Commitments and Contingencies

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

The Company regularly enters into agreements to acquire additional mortgage loans and mortgage-related assets, subject to continuing diligence on such assets and other customary closing conditions. There can be no assurance that the Company will acquire any or all of the mortgage loans or other assets identified in any acquisition agreement as of the date of these consolidated financial statements, and it is possible that the terms of such acquisitions may change.

At June 30, 2023, the Company had a commitment to purchase, subject to due diligence, one NPL secured by a single-family residence with aggregated UPB of $0.2 million. See Note 15 — Subsequent Events, for remaining open acquisitions as of the filing date.

During the three months ended June 30, 2020, the Company issued an aggregate of $125.0 million, net of offering costs, of preferred stock in two series and warrants to institutional accredited investors in a series of private placements. The Company issued 2,307,400 shares of 7.25% Series A Fixed-to-Floating Rate Preferred Stock and 2,892,600 shares of 5.00% Series B Fixed-to-Floating Rate Preferred Stock, and two series of five-year warrants to purchase an aggregate of 6,500,000 shares of the Company's common stock at an exercise price of $10.00 per share. The preferred shares have a liquidation preference of $25.00 per share. Each series of warrants includes a put option that allows the holder to sell the warrants to the Company at a specified put price on or after July 6, 2023. U.S. GAAP requires the Company to account for the outstanding warrants as if the put option will be exercised by the holders.

During the year ended December 31, 2022, the Company repurchased and retired 1,882,451 shares of its series A preferred stock and 1,757,010 shares of its series B preferred stock in a series of repurchase transactions. The series A and series B preferred stock were repurchased for an aggregate of $88.7 million at an average price of $24.37 per share, representing a discount of approximately 2.5% to the face value of $25.00 per share. The repurchase of the preferred stock caused the recognition of $8.2 million of preferred stock discount during the year ended December 31, 2022. Of the 1,882,451 shares of its series A preferred stock and 1,757,010 shares of its series B preferred stock, the Company repurchased and retired during the year ended December 31, 2022, 768,519 shares of its series A preferred stock and 231,481 shares of its series B preferred stock were repurchased and retired during the three and six months ended June 30, 2022. The series A and series B preferred stock were repurchased for an aggregate of $24.5 million at an average price of $24.50 per share, representing a discount of approximately 2.0% to the face value of $25.00 per share. The repurchase of the preferred stock caused the recognition of $2.5 million of preferred stock discount during the three and six months ended June 30, 2022. There was no repurchase of preferred stock during the three and six months ended June 30, 2023. Also during the year ended December 31, 2022, the Company repurchased and retired 4,549,328 of the outstanding warrants for $35.0 million. Of the 4,549,328 warrants the Company repurchased and retired during the year ended December 31, 2022, 1,250,000 warrants were repurchased and retired during the three and six months ended June 30, 2022 for $9.2 million. No warrants were repurchased during the three and six months ended June 30, 2023. The remaining liability on the consolidated balance sheet at June 30, 2023 for the present value of the put liability on the remaining outstanding warrants is $15.6 million, representing the fair value of the put liability at the balance sheet date. The Company is accreting the amount of the liability under the effective interest method to its expected future put value of $15.7 million and marks the obligation to market through earnings. The expense is recognized in the Fair value adjustment on put option liability line of the Company's consolidated statements of operations. The following table sets forth the details of the Company's put option liability ($ in thousands):


	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Beginning balance	$	13,775	$	26,867	$	12,153	$	23,667
Fair value adjustments during the period	1,839		3,595		3,461		6,795
Repurchases	—		(5,628)		—		(5,628)
Ending balance	$	15,614	$	24,834	$	15,614	$	24,834

Litigation, Claims and Assessments

From time to time, the Company may be involved in various claims and legal actions arising in the ordinary course of business. As of June 30, 2023, the Company was not a party to, and its properties were not subject to, any pending or threatened legal proceedings that individually or in the aggregate, are expected to have a material impact on its financial condition, results of operations or cash flows.