Great Ajax(AJX)2024-10-31 22:18Market Risks - The primary market risks include real estate risk, interest rate risk, prepayment risk, and credit risk, which the company actively manages [268]. - Increases in interest rates are expected to lower refinancing volume and potentially increase defaults on CMBS, while home price increases may slow down [269]. - Higher interest rates could lead to a decline in the value of real estate assets and net income if not accompanied by increases in loan yield and rental yield [273]. - Prepayment risk is influenced by various factors, including interest rates and borrower behavior, which can affect the yield on assets and reinvestment opportunities [274]. - Credit risk is present due to potential borrower defaults, which may arise from personal income reductions, job loss, or poor property management [276]. - Inflation and interest rate increases by the Federal Reserve have raised the company's cost of funds, impacting the value of residential mortgage assets [277]. Financial Management - The company plans to continue securitizing whole loan portfolios to create long-term, fixed-rate financing, while utilizing repurchase lines of credit as interim financing [271]. - The company has not experienced any material changes in internal control over financial reporting during the last fiscal quarter [281]. - There are no material pending legal or regulatory proceedings involving the company or its subsidiaries [283]. - No material changes to risk factors were reported for the three months ended September 30, 2024 [284].