MFA - Earnings call transcript Q3 2018

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the MFA Financial Incorporated Third Quarter Earnings Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today's call is being recorded. I would like to turn the conference to your host Hal Schwartz. ahead. go Please

Hal Schwartz

actual expectations speak Good are MFA's statements conference unknown Operator. forward-looking for nature, All XX-K statements The discussed uncertainties anticipate, When management's report information regarding future to Thank and performance year would could, estimate, today from morning, in are in These containing These and on may this may operations. beliefs, reflect statements factors ended including could assumptions the they time Exchange and it as XXXX, intended which December call to Financial, identify to from in assumptions it such any file contain MFA's various on as statements. Commission. including MFA to factors, time that with and are only expressions risks, or MFA's forward-looking you, and makes. types implied other used, other Inc., everyone. to and annual uncertainties, projected, or Securities expressed statements results known the are statements differ reports risks, date that historical as the words forward-looking to and forward-looking of should, Form or other cause those made. not on will, XX, described those subject expect, of similar believe, which materially those refer

see quarter call in CEO now the would for For additional to XXXX turn time. you disclosure information Thank MFA's Knutson. President, use to Craig this regarding results. your relevant MFA's like please press statements, and MFA's financial release forward-looking the of announcing over third I

Craig Knutson

activity today to interest welcome everyone. in thank Senior are pleased other like morning, quarter solid Steve the a to quarter me CFO; of investment results you President; are would you for third in, your Thank with Financial's management. quarter; financial particularly we With Wulfsohn, and Senior President; of members XXXX. XXXX you, Yarad, Kristjansson, webcast. Vice MFA our Hal. Gudmundur Good and Bryan Vice senior MFA I had third

portfolio centered leverage stable profile muted with book assets mortgage provides peers. credit coupled our lower a low to these our results investment MFA's Our residential much interest return than many produce largely rate while with strong multiple, around sensitivity, maintaining value. continues of risk

investment team the XXth paid Our volume relationships loans $X.XX we MFA time consecutive establishing reliable opportunities assets last of Please difficult generated acquire source to counter that analyze value. new which We we in loan we've and reputation competition. has loans to with whole same purchase able limited effort the in spent each volume. as order to some considerable are efforts including cases seeking us year meaningful and last These buyer a bearing quarters. size parties three fruit been transactions of as now earnings At enabled $X.XX residential significant paid MFA's over the to of time, whole third in evaluate Page capacity of to understand, many $X.XX the This has as of shareholders are turn a to on investment three. and to QX XX. quarter and in a years quarter per share continue to the intellectual demonstrated common dividend. is October dividend in have we and price understand new

income that to in made per the capital and quarter offering equity income report completed a common remains as I'm during $X.XX estimated estimated We of was this and raising Our approximately share. the our $X.XX progress September in we deploying third pleased substantial for taxable $XXX new taxable XX August undisturbed quarter. million follow-on

billion as or over whole in XXXX over the $XXX $X.X third in committed to of by loans. million runoff our exceeded investments new purchased residential purchase we Our quarter

loan book our OREO high as to second quarter value the due continues equity a billion billion stable XXXX fundamentals leverage, of primarily strategy last of loans. the over residential these Residential book invested provide originated Most of with strong our has to than over levels whole MFA's of page investment less credit to declined of book drive the low of in more the than Our very and much now has loans. quarters X%. and loans coupled slightly $X with value eight between these $X.XX allocated variance assets. whole share value. been variance attractive investment value strategy $X mortgage three in over to Please of portfolio support through X% X. been average and with returns the turn only MFA's quarters earnings low book credit mortgage a value our half notably quarter-over-quarter book in total including newly We to growth now residential purchase have per

of is rental In at efforts from for $XXX loans. to generally of we Third income. loans, sensitive meaningful began which of assets source These or non-QM loans purchase bulk loans home nearly classes the with to from quarter interest flip these from approximately acquisitions and account these very our credit associated different included we XXXX. of directly assets to early through that have originators carrying begun rather street million make million a process new $XX million as these The of asset $XXX acquiring loans. contribution our from fixed in family net offerings than other loans holders single value our and

new reliable provider agreements, enabling source ability with and explore MSA as our grow investments addition originators a of support equity through to and we've to minority alliances strategic to from also In flow including various investments, them capital. to able arrangements while with been willingness attractive partner

efforts. the committed messy We loans, sensitive improved resources to we've credit and For by ourselves management sometimes recognize managing sensitive we our asset our significant achieve of details credit loans better and whole can returns. in that that immersing outcomes complicated

the Please contribute decision-making. that the financial interest results And bond pursue consistent resulted turn and universe investments, have call finally, of As materially asset in to particularly servicers reliable due and Page there's we originated our are we high yield involvement difference X. excess price. fund We've to equal can good have to in between cost future continues as borrowing acquisitions. reported our third expand to investment our substantial third adding to a we in our whole assets sensitive XX.XX%. success of opportunities of credit our newly to had to have loans. purchases quarter on and to unlevered portfolio tap balances, amortized third good benefit direct that our a its yield but mix, of can in legacy while quarter cash to new to our tangible we added non-agency a and generating call party still add reduced This perform well was in the a par periodic source efforts assets the Recent whole a loans through income capability oversight

easily purchase is our our represent with minimize intention sold from Page As rate quarters residential interest turn at hedged be we were our equity invest quarter efforts whole $XXX duration raise ratio our year not materially similar of in that portfolio. $X.X these strategy. of balance a investment and this specified of other reduced effect can ago began over quarter. to will to whole to This add leverage, asset XX-year lower achieved have our does we add loan our exposure loans, are agency than couple and is sheet, billion to are least new investments our grow residential investment redeploy returns companies, six. in exposure MFA still particularly beginning We below attractive were That the able begin in less was shift balance likely arise some more material debt-to-equity on sheet. to capital. third did the designed continue on in to that liquidity prepayment to fundamental said, new a million remain opportunities the These X.X% because our MBS over Xx for production to to has to classes make including MBS next positions less low more agency Please sensitivity as risk. leverage We third assets and a quite

assets. the we meaningfully million at The carrying of originated quarter. the in residential hard of Interest that the in the the value sheet loans acquisitions during quarter. existing from quarter. newly outcomes we billion our whole the million versus portfolio whole our has offering sensitive approximately finally, raised the income Our our have impact loans most our the had returns $XX.X value by loans equity whole second a was and exceeded quarter balance in residential team $X.X residential runoff credit contributed third management meaningful asset capital additional work in $XX.X held assets for purchased by loan And deployed on these carrying on and whole income to included are and our

turn to like details to Now, the over further quarter. who will on financial third for results I'd the the provide Steve call Yarad

Steve Yarad

Thanks Craig.

of share. per $XX.X quarter third income $X.XX net XXXX, common The or to shareholders million MFA's was

in our portfolio quarters particularly our are in noted, reflected grow mortgage Craig recent starting that had we're results. be pleased residential As further to efforts additions to in our loans performing

primarily the earnings driven reversing our observed quarters two over several net the interest years. trend quarter are by this Specifically, high income past and

key X. note the net In increase sequential and drove also our in will you net lower addition items to expenses third on three quarter that turn were in the income results, overall We the income. In items quarter. there impacting additional this net reviewing page income information other present increase higher quarter Please income. our driving

higher were on prior includes portfolio assets at quarter. originated quarter net with we loans. that million earn QX. as primarily discussed recently as impact pending loan of the income in approximately item first growth for the of which This This than settlement of end acquisitions most the last $X is income The increase interest these of our reflects

purchases QX result we quarter. robust income a as addition million and settled of our $XXX loans acquired all nearly on these earned the current In and over activity, of during investment

which continued which higher prior $X our than fair was net quarter. The second quarter. from was the was $X.X than million million higher growth strong the and item This income, loan the prior level contribution overall approximately of portfolio, value the other reflects

addition thus than income statement unrealized In almost the which and flow fair gains for securities, million are through CRT quarter. value at accounted the last $X on higher

was prior MBS over income at net than million Finally, sales securities CRT the the quarter. of $X and higher impact

noted we of for Footnote summary $XX.X As security of statement, X reported million. income gains realized in to sales QX the

our income like quarter. this third fair level would previously While the I quarter, the the the higher expect the the G&A investment impact the expense next shareholders timing on equity fair gains for of for compensation of prior X.X%. approximately for quarter operating this expenses these expense to lastly, Cumulative third unrealized the current quarter now, over $X was securities to reduction net avoid the after reversing that during recognition fell accounted this double that securities expenses, at our $X raise, few value at of in item in rate lower at the annualized value order were our net certain sold to portfolio impacted and was more Kristjansson details call CRT awards. accounted We on and ratio prior low is securities quarter. approximately are run sold was With to million by following August unrealized to this lower would in gains the reversed period is which other continue and in determination to income. of our provide of period counting to turn Gudmundur the quarters. activity equity million gains And share-based And reported

Gudmundur Kristjansson

Thank you, Steve.

loans investment grew Steve of Slide largest quarter higher income. with million loan by by in had our and at by investment which the investment of and billion stories current team change. as initiatives added in almost pay another quarter meaningfully acquired most was whole issued specified long specified covers X, X, which see we portfolio, third in was the environment. impact approximately portfolio The assets XX-year we're quarter. year-to-date. the portfolio billion carry our swaps Page TPAs our this in out pools We for prepayment $XXX over $X.X in of as third which offer and point. pointed believe as $XXX our X.X we're areas are And mortgage $X.X million CMBS highly our of residential newly universe successful to our pools the grew in to active of extensively investment $X.X as flows. low the more Turning we all will to billion growth ups with in interest attractive of growth new on purchased classes, the These actively low risk purchases the manage expenses quarter exposure We duration this risk We and these rates starting

interest few credit Given CMBS option investments last over the opportunities. a pending eight to has investment the versus of more invest believe they rates a increase viable liquidity and reward excess be improved in large years, risk can we attractive now

million continue of in optimize securities excess CRT [DM] those at our tightened securities as $XXX saw CRT [ph]. to of a We prices holdings as for $XXX about to overtime to you XXX older spreads have million

on attractive increases, and adaptive upgrades. financial and XXXs three interest earning result and XXX from acquiring earning to delinquencies, monetary This spreads points. [DM] Turning the [ph] labor focused improving crisis net and extensive interest eight benefit years from of basis issued was We that interest remained policy As low yields approximately rating in the strategy they replaced newly them spread has with mid LTVs sensitive an of of period assets bonds X. benefited rates rising assets such has rates to thoughtful market. with easy funds almost Despite would is with and of our on low MFA's lower assets by steady and our the after increased investment Page credit

duration has of rate strategy with principal was rising acquisition performance assets short rate rapid our in portfolio supported through the our addition, floating emphasized a In coupon have of environments. the or repayment either

been whole mitigated financings the swaps as currently fixed interest debt of through have of about in funding loan rate and of securitizations Finally, the rate out we rise terming $XXX million which coupon has costs secured with outstanding.

to Turning as to whole flow going yield, yields more ordered our XX, returns. low can newly we for loans value show cost of only and the loans attractive by allocation, holdings as increase, continue to generate expect our X.Xx holdings here utilize on Page at the But continues leverage of we funds more equity see leverage spreads to and there carrying originated The remains at debt-to-equity. we forward. significant

of continue shareholders. yield our leverage attractive appropriate assets for yields current our that in we the marketplace, the amount to the the believe Given generate of and we're returns we with seeing will

interest of Page points by rate to as quarter Turning where we quarter. XX, the basis XXX was basis MFA's at MFA will the rising to sensitivity. in unchanged seven review end the relatively situation points

longer our added agent the During we of hedges of swaps short $XXX duration duration million head quarter, $XXX in CMBS, of million quarter. primarily matured acquisition to or the

As notional while the a X.X heads negative meaningfully result, X.X our in quarter. negative swap million, balance our duration second from increased by $XX to lengthened

secured market interface debt million $XXX our a of XX% financing. currently to fixed agreements repurchase coupon our and addition swaps repo In in of has debt addition about approximately value protection, at approximately represents non-recourse and securitized X% of our

a quarter to As net changes the heads and MFA's result the in of unchanged duration, was of asset basis points. relatively XXX duration

value book to management changes deliver experienced. have consistently book we limiting Turning risk to continues investment or XX, stability quarter-over-quarter MFA's value Page strategy the

than been a factor maintaining in strategy has the this graph. less from a quarter-over-quarter of of graph or on with pages, minus to the can since on this our you can X% value and been on X%, largest has see you XXXX stable book book value plus orange change this achieving see add big line average situation low the as of As change the

XXXX, opportunity quarter financial has to Given during many impressive. recent in quarter book the would fourth take like the fourth remind performance of rates heightened MFA's interest large I In been value to markets, volatility in that the fixed changes the value rose this declines MFA of listeners experienced periods. of these large not first book rates investors is case quarter changed. XXXX leveraged the time has barely who income during value and book This for periods Through interest significantly. XXXX,

will staying believe protecting detail. to With Wulfsohn, book of I they Importantly, the arise. MFA sensitive credit consistently call who our discuss new that more Bryan we to turn advantage opportunities over value, by assets have will in that, as will take power the

Bryan Wulfsohn

benefit from X.X% XX. up Gudmundur. was housing and Please The economy ago. fundamentals National Price August to Index in you, CoreLogic turn Home Page mortgage continue Thank year The a credit. to

However, has CoreLogic projects from and rate been at September recently year of X.X% year-over-year to unemployment as next mortgage over was a year X.X% result level ago. October higher the down a slowing growth growth be X.X%. rates. HPI in down The

residential While, further growth. price we from million able mortgage over support the overall were have Page the low housing release Federal seen loans slight inventory, I'm the Reserve latest increases source in still delinquencies will X.XX%. on to down these According to in basis. we of supply $XXX levels a third whole historically now nationwide are to quarter. levels Board, are XX, turning believe low home We to

success new partners robust. supply existing We adding loan and have in grew origination been Legacy had has relationships. our

two volumes last loans billion on seen have X%. expectations with lines, for value our consistent elect Typically, acquisition. non-performing is non-performing on and an and to is value value billion which appear at loans value, of fair increase the a on year our than of as held reperforming loans for billion. We loans. fair $X.X This loans Again, and carrying reminder, election returns year-to-date X% newly at of held $XX to originated $X.X is the sheet balance permanent more we whole made carrying over time loans our at be and and continue

our Turning portfolio delinquent. Nearly portfolio less to reperforming our continues well. days to Page XX% of is XX perform XX, than

In been over the of delinquent months. of XX or six greater have payments the these addition last days almost XX% is making XX% although portfolio loans

options borrowers gain perform range We could We of access improving happy in than to to this prepayment a result our see speeds see better financing new expectations. as credit. are as speeds remaining

active believe better management loans oversight XX, loans has servicing and at for limit have either and than shows were and Page XX% management non-performing prior more one-year. of timelines to to status. produces quickly servicing that worked that as purchase outcomes. slide get The now well outcomes in to in have economic for reduce the resolution. our we loans performing were XX% to portfolio be asset to in or OREO are liquidated delinquent XX% of our concert XXXX with to still team decisions month end owned partners the purchased paid full, either more team's Turning as reperform or therefore September of are This liquidated

are We performing expectations our since paid or full. either initial to over modification are outperform our with results have our very in pleased is of modifications XX% performance These for continue reperformance.

and yield to digits To-date, value approximately FICO We billion relationships. warehouse through a double average attainable to for considered we partners and XX, And of non-QM only such that and loan over ratios the with either income asset XX able to of bank low is years a and/or mortgage our features utilizing do acquired ranging leverage. the XXX. not with underwriting self-employed the weighted securitization definition believe a of types have Turning been of add leverage of and statements from than of appropriate XX% OREO documented on or interest and to variety X% strategic have we is an we qualified target $X be loans different origination period loan such meet so line Page working borrowers on. originated newly can UPB by term the greater as The are defined as portfolio or is way as to loans structural of income higher prudent. to has debt over loans of CFPB, portfolio use these

SFR through walk to the Gudmundur like to over flip I'd fix and turn call back to Now loans. our you and

Gudmundur Kristjansson

Thanks Bryan.

commitments. our to business of benefit into we Page progress in quarters. loans loan expand very loans we million $XXX volumes loan building work extensive of that have as originators acquired Since seeing with group in ago, put last we're purpose relationships and a volumes in program you to the undrawn and Turning year approximately our purpose about select add we programs. started see couple UPB strong out up purchasing really with pick and work We're XX, new of approximately happy where XXXX the first to has business been began a developing the collaboratively

During flip over and holdings $XXX in additional their and and continues performance earn UPB with to between these commitments. million the million will fixed expectations metrics strong we we and yield third $XX to undrawn be loans are X% and time. of assets doubled Credit X% in quarter, our an

to As million of third continued loans, the the end Similar in loan the performance and to quarter, we flip and strong. held be of metrics credit $XX SFR fix loans.

about our become programs yield progress developing is the our and We're turn we for returns. have non-QM will comments. of final for a as to around Craig asset that, class I loan and Our X%. this and offer part the made flip excited meaningful they in call target over SFR fix some attractive With portfolio

Craig Knutson

you, Thank Gudmundur.

we and Page continue growing to summary, to market have balance Turning XX. we by remain leverage in sheet. we have made our while active substantial to in capacity to In the increase our adding investments base, asset our investment excellent progress

what structure the presentation, to invest be concludes would to that operator always the will please in up questions. open have residential We but reliable, of newly our confident size. we originated returns. the years in our pricing the we attractive recurring expertise will are in We investing bids. can table, means what space be very and so adding predict to loans. are that growing we believe within investment the we much don't long-term, whole quite at you call and have progress set understand good a by investments next This will We've the approach capital for expanding for mortgage cannot for be, we volume disciplined meaningful investment win opportunity aware ample too We're our of lock transaction suboptimal keenly seat sometimes made opportunity able reaching the which and maintained

Operator

go from you. Suisse. ahead. first will come line Thank Our Yes. question Instructions] of Please Credit Doug [Operator from Harter

Doug Harter

Thanks.

and talk the on like that the rates a are leverage Can guys you what little You talked leverage loans. where about go? to financing ability on expand whole about could advance the bit

Craig Knutson

Sure, Doug.

one which bit as of would ratio residential the I So show obvious be Xx. debt-to-equity whole loans at carrying than we a less guess value, a little

depending on they loan, be XX% from so. anywhere to the -- So haircuts or could XX% the could be

that be levered. So at maximum could it XX% Xx the at

X.X don't I X.X see our leverage as is increasing So in or but X.X, to certainly from the or said X.X substantially, I increase to cards.

Doug Harter

it. to good continuing find this assets? view And as Got quarters, obviously the a continue activity guess ability either of kind opportunity increases of leverage to it's quarter, the kind your in I coming

Craig Knutson

We are pretty excited about the newly loans, every originated whole non-performing loans loans every and because day, every unlike our these week, previous purchases month. of reperforming these originate originators

this of billion first $X.X excited three see those So look to you continuing last a but the and time done purchases acquire takes year, product. year, our a reliable see source think we pretty we quarter grow classes about we've billions, and if at in those relationships to I it asset it's as It so we're are were fourth -- what that. about of

Doug Harter

Thank Great. you.

Craig Knutson

Thanks Doug. Sure.

Operator

you. Thank

from line question come then next Please Bose ahead. George will KBW. of go Our from

Eric Hagen

on it's morning, for Bose. Good Thanks. Eric

Just part did accounting guys did. did a Thank release a earnings it? and during the big capture two the through then, And question. quarter How you take if much you quarter? was discount during you. guys credit accretion reserve you How

Steve Yarad

Sure, Eric.

in discount it $XX.X in the with for quarter approximately the quarter. was is for the that discount, And release million. quarter, of accretion $XX amount of million for So approximately net the the terms went

Eric Hagen

the that with recently. sort of on regards the granular somewhat you I'm trends out mean little do fundamentals an like, have in mean how you housing drawn down markets? the show portfolio And I and sort and around to the or you get really the submarkets. But I question, factors employment I you. things and a HPA guess guys to national Slide HPA markets to ticked guess of where individual it build certain the flexibility guys I it. optionality begs XX like you Got Thank do in

Craig Knutson

we Sure. go the back XXXX started And non-agencies. way the buying Eric, when to legacy we can all

not national approach. looking Yes, to National. when very we likely. level. zip it's code HPA. it's whether look price slide or we've never had taken question when a And a we so down at really to drill house we're itself it's is It's to granular loan or at think securities, a where look in we it we But, think deck, codes about only always in I a security buying we of loans pricing. the typically zip appreciation put about at a assets lends pricing And a

So that's suffice to price we're potential a appreciation. years. -- in higher probably to where home almost one equal will appreciation process a part more say, location going of than there's with lower a investment price loan believe in consistent for XX whole all been we of house price But our

Eric Hagen

I different and to have taken have just hallmark that Great. some And have Thanks. Yes. securitization returns that than your your I That's I in non-QM you that some already. a talk, guys you assume financing place looked in of can helpful levered expect what assume on mean securitizations the sort of that what is market. opportunity deals you that mean taken through answer. the are anyways portfolio you. eventually Thank do to that then, side, I the the any the of exit at guess I there the place get portfolio or

Steve Yarad

Thanks.

So, yes, X%. you digit can on to return. execute I low the a this anything else, retaining sell just the think I mentioned a the you is down on in when way expectation just securitization then, really almost the all And like presentation double

leverage leverage, that. less take take of probably less than would we lot a leverage is obviously that but and So

So to we again, we leverage appropriate with those get can think low returns. double digit

Eric Hagen

guys it. for the Got comments. Thank Great. you

Craig Knutson

Eric. Thanks

Operator

you. Thank

of line from question a Delaney Steve have JPM We Securities. from go the ahead. Please

Steve Delaney

really billion new that they evolve to over -- are appreciate look calculate the congratulations page a income just quarter was efforts at a as your didn't at three one things quarter, -- numbers right that on as that about billion happening. of They in for a they the But, to the $X.X about us On to have one have UTI people and X.XX. June your I'm September hand, last see think cost a in below the investors around of the things year at to RMBS. MFA, but figure. looked itself; this disclosure of in on that looked XX or looking is the looking $X.X the the like everybody we morning, the it look class, trying it Q legacy Good the legacy quarter. to the I gains I taxable one they well I by at of like try strategy at I'm but $X.XX exciting against I coming twenty the GAAP, talked rather RMBS. peg questioned to It looking when picture the fair and asset than the was Craig, because value just just if dividend. core backing bigger out

XXX like if call me, shares it's this. million it So just let's helped roughly $X.XX And a XXX some [indiscernible] and it is, share. understand my million point dollars, should

Am going it that me EPS. that be not you If sell in assumption? that me. reflected strikes you're you went Thanks. If necessarily dividend taxable your creating standpoint earnings. and your But that which it EPS clarify I taxable, that is in as that am value benefit bonds from correct for could GAAP your GAAP correct will value what in down is that drives in help that to portfolio thinking assume fair through mark be in I the that then book I a to

Steve Yarad

And I required because you confusing classes various it's at to it that account we're those because the way the and for understand. asset difficult to very apologize when look is

because statement fair does income the flow our all, about I and the on value you're sheet. right think, the but those balance legacy through basis difference our first of right that are book held not versus

income it So through that book of it value, gets over but statement. the does our flow through said, doesn't accreted per period. flow the discount GAAP holding That life

And so every that into happens as it but bit gets period. little gets it single recognized discount accreted, income, a

higher very many bit works. GAAP be about our and taxable actually can tax can a on because quirks it from is truth our is it's income, that accounting of second higher lower. taxable is tax basis of and be that just unfortunately The book Your the on question And of the it income the so how the part a of different large income. quite assets legacy

in -- the been higher So about the in sales the again, tax whole the it's all tax And gains legacy about the say general we I recognized GAAP. basis for generalize but versus than would gains not purposes. that gains recognize accreted for have portfolio, gets how to

Steve Delaney

Okay.

follow-up offline might on Steve appreciate morning. this Thanks. I your with comments but I Something

Steve Yarad

Steve. Thanks,

Operator

Rick Thank Please Instructions] line the a ahead. Shane have question you. from [Operator from go of We JPMorgan.

Rick Shane

to want [ph] are of for my little to talk about guys and XX, taking loans. sort [we'll The did I Hey, helpful. leave] thanks the to then, bit of whole questions. Slide it related a slides very strategies some

the As this home derivative appreciation, curious, am actually increase terms more second strategies credit we're risk. credit in only their I derivative point. at not pointed the historical new in price seeing out, more sensitive, first our but of sort are of

the types previous different investments of If you prior think what making to where about now, cycle? we are these from is

Craig Knutson

Slide in its -- and Well, I the at these I stark and would most thanks the if LTV. alternatives, for LTV. difference you would question look all between now Rick. investment about the It's say that XX, XX

you XX%. look on and if non-QX portfolio, and It's the fix the family XX% So XX% on LTV single rental. flip is weighted average at the

think significant a for our thing that's increase, instead not are take X.X%. home we've again troubling. recently we I I noise. And a flip aren't yourselves, decrease I that it's portfolio, that lower very these be little fix declining the But around us a so house XX read they're it's just mind So you these amounts, comment prices by of been bit actually maybe your home mean in that's sensitive were. short, really mind, could really last and of again, X But it's through X%, If in as think also that instead is prices and start prices like much keep months. they if increasing that's to loans year-over-year and about the typically more been to LTV. we've as something that cycles

one little very there prices typically exposure less to when than loans that take the starting LTV really there's you these home year. fact So are and the

Steve Yarad

though Also at of a prices rate. slower are Eric, appreciating kind so home even

coming that saw we XXX,XXX a each in there about and is rate the as the job that above factor have mortgage a down you is the you the unemployment month. to unemployment wages it rising being report saw really at keeps of And And payments, and created wages are are important finally have Another is fact X%. end day jobs make your to if helpful increasing.

mortgage in general. for So a factor that is credit positive

the wage is trend probably to are a fact bad to going basically the we're forward thing. And what the price is level that going appreciation growth not seeing so probably home of -- which

Rick Shane

Got it.

it's intrigued So, three growth doesn't XX these issue. and X% that were If there think certainly the I loans about comment a really of which versus was the contributed different suggest ago. end I that and think anything that years about It depreciation a is value the isn't where very the we ultimately world collateral are I'm LTVs fair home price is on very plus and from we factors point, growth by X% really was agree collateral unwinding.

previously was second equity factor was third appraisals that the upfront. was were the The less much there unreliable. But,

And you or because changed as previously, only so weakness is the system what good was in again in as think weakness if am a system I there that's appraisal. do LTV the that the where curious that XX% that

Craig Knutson

Yes.

again I past right. You're say in we've as seen would from we've what the learned well.

of before are those those we the actually fix that buy we a are work and instance real. satisfy for loans independently take quite appraisals values to do flip those ourselves you bit and If solid that loans,

someone, up the here whole before lot we a that and acquire that's wrapped these we're we number just work -- this that process from of of management we So asset into look that there's don't and even goes doing get on at part as loans.

Steve Yarad

But, and a something not are whether really originators good also that's it's selecting what completely home. at most it's look comps, we're part, people far mean seeing appraisals] as for we have the [ph] the but we we're [mass seen, pretty those information it's different from I getting the away and

to process. the comfortable do get pretty with lot we we kind out, are of But pointed that for also ourselves to information happy part, values. So with work as that Craig of a most that

Rick Shane

I Thanks taking it. questions. my appreciate guys. for Okay,

Craig Knutson

Rick. Thanks

Steve Yarad

Thank you.

Operator

we've go Please from And you. question KBW. a from Thank George follow-up Bose ahead.

Eric Hagen

for Thanks taking follow the up.

we've on rotation longer an you as into just so can guess far observed book some credit value you during please? update assets us what quarter, and assets modest the spread during widening Just duration I on the just give given the can quarter

Craig Knutson

Eric. Sure,

for of a our on loan caveat, reports month October remittance So don't yet. even portfolio whole have as we the just

points know So and away at we a a a That of little Legacy to lower data we are CRTs and on from the to a least that of week are books a feel October. actual more said, non-agencies, versus our probably be few more so prints. we closing month end ask it have wider but to September. weaker, bit might do little do the seems wider levels they bid

the at more is this is end I but a not very versus than down was order quarter So of say any obviously that magnitude point the of book estimate, estimate value probably rough X%. would the

Eric Hagen

much. it. Thank Got very you

Craig Knutson

Sure.

Operator

questions And this at in you. further have Thank I queue. time, no

Craig Knutson

speaking quarter joining again and We Thank forward right. for today. in to next all us interest MFA look for February. you you All with in your

Operator

conference The and after our replay ladies does And December today. that conclude XX for today for you. will X. Thank through available gentlemen PM be conference

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You may now disconnect.

MFA Financial (MFA) 6 Nov 182018 Q3 Earnings call transcript