Financial Data and Key Metrics Changes - The company reported distributable earnings of $52.1 million or $0.25 per share, and $62.5 million or $0.30 per share excluding one-time realized losses of $10.5 million from the sale of two REO assets in the second quarter [18] - The total delinquencies decreased to $529 million as of June 30 from $654 million at March 31, with non-performing loans (NPLs) at approximately $472 million compared to $511 million last quarter [20][21] - The average yield on core investments decreased to 7.95% from 8.15% last quarter, primarily due to less back interest collected and additional delinquencies [25] Business Line Data and Key Metrics Changes - In the agency business, the company originated $850 million in loans during the second quarter and $1.5 billion for the first six months, with a strong July resulting in $1 billion in agency loans [12][24] - The single-family rental business saw approximately $230 million in new business during the second quarter, with a strong pipeline for future growth [13][14] - The construction lending business closed $265 million in the first six months and an additional $144 million in July, with a strong pipeline of applications [15] Market Data and Key Metrics Changes - The prolonged elevated rate environment has created challenges in the agency originations business, affecting borrowers' ability to transition to fixed-rate loans [8] - The company anticipates that if there is a sustained reduction in interest rates, it will positively impact origination volumes and earnings [10] Company Strategy and Development Direction - The company views 2025 as a transitional year focused on resolving REO assets and delinquencies, aiming to build a strong earnings foundation for 2026 [16][17] - The company is committed to being selective in its lending practices, closing $100 million in the second quarter and $215 million in July, with a target of $1.5 billion to $2 billion in bridge loan production for 2025 [11] - The company is expanding its securitization platform to increase leverage and efficiency in the single-family rental business, enhancing competitive advantage [6][14] Management's Comments on Operating Environment and Future Outlook - Management noted that the current market environment is characterized by volatility and uncertainty, particularly regarding interest rates, which complicates predictions for the remainder of the year [8] - The company is optimistic about future growth, especially if interest rates decrease, which would facilitate increased origination volumes and improved earnings [10][81] Other Important Information - The company successfully completed a high-yield unsecured debt offering, raising $500 million to pay off convertible debt and enhance liquidity [4][5] - The investment portfolio grew to $11.6 billion at June 30, with an all-in yield of 7.86% [24] Q&A Session Summary Question: Drop in net interest income from $75 million to $69 million - Management explained that the drop was due to increased delinquencies and less back interest collected on delinquent loans, along with reversals on certain loans [30][31] Question: Future peak of REO assets - Management indicated that they expect REO assets to peak around $400 million to $600 million, with a focus on accelerating the resolution of non-performing loans [33][34] Question: Interest from outside parties in REO and sub-performing loan books - Management confirmed that there is significant interest in distressed deals, with multiple bidders for such assets, particularly as interest rates decline [40][41] Question: Capital expenditures for repositioning assets - Management estimated that capital expenditures for repositioning assets would be between $25 million to $50 million over the next six to twelve months [70][72] Question: Agency originations dynamics between Fannie and Freddie - Management noted that both agencies have competitive advantages, with Fannie Mae traditionally being more active, but Freddie Mac has been stepping up recently [75][76]