EXHIBIT 10.31

ADMINISTRATIVE SERVICES AGREEMENT

This ADMINISTRATIVE SERVICES AGREEMENT (the “Agreement”) is made effective as of
December 29, 2008 (the “Effective Date”), by and between Pacific Income
Advisers, a Delaware corporation (“PIA”), and Anworth Mortgage Asset
Corporation, a Maryland corporation (“Anworth”).

RECITALS:

A. Anworth is in the business of investing primarily in United States agency
mortgage-backed securities that it acquires in the secondary market;

B. Anworth desires PIA to provide to it certain services and equipment as it may
require, and PIA desires to provide such services and equipment to Anworth, in
accordance with the terms and conditions hereof.

AGREEMENT:

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants agreements contained herein and for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:

1. Services to be Performed by PIA.

1.1 Services.    PIA shall furnish to Anworth and Anworth shall utilize the
services described in Schedule A-1 attached hereto (collectively, the
“Services”).

During the term of this Agreement, PIA will use its best efforts to conduct its
duties hereunder in the best interests of Anworth and in a lawful manner in
compliance with applicable laws, statutes, rules and regulations. PIA shall
provide the Services with the same degree of care, skill and prudence
customarily exercised by it for its own operations. The Services provided by PIA
to Anworth shall be made available by PIA at such level of utilization as
Anworth may reasonably require following the date hereof.

1.2 Inspection; Furnishing of Information and Witnesses.    PIA shall permit
Anworth, and its authorized representatives, to enter upon PIA’s premises during
normal business hours for the purpose of examining or inspecting Anworth’s
records or examining or making extracts of Anworth’s books and records related
to the Services; provided, however, that the same shall be conducted without
unreasonable interference or disruption to the business and operation of PIA.

PIA also agrees to use its best efforts to make available to Anworth, upon
Anworth’s request, PIA’s officers, employees and agents as witnesses to the
extent that such persons may reasonably be required in connection with any
legal, administrative or other proceedings relating to the Services in which
Anworth may, from time to time, be involved. Anworth agrees to reimburse PIA for
its reasonable out-of-pocket expenses incurred in making such officers,
employees and agents available as witnesses.

2. Term and Termination.

The term of this Agreement shall be from the Effective Date until the one year
anniversary of the Effective Date. Thereafter, this Agreement shall
automatically renew for successive one-year terms, unless written notice of
either parties’ intent not to renew is received by the other party no less than
thirty (30) days prior to the expiration of the term or the applicable renewal
period. Notwithstanding the foregoing, Anworth shall have the sole and exclusive
right to terminate this Agreement without liability (other than for accrued but
unpaid liabilities provided hereunder) (i) for any reason upon thirty (30) days
prior written notice to PIA, and (ii) immediately upon any material breach by
PIA of its obligations hereunder.

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3. Compensation.

As full payment for providing the Services, Anworth shall pay PIA the amount set
forth on Schedule A-2 attached hereto, subject to adjustment as described below
(the “Service Charges”). If, for any reason, Anworth’s requirements for the
level, scope or type of Services and/or Equipment to be provided significantly
decreases or completely terminates at any time during the term of this
Agreement, the Service Charges for such Services and/or Equipment shall
immediately be decreased or eliminated accordingly.

The Service Charges shall be calculated as the product of (a) Anworth’s
Stockholder Equity as shown on Anworth’s Balance Sheet for the immediately
preceding quarter multiplied by (b) the Applicable Percentage, as set forth in
Schedule A-2. The Service Charges shall be calculated quarterly in arrears on
the last day of each quarter and paid on or before the thirtieth day of the
first month of each subsequent quarter. If this Agreement is terminated
effective on some day other than the last day of a quarter, the Service Charges
for such partial quarter shall be prorated based on the number of days during
such quarter that this Agreement is in effect.

4. Banking.

Any and all monies received by PIA on behalf of Anworth in the business and
performance of PIA’s duties under this Agreement shall be received in trust for
Anworth and deposited in special accounts bearing the name of Anworth at such
banking institutions and with such authorized signatories as Anworth specifies
in writing. Such monies shall not be commingled with PIA’s funds and may be
withdrawn from the accounts only by Anworth.

5. Litigation.

PIA shall, as soon as it becomes aware of any threatened or potential legal,
administrative or other proceedings involving Anworth, promptly notify Anworth
of such threatened or potential proceeding in writing, and shall promptly
provide to Anworth the originals of any and all correspondence and other
documents related thereto that PIA receives.

6. Books and Records.

6.1 Proprietary.    All books of account, accounting and personnel records,
customers’ and suppliers’ lists, documents, vouchers, letters and all other
papers and records (in whatever form stored or recorded) pertaining to the
Services and information provided to Anworth hereunder shall be the property of
Anworth.

6.2 Maintenance; Delivery.    PIA agrees to maintain books and records
pertaining to the Services and information provided hereunder in accordance with
Anworth’s internal control procedures and shall deliver all such records to
Anworth, at Anworth’s sole expense, promptly upon the expiration of this
Agreement.

7. Confidentiality.

7.1 Duty of Confidentiality.    The parties agree: (i) to hold in trust and
maintain confidential; (ii) not to disclose to others without prior written
approval from the disclosing party; (iii) not to use for any purpose, other than
such purpose as may be authorized in writing by the disclosing party or pursuant
to this Agreement; and (iv) to prevent duplication of and disclosure to any
other party, any Information received from the disclosing party or developed,
presently held or continued to be held, or otherwise obtained, by the receiving
party under this Agreement.

7.2 Information.    “Information” shall mean all information disclosed by either
party to the other orally, visually, in writing, or in any other tangible form,
and shall include, but is not limited to, all technical information, financial
plans, computer databases and similar information disclosed in connection with
this Agreement.

7.3 Exceptions.    The foregoing obligations of confidentiality, non-disclosure
and non-use shall not apply to any Information to the extent that the obligated
party can show that: (i) such Information is or becomes knowledge generally
available to the public other than through the acts or omissions of the
obligated party; (ii) such Information is subsequently received by the obligated
party on a non-confidential

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basis from a third party who did not receive it directly or indirectly from the
disclosing party and who did not have an obligation to keep such Information
confidential; or (iii) disclosure of such Information is required under
applicable law or regulations.

Specific elements of Information shall not be deemed to come under the above
exceptions merely because they are embraced by more general Information which is
or becomes public knowledge.

8. Indemnification.

Anworth shall indemnify, defend and hold harmless PIA and each of its directors,
officers, employees and agents from and against all direct damages, losses and
out-of-pocket expenses (including reasonable legal fees) (“Losses”) caused by or
arising out of the performance of PIA’s obligations and agreements hereunder,
except where such Losses are caused by or arise from PIA’s bad faith, gross
negligence, willful misconduct or recklessness in the performance or the failure
in the performance of its duties hereunder.

9. Miscellaneous.

9.1 No Partnership or Joint Venture.    Nothing contained in this Agreement
shall constitute or be construed to be or create a partnership or joint venture
between PIA on the one hand and Anworth on the other hand.

9.2 Assignment.    Neither this Agreement nor any rights, duties or obligations
hereunder may be assigned or delegated by any of the parties, in whole or in
part, whether voluntarily, by operation of law or otherwise. Any attempted
assignment or delegation in violation of this prohibition shall be null and
void. Nothing contained herein, express or implied, is intended to confer on any
person other than the parties or their respective permitted successors and
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement.

9.3 Specific Performance.    PIA acknowledges that the remedy at law for any
breach, or threatened breach, of its obligations and duties hereunder will be
inadequate and, accordingly, covenants and agrees that, with respect to any
rights or remedies that Anworth may have and regardless of whether such other
rights or remedies have been previously exercised, Anworth is entitled to such
equitable and injunctive relief as may be available.

9.4 Notices.    All notices and other communications required or permitted
hereunder shall be in writing, shall be deemed duly given upon actual receipt,
and shall be delivered (i) in person; (ii) by registered or certified mail (air
mail if addressed to an address outside of the country in which mailed), postage
prepaid, return receipt requested; (iii) by a generally recognized overnight
courier service which provides written acknowledgment by the addressee of
receipt; or (iv) by facsimile or other generally accepted means of electronic
transmission (provided that a copy of any notice delivered pursuant to this
clause (iv) shall also be sent pursuant to clause (ii)), addressed as follows:

If to PIA:

1299 Ocean Avenue

Suite 210

Santa Monica, California 90401

Attention: Heather U. Baines

Fax: (310) 434-0100

If to Anworth:

1299 Ocean Avenue

Second Floor

Santa Monica, California 90401

Attention: Lloyd McAdams

Fax: (310) 434-0070

or to such other addresses as may be specified by like notice to the other
party.

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9.5 Applicable Law.    This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard to conflict
of laws principles.

9.6 Amendments and Waivers.    No modification, amendment, termination or waiver
of any provision of this Agreement, nor consent to any departure therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the parties, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Neither any course of
dealing nor any failure or delay on the part of any of the parties in exercising
any right, power or privilege hereunder shall impair any such power, right or
privilege or operate as a waiver thereof or as a waiver or acquiescence in any
default, nor shall any single or partial exercise thereof preclude any other or
further exercise of any other right, power or privilege. No notice to or demand
on any of the parties in any case shall entitle such party to any other or
further notice or demand in the same, similar or other circumstances.

9.7 Attorneys’ Fees; Costs and Expenses.    In any action or proceeding brought
to enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys’ fees in addition to its costs and expenses and any other
available remedy.

9.8 Invalidity.    If any provision of this Agreement is found by a court of
competent jurisdiction not to be enforceable to its full extent, such provision
shall nevertheless be enforced to the maximum extent permitted by law, and each
party agrees that such provisions may be judicially modified accordingly in any
proceeding brought to enforce this Agreement. If any portion of this Agreement
shall be held to be indefinite, invalid or otherwise entirely unenforceable, the
entire Agreement shall not fail on account thereof. The balance of this
Agreement shall continue in full force and effect.

9.9 Section and Other Headings.    Section titles are for descriptive purposes
only and shall not control or alter the meaning of this Agreement as set forth
in the text.

9.10 Counterparts.    This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each
party and delivered to each party.

9.11 Further Actions.    Subject to the terms and conditions of this Agreement,
each of the parties agrees to use all commercially reasonable efforts to take,
or cause to be taken, all action necessary, proper or advisable to consummate
and make effective the transactions contemplated by this Agreement.

9.12 Termination of Past Agreements; Entire Agreement.    This Agreement
contains the complete agreement between the parties and supersedes any prior
understandings, agreements or representations by or between the parties, written
or oral, which pertains to, conflicts with, or may have related to, the subject
matter hereof in any way including, without limitation, the Administrative
Agreement by and between PIA and Anworth made as of October 14, 2002 and the
Service Agreement by and between PIA and Anworth made as of October 14, 2002,
each of which are hereby terminated as of the Effective Date.

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IN WITNESS WHEREOF, PIA and Anworth have caused this Agreement to be signed by
their duly authorized respective officers, all as of the 29th day of December,
2008.

 

PACIFIC INCOME ADVISERS, INC. By:   /s/    HEATHER U. BAINES         Name:  
Heather U. Baines Title:   Chief Executive Officer ANWORTH MORTGAGE ASSET
CORPORATION By:   /s/    LLOYD MCADAMS         Name:   Lloyd McAdams Title:  
Chief Executive Officer

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SCHEDULE A-1

SERVICES AND EQUIPMENT

 

1. SERVICES

 

  (i) Administrative, secretarial, accounting and bookkeeping services;

 

  (ii) Human Resource services, including, but not limited to, payroll and
benefits;

 

  (iii) Data processing, including, but not limited to, computer programming,
systems support, computer servers and computer operations;

 

  (iv) Maintenance and repair of computer systems and office equipment;

 

  (v) Remote primary server facilities, back-up and server maintenance and
updates and email archiving;

 

  (vi) Disaster recovery and business continuation hot site access and
facilities;

 

  (vii) Access to third party Information Technology support;

 

  (viii) Stockholder communication services, including, but not limited to,
distribution of written materials to stockholders of Anworth;

 

  (ix) Portfolio accounting services and settlement services, including, but not
limited to, settlement of trades;

 

  (x) Use of telephone lines and DS3;

 

  (xi) Usage of off-site storage facilities;

 

  (xii) Usage of parking facilities;

 

  (xiii) Graphic services for Web site and for materials distributed, including,
but not limited to, letterhead and promotional materials; and

 

  (xiv) Receptionist services.

 

2. EQUIPMENT

 

  (i) Office furniture and equipment to be determined by the parties;

 

  (ii) Computer equipment to be determined by the parties;

 

  (iii) Office and kitchen supplies.

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SCHEDULE A-2

SERVICE CHARGES

The Service Charges shall be calculated as the product of (a) Anworth’s
Stockholder Equity as shown on Anworth’s Balance Sheet for the immediately
preceding quarter multiplied by (b) the Applicable Percentage, as set forth in
the table below. The Service Charges shall be calculated quarterly in arrears on
the last day of each quarter and paid on or before the thirtieth day of the
first month of each subsequent quarter. If this Agreement is terminated
effective on some day other than the last day of a quarter, the Service Charges
for any partial quarter shall be prorated based on the number of days during
such quarter that this Agreement is in effect.

 

Stockholder Equity

   Applicable Percentage  

First $225 million

   0.07 %

Next $450 million

   0.05 %

All thereafter

   0.035 %

If, for any reason, Anworth’s requirements for the level, scope or type of
Services and/or Equipment to be provided above significantly decreases or
completely terminates at any time during the term of this Agreement, the Service
Charges for such Services and/or Equipment shall immediately be decreased or
eliminated accordingly.