MFA Financial, Inc.'s residential mortgage investment portfolio jumped by $299 million during Q2 2021 with loan purchase activity that exceeded portfolio run-off. The company's loan acquisitions increased substantially, more than tripling its Q1 2021 numbers. This growth is largely attributed to its $373.6 million in Non-QM loans.
Two securitizations were completed during the quarter, according to the company. These securitizations included a securitization of $394 million of Non-QM loans, with $371 million of bonds sold at a blended cost of 1.37%, lowering the funding rate on these loans by approximately 200 bps, according to the company's financial results. In addition, MFA completed a securitization of $473 million of previously securitized and other re-performing loans, with $435 million of bonds sold at a blended cost of 1.30%, lowering the funding rate on these loans by approximately 85 bps.
According to MFA, loan purchase activity of $857 million approached levels last achieved in the first quarter of 2020, with acquisitions including approximately $375 million of Non-QM and $175 million of Business Purpose loans.
“We completed a Non-QM securitization in April 2021 and a re-lever of a re-performing and non-performing loan securitization in June 2021,” said Craig Knutson, MFA's CEO and president. “These transactions deliver a meaningful benefit by terming out non-mark-to-market financing while significantly reducing borrowing costs and also generating more liquidity. Our income statement demonstrates the impact of these transactions, as our interest expense decreased by 15%.”
“We also took advantage of a strong housing market to continue to reduce our REO portfolio, selling 139 properties for aggregate proceeds of $38.0 million and generating $3.9 million of gains.”
Read more from MFA Financial, Inc.'s financial results from Q2 2021.
