NOTE 6 - REPURCHASE AGREEMENTS

The Company has entered into repurchase agreements to finance its portfolio of investments. The repurchase agreements bear interest at a contractually agreed rate. The repurchase obligations mature and typically reinvest every thirty days to one year and have a weighted average aggregate interest rate of 0.48% at June 30, 2013. Repurchase agreements are being accounted for as secured borrowings since the Company maintains effective control of the financed assets. The following table summarizes certain characteristics of the Company’s repurchase agreements at June 30, 2013 and December 31, 2012:

	June 30, 2013					December 31, 2012
			Weighted					Weighted
	Amount		average			Amount		average
	outstanding		interest rate			outstanding		interest rate
Agency	$	539,910,000		0.40	%	$	59,616,000		0.48	%
Non-Agency⁽¹⁾		23,619,000		2.26	%		3,807,000		2.31	%
Total	$	563,529,000		0.48	%	$	63,423,000		0.59	%

(1) At June 30, 2013 and December 31, 2012, the Company had repurchase agreements of $30,310,000 and $13,989,000, respectively, that were linked to Non-Agency RMBS purchases and were accounted for as Linked Transactions, and as such, the linked repurchase agreements are not included in the above table. (See Note 3).

At June 30, 2013 and December 31, 2012, the repurchase agreements had the following remaining maturities:

	June 30, 2013		December 31, 2012
< 30 days	$	304,140,000	$	59,616,000
31 to 60 days		177,589,000		3,807,000
61 to 90 days		36,461,000		-
> 90 days		45,339,000		-
Total	$	563,529,000	$	63,423,000

Under the repurchase agreements, the respective lender retains the right to mark the underlying collateral to fair value. A reduction in the value of pledged assets would require the Company to provide additional collateral or fund margin calls. In addition, the repurchase agreements are subject to certain financial covenants. The Company is in compliance with these covenants as of June 30, 2013.

The following tables summarize certain characteristics of the Company’s repurchase agreements at June 30, 2013 and December 31, 2012:

	June 30, 2013
	Amount		Percent of total			Weighted average		Company RMBS
Repurchase Agreement Counterparties	Outstanding⁽¹⁾		amount outstanding			days to maturity		held as collateral
North America	$	262,968,000		46.67	%		45	$	275,654,422
Europe ⁽²⁾		193,311,000		34.30	%		41		202,694,448
Asia ⁽²⁾		107,250,000		19.03	%		24		111,953,870
Total	$	563,529,000		100.00	%		40	$	590,302,740

(1) At June 30, 2013, the Company had repurchase agreements of $30,310,000 that were linked to Non-Agency RMBS purchases and were accounted for as Linked Transactions, and as such, the linked repurchase agreements are not included in the above table. (See Note 3).

(2) Counterparties domiciled in Europe and Asia, or their U.S. subsidiaries.

	December 31, 2012
	Amount		Percent of total			Weighted average		Company RMBS
Repurchase Agreement Counterparties	Outstanding⁽¹⁾		amount outstanding			days to maturity		held as collateral
North America	$	52,874,000		83.37	%		17	$	55,462,506
Asia ⁽²⁾		10,549,000		16.63	%		18		10,874,574
Total	$	63,423,000		100.00	%		17	$	66,337,080

(1) At December 31, 2012, the Company had repurchase agreements of $13,989,000 that were linked to Non-Agency RMBS purchases and were accounted for as Linked Transactions, and as such, the linked repurchase agreements are not included in the above table. (See Note 3).

(2) Counterparties domiciled in Europe and Asia, or their U.S. subsidiaries.