- Earnings call transcript Q3 2022

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the MFA Financial, Inc.

Third Quarter 2022 Conference. At this time, all participants are in a listen-only mode. Later we'll conduct a question-and-answer session and instructions will be given at that time. reminder, is a recorded. As instructions] this being conference [Operator conference to our I like the over would now turn to Schwartz. host, Hal Please ahead. go

Hal Schwartz

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

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

Craig Knutson

Investment Financials' with quarter here and and Gudmundur other of are thank Yarad, me management. XXXX and our are today morning, senior members earnings Good for for you Hal. Co-Chief Also Wulfsohn everyone joining Bryan you, Kristjansson Steve Officers CFO; today call. us third MFA Thank

not with particularly with not markets mortgage quarter no the and period continued or already markets considerable up in was mid-August all financial crisis, and the down all-time near despite the over prior highs, since another was respite third rates through Bond Inflation second of the The Equity extremely time XX% quarter. markets. seen S&P across great quarter up certain the for volatile was the XX% very disappoint half recall offered from in and difficult financial challenging it taken was agency stubbornly backing prints historically a it third X% XXXX you'll action third the quarter in to quarter, then Freddie credit XXXX numbers continue Fed. that spreads experienced touching of be which was two by for Fannie volatile good. high XXX down only a the although to quarters

seem and and it point market Japan, inflation recent obvious in a pause yields was stocks participants not UK at in Although becomes Ukraine raging this a with soon. the for likely Fed we subside consistently has to until volatility and a stocks which their is retrace still sometimes up financial advised and clear sole focus to temporary that ill euphoria bonds is to that driving signals a down short seize anticipate market on tenuous random period on been pivot or and this in war levels stresses the

in As spreads many as generally result, levels. yields to sidelines have and a market even wide financial the on historically remained investors cases moved have

one what XX active But time was that conspicuous into of any years, agency mortgage as an XX to the see over versus absence Fed the is quite of even today last an as question for been observed the plus in the the buyer admittedly, we of market nearly effectively which spreads as notion spread RMBS, floor calls market attractive. that as XXXX, period. products explains of on have today even look credit treasuries many wider on looking normal what today. XX-year levels puts average Recent a Now they all back or in wide prior or non-agency the spreads

to were that been agency referred overlapped of first year when periods see earnings and years our then for points whereas financial XXXX. we another times periods four call there basis XXXX, rates basis four dislocation spreads quarter earlier falling for function Fed in rising crises of a and XXXX, systemic rates. the except only XXXX, with is and last total fact, the wider, raised points all today and largely with of rapidly In coincided the XX have XXXX XXX six of a and market XX XXXX, times I all these this XXXX February MBS during times rates unique in

plus and first today, beginning the tightening year through and XXX. tights time, of Agency identical purchases they increases a early basis the remember at tens announcement mortgage almost Fed increase but and July, begin from all by the prior to spread wider. off XXX only finished would low spreads back XX this be recent similar spreads XX in early tapering in points fifties. rose hundreds. Agency in XX XX-year when basis XXXX basis set push April points in off before points XX of XX-year the XX first rose mortgage September. January a widened the asset inside some During taper of widened of widening rising were and in MBS XXX. the yields mortgage late agency point prior XXXX. just for agency the widening which X% to fed Chair widening rate and yields and from of more the tantrum, from treasuries we a taper selloff Contrast to from versus peak that were have would action plus XXX tantrum before announcement That's XXX agencies the XX the A by 'XX, fed from in set future XXX date September the plus summer plus in in spreads peak Bernanke's year in agency over yields to early then basis just rallied had to XX MBS the led and this basis just with and to to a points of widened XX-year about

recollection context. tantrum than was much in spread Somehow the suggest, my today's numbers of actual taper more and this environment these puts again, dramatic

the While direction exceeded foreseeable. the magnitude some fed hikes expectations, of was has

steps at rates dramatically XX pay became rates We at last position and billion than when had duration move extended, $XXX clear and expected. in average X.XX. beginning XX. the to our the team X.X of rose that preserve at of quarter MFA swap of Our we again previously year, at million took year it Fed manage to to more end swaps capital fixed last need interest duration rate fourth year this $X.X This book weighted and billion increased to June as has March would and

these this pace With now lock considered basis does the U book PB cost, in a only to position funding we've steps same approximately our securitizations the benefit billion is securitizations taken at loan our time, locked throughout costs decline. slowed action and asset-based what acquisition cheap beginning but which from year, receive the we also not points. deliberately through a XX% swap XXX now now the quarter mitigated priced yesterday's in, securitizations positive execute leg, fed is we we and in of the floating from effectively first So in continued financing together. nine year our and of our have rate carry These of $X.X value over

which value, portion or value payoff value the book Although immune or is relative vast peer was decline MFA's diminution book It's will we many majority likely on maturity. MFA worth until was significant a due performance also not that versus to book noting of The sheet. fair hold conservatively our loans balance value to in certainly marks better. group in of

As of the billion approximately million. purchase loan September portfolio principle on discount market is $X.X $XXX performing to of our balance unpaid XX,

by issues book of value $X.XX million secured These a below marked $XXX increase are two that approximately produces potential per have $XXX million We also discounts netting. par share. approximately or

loans losses the loans. amount on purchase any particularly losses our on Assuming at liabilities would be and expected low, portfolio. this off pay relatively par, loan realized all are performing But by offset

as and holding the on Having a while also have all the ended cushion in sizeable liquidity our a substantial $XXX S financing at provides a the market balance We've swing our times September cash the of overall pages quarter recourse take prioritized fortified the for us gives not financing that volatile fences. XXXX increased third for and six drag as cash, of we also and We've portion our market equity liquidity was This non-marked creates seven ability quarter We sheet advantage to was arise. to presentation. time of XX% XXth. in and our X.X our of only to with leverage is million position we end. approximately obviously non-market show roe. market on opportunities and of to of

from term than haircuts for financings spreads months multiple extend financing has market XX% despite to and a other financing. we continue financing for counterparties financing term financing the Typically, The from of these months. agreements agreements bank and eager the before is and couple their agreement. calls Our of financing available date are field maturity another fixed this provide year, term of six loan a loan greater is on borrowing and volatility, we expires, existing significant lenders to

some of after housing over bit spreads Activity in widening not at the dramatically. sell-off talk month see has a like credit. parts This home a little should the on and I'd last mortgage least modest about had years. two rates home appreciation a dramatic to residential after and housing price has over a and declines country beginning be mortgage Finally, and impact and the surprise. dramatic to rates month profound mortgage the price some Clearly slowed We're

portfolio show lowered However, eight, combined mid-fifties. cases has page as to considerable on our which the HPA, embedded loan LTVs the has amortization most in current with we

we substantial MFA continue how to liquidity. maintain summarize positioned, to So is

and fortified the term products. for and from LTV. through our financing financing, with seasoning loan price balance sheet appreciation our agreements non-mark licenses has We a and our low rate benefited market And loan financing have fixed swaps has and portfolio secure home

their financial equity now borrowers the I'll substantial to details properties. Yarad additional discuss Steve of results. over And So to have turn in call

Steve Yarad

$X.XX common during the quarter was declined or value value X.X% the $X.XX a for the per MFA's slide share. All modestly income present results. distributed. Book presentation, per were four to negative of On $XX.X million we million of $XX.XX common per Craig. Net gap you, snapshot XXXX was $XX.X $XX.X earnings share. down million. interest common third company earnings book gap our were Thank quarter QX share update or

X.X of economic recourse While times times excludes down ratio book X.X X.X% quarter XX, turn the we $XX.XX, with ended a to with value September to was Gudmundur. call I'll debt at XXXX. was leverage, the And which that, leverage over securitized

Gudmundur Kristjansson

Steve. Thanks

decline as Turning to and capital to in modestly million deployed. to to that continue portfolio on activities we be our XXX the yields loan is investment quarter selective acquisitions higher in the require acquisitions,

business our in the quarter. best organically Lima the new originations find One we and of BPL million to nationwide sourced continue opportunities XXX You originator leading in purpose funded draws through loans where rehab

of Xst, characteristics XX% XXX. We selectively volume strong volumes. of and portfolio of score X.X nationwide Lima underwriting. unchanged with million with XXX The state Lima as demand stronger credit about thrive The three of billion credit approximately a FCO the runoffs of acquisition strong loans. continues attractive asset non time of versus portfolio quarter of delinquent site KM reputation BPL approximately term rate XXX performance by third the The quarter. was term was to year largely origination July than continues loans also maximum at and short rental the Lima quarters leading loans. the MFA's at were portfolio originated term the million average prudent at excellent Continuing XXX with LTV be short the loans products XXX sensitive, relatively about the MFA under to year a in longer has million X% is new volume, throughout less originator in and long. modestly originated from second in XX yields loans on credit for acquisitions average X% valuation seen XXXX. up quarter. of loan million have XX-plus of we RTL trends amounts third trailing and acquired excellent as established One and declines, more About origination with approximately all owned approximately origination quarter ownership compared a the month Lima acquisition performance to

coupons credit higher based rates, we our by of of of year which average focused risk that, get our general. risk BPL reward excellent have adjustments the improved monetary increased. profile economic We To the tightening on in standards, in the throughout tighter quality softer on policy the have originations conditions underwriting has increasing loan been portfolio, proactively while of our before, impact At origination managed ahead Lima's and potentially year increasing price further and was has result, the the coupon portfolio.

an XXXX RTL the increased and At that same has basis increased by dependent currently over And on whole and pipeline smaller is As score the points originators are has this XX phases coupon by vintage in points Lima's sales. BPL XX%. our approximately XXX average origination on year our loan FCO the the to about basis average and example, XX respectively. XXXX compared of points XXXX vintages XXX time,

which been maintaining So standards. prudent have created of quality. been third for opportunity market to has pipeline has volatility, share increased or parties The credit credit an a fairly market steady LIMA grow the by result impaired

the to quarter. starting underwriting due expect decline volume standards are some and tightening in to fourth origination softening We and in higher see of rates borrower to demand

financing to be on approximately terms. P origination. and RTL to availability million BP XX% to of focused is capacity financing non-mark which We And expanded off, end by to continue about our quarter support XXX that in liquidity market the on our

credit Brian. of In will million activities the exceeded over securitization RTL in of addition, $XXX We'll paydowns about turn and discuss I portfolio $XXX performance. million the call loan MFA's draws to not quarter. about

Bryan Wulfsohn

Gudmundur. Thanks,

securitization. made progress significant plan share in financing have to a through greater of obtain our our We

issuer and spreads in we the August loan Over billion which challenging issued took a spreads to moved low and to of securitized In points from wider securitizations non-recourse an issued the the year. types of bond pushed were XX have RTL by before SFR been months, spreads last s we XXX the basis materially has from a have was required has our non-QM securitizations. an spreads year again and Non-QM securitization AAA RPL XX many through and high June. to widened respite, there X September The Triple SFR be XXXs start wider debt A of to covered investors just ONM advantage the XXX in out as and issue to with shortlived XXXX mid-XXX.

perceived about As would which time our mentioned, weeks, every execution hindsight wider to in Craig our even has leak we made in subsequent previously levels disappointed feel great. spreads would look

market be believe will We continue we as to provides financing portfolio. a our securitization to regular issuer in market benefits the marked to significant non

days portfolio purchases. RTO of XX making loans exhibited delinquent The loans portfolio's, Moving September QM was delinquent nine The loans portfolio those the portfolios portfolio RPL portfolio to half our XX% plus delinquent. quarter. are third days of was continued almost X%. credit X%. improve plus percentage over across of remaining with the in NPLs, of the X loans the to performance XX% payments in the and XX The four for delinquencies

borrowers of are XX% making payments. those about However,

our We remaining on loans. laser are non-performing focused

prices, team as is As shifted resolution home management remain possible, costly. can in be protracted our make as working timelines momentum sure to timelines has as asset short to

to As amid potential years, significant relating which a over aided low maintains losses helps LTV by portfolio the limit our two past modifications. HPA the experience

the interest mortgage receive now rate waterfall mortgage will following the modification. We increase not case the the in to an was a crisis. most Borrowers cases account in rate, landscape mitigation into have financial current which the loss adjusted to take our to years see

XXX aggressive have we properties moving taking XXX as questions. REO with to of portfolio the tricky in that, increasingly turn since net for we'll And been call beginning million housing market. remain year, gains successful our the to the we operator of an reducing by $XX Lastly, in the properties over

Operator

Bose we instructions] [Operator go with George KBW. And will Please queue begin ahead. with the

Your line is open.

Mike Smith

aggregate where guys, of the new balancing maintaining this act about liquidity? you where as you for are loans, kind one of back Thanks on kind Mike is And my are securitize levered on questions. given actually investments? the Smith stock thinking first It's between up, follow can Hey how then ROEs and buying taking a Bose. offense, for and

Craig Knutson

to Bryan cash. ROEs of securitized about and talk let about talk I'll the use on So I'll then

Gudmundur Kristjansson

Yeah, year. I what securitization pointed gotten throughout execution as the year, more throughout done we so Bryan out, explained group yield challenging has the and have raised our our as But, and is requirements. funds

And so right SFR now are the on X.X% to coupons X%. around, we side, originating

to is is, there in of targeting we're that execution terms yield mid Securitization X% mid-eight. cost. the So around high probably

So in where say double around thing sell, also volatility it. that's need is XX%. enough could loans basically when about really you, that low some quite ROE we the digit yields the we're And are of in approach in you being amount it. terms be to could how and is, able of the you to But, a probably do we make you to bonds the We high pulling that way math absorb with or we're sure and thinking the cautious spreads. of

some the around On to we're RTL XX%, high XX%. the short, side, originating XX% loans from, range the probably BPL coupons

you can about So yield think a thereof.

You've do probably you quite execution X.X% X%. and is the to deal, securitizations challenging. seen if cost XX% also you were there it to about a XX.X% And,

the of XXX basis probably, about, add you points spread but earning deal you're So XX%.

digits. we terms expanded sat we of obviously the ROE But, the RTL and also on on importantly, in so, that setups market expanded the And warehouse probably, think that. financing non-marked that component call is the about if our double mid you capacity of execution,

warehouse to the hold loans on where those the funds of we lower. is substantially cost So have do ability

then to cost XXX of warehouse is at XXX so sulphur from are cost there funds like of plus X.X%. to funds something think anywhere now the And close that. right You swaps with for XXX, probably

amount a you decent the if can yields the cost that to attract spread a X.X%still hikes so quite of you there. asset basis another XX%, do goes funds to the just you're hundred points, have. math. If the And loans then that creating got we Fed relative spread And

securitization we is, perspective. those warehouse the risk you management hold Bryan to from that last But pointed interest that, we'll the in warehouse and do on So, And to to continue emphasize time just more a think products facilities. non-market to shorter the especially at out as have there a it's financing agitation, liquidity have term do Craig hundred if almost as the $X.X market in clearly of of we out just billion percent of funding on that our piece the rate swaps and pointed on want variable his the kind remarks, offset facilities. being side

there And receive with floating on to side, side. the the so swaps as increases on sulphur, the those we're opposite index as going the on

Mike Smith

Great. That's really, Thanks.

Craig Knutson

first And terms earnings cautious, call about year to a them bunch listened With isn't this are of deploy thinking the We're I've heard on because we've right? we that of Mike, obviously seen you've deploying the cash? that this how in volatility too. and

the liquidity, the prioritizing we're day. Everything's we're shoring balance every table on So, up sheet.

cash, more could probably I But we could on focused buying think deploy these we're as be assets, days. necessarily stock. into So, into it make rushing to be it liquidity than investments

Mike Smith

maybe Obviously color. Great. then short that sounds just pretty BPL. That's And duration. good on one

borrowers, financing of any and providing to in the availability a wondering Just you who's have these credit front? changes seen that you on permanent lot

Craig Knutson

from? about we you counterpart you're that When borrow say our finance, talking

Mike Smith

RTL underlying an on One like, like loan on financing a the the borrower providing say LIMA like that? purpose who's No, for

Craig Knutson

when sell flip they the they when -- property? takeout the mean You

Mike Smith

exactly. Yeah,

Craig Knutson

Oh, okay.

Okay.

Yeah. Follow up. Sorry.

whether most, Look, So borrowers people the deal experienced or estate low same and borrower, you doing or always have in an we to, around highly strategies multifamily, are single they'll the or with one, mind repositioning construction, Lima of investors, properties, been. if as they'll yeah, family, I rehab, it's medium mean, rehab. have low has experienced most lot just to keep be real experienced, if,

rental Some rental Other into and strategies it's will around property selling them be refinance renovating rehab. around be strategy. property of then will a the as strategies

strategy borrowing, a exit If Fanny Freddy the buyer few get then a loan retain likely also loans. rental the property, acquire refinance rental loan. makes sort buyer, And he the some maybe And end to of can a of real be those property maybe the a estate his right? there investor strategy is there's If a, add it's property. different to sale the of to so And, will most things. portfolio, an that that and into LIMA

of is it's obviously it, of those is some some in from do also there. some the available. than is but to financing it refinancing widely widely price from away years has us it past, but, The be of It in tend we been those house. is, could So higher available. But, competitors there's, the, out that

Mike Smith

for Great. the Thanks questions. taking

Operator

Well DeLaney with now go ahead. the Please go line of Securities. Steve JMP

Your line is open.

Steve DeLaney

that that in at in is given it Thanks. reconcile that up $X.XX but with one cash, like in more Craig I'm morning. a team, the coming It about and to spread went more XXX the in I'd in nature points compared versus just to XXX distributable the Good thanks taking like, to implies was I question. that versus and second the interest with and trying for keeping lot know there basis Thanks. the, Anything in there EPS lower nicely missing? spread. else anything start quarter. to you're improvement decline distributable EPS? the looks $X.XX. probably like time I'm your leverage,

Craig Knutson

this includes impact the out the of you, interest to thing Steve. swap whereas I, spread the we is GAAP one Steve, doesn't. the I So Steve, One point that benefit, expense thing net report the is

to the you're the report and position dollar full in seeing reflected in cost why that you're of that. a therefore the the So now swaps the, seeing gap, interest being of doesn't reasons in funds that's spread, the, show of of swap one the expense the received value that we're benefit whereas net the the that required net

income a somewhat our of it's statement. So geography on issue

I'd to help point that, might to out you So reconcile that's that one thing

Steve DeLaney

very is That Yeah. helpful.

Okay.

you're that, saying. not your what the you're you're getting getting you're the that distributable because not you're in that from if in Just yeah, is getting getting swap gap benefit but

Craig Knutson

quite that's not Well, right.

distributable. swaps on the You the are carry in getting the

geography Okay. the income issue in It's it's statement. a just,

Steve DeLaney

Steve, If Well you be just that originations heard if with afterwards. Okay. in third LIMA to don't that up would million I follow comments mind. three range over quarter. forward you XXX any think would may make One, estimated the where will, down, that that next that wanted will did the or, go clear. I can, be to quarters of in going I two can I heard likely I think you you quarterly

Gudmundur Kristjansson

Yeah. Hey, nature. mean, and the writing, coupons. pipeline Steve. we've, so Because that's high I right. throughout that, I we're Yeah, maximum and think rates in Lima managing reducing were year softening some well said and pipeline. approach in through LTVs again, quarter. aggressively on held third amount, a I pipeline up of originated based the pulling seeing our some as and, in quarter. about upon low XXX million raising And were as, that the proactive we But our to third I the on we, to, surprised our, said, things we've Frankly, been raising rates we tightening how the

is, So that substitute that draws that of and includes like to nature. the amount is, that total that things

For the closing. quarter, to expect, probably on is what the origination like maybe, low four decline in s to we're I seeing probably, the would fourth XXX based hundreds,

Steve DeLaney

Okay.

some X%, but of pace. still just and there north slower business So coupons

Bryan Wulfsohn

average coupon the, current and Well, waiter now mentioned, Craig over the the mentioned the said, I coupons XX%. pipeline, I as is and in

we're the of also of are take. fact we, the but volume the so these very down are that yeah, our because coming because are higher, so, being is more great credit so make, launch view rates but we the exposure cognizant is, selective terms in And to we

Steve DeLaney

I to done I are how Got this. mean, this. in it. see better job this it to can And on credit Got touch the not Mike Craig, sheet any just guys reacting I go your have you a seems don't rewarding XX% financings. balance I rate back, fixed holding was up you your market's, to, it. mean, trying have think and to position metrics great

a if you're lot the I to Can value of yield the to any at way thoughts delivering think dividend are what's point a the the is, how as that? looking XX% come not XX% maintain important and you're and you liquidity. liquidity, in factors us this trading guess are you're Thank of and table all to best all. share has book, to event, is that the terms I you shareholders things how out you and you things balance and, is macro at MFA trying But three at for do will, you're that in how and And my discussion with board specific and to of all you. on going look forward? of kind the when those of the looking any

Craig Knutson

and Steve Sure, on I the, the the on recognizing, sheet side. balance on and appreciate you what done hedging we've rate

a And and it limited every have the as In back a year, of said buy in, as how of somewhat helped limit stock I, we that's right, mean, terms worth hasn't by a much this $XXX the think how obviously one of, table plan. in are could of day. over the capital, a we we a all we to in, whole lot. a There's we in million limit, terms deploy I I it under on prior back, question, things daily on about. stock that, things But that we, clearly, right. way, bought are

Steve DeLaney

hear I notion in in this which you, of little there dividends. liquidity? I is know of terms frustrating, terms of, was a

Steve Yarad

the was of our on XXX end about million. the position cash At day September XX

at cash. the two and a that with pay for years with level, dividend current we half So that could dividend

a it's the earnings dividend of distributable earnings And an a, So liquidity current not the issue, are it's in third our obviously issue. more dividends below not level. quarter, were

environment should print have the surprise aggregate lower rate despite living the as backdrop, a QX persistent reduced that the substantial the covered liquidity over dividend given in earnings distributable a this our our acquisition the been four have, volatility, necessarily has Although we've that and distributable rate through. not position quarters, pace, come last And and for given priority given prudently maintaining recent so we're us. lower earnings asset

look this might get And get could have could that and that we over so they over and again. investments, investments and right? we cheap investments more marginal cheap, have marginal that And cheaper made look so get, year, made, we've seen while cheaper

But the we So had at make near difficult future. $XXX that levered the say four those let's just that but it's be added or a book the distributable change and times our that we XX% that times, much third say we our same could in have the earn if of would to this million beginning case we roe, on it earnings, quarter, and let's we investments. value to will three invested, a, invested might likely down $X say $X let's

I have that's really our But think, So look, cheap of across I been the those I've process of liquidity really are And look great have balance that calls earnings things. I hindsight. market think, to the, Yeah, the I've as as it's this almost environment, it's heard a other sheet things things cheap. conviction. are listened and difficult But to. XXXX in opinion, sort is, at really in important least to this thought year all part our and strong think most

don't So helps, know if I, I that Steve.

Steve DeLaney

It does.

couple to and You at so seeing for in you clear, conference a comments. you. guys came the thanks weeks. Thank loud of through Look our forward

Operator

ahead. line go Please the [Operator now Eric of to instructions] We'll go Hagen.

is line Your open.

Eric Hagen

seems the a are then out a you borrowers non funding do for or warehouse that you for differ versus penalty. securitization are guys. enforce to? your they line, for prepayment How all QM two Thank penalties, a bring for non guys QM a good having it right. trust loans, penalties performing your of Hey, delinquent buy two, if onto on on to maybe the counterintuitive kind loans loans? a have in of non-QM loans think like And curious thinking and them of Hope questions. almost balance the to sheet And market but or triggers What example, about potentially the to the lot there non support you're morning I'm once related this wanted BPL? turnover you. ability refinance prepayment QM guess, for, needed loan? you Are, back how doing could are to you I would

Craig Knutson

the for thanks thanks, Sure. question, Eric.

QM there. they non the come if, they go if securitizations, our in for So, don't loans out one of stay securitization, delinquent,

where, us have of would from really, whomever would required that's where at an Right. loans a the making correct loan, to somehow reason property a to underwriting breach? back a you time. if Was would that there defect sale we which, and would it breach. level One your you have penalties penalties, and you like look refinance that It'd performance be discount. that's that reason prepayment would, the I to we'd prepayment a borrower penalties Why you a be prepay for of necessarily, the came have, a and prepaying a that as right? not securitization from aren't could then put borrower those sole investors do have and well, this BPL that, they I kept why don't are is, make if of decision, would found valued but, if at that So and at but are the which of that but out, if sort penalty, it if move, bought evaluate originator would be a right the the only would same that's or for, yet said, if at but bought and the that So for that, made to the to this is question really reason borrower loan the sort be we enforce have selectively, prepaid penalty, restrict answer if, prepayment loans loans loans securitizations the, was out about to to

Eric Hagen

Got just in of any the supporting the obligation for advance kind general? sort securitizations non that just it. for servicing trust how helpful. obligation of and and you QM works servicing That's Can describe

Craig Knutson

sure. Yeah,

a and that And right? So don't direct the to take taxes a would advancing off of sort of would would So you only for go our P&I, loan the and of waterfall. have so if sort were insurance securitizations that would preservation, say be advances property -- of and that MFA. comes protective advances expense be delinquent, it's case the come sort not in would place off

Operator

questioners have And we with in that, Please exhausted all queue. continue.

Craig Knutson

We've quarter announce February. MFA fourth in when look very update to All your forward in Thank our exhausted right. Financial. for Happy we everyone, results you next to holidays much interest We everyone.

Operator

conference your event conclude today. for for using does conferencing. Ladies for gentlemen, our you this and AT&T Thank participation and

You now disconnect. may

MFA Financial (MFA) 3 Nov 222022 Q3 Earnings call transcript