Company: MFAN
Filing Date: 2025-02-20
Form Type: 10-K
Source: 0001055160-25-000004
Chunk: 394

Company: MFA FINANCIAL, INC.
Filing Date: 2025-02-20
Form: 10-K
Item: Item 4
Chunk 394
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, 2024

Prior to December 31, 2023, the Company’s estimates of expected losses that form the basis of the Allowance for Credit Losses included certain qualitative adjustments which had the effect of increasing expected loss estimates.  These qualitative adjustments were determined based on a variety of factors, including differences between the Company’s loan portfolio and the loan portfolios represented by data available in regulatory filings of certain banks that are considered to have similar loan portfolios (available proxy data), and differences between current (and expected future) market conditions in comparison to market conditions that occurred in historical periods. Such differences included uncertainty with respect to any residual impact of the COVID-19 pandemic, anticipated inflation and increasing market interest rates, and heightened political uncertainty.  The Company’s estimates of credit losses reflected the Company’s expectation that the performance of its portfolio might experience higher delinquencies and defaults compared to the performance in historical periods of portfolios included in the available proxy data.  During 2023, the Company eliminated its qualitative adjustment and made updates to certain of its modeling assumptions which, in addition to a reduction in loan balances subject to allowances, caused a reduction in the overall allowance.  Estimates of credit losses under credit losses on financial instruments (“CECL”) are highly sensitive to changes in assumptions and current economic conditions have increased the difficulty of accurately forecasting future conditions.The carrying value of Residential whole loans on nonaccrual status as of December 31, 2024 and December 31, 2023 was $638.3 million and $624.1 million, respectively. During the year ended December 31, 2024, the Company recognized $11.9 million of interest income on loans on nonaccrual status, including $7.9 million on its portfolio of loans which were non-performing at acquisition. At December 31, 2024 and December 31, 2023, there were approximately $38.7 million and $51.6 million, respectively, of loans held at carrying value on nonaccrual status that did not have an associated allowance for credit losses because they were determined to be collateral dependent and the estimated fair value of the related collateral exceeded the carrying value of each loan, respectively. During the year ended December 31, 2024, the Company granted three loan modifications in its carrying value loan portfolio which gave borrowers term extensions.  The average increase in weighted average life was 31 months.  As of December 31, 2024, the carrying value of