Company: CHMI-PB
Filing Date: 2025-05-06
Form Type: 10-Q
Source: 0001140361-25-017536
Chunk: 11

Company: Cherry Hill Mortgage Investment Corp
Filing Date: 2025-05-06
Form: 10-Q
Item: Item 2
Chunk 11
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 certainty.

            We attempt to reduce the exposure of our MSRs to voluntary prepayments through the structuring of recapture agreements with Aurora’s subservicers. Under these agreements,
              the subservicer attempts to refinance specified mortgage loans. The subservicer sells the new mortgage loan to the applicable Agency, transfers the related MSR to Aurora and then subservices the new mortgage loan on behalf of Aurora. See
              “Part I, Item 1. Notes to Consolidated Financial Statements—Note 7. Transactions with Related Parties” for information regarding Aurora’s recapture agreements.

            With respect to our business operations, increases in interest rates, in general, may over time cause:

    •

                    the interest expense associated with our borrowings to increase;

    •

                    the value of our assets to fluctuate;

    •

                    the coupons on any adjustable-rate and hybrid RMBS we may own to reset, although on a delayed basis, to higher interest rates;

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                    prepayments on our RMBS to slow, thereby slowing the amortization of our purchase premiums and the accretion of our purchase discounts; and

    •

                    an increase in the value of any interest rate swap agreements we may enter into as part of our hedging strategy.

              Conversely, decreases in interest rates, in general, may over time cause:

    •

                      prepayments on our RMBS to increase, thereby accelerating the amortization of our purchase premiums and the accretion of our purchase discounts;

    •

                      the interest expense associated with our borrowings to decrease;

    •

                      the value of our assets to fluctuate;

     •

                      a decrease in the value of any interest rate swap agreements we may enter into as part of our hedging strategy; and

    •

                      coupons on any adjustable-rate and hybrid RMBS assets we may own to reset, although on a delayed basis, to lower interest rates.

              Regardless, we cannot predict the impact future actions by the Federal Reserve will have on our business, and any such actions may negatively impact us.

              51

            Effects of Spreads on our Assets

            The spread between the yield on our assets and our funding costs affects the performance of our business. Wider spreads imply the potential for greater income on new
              asset purchases but may have a negative impact on our stated book value. Wider spreads may also negatively impact asset prices. In an environment where spreads are widening, counterparties may require additional collateral to secure