Company: CHMI-PB
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001140361-25-007454
Chunk: 19

Company: Cherry Hill Mortgage Investment Corp
Filing Date: 2025-03-06
Form: 10-K
Item: Item 5
Chunk 19
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icing Related Assets would have a negative impact on our book value. Furthermore, a significant increase in prepayment speeds could materially reduce the
                      ultimate cash flows we receive from the Servicing Related Assets, and we could receive substantially less than what we paid for such assets. Our balance sheet, results of operations and cash flows are susceptible to significant
                      volatility due to changes in the fair value of, or cash flows from, the Servicing Related Assets as interest rates change.

                    A slower than anticipated rate of prepayment due to an increase in market interest rates also will cause the life of the related RMBS to extend beyond that which was projected. As a
                      result, we would have an asset with a lower yield than current investments for a longer period of time. In addition, if we have hedged our interest rate risk, extension may cause the security to be outstanding longer than the related
                      hedge, thereby reducing the protection intended to be provided by the hedge.

                    Voluntary and involuntary prepayment rates may be affected by a number of factors including, but not limited to, the availability of mortgage credit, the relative economic vitality
                      of, or natural disasters affecting, the area in which the related properties are located, the servicing of the mortgage loans, possible changes in tax laws, other opportunities for investment, homeowner mobility and other economic,
                      social, geographic, demographic and legal factors, none of which can be predicted with any 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
                      “Item 8. Consolidated Financial Statements and Supplementary Data—Note 7. Transactions with Related Parties” for information regarding Aurora’s recapture agreements.

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

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                            the interest expense associated with our borrowings to increase;

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                            the value of our assets to fluctuate;

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                            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