Company: AOMN
Filing Date: 2025-05-16
Form Type: 424B5
Source: 0001104659-25-050029
Chunk: 122

Company: Angel Oak Mortgage REIT, Inc.
Filing Date: 2025-05-16
Form: 424B5
Chunk 122
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 is in excess of the de minimis amount described above, as long as such failure was due to reasonable cause and not willful neglect, we may be permitted to avoid disqualification as a REIT, after the 30 day cure period, by taking steps including the disposition of sufficient assets to meet the asset test (generally within six months after the last day of the quarter in which our identification of the failure to satisfy the REIT asset test occurred) and paying a tax equal to the greater of $50,000 or the corporate income tax rate of the net income generated by the non-qualifying assets during the period in which we failed to satisfy the asset test.

We have entered into financing arrangements that are structured as sale and repurchase agreements pursuant to which we would nominally sell certain of our assets to a counterparty and simultaneously enter into an agreement to repurchase these assets at a later date in exchange for a purchase price. Economically, these agreements act as financings which are secured by the assets sold pursuant thereto. We believe that we would be treated for REIT asset and income test purposes as the owner of the assets that are the subject of any such sale and repurchase agreement notwithstanding that such agreement may transfer record ownership of the assets to the counterparty during the term of the agreement. It is possible, however, that the IRS could assert that we did not own the assets during the term of the sale and repurchase agreement, in which case we could fail to qualify as a REIT.

Application of Gross Income and Asset Tests to Certain Assets

We may retain or purchase excess mortgage servicing rights (“MSRs”). We may treat income derived from what we believe to be excess MSRs as “interest on obligations secured by mortgages on real property” and, therefore, as qualifying income for purposes of the 75% gross income test. We also may treat excess MSRs as assets that are “interests in mortgages on real property” and, therefore, as qualifying as real estate assets for purposes of the 75% asset test. However, it is possible that the IRS could disagree with our characterization of such excess MSRs and assert that they are not such qualifying assets and do not give rise to such qualifying income, in which case we could be subject to a penalty tax or fail to qualify as a REIT.

We may invest in residential mortgage-backed securities (“RMBS”) in which principal and interest payments are guaranteed by a U.S. government agency, such as the Government National Mortgage Association, or a government-sponsored enterprise