s yield over its remaining life. The Company’s accrual of interest, discount and premium for U.S. federal and other tax purposes is likely to differ from the financial accounting treatment of these items as described above. Gains and losses from the sale of AFS securities are recorded within "realized gain (loss) on sale of investments, net" in the Company's condensed consolidated statements of operations. Upon the sale of a security, the Company will determine the cost of the security and the amount of unrealized gains or losses to reclassify out of accumulated other comprehensive income (loss) into earnings based on the specific identification method. Unrealized gains and losses on the Company’s AFS securities are recorded as "unrealized gain (loss) on available-for-sale securities, net" in the Company's condensed consolidated statements of comprehensive income (loss). The Company evaluates its MBS, on a quarterly basis, to assess whether a decline, if any, in the fair value of an AFS security below the Company's amortized cost basis is an other-than-temporary impairment (“OTTI”). The presence of OTTI is based upon a fair value decline below a security's amortized cost basis and a corresponding adverse change in expected cash flows due to credit related factors as well as non-credit factors, such as changes in interest rates and market spreads. Impairment is considered other-than-temporary if an entity (i) intends to sell the security, (ii) will more likely than not be required to sell the security before it recovers in value or (iii) does not expect to recover the security's amortized cost basis, even if the entity does not intend to sell the security. Under these scenarios, the impairment is other-than-temporary and the full amount of impairment should be recognized currently in earnings and the cost basis of the investment security is adjusted. However, if an entity does not intend to sell the impaired debt security and it is more likely than not that it will not be required to sell before recovery, OTTI should be recognized to the extent that a decrease in future cash flows expected to be collected is due, at least in part, to an increase in credit impairment. A decrease in future cash flows due to factors other than credit, for example a change in the rate of prepayments, is considered a non-credit impairment. The full amount of the difference between the security’s previous and new cost basis resulting from credit impairment is recognized currently in earnings, and the difference between the new amortized cost basis and the cash flows expected to be collected is accreted as interest income in accordance with the effective interest method. Decreases in cash flows expected to be collected resulting from non-credit impairment are generally recognized prospectively through adjustment of the investment’s yield over its remaining life. |
Residential Mortgage Loans Held-for-Sale, at Fair Value | Residential Mortgage Loans Held-for-Sale, at Fair Value Residential mortgage loans held-for-sale are reported at fair value as a result of a fair value option election. See Note 3 - Fair Value Measurements for details on fair value measurement. Residential mortgage loans are classified as held-for-sale based upon the Company’s intent to sell them in the secondary whole loan market. Interest income on residential mortgage loans held-for-sale is recognized at the loan coupon rate. Interest income recognition is suspended when residential mortgage loans are placed on non-accrual status. The accrual of interest on loans is discontinued when, in management’s opinion, the interest is considered non-collectible, and in all cases when payment becomes greater than 90 days past due. Loans return to accrual status when principal and interest become current and are anticipated to be fully collectible. |
Commercial Mortgage Loans Held-For-Investment | Commercial Mortgage Loans Held-for-Investment Commercial mortgage loans held-for-investment represent floating-rate transitional loans and other commercial mortgage loans purchased by the Company. These loans include loans sold into securitizations that the Company consolidates. Commercial mortgage loans held-for-investment are intended to be held-to-maturity and, accordingly, are carried at their unpaid principal balances, adjusted for net unamortized loan fees and costs (in respect of originated loans), premiums and discounts (in respect of purchased loans) and impairment, if any. Interest income is recognized as revenue using the effective interest method and is recorded on the accrual basis according to the terms of the underlying loan agreement. Any fees, premiums and discounts associated with these loan investments are recorded over the term of the loan using the effective interest method, or on a straight line basis when it approximates the effective interest method. Income accrual is generally suspended and loans are placed on non-accrual status on the earlier of the date at which payment has become 90 days past due or when full and timely collection of interest and principal is considered not probable. The Company may return a loan to accrual status when repayment of principal and interest is reasonably assured under the terms of the underlying loan agreement. As of September 30, 2018 , the Company did not hold any loans placed on non-accrual status. Quarterly, the Company assesses the risk factors of each loan classified as held-for-investment and assigns a risk rating based on a variety of factors, including, without limitation, debt-service coverage ratios ("DSCR"), loan-to-value ratio ("LTV"), property type, geographic and local market dynamics, physical condition, leasing and tenant profile, adherence to business plan and exit plan, maturity default risk and project sponsorship. Based on a 5-point scale, our loans are rated "1" through "5", from least risk to greatest risk, respectively, which ratings are described as follows: 1. Very Low Risk: exceeds expectations, outperforming underwriting 2. Low Risk: meeting expectations 3. Moderate Risk: a loss unlikely due to value and other indicators 4. High Risk: potential risk of default, a loss may occur in the event of default 5. Default Risk: imminent risk of default, a loss is likely in the event of default The Company evaluates each loan classified as held-for-investment which has High Risk or above rating for impairment on a quarterly basis. Impairment occurs when the Company determines that the facts and circumstances of the loan deem it probable that the Company will not be able to collect all amounts due in accordance with the contractual terms of the loan. If a loan is considered to be impaired, an allowance is recorded to reduce the carrying value of the loan through a charge to the provision for loan losses. Impairment of these loans, which are collateral dependent, is measured by comparing the estimated fair value of the underlying collateral, less costs to sell, to the book value of the respective loan. These valuations require significant judgments, which include assumptions regarding capitalization rates, leasing, creditworthiness of major tenants, occupancy rates, availability of financing, exit plan, actions of other lenders, and other factors deemed necessary by the Manager. Actual losses, if any, could ultimately differ from estimated losses. |
Multi-Family and Residential Mortgage Loans Held in Securitization Trusts | Multi-Family and Residential Mortgage Loans Held in Securitization Trusts Multi-family and residential mortgage loans held in consolidated securitization trusts are comprised of multi-family mortgage loans held in the FREMF 2012-KF01Trust as of September 30, 2018 . Based on a number of factors, the Company determined that it was the primary beneficiary of the VIE underlying the trust, met the criteria for consolidation and, accordingly, has consolidated the trust, including its assets, liabilities, income and expenses in its financial statements. The Company has elected the fair value option on each of the assets and liabilities held within the trusts. See Note 3 - Fair Value Measurement below for additional detail. The Company previously consolidated an additional Multi-Family MBS securitization trust, and one residential mortgage loan securitization trust, but following the sale of the subordinated securities in each trust on May 18, 2018 and June 18, 2018, respectively, the Company determined that it was no longer the primary beneficiary of either trust as of that date , and accordingly no longer consolidates either trust as of that date. Interest income on multi-family mortgage loans held in securitization trusts is recognized at the loan coupon rate. Interest income recognition is suspended when mortgage loans are placed on non-accrual status. The accrual of interest on loans is discontinued when, in management’s opinion, the interest is considered non-collectible, and in all cases when payment becomes greater than 90 days past due. Loans return to accrual status when principal and interest become current and are anticipated to be fully collectible. |
Mortgage Servicing Rights and Excess Servicing Rights, at Fair Value | Mortgage Servicing Rights and Excess Servicing Rights, at Fair Value Mortgage servicing rights (“MSRs”) are associated with residential mortgage loans that the Company has historically purchased and subsequently sold or securitized. MSRs are held and managed at the Company’s TRS. As the owner of MSRs, the Company is entitled to receive a portion of the interest payments from the associated residential mortgage loan, and is obligated to service, directly or through a subservicer, the associated loan. MSRs are reported at fair value as a result of a fair value option election. See Note 3 - Fair Value Measurement below for additional detail. Residential mortgage loans for which the Company owns the MSRs are directly serviced by one or more sub-servicers retained by the Company, since the Company does not directly service any residential mortgage loans. MSR income is recognized at the contractually agreed rate, net of the costs of sub-servicers retained by the Company. If a sub-servicer with which the Company contracts were to default, an evaluation of MSR assets for impairment would be undertaken at that time. To the extent that the Company determines it is the primary beneficiary of a residential mortgage loan securitization trust into which it has sold loans, any associated MSRs are eliminated on the consolidation of the trust. The trust is contractually obligated to pay a portion of the interest payments from the associated residential mortgage loans for the direct servicing of the loans, and after deduction of sub-servicing fees payable to contracted sub-servicers, the net amount, excess servicing rights, represents a liability of the trust. See Note 3 - Fair Value Measurement below for additional detail. |
Non-Agency RMBS 10s, at Fair Value | Non-Agency RMBS IOs, at Fair Value Non-Agency RMBS IOs that the Company previously owned are associated with residential mortgage loan securitizations that the Company had previously sponsored and are reported at fair value as a result of a fair value option election. See Note 3 - Fair Value Measurements for details on fair value measurement. Interest income on IOs was recognized at the contractually agreed rate, and changes in fair value were recognized in the Company’s condensed consolidated statement of operations. |
Repurchase Agreements | Repurchase Agreements The Company previously financed the acquisition of certain of its mortgage-backed securities through the use of repurchase agreements. The repurchase agreements are generally short-term debt, which expire within one year. Borrowings under repurchase agreements generally bear interest rates at a specified margin over LIBOR and are generally uncommitted. In accordance with ASC 860 “Transfers and Servicing” the Company accounts for the repurchase agreements as collateralized financing transactions and they are carried at their contractual amounts, as specified in the respective agreements. The contractual amounts approximate fair value due to their short-term nature. |
Collateralized Loan Obligations | Collateralized Loan Obligations Collateralized loan obligations represent third-party liabilities of Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. (the "CLOs"). The CLOs are VIEs of which the Company has determined it is the primary beneficiary and accordingly they are consolidated in the Company's financial statements, excluding liabilities of the CLOs acquired by the Company that are eliminated on consolidation. The third-party obligations of the CLOs do not have any recourse to the Company as the consolidator of the CLOs. Collateralized loan obligations are carried at their outstanding unpaid principal balances, net of any unamortized discounts or deferred financing costs. Any premiums and discounts or deferred financing costs associated with these liabilities are amortized to interest expense using the effective interest method over the expected average life of the related obligations, or on a straight line basis when it approximates the effective interest method. |
Multi-Family and Residential Securitized Debt Obligations | Multi-Family and Residential Securitized Debt Obligations Multi-family and residential securitized debt obligations represent third-party liabilities of the FREMF 2012-KF01 Trust and excludes liabilities of the trust acquired by the Company that are eliminated on consolidation. The third-party obligations of each trust do not have any recourse to the Company as the consolidator of each trust. |
Backstop Guarantees | Backstop Guarantees The Company, through FOAC and in return for fees, provides seller eligibility and backstop guarantee services in respect of residential mortgage loans that are traded through one or more loan exchanges operated by MAXEX LLC (“MAXEX”). On June 27, 2018, FOAC entered into an amendment with MAXEX pursuant to which, amongst other things, FOAC's obligations to provide such seller eligibility and backstop guarantee services will terminate at 11:59 p.m. (Eastern Standard Time) on December 31, 2018 or sooner, at MAXEX's option. See Note 14 and Note 15 for additional information regarding MAXEX. To the extent that a loan seller approved by FOAC fails to honor its obligations to repurchase one or more loans based on an arbitration finding that such seller has breached its representations and warranties, FOAC provides a backstop guarantee of the repurchase obligation. The Company has evaluated its backstop guarantees pursuant to ASC 460, Guarantees, and has determined them to be performance guarantees, for which ASC 460 contains initial recognition and measurement requirements, and related disclosure requirements. FOAC is obligated in two respects: (i) a noncontingent liability, which represents FOAC's obligation to stand ready to perform under the terms of the guarantee in the event that the specified triggering event(s) occur; and (ii) the contingent liability, which represents FOAC’s obligation to make future payments if those triggering events occur. FOAC recognizes the noncontingent liability at the inception of the guarantee at the fair value, which is the fee received or receivable, and is recorded on the Company’s consolidated balance sheet as a liability in the line item “Deferred income.” The Company amortizes these fees into income on a straight-line basis over five years , based on an assumed constant prepayment rate of 15% for residential mortgage loans and other observable data. The Company’s contingent liability is accounted for pursuant to ASC 450, Contingencies, pursuant to which the contingent liability must be recognized when its payment becomes probable and reasonably estimable. |
Common Stock | Common Stock At September 30, 2018 , and December 31, 2017 , the Company was authorized to issue up to 450,000,000 shares of common stock, par value $0.01 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s Board of Directors. |
Stock Repurchase Program | Stock Repurchase Program On December 15, 2015, the Company’s Board of Directors authorized a stock repurchase program (“Repurchase Program”), to repurchase up to $10 million of the Company’s outstanding common stock. Subject to applicable securities laws, repurchase of common stock under the Repurchase Program may be made at times and in amounts as the Company deems appropriate, using available cash resources. Shares of common stock repurchased by the Company under the Repurchase Program, if any, will be canceled and, until reissued by the Company, will be deemed to be authorized but unissued shares of common stock. The Repurchase Program may be suspended or discontinued by the Company at any time and without prior notice. |
Preferred Stock | Preferred Stock At September 30, 2018 , and December 31, 2017 , the Company was authorized to issue up to 50,000,000 shares of preferred stock, par value $0.01 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s Board. |
Income Taxes | Income Taxes The Company has elected to be taxed as a REIT under the Code for U.S. federal income tax purposes, commencing with the Company’s short taxable period ended December 31, 2012. A REIT is generally taxable as a U.S. C-Corporation; however, so long as the Company qualifies as a REIT it is entitled to a special deduction for dividends paid to shareholders not otherwise available to corporations. Accordingly, the Company generally will not be subject to U.S. federal income tax to the extent its distributions to stockholders equals, or exceeds, its REIT taxable income for the year. In addition, the Company must continue to meet certain REIT qualification requirements with respect to distributions, as well as certain asset, income and share ownership tests, in accordance with Sections 856 through 860 of the Code, as summarized below. In addition, the TRS is maintained to perform certain services and earn income for the Company that would potentially disqualify the Company from qualifying as a REIT. To maintain its qualification as a REIT, the Company must meet certain requirements (including but not limited to: (i) distribute at least 90% of its REIT taxable income to its stockholders; (ii) invest at least 75% of its assets in REIT qualifying assets, with additional restrictions with respect to asset concentration risk; and (iii) earn at least 95% of its gross income from qualifying sources of income, including at least 75% from qualifying real estate and real estate related sources. Regardless of the REIT election, the Company may also be subject to certain state, local and franchise taxes. Under certain circumstances, federal income and excise taxes may be due on its undistributed taxable income. If the Company were to fail to meet these requirements, it would be subject to U.S. federal income tax as a U.S. C-Corporation, which could have a material adverse impact on its results of operations and amounts available for distributions to its stockholders. The Company believes it has met, and will continue to meet, all criteria required to maintain the Company's REIT qualification for the applicable periods, but there can be no assurance that these criteria will continue to be met in subsequent periods. The Company assesses its tax positions for all open tax years and determines whether the Company has any material unrecognized liabilities in accordance with ASC 740, Income Taxes. The Company records these liabilities to the extent the Company deems them more likely than not to be incurred. The Company's accounting policy with respect to interest and penalties is to classify these amounts as other interest expense. As further described in Note 20, the Company declared and paid in the fourth quarter of 2016 a deficiency dividend relating to a determination of an inability to offset certain net gains on hedging transactions in 2013 against net capital losses on the sale of certain mortgage-backed securities. In connection with this declaration, during the first quarter of 2017, the Company paid an amount of $2.01 million for interest charges to the IRS. The Company previously provisioned $1.86 million in the third quarter of 2016 in the Company's condensed consolidated balance sheets in the line item "Other accounts payable and accrued expenses"; the remaining balance of $0.15 million was expensed in the first quarter of 2017, which is included in "Other interest expense" in the Company's condensed consolidated statements of operations. The first quarter 2017 payment of $2.01 million is included in "cash paid for interest" in the Company's condensed consolidated statements of cash flows. The Tax Cuts and Jobs Act was enacted in December 2017 and is generally effective for tax years beginning after 2017. This legislation has had no material adverse effect on the Company's business. Certain activities of the Company are conducted through a TRS and therefore are taxed as a standalone U.S. C-Corporation. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The TRS is not subject to a distribution requirement with respect to its REIT owner. The TRS may retain earnings annually, resulting in an increase in the consolidated book equity of the Company and without a corresponding distribution requirement by the REIT. If the TRS generates net income, and declares dividends to the Company, such dividends will be included in its taxable income and necessitate a distribution to its stockholders in accordance with the REIT distribution requirements. |
Earnings per Share | Earnings per Share The Company calculates basic and diluted earnings per share by dividing net income attributable to common stockholders for the period by the weighted-average shares of the Company’s common stock outstanding for that period. Diluted earnings per share takes into account the effect of dilutive instruments, such as warrants, stock options, and unvested restricted stock, but use the average share price for the period in determining the number of incremental shares that are to be added to the weighted-average number of shares outstanding. See Note 18 for details of the computation of basic and diluted earnings per share. |
Stock-Based Compensation | Stock-Based Compensation The Company is required to recognize compensation costs relating to stock-based payment transactions in the financial statements. The Company accounts for share-based compensation issued to its Manager and non-management directors using the fair-value based methodology prescribed by ASC 505, Equity (“ASC 505”), or ASC 718, Share-Based Payment (“ASC 718”), as appropriate. Compensation cost related to restricted common stock issued to the Manager is initially measured at estimated fair value at the grant date, and is remeasured on subsequent dates to the extent the awards are unvested. Additionally, compensation cost related to restricted common stock issued to the non-management directors is measured at its estimated fair value at the grant date and amortized and expensed over the vesting period. See Note 14 for details of stock-based awards issuable under the Manager Equity Plan. |
Comprehensive Income (Loss) Attributable to Common Stockholders | Comprehensive Income (Loss) Attributable to Common Stockholders Comprehensive income (loss) is comprised of net income (loss), as presented in the consolidated statement of comprehensive income (loss), adjusted for changes in unrealized gain or loss on AFS securities (excluding Non-Agency RMBS IOs), reclassification adjustments for net gain (loss) and other-than-temporary impairments included in net income (loss) and dividends paid to preferred stockholders. |
Recently Issued and/or Adopted Accounting Standards | Recently Issued and/or Adopted Accounting Standards Credit Losses In June 2016, the FASB issued ASU 2016-13 which is a comprehensive amendment of credit losses on financial instruments. Currently GAAP requires an “incurred loss” methodology for recognizing credit losses that delays recognition until it is probable a loss has been incurred. The standard’s core principle is that an entity replaces the “incurred loss” impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For public business entities that are SEC filers, the amendment in this update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company continues to assess the impact of this guidance. Fair Value Measurement In August 2018, the FASB issued ASU 2018-13, which amends ASC topic 820, Fair Value Measurement, to reduce the disclosure requirements for fair value measurements. The amendments of ASU 2018-13 remove the requirements to disclose transfers between Levels 1 and 2 of the fair value hierarchy, the policy for the timing of transfers between levels of the fair value hierarchy and the valuation process for Level 3 fair value measurements. ASU 2018-13 is effective for all entities for fiscal years and interim periods within those fiscal years beginning after December 15, 2019. Early adoption is permitted upon issuance of the ASU. The Company is currently evaluating the impact of ASU 2018-13 will have on its consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Reconciliation of Cash, Cash Equivalents and Restricted Cash | The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same amounts shown in the statements of cash flows. September 30, 2018 December 31, 2017 Cash and cash equivalents $ 9,912,051 $ 34,347,339 Repurchase counterparties as restricted collateral — 11,275,263 Restricted cash CRE 2017-FL1, Ltd. 41,864,739 — Restricted cash CRE 2018-FL2, Ltd. $ 35,829,526 $ — Total cash, cash equivalents and restricted cash $ 87,606,316 $ 45,622,602 |
AVAILABLE-FOR-SALE SECURITIES (
AVAILABLE-FOR-SALE SECURITIES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
AFS Investment Securities, by Collateral Type | The following table presents the Company’s AFS investment securities by collateral type at fair value as of December 31, 2017 . As of September 30, 2018 , the Company no longer held any AFS securities: December 31, 2017 Available-for-sale securities: Agency Federal Home Loan Mortgage Corporation $ 530,640,091 Federal National Mortgage Association 754,443,557 Multi-Family 5,742,000 Total available-for-sale securities $ 1,290,825,648 |
Amortized Cost and Fair Value of the AFS Investment Securities, by Collateral Type | The following table presents the amortized cost and fair value of the Company’s AFS investment securities by collateral type as of December 31, 2017 . As of September 30, 2018 , the Company no longer held any AFS securities. December 31, 2017 Agency Multi - Family Total Face Value $ 1,274,329,317 $ 7,500,000 $ 1,281,829,317 Unamortized premium 23,818,687 — 23,818,687 Unamortized discount (491,020 ) (1,713,542 ) (2,204,562 ) Amortized Cost 1,297,656,984 5,786,458 1,303,443,442 Gross unrealized gain 751,458 — 751,458 Gross unrealized (loss) (13,324,794 ) (44,458 ) (13,369,252 ) Fair Value $ 1,285,083,648 $ 5,742,000 $ 1,290,825,648 |
AFS Securities Not Deemed to be Other Than Temporarily Impaired | The following table presents the components comprising the carrying value of AFS securities not deemed to be other than temporarily impaired by length of time the securities had an unrealized loss position as of December 31, 2017 . At September 30, 2018 , the Company did not hold any AFS securities. At December 31, 2017 , the Company held 59 AFS securities, of which 49 were in an unrealized loss position for less than twelve consecutive months and five were in an unrealized loss position for more than twelve months: Less than 12 months Greater than 12 months Total Estimated Fair Value Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses December 31, 2017 $ 1,084,010,586 $ (11,135,736 ) $ 95,024,791 $ (2,233,516 ) $ 1,179,035,377 $ (13,369,252 ) |
Summary of Net Realized Gain (Loss) From the Sale of AFS Securities | The following tables present a summary of the Company’s net realized gain (loss) from the sale of AFS securities for the three and nine months ended September 30, 2018 , and September 30, 2017 : Three Months Ended Three Months Ended AFS securities sold, at cost $ — $ 421,186,153 Proceeds from AFS securities sold $ — $ 416,037,708 Net realized gain (loss) on sale of AFS securities $ — $ (5,148,445 ) Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 AFS securities sold, at cost $ 1,260,655,162 $ 483,621,259 Proceeds from AFS securities sold $ 1,227,314,578 $ 469,004,262 Net realized gain (loss) on sale of AFS securities $ (33,340,584 ) $ (14,616,997 ) |
Fair Value of AFS Investment Securities, by Rate Type | The following table presents the fair value of AFS investment securities by rate type as of December 31, 2017 . As of September 30, 2018 , the Company no longer held any AFS securities: December 31, 2017 Agency Multi- Family Total Adjustable rate $ 1,284,237,670 $ — $ 1,284,237,670 Fixed rate 845,978 5,742,000 6,587,978 Total $ 1,285,083,648 $ 5,742,000 $ 1,290,825,648 |
Fair Value of AFS Investment Securities, by Maturity Date | The following table presents the fair value of AFS investment securities by maturity date as of December 31, 2017 . As of September 30, 2018 , the Company no longer held any AFS securities: December 31, 2017 Greater than or equal to one year and less than five years $ 1,187,909,353 Greater than or equal to five years 102,916,295 Total $ 1,290,825,648 |
Changes of the Unamortized Net Discount and Designated Credit Reserves on the MBS | The following tables present the changes for the nine months ended September 30, 2018 and the year ended December 31, 2017 of the unamortized net discount and designated credit reserves on the Company’s AFS securities: September 30, 2018 Designated credit reserve Unamortized net discount Total Beginning Balance as of January 1, 2018 $ — $ (2,204,562 ) $ (2,204,562 ) Dispositions — 2,042,842 2,042,842 Accretion of net discount — 161,720 161,720 Ending Balance at September 30, 2018 $ — $ — $ — December 31, 2017 Designated credit reserve Unamortized net discount Total Beginning Balance as of January 1, 2017 $ (1,929,833 ) $ (27,841,262 ) $ (29,771,095 ) Dispositions 1,929,833 22,685,756 24,615,589 Accretion of net discount — 2,950,944 2,950,944 Ending Balance at December 31, 2017 $ — $ (2,204,562 ) $ (2,204,562 ) |
Components of Interest Income on AFS Securities | The following tables present components of interest income on the Company’s AFS securities for the three and nine months ended September 30, 2018 and September 30, 2017 : Three Months Ended September 30, 2018 Three Months Ended September 30, 2017 Coupon interest Net (premium amortization)/ discount accretion Interest income Coupon interest Net (premium amortization)/ discount accretion Interest income Agency $ — $ — $ — $ 7,870,458 $ (514,600 ) $ 7,355,858 Non-Agency — — — — — — Multi-Family — — — — 471,423 471,423 Total $ — $ — $ — $ 7,870,458 $ (43,177 ) $ 7,827,281 Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 Coupon Net (premium Interest Coupon Net (premium Interest Agency $ 12,152,397 $ (1,435,534 ) $ 10,716,863 $ 19,613,173 $ (263,230 ) $ 19,349,943 Non-Agency — — — 42,254 9,946 52,200 Multi-Family — 32,103 32,103 — 1,906,439 1,906,439 Total $ 12,152,397 $ (1,403,431 ) $ 10,748,966 $ 19,655,427 $ 1,653,155 $ 21,308,582 |
COMMERCIAL MORTGAGE LOANS HEL_2
COMMERCIAL MORTGAGE LOANS HELD-FOR-INVESTMENT (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Receivables [Abstract] | |
Summary of Commercial Mortgage Loans | The table below sets forth additional information relating to the Company's portfolio as of September 30, 2018 : Loan # Investment Origination Date Total Loan Commitment Outstanding Face Amount Location Property Type Coupon Max Remaining Term (Years) LTV (1) 1 Senior Loan 12-Jun-17 4,675,000 4,675,000 Winston-Salem, NC Multi-Family 1mL + 6.0% 1.8 83.5 % 2 Senior Loan 30-Jan-17 3,743,000 3,743,000 Tyler, TX Multi-Family 1mL + 5.5% 1.4 66.8 % 3 Senior Loan 5-Nov-15 6,035,000 6,035,000 Pascagoula, MS Multi-Family 1mL + 4.5% 2.2 72.9 % 4 Senior Loan 15-Jan-16 13,500,000 12,226,811 Akron, OH Mixed Use 1mL + 5.3% 2.4 56.7 % 5 Senior Loan 11-Oct-17 6,370,000 6,370,000 New Orleans, LA Multi-Family 1mL + 4.1% 4.2 75.5 % 6 Senior Loan 13-Oct-17 14,715,000 14,715,000 Hattiesburg, MS Multi-Family 1mL + 4.8% 4.2 81.5 % 7 Senior Loan 9-Jan-18 10,317,000 9,295,085 North Highlands, CA Multi-Family 1mL + 4.0% 4.4 79.0 % 8 Senior Loan 16-Jun-17 5,810,000 5,653,628 Dallas, TX Multi-Family 1mL + 4.8% 3.8 79.3 % 9 Senior Loan 15-Nov-17 30,505,000 30,505,000 Phoenix, AZ Multi-Family 1mL + 3.8% 4.3 75.5 % 10 Senior Loan 30-Nov-16 5,000,000 4,618,553 Stafford, TX Office 1mL + 5.5% 3.3 56.4 % 11 Senior Loan 16-Aug-17 24,000,000 24,000,000 League City, TX Multi-Family 1mL + 4.5% 2.0 76.4 % 12 Senior Loan 29-Sep-17 12,364,000 11,720,232 Austell, GA Multi-Family 1mL + 4.2% 4.1 80.4 % 13 Senior Loan 4-Nov-16 10,250,000 10,250,000 Greensboro, NC Multi-Family 1mL + 5.3% 1.2 88.7 % 14 Senior Loan 6-Sep-17 15,250,000 15,250,000 Seattle, WA Multi-Family 1mL + 4.5% 1.0 54.1 % 15 Senior Loan 9-May-17 16,500,000 15,050,568 Austin, TX Retail 1mL + 7.3% 3.8 70.8 % 16 Senior Loan 29-Jun-16 23,145,934 23,145,934 Various, TX Multi-Family 1mL + 5.5% 0.8 76.0 % 17 Senior Loan 1-Dec-17 19,110,000 19,110,000 Tuscon, AZ Multi-Family 1mL + 4.5% 4.3 81.0 % 18 Senior Loan 19-Apr-17 11,200,000 8,824,763 Austin, TX Retail 1mL + 5.2% 3.7 32.2 % 19 Senior Loan 8-Aug-18 35,000,000 31,678,000 Dallas, TX Multi-Family 1mL + 3.7% 4.9 81.2 % 20 Senior Loan 25-Oct-17 6,360,000 6,360,000 Tulsa, OK Multi-Family 1mL + 4.5% 4.2 76.6 % 21 Senior Loan 27-Dec-17 7,600,000 7,600,000 Philadelphia, PA Multi-Family 1mL + 4.1% 4.3 79.8 % 22 Senior Loan 9-Jul-18 33,830,000 28,476,000 Baltimore, MD Multi-Family 1mL + 3.1% 4.9 77.6 % 23 Senior Loan 5-Jun-18 51,971,621 31,690,000 Palatine, IL Multi-Family 1mL + 4.3% 4.8 70.9 % 24 Senior Loan 18-May-18 28,000,000 24,521,093 Woodridge, IL Multi-Family 1mL + 3.8% 4.8 77.8 % 25 Senior Loan 29-Nov-17 22,500,000 22,500,000 Richmond, TX Multi-Family 1mL + 3.9% 2.3 73.5 % 26 Senior Loan 31-May-18 24,700,000 19,430,000 Omaha, NE Multi-Family 1mL + 3.7% 4.8 77.3 % 27 Senior Loan 28-Jun-18 17,000,000 14,800,000 Greenville, SC Multi-Family 1mL + 3.9% 4.8 76.3 % 28 Senior Loan 26-Mar-18 19,235,000 13,600,000 Rochelle Park, NJ Office 1mL + 4.0% 4.6 76.8 % 29 Senior Loan 1-Feb-18 14,320,000 12,920,000 Fresno, CA Multi-Family 1mL + 3.9% 4.4 82.3 % 30 Senior Loan 23-Jul-18 16,200,000 12,075,000 Chicago, IL Office 1mL + 3.8% 4.9 72.7 % 31 Senior Loan 24-May-18 12,720,000 11,070,000 Austin, TX Multi-Family 1mL + 3.6% 4.8 80.2 % 32 Senior Loan 25-May-18 11,000,000 9,440,000 Phoenix, AZ Multi-Family 1mL + 3.9% 4.8 69.4 % 33 Senior Loan 12-Mar-18 9,112,000 9,112,000 Waco, TX Student Housing 1mL + 4.8% 4.6 72.9 % 34 Senior Loan 15-Feb-18 10,500,000 8,262,000 Atlanta, GA Multi-Family 1mL + 4.3% 4.5 80.2 % 35 Senior Loan 23-Feb-18 8,070,000 8,070,000 Little Rock, AR Multi-Family 1mL + 4.3% 4.5 86.8 % 36 Senior Loan 4-Apr-18 7,332,000 6,874,000 Little Rock, AR Office 1mL + 4.9% 4.6 72.4 % 37 Senior Loan 9-Nov-17 6,647,000 5,547,000 Las Vegas, NV Self-Storage 1mL + 4.3% 4.3 86.0 % 38 Senior Loan 22-Jun-18 6,200,000 5,322,870 Chicago, IL Multi-Family 1mL + 4.1% 4.8 80.5 % 39 Senior Loan 29-Jun-18 4,525,000 4,325,000 Washington, D.C. Mixed Use 1mL + 4.7% 4.8 73.3 % 40 Senior Loan 30-Apr-18 4,080,000 3,580,000 Wichita, KS Multi-Family 1mL + 5.0% 4.7 69.0 % 41 Senior Loan 30-Aug-18 9,034,000 8,000,000 Blacksburg, VA Student Housing 1mL + 3.9% 5.0 72.7 % 42 Senior Loan 7-Aug-18 9,000,000 7,645,000 Birmingham, AL Multi-Family 1mL + 3.5% 5.0 78.0 % 43 Senior Loan 2-Aug-18 10,000,000 6,500,000 Goldsboro, NC Retail 1mL + 4.0% 4.9 56.5 % The following table summarizes certain characteristics of the Company's investments in commercial mortgage loans as of September 30, 2018 ; the Company had no such investments as of December 31, 2017: Weighted Average Loan Type Unpaid Principal Balance Carrying Value Loan Count Floating Rate Loan % Coupon (1) Life (Years) (2) September 30, 2018 Loans held-for-investment Senior secured loans (3) $ 544,586,537 $ 544,586,537 43 100.0 % 6.5 % 3.9 544,586,537 544,586,537 43 100.0 % 6.5 % 3.9 (1) Average weighted by unpaid principal balance of loan. Weighted average coupon assumes applicable one-month LIBOR rate as of September 30, 2018 (2) The weighted average life of each loan is based on the expected timing of the receipt of contractual cash flows assuming all extension options are exercised by the borrower (3) As of September 30, 2018 , $540,531,960 of the outstanding senior secured loans are held in VIEs and $4,054,577 of the outstanding senior secured loans are loan participations Activity: For the nine months ended September 30, 2018 , the loan portfolio activity was as follows: Commercial Mortgage Loans Held-for-Investment Balance at December 31, 2017 $ — Purchases, net 669,080,048 Proceeds from principal repayments (124,493,511 ) Balance at September 30, 2018 $ 544,586,537 |
Summary of Loan Risk Ratings | The following table presents the principal balance and net book value of the loan portfolio based on the Company's internal risk ratings: September 30, 2018 Risk Rating Number of Loans Unpaid Principal Balance Net Carrying Value 1 — $ — — 2 9 105,814,995 105,814,995 3 30 393,620,797 393,620,797 4 4 45,150,745 45,150,745 5 — — — 43 $ 544,586,537 544,586,537 |
Geographic Concentrations | The following tables present the geographic and property types of collateral underlying the Company's commercial mortgage loans as a percentage of the loans' carrying value: Loans Held-for-Investment September 30, 2018 September 30, 2018 Geography Collateral Property Type Southwest 41.3 % Multi-Family 80.4 % South 20.9 Office 6.8 Midwest 20.0 Retail 5.6 Mid-Atlantic 9.9 Student Housing 3.2 West 7.9 Mixed-Use 3.0 Total 100.0 % Self-Storage 1.0 Total 100.0 % The geographic concentrations of credit risk exceeding 5% of the total loan balances related to the FREMF trusts as of September 30, 2018 and December 31, 2017 are as follows: September 30, 2018 December 31, 2017 Texas 71.4 % New York 16.5 % Connecticut 28.6 % Texas 14.2 % Washington 8.7 % Colorado 7.8 % Georgia 5.7 % |
THE FREMF TRUSTS (Tables)
THE FREMF TRUSTS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Condensed Consolidated Balance Sheets of the FREMF trusts | The condensed consolidated balance sheets of the FREMF trusts at September 30, 2018 and December 31, 2017 are set out below: Balance Sheets September 30, 2018 December 31, 2017 Assets Multi-family mortgage loans held in securitization trusts $ 24,787,988 $ 1,130,874,274 Receivables 110,216 4,377,606 Total assets $ 24,898,204 $ 1,135,251,880 Liabilities and Equity Multi-family securitized debt obligations $ 19,462,838 $ 1,109,204,743 Payables 103,435 4,352,039 Total liabilities $ 19,566,273 $ 1,113,556,782 Equity 5,331,931 21,695,098 Total liabilities and equity $ 24,898,204 $ 1,135,251,880 |
Condensed Consolidated Statements of Operations of the FREMF Trusts | The condensed consolidated statements of operations of the FREMF trusts for the three and nine months ended September 30, 2018 and September 30, 2017 are as follows: Statements of Operations Three Months Ended Three Months Ended Interest income $ 336,824 $ 13,473,913 Interest expense 237,980 12,766,808 Net interest income $ 98,844 $ 707,105 General and administrative fees (56,186 ) (634,222 ) Unrealized gain (loss) on multi-family loans held in securitization trusts 957,549 694,730 Net income (loss) $ 1,000,207 $ 767,613 Statements of Operations Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 Interest income $ 20,540,942 $ 40,992,241 Interest expense 19,404,532 38,866,888 Net interest income $ 1,136,410 $ 2,125,353 General and administrative fees (934,496 ) (1,922,771 ) Unrealized gain (loss) on multi-family loans held in securitization trusts (5,861,373 ) 2,797,566 Net income (loss) $ (5,659,459 ) $ 3,000,148 |
Geographic Concentrations | The following tables present the geographic and property types of collateral underlying the Company's commercial mortgage loans as a percentage of the loans' carrying value: Loans Held-for-Investment September 30, 2018 September 30, 2018 Geography Collateral Property Type Southwest 41.3 % Multi-Family 80.4 % South 20.9 Office 6.8 Midwest 20.0 Retail 5.6 Mid-Atlantic 9.9 Student Housing 3.2 West 7.9 Mixed-Use 3.0 Total 100.0 % Self-Storage 1.0 Total 100.0 % The geographic concentrations of credit risk exceeding 5% of the total loan balances related to the FREMF trusts as of September 30, 2018 and December 31, 2017 are as follows: September 30, 2018 December 31, 2017 Texas 71.4 % New York 16.5 % Connecticut 28.6 % Texas 14.2 % Washington 8.7 % Colorado 7.8 % Georgia 5.7 % |
RESIDENTIAL MORTGAGE LOAN SEC_2
RESIDENTIAL MORTGAGE LOAN SECURITIZATION TRUSTS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Variable Interest Entity [Line Items] | |
Condensed Consolidated Balance Sheets | The condensed consolidated balance sheets of the FREMF trusts at September 30, 2018 and December 31, 2017 are set out below: Balance Sheets September 30, 2018 December 31, 2017 Assets Multi-family mortgage loans held in securitization trusts $ 24,787,988 $ 1,130,874,274 Receivables 110,216 4,377,606 Total assets $ 24,898,204 $ 1,135,251,880 Liabilities and Equity Multi-family securitized debt obligations $ 19,462,838 $ 1,109,204,743 Payables 103,435 4,352,039 Total liabilities $ 19,566,273 $ 1,113,556,782 Equity 5,331,931 21,695,098 Total liabilities and equity $ 24,898,204 $ 1,135,251,880 |
Condensed Consolidated Statements of Operations | The condensed consolidated statements of operations of the FREMF trusts for the three and nine months ended September 30, 2018 and September 30, 2017 are as follows: Statements of Operations Three Months Ended Three Months Ended Interest income $ 336,824 $ 13,473,913 Interest expense 237,980 12,766,808 Net interest income $ 98,844 $ 707,105 General and administrative fees (56,186 ) (634,222 ) Unrealized gain (loss) on multi-family loans held in securitization trusts 957,549 694,730 Net income (loss) $ 1,000,207 $ 767,613 Statements of Operations Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 Interest income $ 20,540,942 $ 40,992,241 Interest expense 19,404,532 38,866,888 Net interest income $ 1,136,410 $ 2,125,353 General and administrative fees (934,496 ) (1,922,771 ) Unrealized gain (loss) on multi-family loans held in securitization trusts (5,861,373 ) 2,797,566 Net income (loss) $ (5,659,459 ) $ 3,000,148 |
Geographic Concentrations | The following tables present the geographic and property types of collateral underlying the Company's commercial mortgage loans as a percentage of the loans' carrying value: Loans Held-for-Investment September 30, 2018 September 30, 2018 Geography Collateral Property Type Southwest 41.3 % Multi-Family 80.4 % South 20.9 Office 6.8 Midwest 20.0 Retail 5.6 Mid-Atlantic 9.9 Student Housing 3.2 West 7.9 Mixed-Use 3.0 Total 100.0 % Self-Storage 1.0 Total 100.0 % The geographic concentrations of credit risk exceeding 5% of the total loan balances related to the FREMF trusts as of September 30, 2018 and December 31, 2017 are as follows: September 30, 2018 December 31, 2017 Texas 71.4 % New York 16.5 % Connecticut 28.6 % Texas 14.2 % Washington 8.7 % Colorado 7.8 % Georgia 5.7 % |
Residential mortgage loans | |
Variable Interest Entity [Line Items] | |
Condensed Consolidated Balance Sheets | The condensed consolidated balance sheet of the residential mortgage loan securitization trust at December 31, 2017 is set out below: Balance Sheets December 31, 2017 Assets Residential mortgage loans held in securitization trusts $ 119,756,455 Receivables 396,000 Total assets $ 120,152,455 Liabilities and Equity Residential securitized debt obligations $ 114,418,318 Payables 320,417 Total liabilities $ 114,738,735 Equity 5,413,720 Total liabilities and equity $ 120,152,455 |
Condensed Consolidated Statements of Operations | The condensed consolidated statements of operations of the residential mortgage loan securitization trusts for the three and nine months ended September 30, 2018 and September 30, 2017 are as follows: Statements of Operations Three Months Ended Three Months Ended Interest income $ — $ 1,249,966 Interest expense — 995,293 Net interest income $ — $ 254,673 General and administrative fees — (11,003 ) Unrealized gain (loss) on residential loans held in securitization trusts — (155,252 ) Net income (loss) $ — $ 88,418 Statements of Operations Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 Interest income $ 2,102,352 $ 3,903,924 Interest expense 1,685,971 3,100,616 Net interest income $ 416,381 $ 803,308 General and administrative fees (20,886 ) (34,227 ) Unrealized gain (loss) on residential loans held in securitization trusts 5,650,199 (773,674 ) Net income (loss) $ 6,045,694 $ (4,593 ) |
Geographic Concentrations | The geographic concentrations of credit risk exceeding 5% of the total loan balances related to the residential mortgage loan securitization trusts as of September 30, 2018 and December 31, 2017 are as follows: September 30, 2018 December 31, 2017 California N/A 37.0 % Washington N/A 15.3 % Massachusetts N/A 8.1 % Florida N/A 6.4 % |
USE OF SPECIAL PURPOSE ENTITI_2
USE OF SPECIAL PURPOSE ENTITIES AND VARIABLE INTEREST ENTITIES USE OF SPECIAL PURPOSE ENTITIES AND VARIABLE INTEREST ENTITIES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Variable Interest Entity [Line Items] | |
Condensed Consolidated Balance Sheets | The condensed consolidated balance sheets of the FREMF trusts at September 30, 2018 and December 31, 2017 are set out below: Balance Sheets September 30, 2018 December 31, 2017 Assets Multi-family mortgage loans held in securitization trusts $ 24,787,988 $ 1,130,874,274 Receivables 110,216 4,377,606 Total assets $ 24,898,204 $ 1,135,251,880 Liabilities and Equity Multi-family securitized debt obligations $ 19,462,838 $ 1,109,204,743 Payables 103,435 4,352,039 Total liabilities $ 19,566,273 $ 1,113,556,782 Equity 5,331,931 21,695,098 Total liabilities and equity $ 24,898,204 $ 1,135,251,880 |
Summary of Loan and Borrowing Characteristics | COMMERCIAL MORTGAGE LOANS HELD-FOR-INVESTMENT The following table summarizes certain characteristics of the Company's investments in commercial mortgage loans as of September 30, 2018 ; the Company had no such investments as of December 31, 2017: Weighted Average Loan Type Unpaid Principal Balance Carrying Value Loan Count Floating Rate Loan % Coupon (1) Life (Years) (2) September 30, 2018 Loans held-for-investment Senior secured loans (3) $ 544,586,537 $ 544,586,537 43 100.0 % 6.5 % 3.9 544,586,537 544,586,537 43 100.0 % 6.5 % 3.9 (1) Average weighted by unpaid principal balance of loan. Weighted average coupon assumes applicable one-month LIBOR rate as of September 30, 2018 (2) The weighted average life of each loan is based on the expected timing of the receipt of contractual cash flows assuming all extension options are exercised by the borrower (3) As of September 30, 2018 , $540,531,960 of the outstanding senior secured loans are held in VIEs and $4,054,577 of the outstanding senior secured loans are loan participations Activity: For the nine months ended September 30, 2018 , the loan portfolio activity was as follows: Commercial Mortgage Loans Held-for-Investment Balance at December 31, 2017 $ — Purchases, net 669,080,048 Proceeds from principal repayments (124,493,511 ) Balance at September 30, 2018 $ 544,586,537 Loan Risk Ratings: As further described in Note 2, the Company evaluates the commercial mortgage loan portfolio on a quarterly basis. In conjunction with the quarterly commercial mortgage loan portfolio review, the Company assesses the risk factors of each loan, and assigns a risk rating based on a variety of factors. Loans are rated "1" (very low risk) through "5" (default risk), which are described in Note 2. The following table presents the principal balance and net book value of the loan portfolio based on the Company's internal risk ratings: September 30, 2018 Risk Rating Number of Loans Unpaid Principal Balance Net Carrying Value 1 — $ — — 2 9 105,814,995 105,814,995 3 30 393,620,797 393,620,797 4 4 45,150,745 45,150,745 5 — — — 43 $ 544,586,537 544,586,537 As of September 30, 2018 , the average risk rating of the commercial mortgage loan portfolio was 2.9 (Moderate Risk), weighted by investment carrying value, with 91.7% of commercial loans held-for-investment rated 3 (Moderate Risk) or better by the Company's Manager. Concentration of Credit Risk: The following tables present the geographic and property types of collateral underlying the Company's commercial mortgage loans as a percentage of the loans' carrying value: Loans Held-for-Investment September 30, 2018 September 30, 2018 Geography Collateral Property Type Southwest 41.3 % Multi-Family 80.4 % South 20.9 Office 6.8 Midwest 20.0 Retail 5.6 Mid-Atlantic 9.9 Student Housing 3.2 West 7.9 Mixed-Use 3.0 Total 100.0 % Self-Storage 1.0 Total 100.0 % The table below sets forth additional information relating to the Company's portfolio as of September 30, 2018 : Loan # Investment Origination Date Total Loan Commitment Outstanding Face Amount Location Property Type Coupon Max Remaining Term (Years) LTV (1) 1 Senior Loan 12-Jun-17 4,675,000 4,675,000 Winston-Salem, NC Multi-Family 1mL + 6.0% 1.8 83.5 % 2 Senior Loan 30-Jan-17 3,743,000 3,743,000 Tyler, TX Multi-Family 1mL + 5.5% 1.4 66.8 % 3 Senior Loan 5-Nov-15 6,035,000 6,035,000 Pascagoula, MS Multi-Family 1mL + 4.5% 2.2 72.9 % 4 Senior Loan 15-Jan-16 13,500,000 12,226,811 Akron, OH Mixed Use 1mL + 5.3% 2.4 56.7 % 5 Senior Loan 11-Oct-17 6,370,000 6,370,000 New Orleans, LA Multi-Family 1mL + 4.1% 4.2 75.5 % 6 Senior Loan 13-Oct-17 14,715,000 14,715,000 Hattiesburg, MS Multi-Family 1mL + 4.8% 4.2 81.5 % 7 Senior Loan 9-Jan-18 10,317,000 9,295,085 North Highlands, CA Multi-Family 1mL + 4.0% 4.4 79.0 % 8 Senior Loan 16-Jun-17 5,810,000 5,653,628 Dallas, TX Multi-Family 1mL + 4.8% 3.8 79.3 % 9 Senior Loan 15-Nov-17 30,505,000 30,505,000 Phoenix, AZ Multi-Family 1mL + 3.8% 4.3 75.5 % 10 Senior Loan 30-Nov-16 5,000,000 4,618,553 Stafford, TX Office 1mL + 5.5% 3.3 56.4 % 11 Senior Loan 16-Aug-17 24,000,000 24,000,000 League City, TX Multi-Family 1mL + 4.5% 2.0 76.4 % 12 Senior Loan 29-Sep-17 12,364,000 11,720,232 Austell, GA Multi-Family 1mL + 4.2% 4.1 80.4 % 13 Senior Loan 4-Nov-16 10,250,000 10,250,000 Greensboro, NC Multi-Family 1mL + 5.3% 1.2 88.7 % 14 Senior Loan 6-Sep-17 15,250,000 15,250,000 Seattle, WA Multi-Family 1mL + 4.5% 1.0 54.1 % 15 Senior Loan 9-May-17 16,500,000 15,050,568 Austin, TX Retail 1mL + 7.3% 3.8 70.8 % 16 Senior Loan 29-Jun-16 23,145,934 23,145,934 Various, TX Multi-Family 1mL + 5.5% 0.8 76.0 % 17 Senior Loan 1-Dec-17 19,110,000 19,110,000 Tuscon, AZ Multi-Family 1mL + 4.5% 4.3 81.0 % 18 Senior Loan 19-Apr-17 11,200,000 8,824,763 Austin, TX Retail 1mL + 5.2% 3.7 32.2 % 19 Senior Loan 8-Aug-18 35,000,000 31,678,000 Dallas, TX Multi-Family 1mL + 3.7% 4.9 81.2 % 20 Senior Loan 25-Oct-17 6,360,000 6,360,000 Tulsa, OK Multi-Family 1mL + 4.5% 4.2 76.6 % 21 Senior Loan 27-Dec-17 7,600,000 7,600,000 Philadelphia, PA Multi-Family 1mL + 4.1% 4.3 79.8 % 22 Senior Loan 9-Jul-18 33,830,000 28,476,000 Baltimore, MD Multi-Family 1mL + 3.1% 4.9 77.6 % 23 Senior Loan 5-Jun-18 51,971,621 31,690,000 Palatine, IL Multi-Family 1mL + 4.3% 4.8 70.9 % 24 Senior Loan 18-May-18 28,000,000 24,521,093 Woodridge, IL Multi-Family 1mL + 3.8% 4.8 77.8 % 25 Senior Loan 29-Nov-17 22,500,000 22,500,000 Richmond, TX Multi-Family 1mL + 3.9% 2.3 73.5 % 26 Senior Loan 31-May-18 24,700,000 19,430,000 Omaha, NE Multi-Family 1mL + 3.7% 4.8 77.3 % 27 Senior Loan 28-Jun-18 17,000,000 14,800,000 Greenville, SC Multi-Family 1mL + 3.9% 4.8 76.3 % 28 Senior Loan 26-Mar-18 19,235,000 13,600,000 Rochelle Park, NJ Office 1mL + 4.0% 4.6 76.8 % 29 Senior Loan 1-Feb-18 14,320,000 12,920,000 Fresno, CA Multi-Family 1mL + 3.9% 4.4 82.3 % 30 Senior Loan 23-Jul-18 16,200,000 12,075,000 Chicago, IL Office 1mL + 3.8% 4.9 72.7 % 31 Senior Loan 24-May-18 12,720,000 11,070,000 Austin, TX Multi-Family 1mL + 3.6% 4.8 80.2 % 32 Senior Loan 25-May-18 11,000,000 9,440,000 Phoenix, AZ Multi-Family 1mL + 3.9% 4.8 69.4 % 33 Senior Loan 12-Mar-18 9,112,000 9,112,000 Waco, TX Student Housing 1mL + 4.8% 4.6 72.9 % 34 Senior Loan 15-Feb-18 10,500,000 8,262,000 Atlanta, GA Multi-Family 1mL + 4.3% 4.5 80.2 % 35 Senior Loan 23-Feb-18 8,070,000 8,070,000 Little Rock, AR Multi-Family 1mL + 4.3% 4.5 86.8 % 36 Senior Loan 4-Apr-18 7,332,000 6,874,000 Little Rock, AR Office 1mL + 4.9% 4.6 72.4 % 37 Senior Loan 9-Nov-17 6,647,000 5,547,000 Las Vegas, NV Self-Storage 1mL + 4.3% 4.3 86.0 % 38 Senior Loan 22-Jun-18 6,200,000 5,322,870 Chicago, IL Multi-Family 1mL + 4.1% 4.8 80.5 % 39 Senior Loan 29-Jun-18 4,525,000 4,325,000 Washington, D.C. Mixed Use 1mL + 4.7% 4.8 73.3 % 40 Senior Loan 30-Apr-18 4,080,000 3,580,000 Wichita, KS Multi-Family 1mL + 5.0% 4.7 69.0 % 41 Senior Loan 30-Aug-18 9,034,000 8,000,000 Blacksburg, VA Student Housing 1mL + 3.9% 5.0 72.7 % 42 Senior Loan 7-Aug-18 9,000,000 7,645,000 Birmingham, AL Multi-Family 1mL + 3.5% 5.0 78.0 % 43 Senior Loan 2-Aug-18 10,000,000 6,500,000 Goldsboro, NC Retail 1mL + 4.0% 4.9 56.5 % (1) LTV as of such date the loan was originated by a Hunt affiliate. LTV has not been updated for any subsequent draws or loan modifications and is not reflective of any changes in value which may have occurred subsequent to the origination date. |
Hunt CRE 2017-FL1, Ltd. | |
Variable Interest Entity [Line Items] | |
Condensed Consolidated Balance Sheets | The carrying values of the Company's total assets and liabilities related to Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. at September 30, 2018 included the following VIE assets and liabilities: ASSETS September 30, 2018 Cash, cash equivalents and restricted cash $ 77,694,265 Accrued interest receivable 2,403,506 Investment related receivable 16,242,900 Loans held for investment 540,531,960 Total Assets $ 636,872,631 LIABILITIES Accrued interest payable $ 750,625 Collateralized loan obligations (1) 503,487,121 Fees and expenses payable to Manager $ 1,816,338 Total Liabilities $ 506,054,084 (1) The stated maturity of the collateral loan obligations per the terms of the underlying collateralized loan obligation agreement is August 15, 2034 for Hunt CRE 2017-FL1, Ltd. and August 15, 2028 for Hunt CRE 2018-FL2, Ltd. |
Summary of Loan and Borrowing Characteristics | The following table presents certain loan and borrowing characteristics of Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd.: As of September 30, 2018 Collateral (loan investments) Debt (notes issued) Unpaid Principal Balance Carrying Value Face Value Carrying Value $ 540,531,960 $ 540,531,960 $ 510,181,000 $ 503,487,121 |
RESTRICTED CASH AND DUE TO BR_2
RESTRICTED CASH AND DUE TO BROKER (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Cash and Cash Equivalents [Abstract] | |
Restricted Cash and Due to Broker Balances | The following table presents the Company's restricted cash and due to broker balances as of September 30, 2018 and December 31, 2017 : September 30, 2018 December 31, 2017 Restricted cash balance held by: Broker counterparties for derivatives trading $ — $ (1,123,463 ) Repurchase counterparties as restricted collateral — 11,275,263 Hunt CRE 2017-FL1, Ltd. reinvestment principal proceeds $ 41,864,739 $ — Hunt CRE 2018-FL2, Ltd. reinvestment principal proceeds $ 35,829,526 $ — Total $ 77,694,265 $ 10,151,800 |
BORROWINGS (Tables)
BORROWINGS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Certain Characteristics of the Repurchase Agreements | The following table summarizes certain characteristics of the Company’s repurchase agreements at December 31, 2017 . The Company was not party to any repurchase agreements at September 30, 2018 : December 31, 2017 Amount outstanding Weighted average interest rate Market value of collateral held Agency $ 1,228,349,000 1.55 % $ 1,285,083,649 Non-Agency 2,555,000 3.38 % 4,399,779 Multi-Family 3,618,000 3.16 % 5,742,000 Total $ 1,234,522,000 1.56 % $ 1,295,225,428 |
Repurchase Agreements Remaining Maturities | At December 31, 2017 , the repurchase agreements had the following remaining maturities. The Company did not hold any repurchase agreements at September 30, 2018 : December 31, 2017 < or equal to 30 days $ 1,175,407,000 31 to 60 days 56,560,000 61 to 90 days 2,555,000 Total $ 1,234,522,000 |
Significant Counterparties of Repurchase Agreements | The following tables summarize certain characteristics of the Company’s repurchase agreements at December 31, 2017 . The Company did not hold any repurchase agreements at September 30, 2018 . December 31, 2017 Repurchase Agreement Counterparties Amount Outstanding Percent of total amount outstanding Weighted days to maturity Market Value of collateral held North America 939,438,000 76.10 % 13 985,672,703 Asia (1) 292,529,000 23.70 % 14 305,152,946 Europe (1) 2,555,000 0.20 % 78 4,399,779 Total $ 1,234,522,000 100.00 % 13 $ 1,295,225,428 (1) Counterparties domiciled in Europe and Asia, or their U.S. subsidiaries. |
DERIVATIVE INSTRUMENTS HEDGIN_2
DERIVATIVE INSTRUMENTS HEDGING AND NON-HEDGING ACTIVITIES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instrument Detail [Abstract] | |
Gross Fair Value and Notional Amount of Derivative Financial Instruments | The following table presents the gross fair value and notional amounts of the Company’s derivative financial instruments as of December 31, 2017 . The Company did not hold any derivative financial instruments at September 30, 2018 : December 31, 2017 Derivative Assets Derivative Liabilities Contracts Fair value Notional Contracts Fair value Notional Eurodollar Futures (Short positions) 14,355 $ 5,349,613 $ 14,355,000,000 — $ — $ — Total 14,355 $ 5,349,613 $ 14,355,000,000 — $ — $ — |
Offsetting Assets | The below tables provide a reconciliation of these assets and liabilities that were subject to Master Agreements or similar agreements and can be potentially offset on the Company’s condensed consolidated balance sheets as of December 31, 2017 . The Company did not hold any such assets or liabilities at September 30, 2018 : December 31, 2017 Gross amounts not offset in the Balance Sheet Description Gross amounts of recognized assets Gross amounts offset in the Balance Sheet Net amounts of assets presented in the Balance Sheet Financial instruments Cash collateral (Received)/ Pledged Net amount Futures (Short positions) $ 5,349,613 $ — $ 5,349,613 $ — $ (1,123,463 ) $ 4,226,150 Total $ 5,349,613 $ — $ 5,349,613 $ — $ (1,123,463 ) $ 4,226,150 December 31, 2017 Gross amounts not offset in the Balance Sheet Description Gross amounts of recognized liabilities Gross amounts offset in the Balance Sheet Net amounts of liabilities presented in the Balance Sheet Financial instruments Cash collateral (Received)/ Pledged Net Amount Repurchase agreements $ (1,234,522,000 ) $ — $ (1,234,522,000 ) $ 1,234,522,000 $ — $ — Total $ (1,234,522,000 ) $ — $ (1,234,522,000 ) $ 1,234,522,000 $ — $ — |
Offsetting Liabilities | The below tables provide a reconciliation of these assets and liabilities that were subject to Master Agreements or similar agreements and can be potentially offset on the Company’s condensed consolidated balance sheets as of December 31, 2017 . The Company did not hold any such assets or liabilities at September 30, 2018 : December 31, 2017 Gross amounts not offset in the Balance Sheet Description Gross amounts of recognized assets Gross amounts offset in the Balance Sheet Net amounts of assets presented in the Balance Sheet Financial instruments Cash collateral (Received)/ Pledged Net amount Futures (Short positions) $ 5,349,613 $ — $ 5,349,613 $ — $ (1,123,463 ) $ 4,226,150 Total $ 5,349,613 $ — $ 5,349,613 $ — $ (1,123,463 ) $ 4,226,150 December 31, 2017 Gross amounts not offset in the Balance Sheet Description Gross amounts of recognized liabilities Gross amounts offset in the Balance Sheet Net amounts of liabilities presented in the Balance Sheet Financial instruments Cash collateral (Received)/ Pledged Net Amount Repurchase agreements $ (1,234,522,000 ) $ — $ (1,234,522,000 ) $ 1,234,522,000 $ — $ — Total $ (1,234,522,000 ) $ — $ (1,234,522,000 ) $ 1,234,522,000 $ — $ — |
Hedged Risks and Gains and Losses on Derivative Instruments | The following table summarizes the underlying hedged risks and the amount of gains and losses on derivative instruments reported net in the condensed consolidated statement of operations as realized gain (loss) on derivative contracts, net and unrealized gain (loss) on derivative contracts, net for the three and nine months ended September 30, 2018 , and September 30, 2017 : Three Months Ended September 30, 2018 Primary underlying risk Amount of realized gain (loss) Amount of unrealized appreciation (depreciation) Total Interest rate: Futures $ — $ — $ — Total $ — $ — $ — Three Months Ended September 30, 2017 Primary underlying risk Amount of realized gain (loss) Amount of unrealized appreciation (depreciation) Total Interest rate: Futures $ (1,636,725 ) $ 307,263 $ (1,329,462 ) Total $ (1,636,725 ) $ 307,263 $ (1,329,462 ) Nine Months Ended September 30, 2018 Primary underlying risk Amount of Amount of Total Interest rate: Futures 25,984,870 (5,349,613 ) 20,635,257 Total $ 25,984,870 $ (5,349,613 ) $ 20,635,257 Nine Months Ended September 30, 2017 Primary underlying risk Amount of Amount of Total Interest rate: Futures 2,049,400 (8,583,100 ) (6,533,700 ) Total $ 2,049,400 $ (8,583,100 ) $ (6,533,700 ) |
MSRs (Tables)
MSRs (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Mortgage Servicing Rights MSR Disclosure [Abstract] | |
MSR Activity | The following table presents the Company’s MSR activity for the period ended September 30, 2018 and the year ended December 31, 2017 : September 30, 2018 December 31, 2017 Balance at beginning of year $ 2,963,861 $ 3,440,809 MSRs relating to sales to securitizations — 10,910 MSRs related to deconsolidation of securitization trust 1,025,129 — Changes in fair value due to: Changes in valuation inputs or assumptions used in valuation model 513,807 39,688 Other changes to fair value (1) (293,673 ) (527,546 ) Balance at end of period $ 4,209,124 $ 2,963,861 Loans associated with MSRs (2) $ 415,564,795 $ 338,167,569 MSR values as percent of loans (3) 1.01 % 0.88 % (1) Amounts represent changes due to realization of expected cash flows. (2) Amounts represent the unpaid principal balance of loans associated with MSRs outstanding at September 30, 2018 and December 31, 2017 , respectively. (3) Amounts represent the carrying value of MSRs at September 30, 2018 and December 31, 2017 , respectively divided by the outstanding balance of the loans associated with these MSRs |
Components of Servicing Income | The following table presents the servicing income recorded on the Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2018 , and September 30, 2017 : Three Months Ended Three Months Ended Servicing income $ 285,745 $ 276,211 Total servicing income $ 285,745 $ 276,211 Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 Servicing income $ 702,127 $ 721,468 Total servicing income $ 702,127 $ 721,468 |
FINANCIAL INSTRUMENTS (Tables)
FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Valuation of Assets and Liabilities at Fair Value | The following tables summarize the valuation of the Company’s assets and liabilities carried at fair value within the fair value hierarchy levels as of September 30, 2018 and December 31, 2017 : September 30, 2018 Quoted prices in active markets for identical assets Level 1 Significant other observable inputs Level 2 Unobservable inputs Level 3 Balance as of September 30, 2018 Assets: Multi-family mortgage loans held in securitization trusts — 24,787,988 — 24,787,988 Mortgage servicing rights — — 4,209,124 4,209,124 Total $ — $ 24,787,988 $ 4,209,124 $ 28,997,112 Liabilities: Multi-family securitized debt obligations $ — $ 19,462,838 $ — $ 19,462,838 Total $ — $ 19,462,838 $ — $ 19,462,838 December 31, 2017 Quoted prices in active markets for identical assets Level 1 Significant other observable inputs Level 2 Unobservable inputs Level 3 Balance as of December 31, 2017 Assets: Residential mortgage-backed securities (1) $ — $ 1,290,825,648 $ — $ 1,290,825,648 Multi-family mortgage loans held in securitization trusts — 1,130,874,274 — 1,130,874,274 Residential mortgage loans held in securitization trusts — 119,756,455 — 119,756,455 Mortgage servicing rights — — 2,963,861 2,963,861 Futures (Short positions) 5,349,613 — — 5,349,613 Total $ 5,349,613 $ 2,541,456,377 $ 2,963,861 $ 2,549,769,851 Liabilities: Multi-family securitized debt obligations $ — $ (1,109,204,743 ) $ — $ (1,109,204,743 ) Residential securitized debt obligations — (114,418,318 ) — (114,418,318 ) Total $ — $ (1,223,623,061 ) $ — $ (1,223,623,061 ) (1) For more detail about the fair value of the Company’s MBS and type of securities, see Note 3 and Note 4 |
Quantitative Information About the Significant Unobservable Inputs Used in the Fair Value Measurement of MSRs Classified as Level 3 | The following table provides quantitative information about the significant unobservable inputs used in the fair value measurement of the Company’s MSRs classified as Level 3 fair value assets at September 30, 2018 and December 31, 2017 : As of September 30, 2018 Valuation Technique Unobservable Input Range Weighted Average Discounted cash flow Constant prepayment rate 7.0 - 19.3% 10.1 % Discount rate 12.0 % 12.0 % As of December 31, 2017 Valuation Technique Unobservable Input Range Weighted Average Discounted cash flow Constant prepayment rate 8.0 - 25.4% 12.8 % Discount rate 12.0 % 12.0 % |
Fair value schedule of financial instruments | The following table details the carrying amount, face amount and fair value of the financial instruments described in Note 3: September 30, 2018 Carrying Value Face Amount Fair Value Assets: Cash and cash equivalents $ 9,912,051 $ 9,912,051 $ 9,912,051 Restricted cash 77,694,265 77,694,265 77,694,265 Commercial mortgage loans held-for-investment 544,586,537 544,586,537 544,586,537 Total $ 632,192,853 $ 632,192,853 $ 632,192,853 Liabilities Collateralized loan obligations $ 503,487,121 $ 510,181,000 $ 512,428,916 Total $ 503,487,121 $ 510,181,000 $ 512,428,916 December 31, 2017 Carrying Value Face Amount Fair Value Assets: Cash and cash equivalents $ 34,347,339 $ 34,347,339 $ 34,347,339 Restricted cash 11,275,263 11,275,263 11,275,263 Total $ 45,622,602 $ 45,622,602 $ 45,622,602 Liabilities: Repurchase agreements $ 1,234,522,000 $ 1,234,522,000 $ 1,234,522,000 Total $ 1,234,522,000 $ 1,234,522,000 $ 1,234,522,000 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Restricted Common Stock Activity | The following table summarizes the activity related to restricted common stock for the nine months ended September 30, 2018 and September 30, 2017 : Nine Months Ended September 30, 2018 2017 Shares Weighted Average Grant Date Fair Market Value Shares Weighted Average Grant Date Fair Market Value Outstanding Unvested Shares at Beginning of Period 4,500 $ 4.33 4,500 $ 5.97 Granted 4,500 3.40 — — Vested — — — — Outstanding Unvested Shares at End of Period 9,000 $ 3.87 4,500 $ 5.97 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
Cash Dividends Declared | The following table presents cash dividends declared by the Company on its common stock during the nine months ended September 30, 2018 : Declaration Date Record Date Payment Date Dividend Amount Cash Dividend Per Weighted Average Share January 5, 2018 January 16, 2018 January 30, 2018 $ 737,388 $ 0.03126 January 5, 2018 February 15, 2018 February 27, 2018 $ 788,649 $ 0.03343 January 5, 2018 March 15, 2018 March 29, 2018 $ 788,649 $ 0.03343 March 16, 2018 April 16, 2018 April 27, 2018 $ 473,663 $ 0.02008 March 16, 2018 May 15, 2018 May 30, 2018 $ 473,663 $ 0.02008 March 16, 2018 June 15, 2018 June 29, 2018 $ 473,663 $ 0.02008 September 10, 2018 September 28, 2018 October 15, 2018 $ 1,421,260 $ 0.06025 The following table presents cash dividends declared by the Company on its Series A Preferred Stock for the nine months ended September 30, 2018 : Declaration Date Record Date Payment Date Dividend Amount Cash Dividend Per Weighted Average Share January 5, 2018 January 16, 2018 January 30, 2018 $ 293,503 $ 0.18230 January 5, 2018 February 15, 2018 February 27, 2018 $ 293,503 $ 0.18230 January 5, 2018 March 15, 2018 March 29, 2018 $ 293,503 $ 0.18230 March 16, 2018 April 16, 2018 April 27, 2018 $ 293,503 $ 0.18230 March 16, 2018 May 15, 2018 May 30, 2018 $ 293,503 $ 0.18230 March 16, 2018 June 15, 2018 June 29, 2018 $ 293,503 $ 0.18230 July 3, 2018 July 16, 2018 July 27, 2018 $ 293,503 $ 0.18230 July 3, 2018 August 15, 2018 August 27, 2018 $ 293,503 $ 0.18230 July 3, 2018 September 17, 2018 September 27, 2018 $ 293,503 $ 0.18230 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Earnings Per Share | The following tables provide additional disclosure regarding the computation for the three and nine months ended September 30, 2018 and September 30, 2017 : Three Months Ended September 30, 2018 Three Months Ended September 30, 2017 Net income (loss) $ 4,353,026 $ (4,256,337 ) Less dividends paid: Common stock $ 1,421,260 $ 3,320,889 Preferred stock 880,509 880,509 2,301,769 4,201,398 Undistributed earnings (deficit) $ 2,051,257 $ (8,457,735 ) Unvested Share-Based Payment Awards Common Stock Unvested Share-Based Payment Awards Common Stock Distributed earnings $ 0.06 $ 0.06 $ 0.15 $ 0.15 Undistributed earnings (deficit) 0.09 0.09 (0.38 ) (0.38 ) Total $ 0.15 $ 0.15 $ (0.23 ) $ (0.23 ) Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 Net income (loss) $ (5,822,037 ) $ (4,183,767 ) Less dividends paid: Common stock $ 5,156,936 $ 8,582,666 Preferred stock 2,631,744 2,631,744 7,788,680 11,214,410 Undistributed earnings (deficit) $ (13,610,717 ) $ (15,398,177 ) Unvested Share-Based Common Stock Unvested Share-Based Common Stock Distributed earnings $ 0.22 $ 0.22 $ 0.45 $ 0.45 Undistributed earnings (deficit) (0.58 ) (0.58 ) (0.80 ) (0.80 ) Total $ (0.36 ) $ (0.36 ) $ (0.35 ) $ (0.35 ) |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Taxable Income Reconciliation | The following table reconciles the Company’s TRS GAAP net income (loss) to taxable income (in thousands): Nine Months Ended September 30, 2018 As of December 31, 2017 GAAP consolidated net income (loss) attributable to Hunt Companies Finance Trust, Inc. (5,822 ) $ 4,707 GAAP net loss (income) from REIT operations 6,830 (4,645 ) GAAP net income (loss) of taxable subsidiary 1,008 62 Capitalized transaction fees (31 ) (41 ) Unrealized gain (loss) (231 ) 639 Deferred income 176 19 Tax income of taxable subsidiary before utilization of net operating losses 922 679 Utilization of net operating losses (922 ) (679 ) Net tax income of taxable subsidiary — $ — |
Schedule of Deferred Tax Assets | The TRS has a deferred tax asset on which the Company has a 100% valuation allowance, comprised of the following (in thousands): As of September 30, 2018 As of December 31, 2017 Accumulated net operating losses of TRS 99 337 Unrealized gain 191 251 Capitalized transaction costs 114 122 Deferred income 103 57 AMT Credit 19 19 Deferred tax asset (liability) 526 786 Valuation allowance (507 ) (767 ) Net non-current deferred tax asset (liability) 19 19 |
ORGANIZATION AND BUSINESS OPE_2
ORGANIZATION AND BUSINESS OPERATIONS - Narrative (Details) | Apr. 30, 2018USD ($)Loan_Participation | Jan. 18, 2018USD ($)$ / sharesshares | Jan. 17, 2018 | Sep. 30, 2018USD ($) | Aug. 20, 2018USD ($) | Dec. 31, 2017USD ($) |
Variable Interest Entity [Line Items] | ||||||
Total Assets | $ 680,811,728 | $ 2,612,541,116 | ||||
Total Liabilities | 528,749,462 | 2,466,749,839 | ||||
Cash and cash equivalents | 9,912,051 | 34,347,339 | ||||
Collateralized loan obligation (net of discount of $2,716,862 and deferred financing costs of $3,977,017 for September 30, 2018) | 503,487,121 | |||||
Oaks Funding, LLC | ||||||
Variable Interest Entity [Line Items] | ||||||
Total Assets | 0 | |||||
Total Liabilities | 0 | |||||
Oaks Funding II, LLC | ||||||
Variable Interest Entity [Line Items] | ||||||
Total Assets | 0 | |||||
Total Liabilities | 0 | |||||
Hunt | Private Placement | ||||||
Variable Interest Entity [Line Items] | ||||||
Common stock issued (in shares) | shares | 1,539,406 | |||||
Common stock, shares issued (in dollars per share) | $ / shares | $ 4.77 | |||||
Aggregate capital raise | $ 7,342,967 | |||||
XL Investments | Hunt | ||||||
Variable Interest Entity [Line Items] | ||||||
Purchase premium (percentage) | 56.90% | |||||
Outstanding common shares owned (percentage) | 9.50% | |||||
XL Investments | Hunt | Private Placement | ||||||
Variable Interest Entity [Line Items] | ||||||
Common stock issued (in shares) | shares | 710,495 | |||||
Hunt CMT | ||||||
Variable Interest Entity [Line Items] | ||||||
Aggregate purchase price | $ 68,000,000 | |||||
Number of loan participations | Loan_Participation | 8 | |||||
Assets acquired | $ 100,000 | |||||
Loan participations acquired | 6,200,000 | |||||
Face Amount | ||||||
Variable Interest Entity [Line Items] | ||||||
Total Assets | 632,192,853 | 45,622,602 | ||||
Total Liabilities | 510,181,000 | 1,234,522,000 | ||||
Cash and cash equivalents | 9,912,051 | 34,347,339 | ||||
Collateralized loan obligation (net of discount of $2,716,862 and deferred financing costs of $3,977,017 for September 30, 2018) | 510,181,000 | |||||
Carrying Value | ||||||
Variable Interest Entity [Line Items] | ||||||
Total Assets | 632,192,853 | 45,622,602 | ||||
Total Liabilities | 503,487,121 | 1,234,522,000 | ||||
Cash and cash equivalents | 9,912,051 | 34,347,339 | ||||
Collateralized loan obligation (net of discount of $2,716,862 and deferred financing costs of $3,977,017 for September 30, 2018) | 503,487,121 | |||||
Hunt CRE 2017-FL1, Ltd. | Hunt CMT | ||||||
Variable Interest Entity [Line Items] | ||||||
Portfolio balance | 339,400,000 | |||||
Cash and cash equivalents | 9,800,000 | |||||
Hunt CRE 2017-FL1, Ltd. | Face Amount | ||||||
Variable Interest Entity [Line Items] | ||||||
Collateralized loan obligation (net of discount of $2,716,862 and deferred financing costs of $3,977,017 for September 30, 2018) | 290,700,000 | |||||
Hunt CRE 2017-FL1, Ltd. | Carrying Value | ||||||
Variable Interest Entity [Line Items] | ||||||
Collateralized loan obligation (net of discount of $2,716,862 and deferred financing costs of $3,977,017 for September 30, 2018) | $ 287,600,000 | |||||
Hunt CRE 2018-FL2, Ltd | ||||||
Variable Interest Entity [Line Items] | ||||||
Cash and cash equivalents | $ 59,700,000 | |||||
Collateralized loan obligation (net of discount of $2,716,862 and deferred financing costs of $3,977,017 for September 30, 2018) | 285,000,000 | |||||
Unpaid Principal Balance | 219,400,000 | $ 225,300,000 | ||||
Commercial real estate portfolio segment | ||||||
Variable Interest Entity [Line Items] | ||||||
Unpaid Principal Balance | 544,586,537 | $ 0 | ||||
Carrying Value | 544,586,537 | |||||
Commercial real estate portfolio segment | Hunt CRE 2018-FL2, Ltd | ||||||
Variable Interest Entity [Line Items] | ||||||
Carrying Value | $ 215,400,000 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) - USD ($) | Mar. 08, 2017 | Mar. 31, 2017 | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2018 | Dec. 31, 2016 | Sep. 30, 2016 | Dec. 15, 2015 | |
Debt and Equity Securities, FV-NI [Line Items] | |||||||||
Maximum exposure to loss from consolidated trusts | $ 5,331,931 | $ 27,108,818 | |||||||
Residential loans held in securitization trusts, at fair value | [1] | 0 | 119,756,455 | $ 0 | |||||
Fair value of investments | 0 | 1,290,825,648 | 0 | ||||||
Available for sale securities | 0 | 1,290,825,648 | 0 | ||||||
Non-accrual status | 0 | 0 | |||||||
Recognized impairment | 0 | 0 | |||||||
Allowance for loan losses | 0 | 0 | |||||||
Outstanding repurchase agreements | $ 0 | $ 1,234,522,000 | $ 0 | ||||||
Backstop deferred income, amortization period | 5 years | ||||||||
Backstop guarantee, assumed prepayment rate (percentage) | 15.00% | ||||||||
Common stock, shares authorized (in shares) | 450,000,000 | 450,000,000 | 450,000,000 | ||||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | ||||||
Common stock, shares issued (in shares) | 23,687,664 | 22,143,758 | 23,687,664 | ||||||
Common stock, shares outstanding (in shares) | 23,687,664 | 22,143,758 | 23,687,664 | ||||||
Stock repurchase program, authorized amount | $ 10,000,000 | ||||||||
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 | 50,000,000 | ||||||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | ||||||
Preferred stock, shares issued (in shares) | 1,610,000 | 1,610,000 | 1,610,000 | ||||||
Preferred stock, shares outstanding (in shares) | 1,610,000 | 1,610,000 | 1,610,000 | ||||||
Equity | $ 152,062,266 | $ 145,791,277 | $ 152,062,266 | ||||||
Stock Repurchase Program | |||||||||
Debt and Equity Securities, FV-NI [Line Items] | |||||||||
Common stock shares repurchased (in shares) | 0 | 126,856 | 126,856 | ||||||
Weighted average share price of common stock repurchased (in dollars per share) | $ 5.09 | $ 5.09 | |||||||
Stock repurchase program, remaining authorized amount | $ 9,400,000 | $ 9,400,000 | |||||||
Internal Revenue Service (IRS) | |||||||||
Debt and Equity Securities, FV-NI [Line Items] | |||||||||
Income taxes, interest paid | $ 2,010,000 | $ 2,010,000 | |||||||
Income taxes, interest provision | $ 1,860,000 | $ 1,860,000 | |||||||
Income taxes, interest expense | $ 150,000 | $ 150,000 | |||||||
Multi-Family MBS | |||||||||
Debt and Equity Securities, FV-NI [Line Items] | |||||||||
Fair value of investments | $ 5,742,000 | ||||||||
Collateralized Loan Obligations | |||||||||
Debt and Equity Securities, FV-NI [Line Items] | |||||||||
Maximum exposure to loss from consolidated trusts | 124,046,671 | ||||||||
Residential mortgage loans | |||||||||
Debt and Equity Securities, FV-NI [Line Items] | |||||||||
Investment in Multi-Family MBS, carrying value | $ 0 | 5,413,720 | $ 0 | ||||||
Equity | $ 5,413,720 | ||||||||
[1] | Our consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs") as the Company is the primary beneficiary of these VIEs. As of September 30, 2018 and December 31, 2017, assets of consolidated VIEs totaled $24,898,204 and $1,255,404,335 respectively, and the liabilities of consolidated VIEs totaled $19,566,273 and $1,228,295,517 respectively |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Reconciliation of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) | Sep. 30, 2018 | Aug. 20, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Cash and Cash Equivalents [Line Items] | |||||
Cash and cash equivalents | $ 9,912,051 | $ 34,347,339 | |||
Restricted cash | 77,694,265 | 11,275,263 | |||
Total cash, cash equivalents and restricted cash | 87,606,316 | 45,622,602 | $ 45,992,208 | $ 37,889,596 | |
Hunt CRE 2017-FL1, Ltd. | |||||
Cash and Cash Equivalents [Line Items] | |||||
Restricted cash | 41,864,739 | 0 | |||
Hunt CRE 2018-FL2, Ltd | |||||
Cash and Cash Equivalents [Line Items] | |||||
Cash and cash equivalents | $ 59,700,000 | ||||
Restricted cash | 35,829,526 | 0 | |||
Repurchase counterparties as restricted collateral | |||||
Cash and Cash Equivalents [Line Items] | |||||
Restricted cash | $ 0 | $ 11,275,263 |
AVAILABLE-FOR-SALE SECURITIES -
AVAILABLE-FOR-SALE SECURITIES - AFS Securities by Collateral Type (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Debt Securities, Available-for-sale [Line Items] | ||
AFS investment securities | $ 0 | $ 1,290,825,648 |
Available for sale securities | $ 0 | 1,290,825,648 |
Agency | ||
Debt Securities, Available-for-sale [Line Items] | ||
AFS investment securities | 1,285,083,648 | |
Agency | Federal Home Loan Mortgage Corporation | ||
Debt Securities, Available-for-sale [Line Items] | ||
AFS investment securities | 530,640,091 | |
Agency | Federal National Mortgage Association | ||
Debt Securities, Available-for-sale [Line Items] | ||
AFS investment securities | 754,443,557 | |
Multi-Family | ||
Debt Securities, Available-for-sale [Line Items] | ||
AFS investment securities | $ 5,742,000 |
AVAILABLE-FOR-SALE SECURITIES_2
AVAILABLE-FOR-SALE SECURITIES - Amortized Cost and Fair Value of AFS Investments by Collateral Type (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Debt Securities, Available-for-sale [Line Items] | |||
Face Value | $ 1,281,829,317 | ||
Unamortized premium | 23,818,687 | ||
Unamortized discount | $ 0 | (2,204,562) | $ (27,841,262) |
Amortized Cost | 1,303,443,442 | ||
Gross unrealized gain | 751,458 | ||
Gross unrealized (loss) | (13,369,252) | ||
Fair Value | 1,290,825,648 | ||
Agency | |||
Debt Securities, Available-for-sale [Line Items] | |||
Face Value | 1,274,329,317 | ||
Unamortized premium | 23,818,687 | ||
Unamortized discount | (491,020) | ||
Amortized Cost | 1,297,656,984 | ||
Gross unrealized gain | 751,458 | ||
Gross unrealized (loss) | (13,324,794) | ||
Fair Value | 1,285,083,648 | ||
Multi-Family | |||
Debt Securities, Available-for-sale [Line Items] | |||
Face Value | 7,500,000 | ||
Unamortized premium | 0 | ||
Unamortized discount | (1,713,542) | ||
Amortized Cost | 5,786,458 | ||
Gross unrealized gain | 0 | ||
Gross unrealized (loss) | (44,458) | ||
Fair Value | $ 5,742,000 |
AVAILABLE-FOR-SALE SECURITIES_3
AVAILABLE-FOR-SALE SECURITIES - Narrative (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($)security | |
Debt Securities, Available-for-sale [Line Items] | |||||
Number of AFS securities | security | 59 | ||||
Unpaid principal balance | $ 1,179,035,377 | ||||
Number of AFS securities, unrealized loss position for less than twelve months | security | 49 | ||||
Number of AFS securities, unrealized loss position for more than twelve months | security | 5 | ||||
Unrealized gains (losses) on AFS securities | $ 0 | $ 2,187,048 | $ 12,617,794 | $ 3,625,531 | |
AFS Securities | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Credit-related OTTI losses | $ 0 | $ 0 | $ 0 | 0 | |
Unrealized gains (losses) on AFS securities | $ (2,954,193) | ||||
Minimum | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Maturity of Available-for-Sale Securities | 10 years |
AVAILABLE-FOR-SALE SECURITIES_4
AVAILABLE-FOR-SALE SECURITIES - Carrying Value of AFS Securities Not Deemed to be Other Than Temporarily Impaired (Details) | Dec. 31, 2017USD ($) |
Investments, Debt and Equity Securities [Abstract] | |
Less than 12 months, Estimated Fair Value | $ 1,084,010,586 |
Less than 12 months, Gross Unrealized Losses | (11,135,736) |
Greater than 12 months, Estimated Fair Value | 95,024,791 |
Greater than 12 months, Gross Unrealized Losses | (2,233,516) |
Total, Estimated Fair Value | 1,179,035,377 |
Total, Gross Unrealized Losses | $ (13,369,252) |
AVAILABLE-FOR-SALE SECURITIES_5
AVAILABLE-FOR-SALE SECURITIES - Realized Gain (Loss) from Sale of AFS Securities (Details) - AFS Securities - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Debt Securities, Available-for-sale [Line Items] | ||||
AFS securities sold, at cost | $ 0 | $ 421,186,153 | $ 1,260,655,162 | $ 483,621,259 |
Proceeds from AFS securities sold | 0 | 416,037,708 | 1,227,314,578 | 469,004,262 |
Net realized gain (loss) on sale of AFS securities | $ 0 | $ (5,148,445) | $ (33,340,584) | $ (14,616,997) |
AVAILABLE-FOR-SALE SECURITIES_6
AVAILABLE-FOR-SALE SECURITIES - Fair Value of AFS Investment Securities by Rate Type (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Debt Securities, Available-for-sale [Line Items] | ||
Available for sale securities | $ 0 | $ 1,290,825,648 |
AFS investment securities | $ 0 | 1,290,825,648 |
Adjustable rate | ||
Debt Securities, Available-for-sale [Line Items] | ||
AFS investment securities | 1,284,237,670 | |
Fixed rate | ||
Debt Securities, Available-for-sale [Line Items] | ||
AFS investment securities | 6,587,978 | |
Agency | ||
Debt Securities, Available-for-sale [Line Items] | ||
AFS investment securities | 1,285,083,648 | |
Agency | Adjustable rate | ||
Debt Securities, Available-for-sale [Line Items] | ||
AFS investment securities | 1,284,237,670 | |
Agency | Fixed rate | ||
Debt Securities, Available-for-sale [Line Items] | ||
AFS investment securities | 845,978 | |
Multi-Family | ||
Debt Securities, Available-for-sale [Line Items] | ||
AFS investment securities | 5,742,000 | |
Multi-Family | Adjustable rate | ||
Debt Securities, Available-for-sale [Line Items] | ||
AFS investment securities | 0 | |
Multi-Family | Fixed rate | ||
Debt Securities, Available-for-sale [Line Items] | ||
AFS investment securities | $ 5,742,000 |
AVAILABLE-FOR-SALE SECURITIES_7
AVAILABLE-FOR-SALE SECURITIES - Fair Value of AFS Investment Securities by Maturity Date (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Investments, Debt and Equity Securities [Abstract] | ||
Greater than or equal to one year and less than five years | $ 1,187,909,353 | |
Greater than or equal to five years | 102,916,295 | |
Total | $ 0 | $ 1,290,825,648 |
AVAILABLE-FOR-SALE SECURITIES_8
AVAILABLE-FOR-SALE SECURITIES - Changes of Unamortized Net Discount and Designated Credit Reserves (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Designated credit reserve | ||
Beginning Balance | $ 0 | $ (1,929,833) |
Dispositions | 0 | 1,929,833 |
Accretion of net discount | 0 | 0 |
Ending Balance | 0 | 0 |
Unamortized net discount | ||
Beginning Balance | (2,204,562) | (27,841,262) |
Dispositions | 2,042,842 | 22,685,756 |
Accretion of net discount | 161,720 | 2,950,944 |
Ending Balance | 0 | (2,204,562) |
Total | ||
Beginning Balance | (2,204,562) | (29,771,095) |
Dispositions | 2,042,842 | 24,615,589 |
Accretion of net discount | 161,720 | 2,950,944 |
Ending Balance | $ 0 | $ (2,204,562) |
AVAILABLE-FOR-SALE SECURITIES_9
AVAILABLE-FOR-SALE SECURITIES - Components of Interest Income on AFS Securities (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Debt Securities, Available-for-sale [Line Items] | ||||
Coupon interest | $ 0 | $ 7,870,458 | $ 12,152,397 | $ 19,655,427 |
Net (premium amortization)/ discount accretion | 0 | (43,177) | (1,403,431) | 1,653,155 |
Interest income | 0 | 7,827,281 | 10,748,966 | 21,308,582 |
Agency | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Coupon interest | 0 | 7,870,458 | 12,152,397 | 19,613,173 |
Net (premium amortization)/ discount accretion | 0 | (514,600) | (1,435,534) | (263,230) |
Interest income | 0 | 7,355,858 | 10,716,863 | 19,349,943 |
Non-Agency | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Coupon interest | 0 | 0 | 0 | 42,254 |
Net (premium amortization)/ discount accretion | 0 | 0 | 0 | 9,946 |
Interest income | 0 | 0 | 0 | 52,200 |
Multi-Family | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Coupon interest | 0 | 0 | 0 | 0 |
Net (premium amortization)/ discount accretion | 0 | 471,423 | 32,103 | 1,906,439 |
Interest income | $ 0 | $ 471,423 | $ 32,103 | $ 1,906,439 |
COMMERCIAL MORTGAGE LOANS HEL_3
COMMERCIAL MORTGAGE LOANS HELD-FOR-INVESTMENT - Summary of Commercial Mortgage Loans (Details) | 9 Months Ended | |
Sep. 30, 2018USD ($)mortgage_loan | Dec. 31, 2017USD ($) | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Commercial mortgage loans held-for-investment, at amortized cost | $ 544,586,537 | $ 0 |
Commercial real estate portfolio segment | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | 544,586,537 | 0 |
Commercial mortgage loans held-for-investment, at amortized cost | 544,586,537 | $ 0 |
Carrying Value | $ 544,586,537 | |
Number of Loans | mortgage_loan | 43 | |
Weighted average, floating rate loan, percentage | 100.00% | |
Weighted average coupon rate, percentage | 6.50% | |
Weighted average, life (in years) | 3 years 10 months 24 days | |
Outstanding senior secured loans from loan participations | $ 4,054,577 | |
Commercial real estate portfolio segment | Hunt CMT | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Commercial mortgage loans held-for-investment, at amortized cost | $ 540,531,960 |
THE FREMF TRUSTS - Narrative (D
THE FREMF TRUSTS - Narrative (Details) - FREMF Trusts - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | |
Variable Interest Entity [Line Items] | |||
Investment in Multi-Family MBS, carrying value | $ 5,331,931 | $ 5,331,931 | $ 21,695,098 |
Multi-family mortgage loans held in securitization trusts, unpaid principal balance | 27,410,393 | 1,078,622,737 | |
Multi-family securitized debt obligations, unpaid principal balance | 27,410,393 | $ 1,078,622,737 | |
Realized losses | $ 13,617 | $ 18,325 |
COMMERCIAL MORTGAGE LOANS HEL_4
COMMERCIAL MORTGAGE LOANS HELD-FOR-INVESTMENT - Loan Portfolio Activity (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Loans Receivable Held-For-Investment, Net, Reconciliation To Cash Flow [Roll Forward] | ||
Balance at December 31, 2017 | $ 544,586,537 | |
Purchases, net | 323,416,036 | $ 0 |
Proceeds from principal repayments | (124,493,511) | $ 0 |
Commercial real estate portfolio segment | ||
Loans Receivable Held-For-Investment, Net, Reconciliation To Cash Flow [Roll Forward] | ||
Balance at December 31, 2017 | 544,586,537 | |
Purchases, net | 669,080,048 | |
Proceeds from principal repayments | $ (124,493,511) |
THE FREMF TRUSTS - Condensed Co
THE FREMF TRUSTS - Condensed Consolidated Balance Sheets (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | |
Assets | |||
Multi-family mortgage loans held in securitization trusts | [1] | $ 24,787,988 | $ 1,130,874,274 |
Total Assets | 680,811,728 | 2,612,541,116 | |
Liabilities and Equity | |||
Multi-family securitized debt obligations | [1] | 19,462,838 | 1,109,204,743 |
Total Liabilities | 528,749,462 | 2,466,749,839 | |
Equity | 152,062,266 | 145,791,277 | |
Total liabilities and stockholders' equity | 680,811,728 | 2,612,541,116 | |
FREMF Trusts | |||
Assets | |||
Multi-family mortgage loans held in securitization trusts | 24,787,988 | 1,130,874,274 | |
Receivables | 110,216 | 4,377,606 | |
Total Assets | 24,898,204 | 1,135,251,880 | |
Liabilities and Equity | |||
Multi-family securitized debt obligations | 19,462,838 | 1,109,204,743 | |
Payables | 103,435 | 4,352,039 | |
Total Liabilities | 19,566,273 | 1,113,556,782 | |
Equity | 5,331,931 | 21,695,098 | |
Total liabilities and stockholders' equity | $ 24,898,204 | $ 1,135,251,880 | |
[1] | Our consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs") as the Company is the primary beneficiary of these VIEs. As of September 30, 2018 and December 31, 2017, assets of consolidated VIEs totaled $24,898,204 and $1,255,404,335 respectively, and the liabilities of consolidated VIEs totaled $19,566,273 and $1,228,295,517 respectively |
COMMERCIAL MORTGAGE LOANS HEL_5
COMMERCIAL MORTGAGE LOANS HELD-FOR-INVESTMENT - Summary of Commercial Loan Risk Ratings (Details) | 9 Months Ended | |
Sep. 30, 2018USD ($)mortgage_loan | Dec. 31, 2017USD ($) | |
Financing Receivable, Recorded Investment [Line Items] | ||
Commercial mortgage loans held-for-investment, at amortized cost | $ 544,586,537 | $ 0 |
Commercial real estate portfolio segment | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Number of Loans | mortgage_loan | 43 | |
Unpaid Principal Balance | $ 544,586,537 | 0 |
Commercial mortgage loans held-for-investment, at amortized cost | $ 544,586,537 | $ 0 |
Commercial real estate portfolio segment | Risk rating, 1 | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Number of Loans | mortgage_loan | 0 | |
Unpaid Principal Balance | $ 0 | |
Commercial mortgage loans held-for-investment, at amortized cost | $ 0 | |
Commercial real estate portfolio segment | Risk rating, 2 | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Number of Loans | mortgage_loan | 9 | |
Unpaid Principal Balance | $ 105,814,995 | |
Commercial mortgage loans held-for-investment, at amortized cost | $ 105,814,995 | |
Commercial real estate portfolio segment | Risk rating, 3 | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Number of Loans | mortgage_loan | 30 | |
Unpaid Principal Balance | $ 393,620,797 | |
Commercial mortgage loans held-for-investment, at amortized cost | $ 393,620,797 | |
Average risk rating, percentage | 91.70% | |
Commercial real estate portfolio segment | Risk rating, 4 | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Number of Loans | mortgage_loan | 4 | |
Unpaid Principal Balance | $ 45,150,745 | |
Commercial mortgage loans held-for-investment, at amortized cost | $ 45,150,745 | |
Commercial real estate portfolio segment | Risk rating, 5 | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Number of Loans | mortgage_loan | 0 | |
Unpaid Principal Balance | $ 0 | |
Commercial mortgage loans held-for-investment, at amortized cost | $ 0 |
THE FREMF TRUSTS - Condensed _2
THE FREMF TRUSTS - Condensed Consolidated Statements of Operations (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Variable Interest Entity [Line Items] | ||||
Net interest income | $ 5,114,636 | $ 4,745,766 | $ 12,802,118 | $ 15,357,448 |
General and administrative fees | (796,600) | (1,288,978) | (3,148,945) | (4,120,807) |
Unrealized gain (loss) on multi-family loans held in securitization trusts | (5,861,373) | 2,797,566 | ||
Net income (loss) | 4,353,026 | (4,256,337) | (5,822,037) | (4,183,767) |
FREMF Trusts | ||||
Variable Interest Entity [Line Items] | ||||
Interest income | 336,824 | 13,473,913 | 20,540,942 | 40,992,241 |
Interest expense | 237,980 | 12,766,808 | 19,404,532 | 38,866,888 |
Net interest income | 98,844 | 707,105 | 1,136,410 | 2,125,353 |
General and administrative fees | (56,186) | (634,222) | (934,496) | (1,922,771) |
Unrealized gain (loss) on multi-family loans held in securitization trusts | 957,549 | 694,730 | (5,861,373) | 2,797,566 |
Net income (loss) | $ 1,000,207 | $ 767,613 | $ (5,659,459) | $ 3,000,148 |
COMMERCIAL MORTGAGE LOANS HEL_6
COMMERCIAL MORTGAGE LOANS HELD-FOR-INVESTMENT - Summary of Concentration of Credit Risk (Details) - Commercial loans held-for-investment - Commercial real estate portfolio segment | 9 Months Ended |
Sep. 30, 2018 | |
Geography | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Concentration risk, percentage | 100.00% |
Collateral Property Type | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Concentration risk, percentage | 100.00% |
Multi-Family | Collateral Property Type | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Concentration risk, percentage | 80.40% |
Office | Collateral Property Type | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Concentration risk, percentage | 6.80% |
Retail | Collateral Property Type | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Concentration risk, percentage | 5.60% |
Student Housing | Collateral Property Type | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Concentration risk, percentage | 3.20% |
Mixed-Use | Collateral Property Type | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Concentration risk, percentage | 3.00% |
Self-Storage | Collateral Property Type | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Concentration risk, percentage | 1.00% |
Southwest | Geography | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Concentration risk, percentage | 41.30% |
South | Geography | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Concentration risk, percentage | 20.90% |
Midwest | Geography | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Concentration risk, percentage | 20.00% |
Mid-Atlantic | Geography | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Concentration risk, percentage | 9.90% |
West | Geography | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Concentration risk, percentage | 7.90% |
THE FREMF TRUSTS - Geographic C
THE FREMF TRUSTS - Geographic Concentrations (Details) - Geography - FREMF Trusts | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Texas | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 71.40% | 14.20% |
Connecticut | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 28.60% | |
New York | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 16.50% | |
Washington | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 8.70% | |
Colorado | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 7.80% | |
Georgia | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 5.70% |
COMMERCIAL MORTGAGE LOANS HEL_7
COMMERCIAL MORTGAGE LOANS HELD-FOR-INVESTMENT - Additional Portfolio Information (Details) - Commercial real estate portfolio segment - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 544,586,537 | $ 0 |
Multi-Family | Winston-Salem, NC | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 4,675,000 | |
Coupon | 6.00% | |
Max Remaining Term (Years) | 1 year 9 months 18 days | |
LTV1 | 83.50% | |
Multi-Family | Tyler, TX | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 3,743,000 | |
Coupon | 5.50% | |
Max Remaining Term (Years) | 1 year 4 months 24 days | |
LTV1 | 66.80% | |
Multi-Family | Pascagoula, MS | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 6,035,000 | |
Coupon | 4.50% | |
Max Remaining Term (Years) | 2 years 2 months 12 days | |
LTV1 | 72.90% | |
Multi-Family | New Orleans, LA | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 6,370,000 | |
Coupon | 4.10% | |
Max Remaining Term (Years) | 4 years 2 months 12 days | |
LTV1 | 75.50% | |
Multi-Family | Hattiesburg, MS | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 14,715,000 | |
Coupon | 4.80% | |
Max Remaining Term (Years) | 4 years 2 months 12 days | |
LTV1 | 81.50% | |
Multi-Family | North Highlands, CA | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 9,295,085 | |
Coupon | 4.00% | |
Max Remaining Term (Years) | 4 years 4 months 24 days | |
LTV1 | 79.00% | |
Multi-Family | Dallas, TX | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 5,653,628 | |
Coupon | 4.80% | |
Max Remaining Term (Years) | 3 years 9 months 18 days | |
LTV1 | 79.30% | |
Multi-Family | Phoenix, AZ | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 30,505,000 | |
Coupon | 3.80% | |
Max Remaining Term (Years) | 4 years 3 months 18 days | |
LTV1 | 75.50% | |
Multi-Family | League City, TX | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 24,000,000 | |
Coupon | 4.50% | |
Max Remaining Term (Years) | 2 years | |
LTV1 | 76.40% | |
Multi-Family | Austell, GA | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 11,720,232 | |
Coupon | 4.20% | |
Max Remaining Term (Years) | 4 years 1 month 6 days | |
LTV1 | 80.40% | |
Multi-Family | Greensboro, NC | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 10,250,000 | |
Coupon | 5.30% | |
Max Remaining Term (Years) | 1 year 2 months 12 days | |
LTV1 | 88.70% | |
Multi-Family | Seattle, WA | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 15,250,000 | |
Coupon | 4.50% | |
Max Remaining Term (Years) | 1 year | |
LTV1 | 54.10% | |
Multi-Family | Various, TX | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 23,145,934 | |
Coupon | 5.50% | |
Max Remaining Term (Years) | 9 months 18 days | |
LTV1 | 76.00% | |
Multi-Family | Tuscon, AZ | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 19,110,000 | |
Coupon | 4.50% | |
Max Remaining Term (Years) | 4 years 3 months 18 days | |
LTV1 | 81.00% | |
Multi-Family | Dallas, TX | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 31,678,000 | |
Coupon | 3.70% | |
Max Remaining Term (Years) | 4 years 10 months 24 days | |
LTV1 | 81.20% | |
Multi-Family | Tulsa, OK | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 6,360,000 | |
Coupon | 4.50% | |
Max Remaining Term (Years) | 4 years 2 months 12 days | |
LTV1 | 76.60% | |
Multi-Family | Philadelphia, PA | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 7,600,000 | |
Coupon | 4.10% | |
Max Remaining Term (Years) | 4 years 3 months 18 days | |
LTV1 | 79.80% | |
Multi-Family | Baltimore, MD | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 28,476,000 | |
Coupon | 3.10% | |
Max Remaining Term (Years) | 4 years 10 months 24 days | |
LTV1 | 77.60% | |
Multi-Family | Palatine, IL | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 31,690,000 | |
Coupon | 4.30% | |
Max Remaining Term (Years) | 4 years 9 months 18 days | |
LTV1 | 70.90% | |
Multi-Family | Woodridge, IL | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 24,521,093 | |
Coupon | 3.80% | |
Max Remaining Term (Years) | 4 years 9 months 18 days | |
LTV1 | 77.80% | |
Multi-Family | Richmond, TX | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 22,500,000 | |
Coupon | 3.90% | |
Max Remaining Term (Years) | 2 years 3 months 18 days | |
LTV1 | 73.50% | |
Multi-Family | Omaha, NE | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 19,430,000 | |
Coupon | 3.70% | |
Max Remaining Term (Years) | 4 years 9 months 18 days | |
LTV1 | 77.30% | |
Multi-Family | Greenville, SC | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 14,800,000 | |
Coupon | 3.90% | |
Max Remaining Term (Years) | 4 years 9 months 18 days | |
LTV1 | 76.30% | |
Multi-Family | Fresno, CA | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 12,920,000 | |
Coupon | 3.90% | |
Max Remaining Term (Years) | 4 years 4 months 24 days | |
LTV1 | 82.30% | |
Multi-Family | Austin, TX | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 11,070,000 | |
Coupon | 3.60% | |
Max Remaining Term (Years) | 4 years 9 months 18 days | |
LTV1 | 80.20% | |
Multi-Family | Phoenix, AZ | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 9,440,000 | |
Coupon | 3.90% | |
Max Remaining Term (Years) | 4 years 9 months 18 days | |
LTV1 | 69.40% | |
Multi-Family | Atlanta, GA | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 8,262,000 | |
Coupon | 4.30% | |
Max Remaining Term (Years) | 4 years 6 months | |
LTV1 | 80.20% | |
Multi-Family | Little Rock, AR | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 8,070,000 | |
Coupon | 4.30% | |
Max Remaining Term (Years) | 4 years 6 months | |
LTV1 | 86.80% | |
Multi-Family | Chicago, IL | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 5,322,870 | |
Coupon | 4.10% | |
Max Remaining Term (Years) | 4 years 9 months 18 days | |
LTV1 | 80.50% | |
Multi-Family | Wichita, KS | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 3,580,000 | |
Coupon | 5.00% | |
Max Remaining Term (Years) | 4 years 8 months 12 days | |
LTV1 | 69.00% | |
Multi-Family | Birmingham, AL | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 7,645,000 | |
Coupon | 3.50% | |
Max Remaining Term (Years) | 5 years | |
LTV1 | 78.00% | |
Mixed-Use | Akron, OH | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 12,226,811 | |
Coupon | 5.30% | |
Max Remaining Term (Years) | 2 years 4 months 24 days | |
LTV1 | 56.70% | |
Mixed-Use | Washington, D.C. | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 4,325,000 | |
Coupon | 4.70% | |
Max Remaining Term (Years) | 4 years 9 months 18 days | |
LTV1 | 73.30% | |
Office | Stafford, TX | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 4,618,553 | |
Coupon | 5.50% | |
Max Remaining Term (Years) | 3 years 3 months 18 days | |
LTV1 | 56.40% | |
Office | Rochelle Park, NJ | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 13,600,000 | |
Coupon | 4.00% | |
Max Remaining Term (Years) | 4 years 7 months 6 days | |
LTV1 | 76.80% | |
Office | Chicago, IL | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 12,075,000 | |
Coupon | 3.80% | |
Max Remaining Term (Years) | 4 years 10 months 24 days | |
LTV1 | 72.70% | |
Office | Little Rock, AR | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 6,874,000 | |
Coupon | 4.90% | |
Max Remaining Term (Years) | 4 years 7 months 6 days | |
LTV1 | 72.40% | |
Retail | Austin, TX | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 15,050,568 | |
Coupon | 7.30% | |
Max Remaining Term (Years) | 3 years 9 months 18 days | |
LTV1 | 70.80% | |
Retail | Austin, TX | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 8,824,763 | |
Coupon | 5.20% | |
Max Remaining Term (Years) | 3 years 8 months 12 days | |
LTV1 | 32.20% | |
Retail | Goldsboro, NC | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 6,500,000 | |
Coupon | 4.00% | |
Max Remaining Term (Years) | 4 years 10 months 24 days | |
LTV1 | 56.50% | |
Self-Storage | Las Vegas, NV | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 5,547,000 | |
Coupon | 4.30% | |
Max Remaining Term (Years) | 4 years 3 months 18 days | |
LTV1 | 86.00% | |
Student Housing | Waco, TX | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 9,112,000 | |
Coupon | 4.80% | |
Max Remaining Term (Years) | 4 years 7 months 6 days | |
LTV1 | 72.90% | |
Student Housing | Blacksburg, VA | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unpaid Principal Balance | $ 8,000,000 | |
Coupon | 3.90% | |
Max Remaining Term (Years) | 5 years | |
LTV1 | 72.70% |
RESIDENTIAL MORTGAGE LOAN SEC_3
RESIDENTIAL MORTGAGE LOAN SECURITIZATION TRUSTS - Narrative (Details) - Residential mortgage loans - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Variable Interest Entity [Line Items] | ||
Investment in Non-Agency RMBS, carrying value | $ 0 | $ 5,413,720 |
Residential mortgage loans held in securitization trust, unpaid balance | 118,884,113 | |
Residential mortgage loan securitized debt obligation, unpaid principal balance | $ 0 | $ 118,884,113 |
RESIDENTIAL MORTGAGE LOAN SEC_4
RESIDENTIAL MORTGAGE LOAN SECURITIZATION TRUSTS - Condensed Consolidated Balance Sheets (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | |
Assets | |||
Residential mortgage loans held in securitization trusts | [1] | $ 24,787,988 | $ 1,130,874,274 |
Total Assets | 680,811,728 | 2,612,541,116 | |
Liabilities and Equity | |||
Residential securitized debt obligations | [1] | 19,462,838 | 1,109,204,743 |
Total Liabilities | 528,749,462 | 2,466,749,839 | |
Equity | 152,062,266 | 145,791,277 | |
Total liabilities and stockholders' equity | $ 680,811,728 | 2,612,541,116 | |
Residential mortgage loans | |||
Assets | |||
Residential mortgage loans held in securitization trusts | 119,756,455 | ||
Receivables | 396,000 | ||
Total Assets | 120,152,455 | ||
Liabilities and Equity | |||
Residential securitized debt obligations | 114,418,318 | ||
Payables | 320,417 | ||
Total Liabilities | 114,738,735 | ||
Equity | 5,413,720 | ||
Total liabilities and stockholders' equity | $ 120,152,455 | ||
[1] | Our consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs") as the Company is the primary beneficiary of these VIEs. As of September 30, 2018 and December 31, 2017, assets of consolidated VIEs totaled $24,898,204 and $1,255,404,335 respectively, and the liabilities of consolidated VIEs totaled $19,566,273 and $1,228,295,517 respectively |
RESIDENTIAL MORTGAGE LOAN SEC_5
RESIDENTIAL MORTGAGE LOAN SECURITIZATION TRUSTS - Condensed Consolidated Statements of Operations (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Variable Interest Entity [Line Items] | ||||
Net interest income | $ 5,114,636 | $ 4,745,766 | $ 12,802,118 | $ 15,357,448 |
General and administrative fees | (796,600) | (1,288,978) | (3,148,945) | (4,120,807) |
Unrealized gain (loss) on residential loans held in securitization trusts | 0 | (155,252) | 5,650,199 | (773,674) |
Net income (loss) | 4,353,026 | (4,256,337) | (5,822,037) | (4,183,767) |
Residential mortgage loans | ||||
Variable Interest Entity [Line Items] | ||||
Interest income | 0 | 1,249,966 | 2,102,352 | 3,903,924 |
Interest expense | 0 | 995,293 | 1,685,971 | 3,100,616 |
Net interest income | 0 | 254,673 | 416,381 | 803,308 |
General and administrative fees | 0 | (11,003) | (20,886) | (34,227) |
Unrealized gain (loss) on residential loans held in securitization trusts | 0 | (155,252) | 5,650,199 | (773,674) |
Net income (loss) | $ 0 | $ 88,418 | $ 6,045,694 | $ (4,593) |
RESIDENTIAL MORTGAGE LOAN SEC_6
RESIDENTIAL MORTGAGE LOAN SECURITIZATION TRUSTS - Geographic Concentrations (Details) - Geography - Residential mortgage loans | 12 Months Ended |
Dec. 31, 2017 | |
California | |
Variable Interest Entity [Line Items] | |
Concentration risk, percentage | 37.00% |
Washington | |
Variable Interest Entity [Line Items] | |
Concentration risk, percentage | 15.30% |
Massachusetts | |
Variable Interest Entity [Line Items] | |
Concentration risk, percentage | 8.10% |
Florida | |
Variable Interest Entity [Line Items] | |
Concentration risk, percentage | 6.40% |
USE OF SPECIAL PURPOSE ENTITI_3
USE OF SPECIAL PURPOSE ENTITIES AND VARIABLE INTEREST ENTITIES - Narrative (Details) | Jun. 18, 2018mortgage_loan_trust |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of trusts | 2 |
USE OF SPECIAL PURPOSE ENTITI_4
USE OF SPECIAL PURPOSE ENTITIES AND VARIABLE INTEREST ENTITIES - Condensed Consolidated Balance Sheets (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Variable Interest Entity [Line Items] | ||
Cash and cash equivalents | $ 9,912,051 | $ 34,347,339 |
Accrued interest receivable | 2,542,868 | 8,852,036 |
Investment related receivable | 16,242,900 | 7,461,128 |
Loans held for investment | 544,586,537 | 0 |
Total Assets | 680,811,728 | 2,612,541,116 |
Accrued interest payable | 854,060 | 6,194,464 |
Collateralized loan obligation (net of discount of $2,716,862 and deferred financing costs of $3,977,017 for September 30, 2018) | 503,487,121 | |
Fees and expenses payable to Manager | 3,001,338 | 752,000 |
Total Liabilities | 528,749,462 | $ 2,466,749,839 |
Hunt CRE 2017-FL1, Ltd. | ||
Variable Interest Entity [Line Items] | ||
Cash and cash equivalents | 77,694,265 | |
Accrued interest receivable | 2,403,506 | |
Investment related receivable | 16,242,900 | |
Loans held for investment | 540,531,960 | |
Total Assets | 636,872,631 | |
Accrued interest payable | 750,625 | |
Collateralized loan obligation (net of discount of $2,716,862 and deferred financing costs of $3,977,017 for September 30, 2018) | 503,487,121 | |
Fees and expenses payable to Manager | 1,816,338 | |
Total Liabilities | $ 506,054,084 |
USE OF SPECIAL PURPOSE ENTITI_5
USE OF SPECIAL PURPOSE ENTITIES AND VARIABLE INTEREST ENTITIES - Summary of Loan and Borrowing Characteristics (Details) | Sep. 30, 2018USD ($) |
Variable Interest Entity [Line Items] | |
Collateralized loan obligation (net of discount of $2,716,862 and deferred financing costs of $3,977,017 for September 30, 2018) | $ 503,487,121 |
Hunt CRE 2017-FL1, Ltd. | |
Variable Interest Entity [Line Items] | |
Collateralized loan obligation (net of discount of $2,716,862 and deferred financing costs of $3,977,017 for September 30, 2018) | 503,487,121 |
Face Amount | |
Variable Interest Entity [Line Items] | |
Collateralized loan obligation (net of discount of $2,716,862 and deferred financing costs of $3,977,017 for September 30, 2018) | 510,181,000 |
Face Amount | Hunt CRE 2017-FL1, Ltd. | |
Variable Interest Entity [Line Items] | |
Unpaid Principal Balance | 540,531,960 |
Collateralized loan obligation (net of discount of $2,716,862 and deferred financing costs of $3,977,017 for September 30, 2018) | 510,181,000 |
Carrying Value | |
Variable Interest Entity [Line Items] | |
Collateralized loan obligation (net of discount of $2,716,862 and deferred financing costs of $3,977,017 for September 30, 2018) | 503,487,121 |
Carrying Value | Hunt CRE 2017-FL1, Ltd. | |
Variable Interest Entity [Line Items] | |
Carrying Value | 540,531,960 |
Collateralized loan obligation (net of discount of $2,716,862 and deferred financing costs of $3,977,017 for September 30, 2018) | $ 503,487,121 |
RESTRICTED CASH AND DUE TO BR_3
RESTRICTED CASH AND DUE TO BROKER (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Restricted cash balance held by: | ||
Due to broker | $ 0 | $ (1,123,463) |
Restricted cash | 77,694,265 | 11,275,263 |
Total | 77,694,265 | 10,151,800 |
Broker counterparties for derivatives trading | ||
Restricted cash balance held by: | ||
Due to broker | 0 | (1,123,463) |
Repurchase counterparties as restricted collateral | ||
Restricted cash balance held by: | ||
Restricted cash | 0 | 11,275,263 |
Collateralized Loan Obligations | ||
Restricted cash balance held by: | ||
Restricted cash | 0 | |
Hunt CRE 2017-FL1, Ltd. | ||
Restricted cash balance held by: | ||
Restricted cash | 41,864,739 | 0 |
Hunt CRE 2018-FL2, Ltd | ||
Restricted cash balance held by: | ||
Restricted cash | $ 35,829,526 | $ 0 |
BORROWINGS - Narrative (Details
BORROWINGS - Narrative (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Debt Disclosure [Abstract] | ||
Weighted average interest rate, percentage | 1.56% | |
Repurchase agreement covenant, minimum stockholders' equity | $ 75,000,000 | |
Repurchase agreement covenant, minimum stockholders' equity, percentage of historical stockholders' equity | 50.00% |
BORROWINGS - Types of Repurchas
BORROWINGS - Types of Repurchase Agreements (Details) | Dec. 31, 2017USD ($) |
Repurchase Agreements | |
Amount outstanding | $ 1,234,522,000 |
Weighted average interest rate, percentage | 1.56% |
Market value of collateral held | $ 1,295,225,428 |
Agency | |
Repurchase Agreements | |
Amount outstanding | $ 1,228,349,000 |
Weighted average interest rate, percentage | 1.55% |
Market value of collateral held | $ 1,285,083,649 |
Non-Agency | |
Repurchase Agreements | |
Amount outstanding | $ 2,555,000 |
Weighted average interest rate, percentage | 3.38% |
Market value of collateral held | $ 4,399,779 |
Multi-Family | |
Repurchase Agreements | |
Amount outstanding | $ 3,618,000 |
Weighted average interest rate, percentage | 3.16% |
Market value of collateral held | $ 5,742,000 |
BORROWINGS - Maturities of Repu
BORROWINGS - Maturities of Repurchase Agreements (Details) | Dec. 31, 2017USD ($) |
Repurchase Agreements [Line Items] | |
Repurchase agreements | $ 1,234,522,000 |
Maturity Less Than or Equal to 30 Days | |
Repurchase Agreements [Line Items] | |
Repurchase agreements | 1,175,407,000 |
Maturity 31 To 60 Days | |
Repurchase Agreements [Line Items] | |
Repurchase agreements | 56,560,000 |
Maturity 61 To 90 Days | |
Repurchase Agreements [Line Items] | |
Repurchase agreements | $ 2,555,000 |
BORROWINGS - Significant Counte
BORROWINGS - Significant Counterparties of Repurchase Agreements (Details) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Repurchase Agreement Counterparty [Line Items] | |
Amount Outstanding | $ 1,234,522,000 |
Percent of total amount outstanding | 100.00% |
Weighted days to maturity | 13 days |
Market Value of collateral held | $ 1,295,225,428 |
North America | |
Repurchase Agreement Counterparty [Line Items] | |
Amount Outstanding | $ 939,438,000 |
Percent of total amount outstanding | 76.10% |
Weighted days to maturity | 13 days |
Market Value of collateral held | $ 985,672,703 |
Asia | |
Repurchase Agreement Counterparty [Line Items] | |
Amount Outstanding | $ 292,529,000 |
Percent of total amount outstanding | 23.70% |
Weighted days to maturity | 14 days |
Market Value of collateral held | $ 305,152,946 |
Europe | |
Repurchase Agreement Counterparty [Line Items] | |
Amount Outstanding | $ 2,555,000 |
Percent of total amount outstanding | 0.20% |
Weighted days to maturity | 78 days |
Market Value of collateral held | $ 4,399,779 |
DERIVATIVE INSTRUMENTS HEDGIN_3
DERIVATIVE INSTRUMENTS HEDGING AND NON-HEDGING ACTIVITIES - Fair Value and Notional Amounts (Details) | Dec. 31, 2017USD ($)contract |
Derivative Assets | |
Number of contracts | contract | 14,355 |
Fair value | $ 5,349,613 |
Notional | $ 14,355,000,000 |
Derivative Liabilities | |
Number of contracts | contract | 0 |
Fair value | $ 0 |
Notional | $ 0 |
Eurodollar Futures (Short positions) | |
Derivative Assets | |
Number of contracts | contract | 14,355 |
Fair value | $ 5,349,613 |
Notional | $ 14,355,000,000 |
Derivative Liabilities | |
Number of contracts | contract | 0 |
Fair value | $ 0 |
Notional | $ 0 |
DERIVATIVE INSTRUMENTS HEDGIN_4
DERIVATIVE INSTRUMENTS HEDGING AND NON-HEDGING ACTIVITIES - Asset and Liabilities Subject to Master Netting Agreements (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Derivative [Line Items] | ||
Gross amounts of recognized assets | $ 5,349,613 | |
Gross amounts offset in the Balance Sheet | 0 | |
Net amounts of assets presented in the Balance Sheet | 5,349,613 | |
Gross amounts not offset in the Balance Sheet, Financial instruments | 0 | |
Gross amounts not offset in the Balance Sheet, Cash collateral (Received)/Pledged | (1,123,463) | |
Net Amount | $ 0 | 4,226,150 |
Gross amounts of recognized liabilities | (1,234,522,000) | |
Gross amounts offset in the Balance Sheet | 0 | |
Net amounts of liabilities presented in the Balance Sheet | (1,234,522,000) | |
Gross amounts not offset in the Balance Sheet, Cash collateral (Received)/Pledged | 1,234,522,000 | |
Gross amounts not offset in the Balance Sheet, Cash collateral (Received) / Pledged | 0 | |
Net Amount | $ 0 | 0 |
Repurchase agreements | ||
Derivative [Line Items] | ||
Gross amounts of recognized liabilities | (1,234,522,000) | |
Gross amounts offset in the Balance Sheet | 0 | |
Net amounts of liabilities presented in the Balance Sheet | (1,234,522,000) | |
Gross amounts not offset in the Balance Sheet, Cash collateral (Received)/Pledged | 1,234,522,000 | |
Gross amounts not offset in the Balance Sheet, Cash collateral (Received) / Pledged | 0 | |
Net Amount | 0 | |
Futures | ||
Derivative [Line Items] | ||
Gross amounts of recognized assets | 5,349,613 | |
Gross amounts offset in the Balance Sheet | 0 | |
Net amounts of assets presented in the Balance Sheet | 5,349,613 | |
Gross amounts not offset in the Balance Sheet, Financial instruments | 0 | |
Gross amounts not offset in the Balance Sheet, Cash collateral (Received)/Pledged | (1,123,463) | |
Net Amount | $ 4,226,150 |
DERIVATIVE INSTRUMENTS HEDGIN_5
DERIVATIVE INSTRUMENTS HEDGING AND NON-HEDGING ACTIVITIES - Gains and Losses on Derivative Contracts (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Interest rate: | ||||
Amount of realized gain (loss) | $ 0 | $ (1,636,725) | $ 25,984,870 | $ 2,049,400 |
Amount of unrealized appreciation (depreciation) | 0 | 307,263 | (5,349,613) | (8,583,100) |
Total | 0 | (1,329,462) | 20,635,257 | (6,533,700) |
Futures | ||||
Interest rate: | ||||
Amount of realized gain (loss) | 0 | (1,636,725) | 25,984,870 | 2,049,400 |
Amount of unrealized appreciation (depreciation) | 0 | 307,263 | (5,349,613) | (8,583,100) |
Total | $ 0 | $ (1,329,462) | $ 20,635,257 | $ (6,533,700) |
MSRs - MSR Activity (Details)
MSRs - MSR Activity (Details) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018USD ($)mortgage_loan_trust | Dec. 31, 2017USD ($) | |
Movement in Mortgage Service Rights | ||
Number of residential mortgage loan securitization trusts | mortgage_loan_trust | 4 | |
Mortgage Servicing Rights | ||
Movement in Mortgage Service Rights | ||
Balance at beginning of year | $ 2,963,861 | $ 3,440,809 |
MSRs relating to sales to securitizations | 0 | 10,910 |
MSRs related to deconsolidation of securitization trust | 1,025,129 | 0 |
Changes in fair value due to: | ||
Changes in valuation inputs or assumptions used in valuation model | 513,807 | 39,688 |
Other changes to fair value | (293,673) | (527,546) |
Balance at end of period | 4,209,124 | 2,963,861 |
Loans associated with MSRs | $ 415,564,795 | $ 338,167,569 |
MSR values as percent of loans | 1.01% | 0.88% |
MSRs - Components of Servicing
MSRs - Components of Servicing Income (Details) - Mortgages - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Schedule Of Components Of Servicing Income [Line Items] | ||||
Servicing income | $ 285,745 | $ 276,211 | $ 702,127 | $ 721,468 |
Total servicing income | $ 285,745 | $ 276,211 | $ 702,127 | $ 721,468 |
FINANCIAL INSTRUMENTS - Assets
FINANCIAL INSTRUMENTS - Assets and Liabilities at Fair Value (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Assets: | ||
Total assets | $ 28,997,112 | $ 2,549,769,851 |
Liabilities: | ||
Total liabilities | (19,462,838) | (1,223,623,061) |
Quoted prices in active markets for identical assets Level 1 | ||
Assets: | ||
Total assets | 0 | 5,349,613 |
Liabilities: | ||
Total liabilities | 0 | 0 |
Significant other observable inputs Level 2 | ||
Assets: | ||
Total assets | 24,787,988 | 2,541,456,377 |
Liabilities: | ||
Total liabilities | (19,462,838) | (1,223,623,061) |
Unobservable inputs Level 3 | ||
Assets: | ||
Total assets | 4,209,124 | 2,963,861 |
Liabilities: | ||
Total liabilities | 0 | 0 |
Multi-family mortgage loans held in securitization trusts | ||
Assets: | ||
Total assets | 24,787,988 | 1,130,874,274 |
Multi-family mortgage loans held in securitization trusts | Quoted prices in active markets for identical assets Level 1 | ||
Assets: | ||
Total assets | 0 | 0 |
Multi-family mortgage loans held in securitization trusts | Significant other observable inputs Level 2 | ||
Assets: | ||
Total assets | 24,787,988 | 1,130,874,274 |
Multi-family mortgage loans held in securitization trusts | Unobservable inputs Level 3 | ||
Assets: | ||
Total assets | 0 | 0 |
Mortgage servicing rights | ||
Assets: | ||
Total assets | 4,209,124 | 2,963,861 |
Mortgage servicing rights | Quoted prices in active markets for identical assets Level 1 | ||
Assets: | ||
Total assets | 0 | 0 |
Mortgage servicing rights | Significant other observable inputs Level 2 | ||
Assets: | ||
Total assets | 0 | 0 |
Mortgage servicing rights | Unobservable inputs Level 3 | ||
Assets: | ||
Total assets | 4,209,124 | 2,963,861 |
Multi-family securitized debt obligations | ||
Liabilities: | ||
Total liabilities | (19,462,838) | (1,109,204,743) |
Multi-family securitized debt obligations | Quoted prices in active markets for identical assets Level 1 | ||
Liabilities: | ||
Total liabilities | 0 | 0 |
Multi-family securitized debt obligations | Significant other observable inputs Level 2 | ||
Liabilities: | ||
Total liabilities | (19,462,838) | (1,109,204,743) |
Multi-family securitized debt obligations | Unobservable inputs Level 3 | ||
Liabilities: | ||
Total liabilities | $ 0 | 0 |
Residential securitized debt obligations | ||
Liabilities: | ||
Total liabilities | (114,418,318) | |
Residential securitized debt obligations | Quoted prices in active markets for identical assets Level 1 | ||
Liabilities: | ||
Total liabilities | 0 | |
Residential securitized debt obligations | Significant other observable inputs Level 2 | ||
Liabilities: | ||
Total liabilities | (114,418,318) | |
Residential securitized debt obligations | Unobservable inputs Level 3 | ||
Liabilities: | ||
Total liabilities | 0 | |
Residential mortgage-backed securities | ||
Assets: | ||
Total assets | 1,290,825,648 | |
Residential mortgage-backed securities | Quoted prices in active markets for identical assets Level 1 | ||
Assets: | ||
Total assets | 0 | |
Residential mortgage-backed securities | Significant other observable inputs Level 2 | ||
Assets: | ||
Total assets | 1,290,825,648 | |
Residential mortgage-backed securities | Unobservable inputs Level 3 | ||
Assets: | ||
Total assets | 0 | |
Residential mortgage loans held in securitization trusts | ||
Assets: | ||
Total assets | 119,756,455 | |
Residential mortgage loans held in securitization trusts | Quoted prices in active markets for identical assets Level 1 | ||
Assets: | ||
Total assets | 0 | |
Residential mortgage loans held in securitization trusts | Significant other observable inputs Level 2 | ||
Assets: | ||
Total assets | 119,756,455 | |
Residential mortgage loans held in securitization trusts | Unobservable inputs Level 3 | ||
Assets: | ||
Total assets | 0 | |
Futures | ||
Assets: | ||
Total assets | 5,349,613 | |
Futures | Quoted prices in active markets for identical assets Level 1 | ||
Assets: | ||
Total assets | 5,349,613 | |
Futures | Significant other observable inputs Level 2 | ||
Assets: | ||
Total assets | 0 | |
Futures | Unobservable inputs Level 3 | ||
Assets: | ||
Total assets | $ 0 |
FINANCIAL INSTRUMENTS - Narrati
FINANCIAL INSTRUMENTS - Narrative (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets | $ 28,997,112 | $ 2,549,769,851 |
Unobservable inputs Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets | 4,209,124 | 2,963,861 |
Mortgage Servicing Rights | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets | 4,209,124 | 2,963,861 |
Mortgage Servicing Rights | Unobservable inputs Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets | $ 4,209,124 | $ 2,963,861 |
FINANCIAL INSTRUMENTS - Unobser
FINANCIAL INSTRUMENTS - Unobservable Inputs Information (Details) - Mortgage servicing rights - Discounted cash flow - Unobservable inputs Level 3 | Sep. 30, 2018 | Dec. 31, 2017 |
Constant prepayment rate | Minimum | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Unobservable Input | 0.070 | 0.080 |
Constant prepayment rate | Maximum | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Unobservable Input | 0.193 | 0.254 |
Constant prepayment rate | Weighted Average | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Unobservable Input | 0.101 | 0.128 |
Discount rate | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Unobservable Input | 0.120 | 0.120 |
Discount rate | Weighted Average | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Unobservable Input | 0.120 | 0.120 |
FINANCIAL INSTRUMENTS FINANCIAL
FINANCIAL INSTRUMENTS FINANCIAL INSTRUMENTS - Fair Value Information on Financial Instruments (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | $ 9,912,051 | $ 34,347,339 |
Restricted cash | 77,694,265 | 11,275,263 |
Available-for-sale securities | 0 | 1,234,522,000 |
Total Assets | 680,811,728 | 2,612,541,116 |
Collateralized loan obligation (net of discount of $2,716,862 and deferred financing costs of $3,977,017 for September 30, 2018) | 503,487,121 | |
Total Liabilities | 528,749,462 | 2,466,749,839 |
Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | 9,912,051 | 34,347,339 |
Restricted cash | 77,694,265 | 11,275,263 |
Available-for-sale securities | 1,234,522,000 | |
Commercial mortgage loans held-for-investment, at amortized cost | 544,586,537 | |
Total Assets | 632,192,853 | 45,622,602 |
Collateralized loan obligation (net of discount of $2,716,862 and deferred financing costs of $3,977,017 for September 30, 2018) | 503,487,121 | |
Total Liabilities | 503,487,121 | 1,234,522,000 |
Face Amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | 9,912,051 | 34,347,339 |
Restricted cash | 77,694,265 | 11,275,263 |
Available-for-sale securities | 1,234,522,000 | |
Commercial mortgage loans held-for-investment, at amortized cost | 544,586,537 | |
Total Assets | 632,192,853 | 45,622,602 |
Collateralized loan obligation (net of discount of $2,716,862 and deferred financing costs of $3,977,017 for September 30, 2018) | 510,181,000 | |
Total Liabilities | 510,181,000 | 1,234,522,000 |
Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | 9,912,051 | 34,347,339 |
Restricted cash | 77,694,265 | 11,275,263 |
Available-for-sale securities | 1,234,522,000 | |
Commercial mortgage loans held-for-investment, at amortized cost | 544,586,537 | |
Total Assets | 632,192,853 | 45,622,602 |
Collateralized loan obligation (net of discount of $2,716,862 and deferred financing costs of $3,977,017 for September 30, 2018) | 512,428,916 | |
Total Liabilities | $ 512,428,916 | $ 1,234,522,000 |
RELATED PARTY TRANSACTIONS - Na
RELATED PARTY TRANSACTIONS - Narrative (Details) | Aug. 20, 2018USD ($) | Apr. 30, 2018USD ($)shares | Jan. 18, 2018 | Jun. 07, 2017 | Jan. 18, 2018USD ($) | Jun. 30, 2017 | Sep. 30, 2018USD ($)mortgage_loan | Jun. 30, 2018USD ($)security | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) |
Related Party Transaction [Line Items] | ||||||||||||
Management fee percentage | 1.50% | 1.50% | ||||||||||
Management fee percentage, waived portion | 0.75% | |||||||||||
Management fee waived | $ 6,959 | $ 6,959 | $ 79,415 | |||||||||
Management fee expense | $ 586,926 | $ 573,412 | 1,767,252 | 1,670,804 | $ 1,767,252 | |||||||
Management fee payable | 592,500 | 187,000 | 592,500 | 187,000 | ||||||||
Reimbursable expenses | 548,132 | 915,452 | 1,865,057 | 3,086,304 | ||||||||
Reimbursable expenses payable | 592,500 | 400,000 | 592,500 | 400,000 | ||||||||
Deferred financing cost | 3,977,017 | 3,977,017 | ||||||||||
Payments of financing costs | 4,075,446 | 0 | ||||||||||
Notional amount | 1,281,829,317 | |||||||||||
Earned fees | 0 | 7,827,281 | 10,748,966 | 21,308,582 | ||||||||
Restricted Stock Units (RSUs) | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Compensation expense | $ 18,095 | 16,634 | ||||||||||
Manager Equity Plan | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Maximum shares issued, percentage of issued and outstanding shares of common stock | 3.00% | |||||||||||
Manager Equity Plan | Restricted Stock Units (RSUs) | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Unrecognized compensation expense | 12,740 | $ 0 | $ 12,740 | 0 | ||||||||
Weighted average period for compensation expense not yet recognized | 8 years 8 months 12 days | |||||||||||
Hunt Investment Management, LLC | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Annual management fee percentage | 1.50% | |||||||||||
Quarterly management fee percentage | 0.375% | |||||||||||
Quarterly incentive fee percentage | 20.00% | |||||||||||
Hurdle rate percentage | 8.00% | |||||||||||
Lead independent director | Loan Review Services | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Proceeds from fees | $ 20,000 | |||||||||||
Lead independent director | MAXEX LLC | Residential Mortgage Loans | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Proceeds from sale of loans | $ 24,600,000 | |||||||||||
Lead independent director | MAXEX LLC | Loan Review Services | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Proceeds from fees | $ 263,117 | 241,455 | ||||||||||
Marketing fees paid | 61,373 | $ 51,904 | ||||||||||
Affiliate of manager | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Number of available for sale sold | security | 4 | |||||||||||
Notional amount | $ 82,900,000 | |||||||||||
Class A-4 warrant | Lead independent director | MAXEX LLC | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Number of securities called by warrants (in warrants) | shares | 35,658 | |||||||||||
Hunt CRE 2018-FL2, Ltd | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Deferred financing cost | 4,100,000 | 4,100,000 | ||||||||||
Unpaid Principal Balance | $ 225,300,000 | 219,400,000 | 219,400,000 | |||||||||
Hunt CRE 2018-FL2, Ltd | Hunt Investment Management, LLC | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Payments of financing costs | 2,300,000 | |||||||||||
Hunt CRE 2018-FL2, Ltd | Lead independent director | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Payments of financing costs | $ 1,800,000 | |||||||||||
Hunt CRE 2018-FL2, Ltd | Hunt Financial Services, LLC | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Earned fees | $ 208,477 | |||||||||||
Hunt CRE 2018-FL2, Ltd | Hunt Finance Company, LLC | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Number of Loans | mortgage_loan | 21 | |||||||||||
Unpaid Principal Balance | $ 245,115,093 | 245,115,093 | ||||||||||
Hunt CRE 2017-FL1, Ltd. | Hunt Finance Company, LLC | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Number of Loans | mortgage_loan | 4 | |||||||||||
Unpaid Principal Balance | $ 73,114,000 | $ 73,114,000 |
RELATED PARTY TRANSACTIONS - Un
RELATED PARTY TRANSACTIONS - Unvested Share Activity (Details) - Employee Stock Option - $ / shares | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Shares | ||
Outstanding Unvested Shares at Beginning of Period (in shares) | 4,500 | 4,500 |
Granted (in shares) | 4,500 | 0 |
Vested (in shares) | 0 | 0 |
Outstanding Unvested Shares at End of Period (in shares) | 9,000 | 4,500 |
Weighted Average Grant Date Fair Market Value | ||
Outstanding Unvested Shares at Beginning of Period (in dollars per share) | $ 4.33 | $ 5.97 |
Granted (in dollars per share) | 3.40 | 0 |
Vested (in dollars per share) | 0 | 0 |
Outstanding Unvested Shares at End of Period (in dollars per share) | $ 3.87 | $ 5.97 |
GUARANTEES (Details)
GUARANTEES (Details) - USD ($) | Jun. 15, 2016 | Sep. 30, 2018 | Dec. 31, 2017 |
Guarantor Obligations [Line Items] | |||
Basis spread | 0.0325% | ||
Backstop Guarantee | |||
Guarantor Obligations [Line Items] | |||
Representation and warranty breach, threshold period for likely occurance | 5 years | ||
Maximum amount of estimated future payments under the backstop guarantees | $ 1,178,799,051 | $ 629,278,629 | |
Minimum available liquidity | $ 5,000,000 | ||
Minimum available liquidity, percentage of aggregate unpaid principal balance | 0.10% | ||
Indemnification Agreement | |||
Guarantor Obligations [Line Items] | |||
Maximum amount of estimated future payments under the backstop guarantees | $ 0 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions | Sep. 30, 2018USD ($) |
Hunt CRE 2017-FL1, Ltd. | |
Loss Contingencies [Line Items] | |
Unfunded commitment related to loans held-for-investment | $ 16 |
Hunt CRE 2018-FL2, Ltd | |
Loss Contingencies [Line Items] | |
Unfunded commitment related to loans held-for-investment | $ 56.9 |
STOCKHOLDERS' EQUITY - Narrativ
STOCKHOLDERS' EQUITY - Narrative (Details) - USD ($) | Jan. 18, 2018 | Jun. 16, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Sep. 30, 2018 | Dec. 27, 2016 | Dec. 15, 2015 |
Stockholders' Equity Note [Line Items] | ||||||||||
Net income (loss) | $ 4,353,026 | $ (4,256,337) | $ (5,822,037) | $ (4,183,767) | ||||||
Common stock, shares authorized (in shares) | 450,000,000 | 450,000,000 | 450,000,000 | 450,000,000 | ||||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | ||||||
Common stock, shares issued (in shares) | 23,687,664 | 23,687,664 | 22,143,758 | 23,687,664 | ||||||
Common stock, shares outstanding (in shares) | 23,687,664 | 23,687,664 | 22,143,758 | 23,687,664 | ||||||
Proceeds from issuance of common stock | $ 19,800,000 | $ 7,245,817 | $ 19,827,811 | |||||||
Stock repurchase program, authorized amount | $ 10,000,000 | |||||||||
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 | 50,000,000 | 50,000,000 | ||||||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | ||||||
Preferred stock, shares issued (in shares) | 1,610,000 | 1,610,000 | 1,610,000 | 1,610,000 | ||||||
Preferred stock, dividend rate, percentage | 8.75% | 8.75% | ||||||||
Preferred stock, liquidation preference (in dollars per share) | $ 25 | $ 25 | $ 25 | $ 25 | ||||||
Preferred stock, shares outstanding (in shares) | 1,610,000 | 1,610,000 | 1,610,000 | 1,610,000 | ||||||
Dividends payable | $ 1,450,609 | 29,349 | $ 1,450,609 | $ 29,349 | $ 39,132 | $ 1,450,609 | ||||
Comprehensive Income (Loss), Net of Tax, Attributable to Parent | 3,472,517 | $ (2,949,798) | $ 4,164,013 | $ (3,189,980) | ||||||
Stock Repurchase Program | ||||||||||
Stockholders' Equity Note [Line Items] | ||||||||||
Common stock shares repurchased (in shares) | 0 | 126,856 | 126,856 | |||||||
Weighted average share price of common stock repurchased (in dollars per share) | $ 5.09 | $ 5.09 | ||||||||
Stock repurchase program, remaining authorized amount | $ 9,400,000 | $ 9,400,000 | $ 9,400,000 | |||||||
Series A Preferred Stock | ||||||||||
Stockholders' Equity Note [Line Items] | ||||||||||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | ||||||
Preferred stock, dividend rate, percentage | 8.75% | |||||||||
Preferred stock, liquidation preference (in dollars per share) | $ 25 | $ 25 | $ 25 | |||||||
Common Stock | ||||||||||
Stockholders' Equity Note [Line Items] | ||||||||||
Common stock, shares issued (in dollars per share) | $ 4.60 | |||||||||
Issuance of common stock, net (in shares) | 1,539,406 | 4,600,000 | 1,543,906 | |||||||
Dividends payable | $ 5,156,936 | $ 5,156,936 | $ 5,156,936 | |||||||
Dividends payable, amount per share (in dollars per share) | $ 0.22 | $ 0.22 | $ 0.22 | |||||||
XL Investments | ||||||||||
Stockholders' Equity Note [Line Items] | ||||||||||
Common stock shares into which warrants may be converted (in shares) | 3,753,492 | 3,753,492 | ||||||||
Common stock, shares issued (in dollars per share) | $ 13.11 | |||||||||
Hunt | Private Placement | ||||||||||
Stockholders' Equity Note [Line Items] | ||||||||||
Common stock, shares issued (in dollars per share) | $ 4.77 | |||||||||
Aggregate capital raise | $ 7,342,967 |
STOCKHOLDERS' EQUITY - Dividend
STOCKHOLDERS' EQUITY - Dividends Declared (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 |
Dividends [Line Items] | |||
Dividend Amount | $ 1,450,609 | $ 39,132 | $ 29,349 |
Common Stock | |||
Dividends [Line Items] | |||
Dividend Amount | $ 5,156,936 | ||
Cash Dividend Per Weighted Average Share (in dollars per share) | $ 0.22 | ||
Distribution One | Series A Preferred Stock | |||
Dividends [Line Items] | |||
Dividend Amount | $ 293,503 | ||
Cash Dividend Per Weighted Average Share (in dollars per share) | $ 0.18230 | ||
Distribution One | Common Stock | |||
Dividends [Line Items] | |||
Dividend Amount | $ 737,388 | ||
Cash Dividend Per Weighted Average Share (in dollars per share) | $ 0.03126 | ||
Distribution Two | Series A Preferred Stock | |||
Dividends [Line Items] | |||
Dividend Amount | $ 293,503 | ||
Cash Dividend Per Weighted Average Share (in dollars per share) | $ 0.18230 | ||
Distribution Two | Common Stock | |||
Dividends [Line Items] | |||
Dividend Amount | $ 788,649 | ||
Cash Dividend Per Weighted Average Share (in dollars per share) | $ 0.03343 | ||
Distribution Three | Series A Preferred Stock | |||
Dividends [Line Items] | |||
Dividend Amount | $ 293,503 | ||
Cash Dividend Per Weighted Average Share (in dollars per share) | $ 0.18230 | ||
Distribution Three | Common Stock | |||
Dividends [Line Items] | |||
Dividend Amount | $ 788,649 | ||
Cash Dividend Per Weighted Average Share (in dollars per share) | $ 0.03343 | ||
Distribution Four | Series A Preferred Stock | |||
Dividends [Line Items] | |||
Dividend Amount | $ 293,503 | ||
Cash Dividend Per Weighted Average Share (in dollars per share) | $ 0.1823 | ||
Distribution Four | Common Stock | |||
Dividends [Line Items] | |||
Dividend Amount | $ 473,663 | ||
Cash Dividend Per Weighted Average Share (in dollars per share) | $ 0.02008 | ||
Distribution Five | Series A Preferred Stock | |||
Dividends [Line Items] | |||
Dividend Amount | $ 293,503 | ||
Cash Dividend Per Weighted Average Share (in dollars per share) | $ 0.1823 | ||
Distribution Five | Common Stock | |||
Dividends [Line Items] | |||
Dividend Amount | $ 473,663 | ||
Cash Dividend Per Weighted Average Share (in dollars per share) | $ 0.02008 | ||
Distribution Six | Series A Preferred Stock | |||
Dividends [Line Items] | |||
Dividend Amount | $ 293,503 | ||
Cash Dividend Per Weighted Average Share (in dollars per share) | $ 0.1823 | ||
Distribution Six | Common Stock | |||
Dividends [Line Items] | |||
Dividend Amount | $ 473,663 | ||
Cash Dividend Per Weighted Average Share (in dollars per share) | $ 0.02008 | ||
Distribution Seven | Series A Preferred Stock | |||
Dividends [Line Items] | |||
Dividend Amount | $ 293,503 | ||
Cash Dividend Per Weighted Average Share (in dollars per share) | $ 0.1823 | ||
Distribution Seven | Common Stock | |||
Dividends [Line Items] | |||
Dividend Amount | $ 1,421,260 | ||
Cash Dividend Per Weighted Average Share (in dollars per share) | $ 0.06025 | ||
Distribution Eight [Member] | Series A Preferred Stock | |||
Dividends [Line Items] | |||
Dividend Amount | $ 293,503 | ||
Cash Dividend Per Weighted Average Share (in dollars per share) | $ 0.1823 | ||
Distribution Nine [Member] | Series A Preferred Stock | |||
Dividends [Line Items] | |||
Dividend Amount | $ 293,503 | ||
Cash Dividend Per Weighted Average Share (in dollars per share) | $ 0.1823 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Jan. 18, 2018 | Dec. 27, 2016 | |
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||||
Net income (loss) | $ 4,353,026 | $ (4,256,337) | $ (5,822,037) | $ (4,183,767) | ||
Less dividends paid: | ||||||
Common stock | 1,421,260 | 3,320,889 | 5,156,936 | 8,582,666 | ||
Preferred stock | 880,509 | 880,509 | 2,631,744 | 2,631,744 | ||
Dividends | 2,301,769 | 4,201,398 | 7,788,680 | 11,214,410 | ||
Undistributed earnings (deficit) | $ 2,051,257 | $ (8,457,735) | $ (13,610,717) | $ (15,398,177) | ||
Adjustment to calculation of diluted earnings per share for warrants (in shares) | 0 | 0 | 0 | 0 | ||
Weighted average number of shares of common stock outstanding (in shares) | 23,687,273 | 22,139,258 | 23,588,688 | 19,342,188 | ||
Common Stock | ||||||
Less dividends paid: | ||||||
Distributed earnings (in dollars per share) | $ 0.06 | $ 0.15 | $ 0.22 | $ 0.45 | ||
Undistributed earnings (deficit) (in dollars per share) | 0.09 | (0.38) | (0.58) | (0.80) | ||
Total (in dollars per share) | 0.15 | (0.23) | (0.36) | (0.35) | ||
Unvested Share-Based Payment Awards | ||||||
Less dividends paid: | ||||||
Distributed earnings (in dollars per share) | 0.06 | 0.15 | 0.22 | 0.45 | ||
Undistributed earnings (deficit) (in dollars per share) | 0.09 | (0.38) | (0.58) | (0.80) | ||
Total (in dollars per share) | $ 0.15 | $ (0.23) | $ (0.36) | $ (0.35) | ||
XL Investments | ||||||
Less dividends paid: | ||||||
Common stock shares into which warrants may be converted (in shares) | 3,753,492 | 3,753,492 |
INCOME TAXES - Taxable Income R
INCOME TAXES - Taxable Income Reconciliation (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Income Tax Disclosure [Line Items] | |||||
Net income (loss) | $ 4,353,026 | $ (4,256,337) | $ (5,822,037) | $ (4,183,767) | |
REIT Operation | |||||
Income Tax Disclosure [Line Items] | |||||
Net income (loss) | 6,830,000 | $ (4,645,000) | |||
Five Oaks Investment Corp | |||||
Income Tax Disclosure [Line Items] | |||||
Net income (loss) | (5,822,000) | 4,707,000 | |||
Subsidiaries | |||||
Income Tax Disclosure [Line Items] | |||||
Net income (loss) | 1,008,000 | 62,000 | |||
Capitalized transaction fees | (31,000) | (41,000) | |||
Unrealized gain (loss) | (231,000) | 639,000 | |||
Deferred income | 176,000 | 19,000 | |||
Tax income of taxable subsidiary before utilization of net operating losses | 922,000 | 679,000 | |||
Utilization of net operating losses | (922,000) | (679,000) | |||
Net tax income of taxable subsidiary | $ 0 | $ 0 |
INCOME TAXES - Deferred Tax Ass
INCOME TAXES - Deferred Tax Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Non-current Deferred Tax Asset (Liability) | |||
Accumulated net operating losses of TRS | $ 99 | $ 337 | |
Unrealized gain | 191 | 251 | |
Capitalized transaction costs | 114 | 122 | |
Deferred income | 103 | 57 | |
AMT Credit | 19 | 19 | $ 19 |
Deferred tax asset (liability) | 526 | 786 | |
Valuation allowance | (507) | (767) | |
Net non-current deferred tax asset (liability) | $ 19 | $ 19 |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) | Mar. 08, 2017 | Mar. 31, 2017 | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 |
Income Tax Disclosure [Line Items] | ||||||
Decrease in deferred tax asset | $ 364,000 | |||||
AMT Credit | $ 19,000 | 19,000 | $ 19,000 | |||
Percent of valuation allowance | 100.00% | |||||
Net non-current deferred tax asset | $ 0 | $ 0 | ||||
Increase in valuation allowance | 260,000 | |||||
Net operating loss carryforwards | $ 400,000 | |||||
Internal Revenue Service (IRS) | ||||||
Income Tax Disclosure [Line Items] | ||||||
Income taxes, interest provision | $ 1,860,000 | $ 1,860,000 | ||||
Income taxes, interest paid | $ 2,010,000 | $ 2,010,000 | ||||
Income taxes, interest expense | $ 150,000 | $ 150,000 |