7.	Loan Repurchase Facility

	*Mortgage Loans*

	The Loan Repurchase Facility is used to fund purchases of the Company's target assets and, during the six months ended June 30, 2013, the Company utilized the Loan Repurchase Facility to fund a portion of its residential mortgage loan portfolio with an unpaid principal balance of approximately $152.2 million at the time of acquisition. The Loan Repurchase Facility closed on May 30, 2013, and is committed for a period of 364 days from inception. The obligations are fully guaranteed by the Company.

	The principal amount paid by Citi under the Loan Repurchase Facility for the Trust Certificate, which represent interests in residential mortgage loans, is based on a percentage of the lesser of the market value or the unpaid principal balance of such mortgage loans backing the Trust Certificate. Upon the Company's repurchase of a Trust Certificate sold to Citi under the Loan Repurchase Facility, the Company is required to repay Citi a repurchase amount based on the purchase price plus accrued interest. The Company is also required to pay Citi a commitment fee for the Loan Repurchase Facility, as well as certain other administrative costs and expenses in connection with Citi's structuring, management and ongoing administration of the Loan Repurchase Facility.

	The Loan Repurchase Facility contains margin call provisions that provide Citi with certain rights in the event of a decline in the market value of the mortgage loans backing the purchased Trust Certificate, subject to a floor amount. Under these provisions, Citi may require the Company to transfer cash sufficient to eliminate any margin deficit resulting from such a decline.

	The following table presents certain information regarding the Company's Loan Repurchase Facility as of June 30, 2013 by remaining maturity:

	Mortgage loans
	Balance		Weighted Average Rate
Loan Repurchase Facility borrowings maturing within
30 days or less	$	-	-	%
31-90 days		-	-
91-180 days		-	-
Greater than 180 days to 1 year		89,112,325	2.94
Total / weighted average	$	89,112,325	2.94	%

The following table presents information with respect to the Company's posting of mortgage loan collateral at June 30, 2013:

Repurchase agreements secured by mortgage loans	$	89,112,325
Fair value of mortgage loans pledged as collateral under repurchase agreements		120,517,248
Fair value of mortgage loans not pledged as collateral under repurchase agreements		266,177
Cash pledged under repurchase agreements		-

The following is a summary of financial information relating to mortgage loans at fair value sold under agreements to repurchase:

	Three Months Ended					Six Months Ended
				December 31,					December 31,
	June 30, 2013			2012		June 30, 2013			2012
Period end:
Balance	$	89,112,325		$	-	$	89,112,325		$	-
Unused amount⁽¹⁾	$	60,887,675			-	$	60,887,675			-
Weighted-average interest rate at end of period		2.94	%		-		2.94	%		-
Fair value of mortgage loans pledged as
collateral under repurchase agreements	$	120,517,248			-	$	120,517,248			-
During the period:
Weighted-average interest rate		2.94	%		-		2.94	%		-
Average balance of loans sold under
agreements to repurchase	$	266,499			-	$	266,499			-
Maximum daily amount outstanding	$	89,112,325			-	$	89,112,325			-
Total interest expense	$	289,296			-	$	289,296			-
____________________

(1)

The amount the Company is able to borrow under loan repurchase agreements is tied to the fair value of unencumbered mortgage loans eligible to secure those agreements and the Company's ability to fund the agreements' margin requirements relating to the collateral sold.