Financial Data and Key Metrics Changes - The company's book value increased to $11.13 per share at December 31, 2025, compared to $11.04 per share at September 30, 2025, resulting in a quarterly economic return of +3.9% [12] - Comprehensive income for the fourth quarter was $50.4 million or $0.48 per share, with net interest and servicing income decreasing due to MSR sales and lower float income [12][13] - The total economic return on book value for the full year 2025 was -12.6%, but excluding a litigation settlement expense, the return was +12.1% [7] Business Line Data and Key Metrics Changes - The company settled on the sale of an additional $10 billion UPB of MSR, increasing total third-party subservicing to $40 billion at year-end compared to $30 billion at the end of the third quarter [10] - The direct-to-consumer (DTC) platform funded $94 million in first and second liens, a 90% increase from the third quarter [10] - The MSR portfolio experienced a minor increase in prepayment rates to 6.4% from 6.0% CPR, with 60-plus-day delinquencies remaining low at under 1% [22] Market Data and Key Metrics Changes - The yield curve steepened, with two-year Treasury yields down 14 basis points to 3.47%, while 10-year Treasury yields rose by 2 basis points to 4.17% [9] - The nominal spread for current coupon RMBS tightened by 30 basis points to 114 basis points of the swap curve, indicating a positive response to the decline in interest rate volatility [16] - The share of 30-year loans eligible for refinance returned to nearly 20%, with refinanceable coupon speeds increasing [18] Company Strategy and Development Direction - The merger with United Wholesale Mortgage (UWM) is expected to double the size of the MSR portfolio to a pro forma $400 billion and create a powerful strategic alignment for accelerated growth [6] - The company aims to leverage UWM's expertise in capital markets and asset management while enhancing its own servicing capabilities [6] - The focus remains on maintaining a paired portfolio construction of MSR and Agency RMBS to generate attractive risk-adjusted returns [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that the merger with UWM will bring significant benefits and position the company for accelerated growth [11] - The administration's commitment to lower mortgage rates is expected to stimulate increased mortgage and origination activity in 2026 [7] - Management noted that while no decisions have been made regarding the securities portfolio post-merger, they will be thoughtful about future actions [8] Other Important Information - The company ended the quarter with over $800 million in cash and repaid $261.9 million in convertible senior notes on their maturity date [14] - The economic debt to equity ratio was slightly lower at 7 times, with portfolio sensitivity to spread changes marginally increasing [15] Q&A Session Summary Question: How is the merger impacting portfolio construction? - Management confirmed that they are operating as an independent company and managing the portfolio as usual, with changes reflecting market assessments of risk and reward [28] Question: What is the current book value? - The book value is up about 1.5%-2% as of January 30, 2026 [29] Question: How is leverage being considered in the current market? - Management has become more defensive due to the current spread environment and has reduced leverage and mortgage risk [34] Question: What are the chances of an LLPA or guarantee fee reduction at the GSEs? - There is a reasonable chance for changes on the LLPA grid, but the market is still digesting the potential impacts [38] Question: How is the MSR market performing? - The interest in the MSR market remains strong, with no notable changes in bank activity [39] Question: What is the prospective return outlook? - Spreads have tightened since the end of December, which may marginally affect dividend levels [43]

Financial Data and Key Metrics Changes - The total economic return for the fourth quarter was 10.2%, consisting of $0.51 of common dividends and a $0.78 increase in book value per share [25] - For the year, the book value increased by $0.75, and $2 of dividends per common share were declared, paid monthly [25] - Comprehensive income for the quarter was $190 million and $354 million for the year [25] - The company ended the quarter with leverage of 7.3x total equity and a strong liquidity position of $1.4 billion in cash and unencumbered securities, representing over 55% of total equity [25] Business Line Data and Key Metrics Changes - The TBA and mortgage-backed securities portfolio started the year at $9.8 billion, grew to $15.8 billion by the end of September, and ended the year at $19.4 billion, with approximately $22 billion currently [27] - The company raised and invested over $1 billion in 2025, with a price-to-book valuation rising [16] Market Data and Key Metrics Changes - The company experienced a 29.4% total shareholder return in 2025, driven by both dividend income and significant share price performance [8] - The total equity market capitalization, including preferred shares, was $3 billion at the end of the reporting period [8] Company Strategy and Development Direction - The company emphasizes a performance-first mentality and ethical stewardship of shareholders' capital, focusing on risk management and adaptability [4][6] - The strategy includes raising capital at accretive levels to expand the equity base and improve trading liquidity, which strengthens the shareholder base and lowers the cost of capital [12][13] - The company is prepared for a rapidly changing global landscape, with a focus on liquidity and flexibility in its risk appetite [10] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of government policy in shaping asset returns and indicated that the current environment presents both risks and opportunities [14][18] - The return of GSE balance sheets is expected to provide a technical tailwind for spreads, supporting valuations and limiting spread widening [18][20] - Management expressed confidence in the ability to generate reliable dividends backed by a resilient portfolio, attracting capital seeking durable income [11][12] Other Important Information - The company has made significant investments in its team and infrastructure, including the addition of a new Chief Operating Officer and expansion of its legal and investment teams [9] - General and administrative expenses as a percentage of capital decreased from 2.9% to 2.1% year-over-year [29] Q&A Session Summary Question: Can you quantify where you see incremental investment returns today? - Management indicated that hedged ROEs are in the mid-teens with leverage around 7x, and with targeted leverage in the low eights, ROEs could reach mid- to high teens [33] Question: How does this compare to three months ago given the spread tightening? - The dynamic is that spreads are approximately 150 to 300 basis points tighter than at the end of the previous quarter [35] Question: What is the probability of politically motivated actions to improve housing affordability? - Management acknowledged the historical role of GSEs in managing housing and indicated that government intervention is possible, including lowering G-fees [49] Question: Can you provide an update on where you've deployed the capital raised in January? - The company is finding opportunities primarily in the belly of the coupon stack, particularly in fives and five and a halves [55] Question: What is the appropriate size of the portfolio in context with the current opportunity set? - Management believes there are significant opportunities to generate alpha and that the company can grow while still maintaining a compelling investment environment [63][64]

Financial Data and Key Metrics Changes - The company recorded a comprehensive loss of $80.2 million, or $0.77 per share, including a litigation settlement expense of $175.1 million, which equates to $1.68 per share [16][17] - The return on book value was -0.63% including the litigation expense, while it would have been +7.6% excluding the expense [16] - Total economic return for the third quarter was -6.3%, and +7.6% without the litigation expense [9] Business Line Data and Key Metrics Changes - The RMBS portfolio decreased from $11.4 billion to $10.9 billion due to agency securities sales [6] - The company funded $49 million of UPB in first and second liens during the third quarter, with an additional $52 million UPB in the origination pipeline at quarter-end [12] - The company brokered $60 million UPB in second liens, a significant increase from $44 million in Q2 [12] Market Data and Key Metrics Changes - The Fed cut rates by 25 basis points in September, marking the first cut since November 2024, which positively impacted equity markets, with the S&P 500 up almost 8% by quarter-end [10] - The nominal spread for current coupon RMBS tightened by 26 basis points to 145 basis points to the swap curve [22] Company Strategy and Development Direction - The company aims to enhance and grow its servicing and origination activities while focusing on a MSR-focused investment strategy [9] - The company plans to redeem $262 million of outstanding convertible notes to reduce structural leverage to historical levels [8] - The company is optimistic about the investment opportunities available in the market, particularly in the MSR and MBS portfolio [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's liquidity and risk metrics following the litigation settlement [5] - The company sees no reason for its stock to trade at an 11% discount to book value, given the quality of its assets and the uncertainty created by the litigation now resolved [13] - Management highlighted the importance of technology investments to maintain growth in the direct-to-consumer origination platform [69] Other Important Information - The company has established a significant relationship with a new sub-servicing client, bringing the total sub-servicing UPB to approximately $40 billion [11] - The company is focused on improving efficiencies and lowering costs in light of the recent settlement payments [9] Q&A Session Summary Question: What are the key drivers of the increase in the EAD in the third quarter relative to the second quarter? - The increase in EAD is attributed to the decrease in financing costs, allowing asset yields to remain constant [34] Question: Can you give us an update on your book value quarter to date? - The book value was up about 1% as of last Friday [37] Question: Can you talk about the various risk metrics as you think about the size of the portfolio? - The company considers multiple risk metrics, including returns available on asset classes and the ideal mix in the current market context [41][43] Question: Does the return potential slide factor in potential cost savings? - The return potential slide reflects current costs, and there is potential upside as cost savings are realized [44][46] Question: Can you help us understand the strategy behind the coupon positioning? - The coupon exposure is managed based on how rates move and the current coupon's position relative to risk exposures [51][52] Question: Can you give us color on growth opportunities in the sub-servicing business? - The company is focused on developing relationships and attracting clients dissatisfied with their current sub-servicers [60] Question: How do you see MSR valuations responding to a further drop in interest rates? - MSR valuations are expected to remain stable, with strong demand for low gross WAC MSR despite potential declines in prices [87][88] Question: What is the valuation of the flow MSRs that you're originating versus your existing portfolio? - The price multiple for the entire portfolio is 5.8x, with variations based on coupon rates [99]

Financial Data and Key Metrics Changes - The company recorded a comprehensive loss of $80.2 million, or $0.77 per share, including a litigation settlement expense of $175.1 million, which was $1.68 per share [16][17] - The return on book value was negative 0.63% including the litigation expense, while it would have been positive 7.6% excluding the expense [16][17] - Total economic return for the third quarter was negative 6.3%, and positive 7.6% without the litigation expense [9][10] Business Line Data and Key Metrics Changes - The RMBS portfolio decreased to $10.9 billion from $11.4 billion due to agency securities sales [6] - The company sold $19.1 billion UPB of MSR and an additional $10 billion UPB expected to settle soon, both slightly above marks [6][8] - The direct-to-consumer originations platform funded $49 million of UPB in first and second liens, with a record high of $60 million UPB in second liens brokered during the quarter [12][24] Market Data and Key Metrics Changes - The Fed cut rates by 25 basis points in September, marking the first cut since November 2024, which positively impacted equity markets, with the S&P 500 up almost 8% by quarter-end [10][11] - The nominal spread for current coupon RMBS tightened by 26 basis points to 145 basis points to the swap curve [22] Company Strategy and Development Direction - The company aims to enhance its MSR-focused investment strategy and grow its servicing and origination activities [9][13] - The company plans to redeem $262 million UPB of outstanding convertible notes to reduce structural leverage to historical levels [8] - The company is optimistic about the investment opportunities available in the market, particularly in the MSR and MBS portfolio [15][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's liquidity and risk metrics post-litigation settlement, indicating a clear path forward [5][9] - The company sees mortgage spreads as attractive despite recent tightening and believes its strategy is well-positioned to capitalize on market conditions [14][31] - Management highlighted the importance of technology investments to improve customer experiences and reduce costs [13][69] Other Important Information - The company has established a significant relationship with a new sub-servicing client, bringing the total sub-servicing UPB to approximately $40 billion [8] - The company is focused on improving efficiencies and lowering costs in light of the recent settlement payments [9] Q&A Session Summary Question: What are the key drivers of the increase in the EAD in the third quarter relative to the second quarter? - The increase in EAD is attributed to the decrease in financing costs, allowing asset yields to remain constant [34] Question: Can you give us an update on your book value quarter to date? - The book value was up about 1% as of last Friday [37] Question: Can you talk about the various risk metrics as you think about the size of the portfolio following the settlement? - The company looks at multiple risk metrics, including returns available on asset classes and overall leverage [41][43] Question: Does the return potential slide factor in potential cost savings? - The return potential slide reflects current costs, with potential upside as cost savings are realized [44][46] Question: Can you help us understand the coupon positioning strategy? - The coupon exposure is managed based on how rates move and the current coupon risk in the MSR portfolio [51][52] Question: Can you provide insight into growth opportunities in the sub-servicing business? - The company is focused on building relationships and attracting clients dissatisfied with their current sub-servicers [60][61] Question: How do you see MSR valuations responding to a further drop in interest rates? - MSR valuations are expected to remain stable, with strong demand for low gross WAC MSR [87][88] Question: What is the valuation of the flow MSRs that you're originating versus your existing portfolio? - The price multiple for the entire portfolio is 5.8 times, with variations based on coupon rates [99][100]