Note 20—Net Interest Income (Expense)

Net interest income (expense) is summarized below:


	Year ended December 31,
	2018		2017		2016
	(in thousands)
Interest income:
From non-affiliates:
Short-term investments	$	2,038	$	2,356	$	2,558
Mortgage loans held for sale at fair value		128,732		91,972		54,584
Placement fees relating to custodial funds		78,184		40,813		16,155
		208,954		135,141		73,297
From PennyMac Mortgage Investment Trust—Assets purchased from PennyMac Mortgage Investment Trust under agreements to resell		7,462		8,038		7,830
		216,416		143,179		81,127

Interest expense:
To non-affiliates:
Assets sold under agreements to repurchase (1)		22,463		60,286		49,791
Mortgage loan participation purchase and sale agreements		8,754		5,496		5,523
Notes payable		73,610		39,369		8,688
Obligations under capital lease		536		769		510
Interest shortfall on repayments of mortgage loans serviced for Agency securitizations		18,777		16,933		15,102
Interest on mortgage loan impound deposits		5,319		4,716		3,991
		129,459		127,569		83,605
To PennyMac Mortgage Investment Trust—Excess servicing spread financing at fair value		15,138		16,951		22,601
		144,597		144,520		106,206
	$	71,819	$	(1,341)	$	(25,079)

(1)

In 2017, the Company entered a master repurchase agreement that provides the Company with incentives to finance mortgage loans approved for satisfying certain consumer relief characteristics as provided in the agreement. During the years ended December 31, 2018 and 2017, the Company included $48.1 million and $9.2 million, respectively of such incentives as a reduction in Interest expense. The master repurchase agreement is subject to a rolling six-month term through August 21, 2019, unless terminated earlier at the option of the lender. The Company expects that it will cease to accrue the incentives under the repurchase agreement in the second quarter of 2019.