Company: AOMN
Filing Date: 2025-03-24
Form Type: 10-K
Source: 0001766478-25-000019
Chunk: 49

Company: Angel Oak Mortgage REIT, Inc.
Filing Date: 2025-03-24
Form: 10-K
Item: Item 1A
Chunk 49
---
 could exceed the value of such property or the principal balance of the related investment. In certain circumstances, a lender may choose not to foreclose on contaminated property rather than risk incurring a liability for remedial actions. In the event of any default under a commercial mortgage loan held by us, we will bear a risk of loss of principal to the extent of any deficiency between the value of the collateral and the principal and accrued interest of the mortgage loan, which could materially and adversely affect us.

We have acquired and may continue to acquire second lien mortgage loans and HELOC mortgage loans, which may pose additional risks for us.

We have acquired and may continue to acquire second lien mortgage loans and HELOC mortgage loans. A second lien mortgage loan is a residential mortgage loan that is subordinate to the primary or first lien mortgage loan on a residential property. In the event of a default or a bankruptcy of the borrower, the second lien mortgage loan will not receive payment until the first lien mortgage loan is fully paid, resulting in a higher likelihood that we will be subject to losses on such second lien mortgage loan. As a result, we may not recover all or a significant part of our investment, which could result in losses and have a material adverse effect on us.

               A HELOC is an open or closed end home equity revolving line of credit, secured by a mortgage, deed of trust or other instrument creating a first or junior lien on a residential property, which lien secures the related line of credit. Due to the flexible nature of a revolving home equity line of credit allowing a borrower to increase the total principal balance of their open HELOC mortgage loan, such open HELOC mortgage loans are more sensitive to economic factors and the financial circumstances of the borrowers, which could affect the ability of borrowers to pay their obligations or the value of the related mortgaged properties, which could result in losses and have a material adverse impact on us.  In addition, because of the length of such revolving periods, a borrower’s creditworthiness at origination may not accurately reflect their current ability to pay their mortgage loan at the time of subsequent draws, which could result in losses for us to the extent a borrower is unable to repay such subsequent draws.

 We may invest in commercial bridge loans, mezzanine loans, construction loans, and B-Notes, which would subject us to an increased risk of loss.

 We may invest in commercial bridge loans, mezzanine loans, construction loans, and B-Notes as part of our strategy. Our investments in these asset classes would subject