Company: MITN
Filing Date: 2025-03-04
Form Type: 10-K
Source: 0001514281-25-000026
Chunk: 54

Company: AG Mortgage Investment Trust, Inc.
Filing Date: 2025-03-04
Form: 10-K
Item: Item 1A
Chunk 54
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 or first lien mortgage loan on a residential property (i.e., the senior debt).  The repayment of Home Equity Loans by a borrower is highly dependent on the borrower's creditworthiness as well as the stability of home values. If a borrower defaults on a Home Equity Loan or on its senior debt, or in the event of a borrower bankruptcy, such loan will be satisfied only after all senior debt is paid in full. In such situation, there is a higher likelihood that we may lose all or a significant part of our investment, which could result in losses and have a material adverse effect on us. This risk would be exacerbated in times of declining home values or recessionary periods. 

Additionally, the lines of credit in certain Home Equity Loans and other second lien investments may subject us to future funding obligations. Future funding obligations may adversely impact our liquidity and require us to maintain higher liquidity than we might otherwise maintain, which could reduce the overall return on our investment portfolio.

Changes in prepayment rates may adversely affect the return on our investments.

When borrowers prepay mortgage loans that we own or are underlying the securities we own at rates faster or slower than anticipated, it exposes us to prepayment or extension risk, respectively. Prepayment rates are impacted by a variety of factors, including prevailing mortgage rates, loan age and size, loan-to-value ratios, housing price trends, general economic conditions and other factors not in our control.

To the extent that actual prepayment speeds differ from our expectations, our operating results could be adversely affected, and we could be forced to sell assets to maintain adequate liquidity, which could cause us to incur realized losses. In addition, should significant prepayments occur, there is no certainty that we will be able to identify acceptable new investments, which could reduce our invested capital or result in us investing in less favorable investments.

In periods of declining interest rates, prepayments on investments generally increase and the proceeds of prepayments received during these periods may generally be reinvested by us in comparable assets at reduced yields. In addition, the market value of investments subject to prepayment may, because of the risk of prepayment, benefit less than other fixed-income securities from declining interest rates. Conversely, in periods of rising interest rates, prepayments on investments, where contractually permitted, generally decrease, in which case we would not have the prepayment proceeds available to invest in comparable assets at higher yields and our cost to finance such assets would likely increase.  Under certain interest rate and prepayment scenarios, we may fail to recoup fully our cost