CIM-PD

MKT CAP $1.8BP/E —DIV YIELD 7.55%FCF YIELD —REV TTM —NET INCOME $1.2M −99.4%NET CASH $191.5M52W 21.24 – 24.81SEC XBRL · TTM TO Invalid Date

How CIM-PD rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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+8,507

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Risk Factors You should carefully consider the following factors, together with all the other information included in this 2025 Form 10-K, in evaluating our company and our business.
Summary Risk Factors Risks Related to Financing • Our inability to access funding, our cost of funding or the terms on which such funding is available could have a material adverse effect on our financial condition, liquidity or profitability. • An increase in our borrowing costs relative to the interest we receive on our assets may materially adversely affect our profitability. • We may not achieve what we believe to be optimal levels of leverage or we may become overleveraged, which may materially adversely affect our liquidity, results of operations, profitability or financial condition. • Failure to effectively manage our liquidity could adversely affect our results and financial condition. • Our financing facilities may contain covenants that restrict our business activities. • We may have difficulty accessing or be unable to access capital markets.
Risks Associated with Our Investments • Interest rate fluctuations and changes in the yield curve may have various negative effects on us and may lead to reduced earnings, increased volatility in our earnings, and reduction in our book value. • The impact of inflation and related monetary policy efforts may adversely affect our financial performance. • The nature of the mortgage loans we acquire and that underlie the RMBS we acquire exposes us to credit risk that could negatively affect the value of those assets and investments. • A significant portion of our investments are in the most subordinated first-loss position of the capital structure of Non-Agency RMBS, disproportionately exposing us to credit risk. • A significant portion of the RMBS we acquire through securitization is subject to the Risk Retention Rules. • We have a significant amount of investments in Non-Agency RMBS collateralized by mortgage loans that do not meet the prime loan underwriting standards and are subject to increased risk of losses. • Our investments in mortgage loans and MSRs depend on the performance of third-party mortgage servicers. • Falling rates may accelerate mortgage prepayments, reducing future servicing income and decreasing MSR valuations. • We may be required to fund servicing advances on delinquent loans with respect to our MSR investments, which could create liquidity demands, particularly during market downturns or periods of increased borrower distress. • Changes in prepayment rates could negatively affect the value of our investment portfolio, which could result in reduced earnings, book value impairments, and/or negatively affect the cash available for distribution to our stockholders. • A significant portion of our Non-Agency RMBS and residential loans are secured by properties in a small number of geographic areas and may be disproportionately affected by adverse events in those markets. • We may change our investment strategy, adjust our asset allocation, or enter other operating businesses or financing plans without stockholder consent. • Changes in the fair values of our assets, liabilities, and derivatives can reduce earnings, affect liquidity, increase earnings volatility, and create variability in our book value. • Our calculations of the fair value of the assets we own or consolidate as well as liabilities related to consolidated securitizations are based upon assumptions that are inherently subjective, and the failure to realize such valuations may have a material adverse effect on our financial condition. • Any deterioration or uncertainty in market conditions for mortgages and mortgage-related assets, as well as in broader U.S. and global economic and geopolitical conditions, could have a material adverse effect on us.
Risks Related to Our Recent Acquisition and Loan Origination and Acquisition Business • We may fail to realize the expected benefits of the HomeXpress Acquisition. • Our loan origination and acquisition volume and ability to sell loans are highly dependent on macroeconomic and U.S. residential real estate market conditions. • A disruption in the secondary home loan market, our ability to sell the loans that we originate or acquire, or loan compliance issues could have a negative effect on our business. • Our subsidiary, HomeXpress, relies on warehouse facilities, structured as repurchase agreements, to finance loan originations and acquisitions.
These facilities are short-term and subject us to various risks. • Our business is dependent on our ability to maintain and expand our relationships with our clients, the independent mortgage brokers and bankers. • Our mortgage loans are primarily initiated by third parties, which exposes us to business and other risks.
Risks Related to Our Investment Management and Advisory Services • Our investment management and advisory services involve certain risks, which could adversely affect our business, financial condition and results of operations. • Our failure to appropriately manage or address conflicts of interest could damage our reputation. • Two of our subsidiaries are currently required to be registered as an investment adviser or a relying adviser, subjecting us to extensive regulation and examination by the SEC. • Our asset management and advisory services business has significant client concentration.
Failure to attract, grow, and retain a diverse and balanced client base could adversely affect our asset management and advisory services business.
Risks Related to Hedging • Hedging against interest rate exposure may not be successful in mitigating the risks associated with interest rates and may reduce our cash and adversely affect our financial condition and result of operations. • We may enter into hedging instruments that could expose us to contingent liabilities in the future, which could materially adversely affect our results of operations. • The characteristics of hedging instruments present various concerns, including illiquidity, enforceability, and counterparty risks, which could adversely affect our business and results of operations.
Risks Associated with Our Operations • Through certain of our wholly owned subsidiaries we may from time to time engage in securitization transactions relating to residential mortgage loans, which may expose us to potentially material risks. • Our ability to profitably execute future securitization transactions may be negatively impacted by adverse market conditions. • Competition may affect our ability to source our target assets at attractive prices and grow our investment management and advisory services, which may have a material adverse effect on our business, financial condition and results of operations. • Risks related to servicers and other third parties, including their ability to perform their services at a high level and comply with applicable laws, may have an adverse impact on our business. • Our use of third-party analytical models and data introduce risks related to model accuracy that may have an adverse effect on our execution of investment activities. • We are dependent on information technology and systems and their failure, including through cyber-attacks, could significantly disrupt our business. • The development, proliferation and use of artificial intelligence could give rise to legal and/or regulatory action, damage our reputation or otherwise materially impact our business, financial condition, and liquidity. • The loss of key employee may materially adversely affect our business.
Risks Related to Regulatory Matters, Accounting, and Our 1940 Act Exemption • Our business is subject to extensive regulation that may subject us to significant costs and compliance requirements, and there can be no assurance that we will satisfactorily comply with such regulations. • There is no assurance we will be able to obtain various state licenses to purchase mortgage loans. • Loss of our 1940 Act exemption would negatively affect our share price, our ability to distribute dividends, and us generally.
Federal Income Tax Risks and Risk Related to Our REIT Status • Risks related to compliance with REIT requirements, our qualification as a REIT and our election to qualify as a REIT. • Distributions or gain on sale may be treated as unrelated business taxable income to tax-exempt investors. • Classification of our securitizations or financing arrangements as a taxable mortgage pool could subject us or certain of our stockholders to increased taxation. • Failure to make required distributions would subject us to tax, which would reduce the cash available for distribution to our stockholders.
Risks Related to Our Organization and Structure • Certain provisions of Maryland Law, of our charter, and of our bylaws may inhibit potential acquisition bids that stockholders may consider favorable and may affect the market price of our capital stock Risks Related to Financing Our inability to access funding, our cost of funding or the terms on which such funding is available could have a material adverse effect on our financial condition, liquidity or profitability, particularly during times of severe market disruption in the financial, mortgage, housing or related sectors.
Our ability to fund our operations, meet financial obligations and finance target asset acquisitions may be impacted by our ability to secure and maintain our financing arrangements, including repurchase agreements, secured financing trusts and warehouse facilities with our counterparties.
Because repurchase agreements and warehouse facilities are often short-term commitments of capital, lenders may respond to market conditions by making it more difficult for us to renew or replace on a continuous basis our maturing short-term borrowings and have and may continue to impose more onerous conditions when rolling such financings.
During a period of rising or elevated interest rates, our borrowing costs generally will increase at a faster pace than our interest earnings on the leveraged portion of our investment portfolio, which could result in a decline in our net interest spread and net interest margin.
For certain investments we may evaluate the feasibility of entering into non-MTM financing in order to mitigate liquidity risks related to volatile interest rates and credit market conditions.
Non-MTM facilities typically have higher interest rates and deleveraging provisions which reduce the net cash we receive from underlying assets.
See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this 2025 Form 10-K, for further discussion regarding risks related to exposure to financial institution counterparties.
As of December 31, 2025, we had amounts outstanding under repurchase agreements with 20 separate lenders, including amounts at risk with Nomura Securities International, Inc.
(“Nomura”), of 18% of our equity related to the collateral posted on secured financing agreements.
These risks may be more acute during periods of heightened volatility in securities prices in the mortgage sector, making it more difficult to raise capital accretive to our earnings, book value and overall results of operations.
Risks Associated with Our Investments Interest rate fluctuations, including as a result of the Federal Reserve's monetary policy, may have various negative effects on us and may reduce the market value of our investments and negatively affect our book value, earnings and cash available for distribution, as well as increasing volatility.
Changes in interest rates, the interrelationships between various rates, interest rate volatility, and the shape of the yield curve, including changes to the Federal Reserve’s interest rate policies in response to inflation, labor market conditions and other economic factors, may have negative effects on our earnings, the fair value of our assets and liabilities, loan prepayment rates, and our access to liquidity.
For example, interest rate changes, particularly increases in interest rates, could have one more of the following consequences: • Some of the loans and securities we own or may acquire have adjustable-rate coupons or may be subordinate securities entitled to cash flow only after the more senior securities have been paid.
As such, the cash flows and earnings we receive from these assets may vary as a function of interest rates. • Changes in interest rates may harm the credit performance of our assets and result in costlier financing, which may affect our earnings results, reduce our ability to securitize, re-securitize, or sell our assets, or reduce our liquidity. • Higher interest rates could reduce mortgage borrowers’ ability to make interest payments or to refinance their loans, reduce property values, lead to increased credit losses, and reduce mortgage originations, thus reducing our opportunities to acquire or originate new assets. • Our investment portfolio contains a significant allocation to MBS and residential loans, which are generally sensitive to changes in long-term interest rates.
Decreases in the market value of these investments may reduce our earnings or result in realized losses, which could negatively impact our stockholders by reducing the cash available for distribution and/or book value. • If both short-term and long-term interest rates rise significantly, we may be subject not only to higher financing costs on our repurchase agreements but also to declining valuations in our portfolio.
Changes in the yield curve may cause differences in timing between interest rate adjustments on our interest-earning assets and our borrowings, adversely affecting our net interest spread, and may impact our assets and liabilities differently, adversely affecting our book value if our assets are negatively impacted or the value of our liabilities increase.
Because our assets, on average, bear interest based on longer-term rates than our borrowings, a flattening or inversion of the yield curve would tend to decrease our net interest margin, net income, book value, and the market value of our net assets.
In addition, changes in the shape of the yield curve may impact our assets and liabilities differently, and when such changes negatively impact the value of our assets, or increase the value of our liabilities, it may adversely affect our book value.
Certain actions taken by the U.S. government, including the Federal Reserve, may impact our results.
In response to concerns about inflation, labor market conditions, or other economic factors, the Federal Reserve may adjust monetary policy.
Given our reliance on short-term borrowings to generate interest income, if the yield curve were to flatten or even invert, or if the Federal Reserve finds itself falling behind on inflation and more aggressively tightens monetary policy, our results of operations, financial condition and business could be materially adversely impacted.
The nature of the mortgage loans we acquire and that underlie the RMBS and MSRs we acquire exposes us to credit risk that could negatively affect the value of those assets and investments.
We assume credit risk primarily through the ownership of MSRs and securities backed by residential, multi-family, and commercial real estate loans and through direct investments in residential real estate loans.
We acquire residential loans including reperforming loans, nonperforming loans, Non-QMs, jumbo prime loans, and RTLs, which are subject to increased risk of loss.
Unlike Agency RMBS, Non-Agency RMBS and residential mortgage loans generally are not guaranteed by the U.S.
Government or any GSEs such as Fannie Mae and Freddie Mac.
A residential loan is directly exposed to losses resulting from a borrower default.
In addition, we acquire and may retain Non-QMs that will not have the benefit of enhanced legal protections otherwise available to residential mortgage loans originated to a more restrictive credit standard than just determining a borrower’s ability to repay.
Failure of residential mortgage loan originators or servicers to comply with the CFPB’s Ability-to-Repay Rule could subject us, as an assignee or purchaser of these loans (or as an investor in securities backed by these loans), to monetary penalties assessed by the CFPB through its administrative enforcement authority and by mortgagors through a private right of action against lenders or as a defense to foreclosure, including by recoupment or setoff of finance charges and fees collected, and could result in rescission of the affected residential mortgage loans, which could adversely impact our business and financial results.

and 323 more.

Gone since FY2024

Risk Factors You should carefully consider the following factors, together with all the other information included in this 2024 Form 10-K, in evaluating our company and our business.
Summary Risk Factors Risks Related to Financing • Our inability to access funding, our cost of funding or the terms on which such funding is available could have a material adverse effect on our financial condition, liquidity or profitability, particularly during times of severe market disruption in the financial, mortgage, housing or related sectors. • An increase in our borrowing costs relative to the interest we receive on our assets may materially adversely affect our profitability. • Our business strategy involves the use of leverage.
We may not achieve what we believe to be optimal levels of leverage or we may become overleveraged, which may materially adversely affect our liquidity, results of operations, profitability or financial condition. • Failure to effectively manage our liquidity would adversely affect our results and financial condition. • Our financing facilities may contain covenants that restrict our operations. • We may have difficulty accessing or be unable to access capital markets.
Risks Associated with Our Investments • Interest rate fluctuations, including as a result of the Federal Reserve's monetary policy, may have various negative effects on us and may lead to reduced earnings and increased volatility in our earnings. • Changes in the yield curve may cause differences in timing between interest rate adjustments on our interest-earning assets and our borrowings, adversely affecting our net interest spread. • Significant changes in interest rates, particularly increases in long-term rates, may reduce the market value of our investments and negatively affect our book value, earnings and cash available for distribution. • The impact of inflation and related monetary policy efforts may adversely affect our financial performance. • A significant portion of our investments are in the most subordinated first-loss position of the capital structure of Non-Agency RMBS, disproportionately exposing us to credit risk. • A significant portion of the RMBS we acquire through securitization is subject to the Risk Retention Rules. • We have a significant amount of investments in Non-Agency RMBS collateralized by mortgage loans that do not meet the prime loan underwriting standards and are subject to increased risk of losses. • The nature of the mortgage loans we acquire and that underlie the RMBS we acquire exposes us to credit risk that could negatively affect the value of those assets and investments. • Changes in prepayment rates could negatively affect the value of our investment portfolio, which could result in reduced earnings or losses and negatively affect the cash available for distribution to our stockholders. • A significant portion of our Non-Agency RMBS and residential loans are secured by properties in a small number of geographic areas and may be disproportionately affected by adverse events in those markets. • We may change our investment strategy, adjust our asset allocation, or enter other operating businesses or financing plans without stockholder consent, which may result in riskier investments or subject us to new or increased regulatory risks and have an adverse effect on our business, results of operations and financial condition. • Changes in the fair values of our assets, liabilities, and derivatives can reduce earnings, affect liquidity, increase earnings volatility, and create volatility in our book value. • Our calculations of the fair value of the assets we own or consolidate are based upon assumptions that are inherently subjective and involve a high degree of management judgment. • Any deterioration or uncertainty in market conditions for mortgages and mortgage-related assets, as well as in broader U.S. and global economic and geopolitical conditions, could have a material adverse effect on us.
Risks Related to Our Recent Acquisition and Investment Management and Advisory Services • We may be unable to successfully integrate and realize the anticipated benefits of the Palisades Acquisition. • Our investment management and advisory services involve certain risks, which could adversely affect our business, financial condition and results of operations. • Our failure to appropriately manage or address conflicts of interest could damage our reputation. • Two of our subsidiaries are currently required to be registered as an investment adviser or a relying adviser, subjecting us to extensive regulation that could adversely affect our ability to manage our business.
Risks Related to Hedging • Hedging against interest rate exposure may not be successful in mitigating the risks associated with interest rates and may reduce our cash available for distribution to our stockholders and adversely affect our financial condition and result of operations. • We may enter into hedging instruments that could expose us to contingent liabilities in the future, which could materially adversely affect our results of operations. • The characteristics of hedging instruments present various concerns, including illiquidity, enforceability, and counterparty risks, which could adversely affect our business and results of operations.
Risks Associated with Our Operations • Through certain of our wholly owned subsidiaries we may from time to time engage in securitization transactions relating to residential mortgage loans, which may expose us to potentially material risks. • Our ability to profitably execute future securitization transactions may be negatively impacted by adverse market conditions. • Competition may affect our ability to source our target assets at attractive prices and have a material adverse effect on our business, financial condition and results of operations. • The loss of any executive officer or key employee may materially adversely affect our business. • Risks related to servicers and other third parties, including their ability to perform their services at a high level and comply with applicable laws, and the use of third-party analytical models and data. • The expanding body of regulations and the investigations of servicers may increase their cost of compliance and the risks of noncompliance. • We are dependent on information technology and systems and their failure, including through cyber-attacks, could significantly disrupt our business.
Risks Related to Regulatory Matters, Accounting, and Our 1940 Act Exemption • Our business is subject to extensive regulation that may subject us to significant costs and compliance requirements, and there can be no assurance that we will satisfactorily comply with such regulations. • There is no assurance we will be able to obtain various state licenses to purchase mortgage loans. • Our GAAP financial results may not be an accurate indicator of taxable income and dividend distributions. • Changes in accounting rules could impact us negatively. • Loss of our 1940 Act exemption would negatively affect our share price, our ability to distribute dividends, and us generally.
Federal Income Tax Risks and Risk Related to Our REIT Status • Risks related to compliance with REIT requirements. • Risks related to our qualification as a REIT and our election to qualify as a REIT. • Distributions or gain on sale may be treated as unrelated business taxable income to tax-exempt investors. • Classification of our securitizations or financing arrangements as a taxable mortgage pool could subject us or certain of our stockholders to increased taxation. • Failure to make required distributions would subject us to tax, which would reduce the cash available for distribution to our stockholders. • Our ownership of and relationship with our TRSs will be limited, and a failure to comply with the limits would jeopardize our REIT status and may result in the application of a 100% excise tax. • The tax on prohibited transactions will limit our ability to engage in transactions, including certain methods of securitizing mortgage loans, that would be treated as sales for U.S. federal income tax purposes. • The interest apportionment rules may affect our ability to comply with the REIT asset and gross income tests. • We may be subject to adverse tax changes that could reduce the market price of our capital stock and our business in general.
Risks Related to Our Organization and Structure • Certain provisions of Maryland Law, of our charter, and of our bylaws may inhibit potential acquisition bids that stockholders may consider favorable and may affect the market price of our capital stock.
Risks Related to Our Securities • The market price and trading volume of our shares of capital stock may be volatile. • We may not be able to pay dividends or other distributions on our capital stock. • Interests of holders of our securities are structurally subordinated to the liabilities and obligations of our subsidiaries and may also be adversely affected by future offerings of securities.
Risks Related to Financing Our inability to access funding, our cost of funding or the terms on which such funding is available could have a material adverse effect on our financial condition, liquidity or profitability, particularly during times of severe market disruption in the financial, mortgage, housing or related sectors.
Our ability to fund our operations, meet financial obligations and finance target asset acquisitions may be impacted by our ability to secure and maintain our financing arrangements, including our repurchase agreements, secured financing trusts and warehouse facilities with our counterparties.
Because repurchase agreements and warehouse facilities are short-term commitments of capital, lenders may respond to market conditions making it more difficult for us to renew or replace on a continuous basis our maturing short-term borrowings and have and may continue to impose more onerous conditions when rolling such financings.
During a period of rising or elevated interest rates (as has been the case in recent years), our borrowing costs generally will increase at a faster pace than our interest earnings on the leveraged portion of our investment portfolio, which could result in a decline in our net interest spread and net interest margin.
For example, in 2023 and 2022, as the Federal Reserve increased interest rates we added more non-MTM facilities.
These facilities typically have higher interest rates and cash trapping provisions which reduce the net cash we receive from these levered assets.
See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this 2024 Form 10-K, for further discussion regarding risks related to exposure to financial institution counterparties in light of recent market conditions.
As of December 31, 2024, we had amounts outstanding under repurchase agreements with 13 separate lenders, including amounts at risk with Nomura Securities International, Inc.
(“Nomura”), of 20% of our equity related to the collateral posted on secured financing agreements.
These risks may be more acute during periods of heightened volatility in securities prices in the mortgage sector, such as those experienced in recent years, making it more difficult to raise capital accretive to our earnings, book value and overall results of operations.
Risks Associated with Our Investments Interest rate fluctuations, including as a result of the Federal Reserve's monetary policy, may have various negative effects on us and may lead to reduced earnings and increased volatility in our earnings.
Changes in interest rates, the interrelationships between various interest rates, and interest rate volatility, such as the changes that have occurred in recent years and may continue to occur as the Federal Reserve adjusts its interest rate policies in response to inflation, continue to affect the financial markets.
Such changes and fluctuations have had, and may continue to have, negative effects on our earnings, the fair value of our assets and liabilities, loan prepayment rates, and our access to liquidity.
For example, some of the loans and securities we own or may acquire have adjustable-rate coupons or may be subordinate securities entitled to cash flow only after the more senior securities have been paid.
As such, the cash flows and earnings we receive from these assets may vary as a function of interest rates.
Changes in interest rates may harm the credit performance of our assets and result in costlier financing, which may affect our earnings results, reduce our ability to securitize, re-securitize, or sell our assets, or reduce our liquidity.
In addition, higher interest rates could reduce mortgage borrowers’ ability to make interest payments or to refinance their loans, reduce property values, lead to increased credit losses, and reduce mortgage originations, thus reducing our opportunities to acquire new assets.
Changes in the yield curve may cause differences in timing between interest rate adjustments on our interest-earning assets and our borrowings, adversely affecting our net interest spread.
Because our assets, on average, bear interest based on longer-term rates than our borrowings, a flattening or inversion of the yield curve would tend to decrease—and has in recent years decreased—our net interest margin, net income, book value, and the market value of our net assets.
Significant changes in interest rates, particularly increases in long-term rates, may reduce the market value of our investments and negatively affect our book value, earnings and cash available for distribution.
Our investment portfolio contains a significant allocation to MBS and residential loans, which are generally sensitive to changes in long-term interest rates.
Decreases in the market value of these investments may reduce our earnings or result in realized losses, which could negatively impact our stockholders by reducing the cash available for distribution and/or book value.
Furthermore, if both short-term and long-term interest rates rise significantly, we may be subject not only to higher financing costs on our repurchase agreements but also to declining valuations in our portfolio.
In response to concerns about inflation, the Federal Reserve has maintained the benchmark interest rate at elevated levels.
As a result, mortgage rates have remained at elevated levels causing more home buyers to pull back from the market.
This has negatively impacted both the primary and secondary markets for residential mortgages.
As the Federal Reserve maintains an elevated federal funds rate, the margin between short and long-term rates may compress or remain compressed.
Given our reliance on short-term borrowings to generate interest income, if the curve continues to flatten or even invert, or if the Federal Reserve finds itself falling behind on inflation and more aggressively tightens current projections, our results of operations, financial condition and business could be materially adversely impacted.
The nature of the mortgage loans we acquire and that underlie the RMBS we acquire exposes us to credit risk that could negatively affect the value of those assets and investments.

and 98 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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