10-Q

Counterparty

Amount at risk

Weighted average maturity

(in thousands)

Goldman Sachs & Co. LLC

September 5, 2024

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-34416

PennyMac Mortgage Investment Trust

(Exact name of registrant as specified in its charter)


Maryland		27-0186273
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

3043 Townsgate Road, Westlake Village, California		91361
(Address of principal executive offices)		(Zip Code)

(818) 224-7442

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol (s)	Name of Each Exchange on Which Registered
Common Shares of Beneficial Interest, $0.01 Par Value	PMT	New York Stock Exchange
8.125% Series A Cumulative Redeemable Preferred Shares of Beneficial Interest, $0.01 Par Value	PMT/PRA	New York Stock Exchange
8.00% Series B Cumulative Redeemable Preferred Shares of Beneficial Interest, $0.01 Par Value 6.75% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest, $0.01 Par Value	PMT/PRB PMT/PRC	New York Stock Exchange New York Stock Exchange
8.50% Senior Note Due 2028	PMTU	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.


Class		Outstanding at July 31, 2024
Common Shares of Beneficial Interest, $0.01 par value		86,860,960

PENNYMAC MORTGAGE INVESTMENT TRUST

FORM 10-Q

June 30, 2024

TABLE OF CONTENTS


		Page
Special Note Regarding Forward-Looking Statements		1
PART I. FINANCIAL INFORMATION		4
Item 1.	Financial Statements (Unaudited)	4
	Consolidated Balance Sheets	4
	Consolidated Statements of Income	6
	Consolidated Statements of Changes in Shareholders’ Equity	7
	Consolidated Statements of Cash Flows	9
	Notes to Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	58
	Our Company	58
	Results of Operations	61
	Net Investment Income	63
	Expenses	72
	Balance Sheet Analysis	75
	Asset Acquisitions	75
	Investment Portfolio Composition	76
	Cash Flows	78
	Liquidity and Capital Resources	79
	Off-Balance Sheet Arrangements and Aggregate Contractual Obligations	83
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	83
Item 4.	Controls and Procedures	84
PART II. OTHER INFORMATION		86
Item 1.	Legal Proceedings	86
Item 1A	Risk Factors	86
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	86
Item 3.	Defaults Upon Senior Securities	86
Item 4.	Mine Safety Disclosures	86
Item 5.	Other Information	86
Item 6.	Exhibits	87

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Report”) contains certain forward-looking statements that are subject to various risks and uncertainties. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “seek,” “anticipate,” “estimate,” “approximately,” “believe,” “could,” “project,” “predict,” “continue,” “plan” or other similar words or expressions.

Forward-looking statements are based on certain assumptions, discuss future expectations, future plans and strategies, contain financial and operating projections or state other forward-looking information. Examples of forward-looking statements include the following:

•

projections of our revenues, income, earnings per share, capital structure or other financial items;

•

descriptions of our plans or objectives for future operations, products or services;

•

forecasts of our future economic performance, interest rates, profit margins and our share of future markets; and

•

descriptions of assumptions underlying or relating to any of the foregoing expectations regarding the timing of generating any revenues.

Our ability to predict results or the actual effect of future events, actions, plans or strategies is inherently uncertain. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements. There are a number of factors, many of which are beyond our control that could cause actual results to differ significantly from management’s expectations. Some of these factors are discussed below.

You should not place undue reliance on any forward-looking statement and should consider the following uncertainties and risks, as well as the risks and uncertainties discussed elsewhere in this Report and the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (“SEC”) on February 22, 2024.

Factors that could cause actual results to differ materially from historical results or those anticipated include, but are not limited to:

•

changes in interest rates and other macroeconomic conditions;

•

our ability to comply with various federal, state and local laws and regulations that govern our business;

•

changes in our investment objectives or investment or operational strategies, including any new lines of business or new products and services that may subject us to additional risks;

•

changes in real estate values, housing prices and housing sales;

•

the degree and nature of our competition;

•

volatility in our industry, the debt or equity markets, the general economy or the real estate finance and real estate markets specifically, whether the result of market events or otherwise;

•

events or circumstances which undermine confidence in the financial and housing markets or otherwise have a broad impact on financial and housing markets, such as the sudden instability or collapse of large depository institutions or other significant corporations, terrorist attacks, natural or man-made disasters, or threatened or actual armed conflicts;

•

changes in general business, economic, market, employment and domestic and international political conditions, or in consumer confidence and spending habits from those expected;

•

the availability of, and level of competition for, attractive risk-adjusted investment opportunities in loans and mortgage-related assets that satisfy our investment objectives;

•

the inherent difficulty in winning bids to acquire loans, and our success in doing so;

•

the concentration of credit risks to which we are exposed;

•

our dependence on PennyMac Financial Services, Inc., PNMAC Capital Management, LLC and PennyMac Loan Services, LLC, potential conflicts of interest with such entities and their affiliates, and the performance of such entities;

•

changes in personnel and lack of availability of qualified personnel at PennyMac Financial Services, Inc., PNMAC Capital Management, LLC and PennyMac Loan Services, LLC, and their affiliates;

•

the availability, terms and deployment of short-term and long-term capital;

•

the adequacy of our cash reserves and working capital;

•

our substantial amount of debt;

•

our ability to maintain the desired relationship between our financing and the interest rates and maturities of our assets;

•

the timing and amount of cash flows, if any, from our investments;

•

our exposure to risks of loss and disruptions in operations resulting from adverse weather conditions, man-made or natural disasters, climate change and pandemics;

•

unanticipated increases or volatility in financing and other costs, including a rise in interest rates;

•

the performance, financial condition and liquidity of borrowers;

•

the ability of our servicer, which also provides us with fulfillment services, to approve and monitor correspondent sellers and underwrite loans to investor standards;

•

incomplete or inaccurate information or documentation provided by customers or counterparties, or adverse changes in the financial condition of our customers and counterparties;

•

our indemnification and repurchase obligations in connection with loans we purchase and later sell or securitize;

•

the quality and enforceability of the collateral documentation evidencing our ownership and rights in the assets in which we invest;

•

increased rates of delinquency, default and/or decreased recovery rates on our investments;

•

the performance of loans underlying mortgage-backed securities in which we retain credit risk;

•

our ability to foreclose on our investments in a timely manner or at all;

•

the degree to which our hedging strategies may or may not protect us from interest rate volatility;

•

the effect of the accuracy of or changes in the estimates we make about uncertainties, contingencies and asset and liability valuations when measuring and reporting upon our financial condition and results of operations;

•

our ability to maintain appropriate internal control over financial reporting;

•

technology failures, cybersecurity risks and incidents, and our ability to mitigate cybersecurity risks and cyber intrusions;

•

our ability to obtain and/or maintain licenses and other approvals in those jurisdictions where required to conduct our business;

•

our ability to detect misconduct and fraud;

•

changes in our credit risk transfer arrangements and agreements;

•

developments in the secondary markets for our loan products;

•

legislative and regulatory changes that impact the loan industry or housing market;

•

changes in regulations that impact the business, operations or governance of mortgage lenders and/or publicly-traded companies or such changes that increase the cost of doing business with such entities;

•

the Consumer Financial Protection Bureau and its issued and future rules and the enforcement thereof;

•

changes in government support of homeownership;

•

our ability to effectively identify, manage and hedge our credit, interest rate, prepayment, liquidity and climate risks;

•

changes in government or government-sponsored home affordability programs;

•

limitations imposed on our business and our ability to satisfy complex rules for us to qualify as a real estate investment trust (“REIT”) for U.S. federal income tax purposes and qualify for an exclusion from the Investment Company Act of 1940 and the ability of certain of our subsidiaries to qualify as REITs or as taxable REIT subsidiaries for U.S. federal income tax purposes, as applicable, and our ability and the ability of our subsidiaries to operate effectively within the limitations imposed by these rules;

•

changes in governmental regulations, accounting treatment, tax rates and similar matters (including changes to laws governing the taxation of REITs, or the exclusions from registration as an investment company);

•

our ability to make distributions to our shareholders in the future;

•

our failure to deal appropriately with issues that may give rise to reputational risk; and

•

our organizational structure and certain requirements in our charter documents.

Other factors that could also cause results to differ from our expectations may not be described in this Report or any other document. Each of these factors could by itself, or together with one or more other factors, adversely affect our business, income and/or financial condition.

Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update any forward-looking statement to reflect the impact of circumstances or events that arise after the date the forward-looking statement was made.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)


	June 30,			December 31,
	2024			2023
	(in thousands, except share information)
ASSETS
Cash	$	130,734		$	281,085
Short-term investments at fair value		336,296			128,338
Mortgage-backed securities at fair value pledged to creditors		4,068,337			4,836,292
Loans acquired for sale at fair value ($685,231 and $659,751 pledged to creditors, respectively)		694,391			669,018
Loans at fair value ($1,376,005 and $1,431,896 pledged to creditors, respectively)		1,377,836			1,433,820
Derivative assets ($24,305 and $16,160 pledged to creditors, respectively)		90,753			177,984
Deposits securing credit risk transfer arrangements pledged to creditors		1,163,268			1,209,498
Mortgage servicing rights at fair value ($3,889,087 and $3,871,249 pledged to creditors, respectively)		3,941,861			3,919,107
Servicing advances ($78,786 and $181,201 pledged to creditors, respectively)		98,989			206,151
Due from PennyMac Financial Services, Inc.		1			56
Other ($1,515 and $1,905 pledged to creditors, respectively)		178,484			252,538
Total assets	$	12,080,950		$	13,113,887
LIABILITIES
Assets sold under agreements to repurchase	$	4,700,225		$	5,624,558
Mortgage loan participation purchase and sale agreements		13,582			—
Notes payable secured by credit risk transfer and mortgage servicing assets		2,933,845			2,910,605
Unsecured senior notes		813,838			600,458
Asset-backed financing of variable interest entities at fair value		1,288,180			1,336,731
Interest-only security payable at fair value		32,708			32,667
Derivative and credit risk transfer strip liabilities at fair value		18,892			51,381
Accounts payable and accrued liabilities		126,314			354,989
Due to PennyMac Financial Services, Inc.		29,413			29,262
Income taxes payable		170,901			190,003
Liability for losses under representations and warranties		13,183			26,143
Total liabilities		10,141,081			11,156,797

Commitments and contingencies ─ Note 17

SHAREHOLDERS’ EQUITY
Preferred shares of beneficial interest, $0.01 par value per share, authorized 100,000,000 shares, issued and outstanding 22,400,000, liquidation preference $560,000,000		541,482			541,482
Common shares of beneficial interest—authorized, 500,000,000 common shares of $0.01 par value; issued and outstanding, 86,860,960 and 86,624,044 common shares, respectively		869			866
Additional paid-in capital		1,923,780			1,923,437
Accumulated deficit		(526,262	)		(508,695	)
Total shareholders’ equity		1,939,869			1,957,090
Total liabilities and shareholders’ equity	$	12,080,950		$	13,113,887

The accompanying notes are an integral part of these consolidated financial statements.

PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

Assets and liabilities of consolidated variable interest entities (“VIEs”) included in total assets and liabilities (the assets of each VIE can only be used to settle liabilities of that VIE) are summarized below:


	June 30,		December 31,
	2024		2023
	(in thousands)
ASSETS
Loans at fair value	$	1,375,838	$	1,431,689
Derivative assets		24,305		16,160
Deposits securing credit risk transfer arrangements		1,163,268		1,209,498
Other—interest receivable		4,001		4,106
	$	2,567,412	$	2,661,453
LIABILITIES
Asset-backed financings at fair value	$	1,288,180	$	1,336,731
Derivative and credit risk transfer strip liabilities at fair value		16,974		46,692
Interest-only security payable at fair value		32,708		32,667
Accounts payable and accrued liabilities—interest payable		4,001		4,106
	$	1,341,863	$	1,420,196

The accompanying notes are an integral part of these consolidated financial statements.

PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


	Quarter ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
	(in thousands, except per common share amounts)
Net investment income
Net loan servicing fees:
From nonaffiliates
Contractually specified	$	162,127		$	165,499		$	322,484		$	329,713
Other		2,815			6,826			5,826			10,769
		164,942			172,325			328,310			340,482
Change in fair value of mortgage servicing rights		(50,556	)		(87,997	)		(78,758	)		(225,441	)
Mortgage servicing rights hedging results		(18,365	)		23,996			(108,179	)		(30,895	)
		96,021			108,324			141,373			84,146
From PennyMac Financial Services, Inc.		473			509			826			994
		96,494			108,833			142,199			85,140
Net gains on loans acquired for sale:
From nonaffiliates		10,110			2,614			23,023			7,759
From PennyMac Financial Services, Inc.		2,050			1,832			3,655			3,160
		12,160			4,446			26,678			10,919
Loan origination fees		2,451			4,295			4,459			12,001
Net (losses) gains on investments and financings		(19,743	)		(2,499	)		20,010			123,305
Net interest expense:
Interest income		151,835			162,684			295,394			315,703
Interest expense		171,841			187,390			343,368			366,527
Net interest expense		(20,006	)		(24,706	)		(47,974	)		(50,824	)
Results of real estate acquired in settlement of loans		(224	)		(56	)		(90	)		—
Other		66			139			121			277
Net investment income		71,198			90,452			145,403			180,818
Expenses
Earned by PennyMac Financial Services, Inc.:
Loan servicing fees		20,264			20,317			40,526			40,766
Management fees		7,133			7,078			14,321			14,335
Loan fulfillment fees		4,427			5,441			8,443			17,364
Professional services		2,366			1,881			4,124			3,404
Compensation		1,369			1,279			3,285			2,818
Loan collection and liquidation		671			909			2,040			1,488
Safekeeping		961			1,124			1,893			2,240
Loan origination		533			897			1,006			3,075
Other		4,865			4,673			8,775			9,674
Total expenses		42,589			43,599			84,413			95,164
Income before provision for (benefit from) income taxes		28,609			46,853			60,990			85,654
Provision for (benefit from) income taxes		3,175			22,229			(12,052	)		333
Net income		25,434			24,624			73,042			85,321
Dividends on preferred shares		10,454			10,454			20,909			20,909
Net income attributable to common shareholders	$	14,980		$	14,170		$	52,133		$	64,412
Earnings per common share
Basic	$	0.17		$	0.16		$	0.60		$	0.73
Diluted	$	0.17		$	0.16		$	0.60		$	0.68
Weighted average common shares outstanding
Basic		86,849			87,269			86,769			88,046
Diluted		86,849			87,269			86,769			112,374

The accompanying notes are an integral part of these consolidated financial statements.

PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)


	Quarter ended June 30, 2024
	Preferred shares				Common shares
	Number				Number						Additional
	of				of			Par			paid-in			Accumulated
	shares		Amount		shares			value			capital			deficit			Total
	(in thousands, except per share amounts)
Balance at March 31, 2024		22,400	$	541,482		86,845		$	868		$	1,922,954		$	(506,391	)	$	1,958,913
Net income		—		—		—			—			—			25,434			25,434
Share-based compensation		—		—		16			1			826			—			827
Dividends:
Preferred shares		—		—		—			—			—			(10,455	)		(10,455	)
Common shares ($0.40 per share)		—		—		—			—			—			(34,850	)		(34,850	)
Balance at June 30, 2024		22,400	$	541,482		86,861		$	869		$	1,923,780		$	(526,262	)	$	1,939,869



	Quarter ended June 30, 2023
	Preferred shares				Common shares
	Number				Number						Additional
	of				of			Par			paid-in			Accumulated
	shares		Amount		shares			value			capital			deficit			Total
	(in thousands, except per share amounts)
Balance at March 31, 2023		22,400	$	541,482		88,386		$	884		$	1,940,297		$	(511,929	)	$	1,970,734
Net income		—		—		—			—			—			24,624			24,624
Share-based compensation		—		—		11			—			845			—			845
Dividends:
Preferred shares		—		—		—			—			—			(10,455	)		(10,455	)
Common shares ($0.40 per share)		—		—		—			—			—			(34,804	)		(34,804	)
Repurchase of common shares		—		—		(1,636	)		(16	)		(19,432	)		—			(19,448	)
Balance at June 30, 2023		22,400	$	541,482		86,761		$	868		$	1,921,710		$	(532,564	)	$	1,931,496

The accompanying notes are an integral part of these consolidated financial statements.


	Six months ended June 30, 2024
	Preferred shares				Common shares
	Number				Number						Additional
	of				of			Par			paid-in			Accumulated
	shares		Amount		shares			value			capital			deficit			Total
	(in thousands, except per share amounts)
Balance at December 31, 2023		22,400	$	541,482		86,624		$	866		$	1,923,437		$	(508,695	)	$	1,957,090
Net income		—		—		—			—			—			73,042			73,042
Share-based compensation		—		—		237			3			343			—			346
Dividends:
Preferred shares		—		—		—			—			—			(20,910	)		(20,910	)
Common shares ($0.80 per share)		—		—		—			—			—			(69,699	)		(69,699	)
Balance at June 30, 2024		22,400	$	541,482		86,861		$	869		$	1,923,780		$	(526,262	)	$	1,939,869



	Six months ended June 30, 2023
	Preferred shares				Common shares
	Number				Number						Additional
	of				of			Par			paid-in			Accumulated
	shares		Amount		shares			value			capital			deficit			Total
	(in thousands, except per share amounts)
Balance at December 31, 2022		22,400	$	541,482		88,889		$	889		$	1,947,266		$	(526,822	)	$	1,962,815
Net income		—		—		—			—			—			85,321			85,321
Share-based compensation		—		—		146			1			1,433			—			1,434
Dividends:
Preferred shares		—		—		—			—			—			(20,909	)		(20,909	)
Common shares ($0.80 per share)		—		—		—			—			—			(70,154	)		(70,154	)
Repurchase of common shares		—		—		(2,274	)		(22	)		(26,989	)		—			(27,011	)
Balance at June 30, 2023		22,400	$	541,482		86,761		$	868		$	1,921,710		$	(532,564	)	$	1,931,496

The accompanying notes are an integral part of these consolidated financial statements.

PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Six months ended June 30,
	2024			2023
	(in thousands)
Cash flows from operating activities
Net income	$	73,042		$	85,321
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Change in fair value of mortgage servicing rights		78,758			225,441
Mortgage servicing rights hedging results		108,179			30,895
Net gains on loans acquired for sale		(26,678	)		(10,919	)
Net gains on investments and financings		(20,010	)		(123,305	)
Accrual of unearned discounts and amortization of purchase premiums on mortgage-backed securities, loans at fair value, and asset-backed financings		(7,049	)		2,813
Amortization of debt issuance costs		9,106			7,463
Results of real estate acquired in settlement of loans		90			—
Share-based compensation expense		2,192			2,001
Purchase of loans acquired for sale from nonaffiliates		(41,331,303	)		(41,942,691	)
Sale to nonaffiliates and repayment of loans acquired for sale		4,168,594			10,469,060
Sale of loans acquired for sale to PennyMac Financial Services, Inc.		37,161,319			32,087,158
Repurchase of loans subject to representations and warranties		(17,706	)		(36,702	)
Decrease in servicing advances		107,074			84,886
Decrease (increase) in due from PennyMac Financial Services, Inc.		55			(4,264	)
Repurchase of real estate previously sold as loans acquired for sale		—			(443	)
Increase in other assets		(153,564	)		(63,247	)
Decrease in accounts payable and accrued liabilities		(231,719	)		(54,811	)
Increase (decrease) in due to PennyMac Financial Services, Inc.		151			(11,326	)
Decrease in income taxes payable		(19,102	)		(3,806	)
Net cash (used in) provided by operating activities		(98,571	)		743,524
Cash flows from investing activities
Net (increase) decrease in short-term investments		(207,958	)		10,234
Purchase of mortgage-backed securities		(399,460	)		(3,044,317	)
Sale and repayment of mortgage-backed securities		1,103,969			2,789,954
Repurchase of loans at fair value		—			(119	)
Repayment of loans at fair value		49,223			47,064
Net settlement of derivative financial instruments		(6,005	)		1,805
Distribution from credit risk transfer arrangements		76,583			88,479
Purchase of mortgage servicing rights		(26,484	)		—
Transfer of mortgage servicing rights relating to delinquent loans to Agency		(216	)		723
Sale of real estate acquired in settlement of loans		647			2,609
Decrease (increase) in margin deposits		173,182			(29,088	)
Net cash provided by (used in) investing activities		763,481			(132,656	)

The accompanying notes are an integral part of these consolidated financial statements.

Statements continued on the next page

PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Continued)


	Six months ended June 30,
	2024			2023
	(in thousands)
Cash flows from financing activities
Sale of assets under agreements to repurchase		54,582,250			64,121,374
Repurchase of assets sold under agreements to repurchase		(55,506,481	)		(64,823,803	)
Issuance of mortgage loan participation purchase and sale agreements		692,186			1,066,247
Repayment of mortgage loan participation purchase and sale agreements		(678,604	)		(1,031,460	)
Issuance of notes payable secured by credit risk transfer and mortgage servicing assets		908,000			400,000
Repayment of notes payable secured by credit risk transfer and mortgage servicing assets		(882,425	)		(46,743	)
Issuance of asset-backed financing of variable interest entities		8,137			—
Repayment of asset-backed financings of variable interest entities		(47,806	)		(45,747	)
Issuance of unsecured senior notes		216,500			—
Payment of debt issuance costs		(14,663	)		(4,302	)
Payment of dividends to preferred shareholders		(20,910	)		(20,909	)
Payment of dividends to common shareholders		(69,599	)		(71,008	)
Payment of vested share-based compensation tax withholdings		(1,846	)		(567	)
Repurchase of common shares of beneficial interest		—			(27,011	)
Net cash used in financing activities		(815,261	)		(483,929	)
Net (decrease) increase in cash		(150,351	)		126,939
Cash at beginning of period		281,085			111,866
Cash at end of period	$	130,734		$	238,805
Supplemental cash flow information
Payments, net:
Income taxes	$	7,051		$	4,139
Interest	$	383,862		$	365,367
Non cash investing activities:
Receipt of mortgage servicing rights as proceeds from sales of loans	$	71,868		$	191,365
Unsettled purchase of mortgage servicing rights	$	2,944		$	—
Transfer of loans and advances to real estate acquired in settlement of loans	$	—		$	803
Non-cash financing activities:
Dividends declared, not paid	$	34,850		$	34,804

The accompanying notes are an integral part of these consolidated financial statements.

PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1—Organization

PennyMac Mortgage Investment Trust (“PMT” or the “Company”) is a specialty finance company, which, through its subsidiaries (all of which are wholly-owned), invests in residential mortgage-related assets. The Company operates in four segments: credit sensitive strategies, interest rate sensitive strategies, correspondent production, and corporate:

•

The credit sensitive strategies segment represents the Company’s investments in credit risk transfer (“CRT”) arrangements referencing loans from its own correspondent production (“CRT arrangements”) and subordinate mortgage-backed securities (“MBS”).

•

The interest rate sensitive strategies segment represents the Company’s investments in mortgage servicing rights (“MSRs”), Agency and senior non-Agency MBS and the related interest rate hedging activities.

•

The correspondent production segment represents the Company’s operations aimed at serving as an intermediary between lenders and the capital markets by purchasing, pooling and reselling newly originated prime credit quality loans either directly or in the form of MBS, using the services of PNMAC Capital Management, LLC (“PCM”) and PennyMac Loan Services, LLC (“PLS”), both wholly-owned subsidiaries of PennyMac Financial Services, Inc. (“PFSI”), a publicly-traded mortgage banking and investment management company separately listed on the New York Stock Exchange.

The Company primarily sells the loans it acquires through its correspondent production activities to government-sponsored entities ("GSEs") such as the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”) or to PLS for sale into securitizations guaranteed by the Government National Mortgage Association ("Ginnie Mae"), or the GSEs. Fannie Mae, Freddie Mac and Ginnie Mae are each referred to as an “Agency” and, collectively, as the “Agencies.”

•

The corporate segment includes management fees, corporate expense amounts and certain interest income and expense.

The Company conducts substantially all of its operations and makes substantially all of its investments through its subsidiary, PennyMac Operating Partnership, L.P. (the “Operating Partnership”), and the Operating Partnership’s subsidiaries. A wholly-owned subsidiary of the Company is the sole general partner, and the Company is the sole limited partner, of the Operating Partnership.

The Company believes that it qualifies, and has elected to be taxed, as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended. To maintain its tax status as a REIT, the Company is required to distribute at least 90% of its taxable income in the form of qualifying distributions to shareholders.

Note 2—Basis of Presentation and Recently Issued Accounting Pronouncements

The Company’s consolidated financial statements have been prepared in compliance with accounting principles generally accepted in the United States (“GAAP”) as codified in the Financial Accounting Standards Board’s ("FASB") Accounting Standards Codification for interim financial information and with the Securities and Exchange Commission’s instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, these financial statements and notes do not include all of the information required by GAAP for complete financial statements. This interim consolidated information should be read together with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

These unaudited consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, income, and cash flows for the interim periods presented, but are not necessarily indicative of the income that may be anticipated for the full year. Intercompany accounts and transactions have been eliminated.

Preparation of financial statements in compliance with GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the reporting period. Actual results will likely differ from those estimates.

The Company held no restricted cash or restricted cash equivalents during the periods presented. Therefore, the consolidated statements of cash flows do not include references to restricted cash or restricted cash equivalents.

Recently Issued Accounting Pronouncements

During 2023, the FASB issued two Accounting Standards Updates (“ASUs”) aimed at increasing the amount of detail provided to financial statement users in certain existing disclosures. Neither ASU requires changes to the Company’s accounting. The ASUs are discussed below:

Segment Disclosures

The FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), that is intended to improve disclosures about a public entity’s reportable segments and addresses requests from investors and other allocators of capital for more detailed information about a reportable segment’s expenses.

The amendments in ASU 2023-07 are intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The key amendments will require that the Company supplement its existing disclosures to include disclosure of:

•

significant segment expenses that are regularly provided to the chief operating decision maker included within each reported measure of segment profit or loss; and

•

an amount for other segment items by reportable segment and a description of its composition. The other segment items category is the difference between segment revenue less the significant expenses disclosed and each reported measure of segment profit or loss.

The Company will be required to apply ASU 2023-07 in annual periods beginning with its fiscal year ending December 31, 2024 and for quarterly periods ended thereafter with early adoption permitted.

Income Tax Disclosures

The FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), that is intended to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 requires disclosures of:

•

Reconciliation of the expected income tax at the applicable statutory federal income tax rate to the reported income tax in a tabular format, using both percentages and amounts, broken out into specific categories with certain reconciling items of five percent or greater of the expected tax further broken out by nature and/or jurisdiction; and

•

Income taxes paid, net of refunds received, broken out between federal and state and local income taxes. Payments to individual jurisdictions representing five percent or more of the total income tax payments must also be separately disclosed.

The disclosures required by ASU 2023-09 are required in the Company’s annual financial statements beginning with the year ending December 31, 2025, with early adoption permitted.

Note 3—Concentration of Risks

As discussed in Note 1 – Organization above, PMT’s operations and investing activities are centered in residential mortgage-related assets, including CRT arrangements, subordinate MBS, Agency and senior Non-Agency MBS and MSRs. CRT arrangements and subordinate MBS are more sensitive to borrower credit performance than other mortgage-related investments such as traditional loans. Agency MBS, Interest-only (“IO”) stripped MBS, principal-only stripped MBS and senior non-Agency MBS are sensitive to changes in market interest rates. MSRs are sensitive to changes in market interest rates, prepayment rate activity and expectations.

Credit Risk

Note 6 – Variable Interest Entities details the Company’s investments in CRT arrangements whereby the Company sold pools of loans into Fannie Mae guaranteed loan securitizations which became reference pools underlying the CRT arrangements. Fannie Mae transferred IO ownership interests and recourse obligations based upon securitized reference pools of loans subject to the CRT arrangements into trust entities, and the Company acquired the IO ownership interest and assumed the recourse obligations in the CRT arrangements through the acquisition of beneficial interests in the trust entities.

The Company also invests in subordinate MBS, which are among the first beneficial interests in the issuing trusts to absorb credit losses on the underlying loans.

The Company’s retention of credit risk through its investment in CRT arrangements and subordinate MBS subjects it to risks associated with delinquency and foreclosure similar to the risks of loss associated with owning the underlying loans, which is greater than the risk of loss associated with selling such loans to the Agencies without the retention of such credit risk in the case of CRT arrangements and investing in senior mortgage-backed securities in the case of subordinate MBS.

Certain of the Company’s investments in CRT arrangements are structured such that loans that reach a specific number of days delinquent trigger losses chargeable to the CRT arrangements based on the sizes of the delinquent loans and a contractual schedule of loss severity. Therefore, the risks associated with delinquency and foreclosure may in some instances be greater than the risks associated with owning the related loans because the structure of those CRT arrangements provides that the Company may be required to absorb losses in the event of delinquency or foreclosure even when there is ultimately no loss realized with respect to such loans (e.g., as a result of a borrower’s re-performance). In contrast, the structure of the Company’s other investments in CRT arrangements requires PMT to absorb losses only when the reference loans realize losses.

Fair Value Risk

The Company is exposed to fair value risk in addition to the risks specific to credit and, as a result of prevailing market conditions, may be required to recognize losses associated with adverse changes to the fair value of its investments in MSRs, CRT arrangements, and MBS:

•

The fair value of MSRs is sensitive to changes in prepayment speeds, estimates of cost to service the underlying loans and to the returns demanded by market participants;

•

The fair values of CRT arrangements and subordinate MBS are sensitive to market perceptions of future credit performance of the underlying loans as well as the actual credit performance of such loans and to the returns required by market participants to hold such investments; and

•

The fair values of Agency and senior non-Agency MBS are sensitive to changes in market interest rates.

Note 4—Transactions with Related Parties

The Company enters into transactions with subsidiaries of PFSI in support of its operating, investing and financing activities as summarized below.

Operating Activities

Loan Servicing

The Company has a loan servicing agreement with PLS (the “Servicing Agreement”) pursuant to which PLS provides subservicing for the Company's portfolio of MSRs, loans held for sale and loans held in VIEs (prime servicing), and its portfolio of residential loans purchased with credit deterioration (special servicing). The Servicing Agreement provides for servicing fees earned by PLS that are established at a per loan monthly amount based on the delinquency, bankruptcy and/or foreclosure status of the serviced loan or real estate acquired in settlement of loans (“REO").

Prime Servicing

The per-loan base servicing fees for prime loans subserviced by PLS on the Company’s behalf are $7.50 per month for fixed-rate loans and $8.50 per month for adjustable-rate loans.

To the extent that these prime loans become delinquent, PLS is entitled to an additional servicing fee per loan ranging from $10 to $55 per month based on the delinquency, bankruptcy and foreclosure status of the loan or $75 per month if the underlying mortgaged property becomes REO.

PLS is also entitled to customary ancillary income and certain market-based fees and charges, including boarding and deboarding fees, liquidation and disposition fees, assumption, modification and origination fees and certain fees for pandemic-related forbearance and modification activities.

Special Servicing

The per-loan base servicing fee rates for loans purchased with credit deterioration (distressed loans) range from $30 per month for current loans up to $95 per month for loans in foreclosure proceedings. The base servicing fee rate for REO is $75 per month. PLS also receives a supplemental servicing fee of $25 per month for each special servicing loan.

PLS receives activity-based fees for modifications, foreclosures and liquidations that it facilitates with respect to special servicing, as well as other market-based refinancing and loan disposition fees.

The Servicing Agreement expires on June 30, 2025, subject to automatic renewal for additional 18-month periods, unless terminated earlier in accordance with its terms.

MSR Recapture Agreement

The Company has an MSR recapture agreement with PLS. Pursuant to the terms of the MSR recapture agreement, if PLS refinances (recaptures) mortgage loans for which the Company previously held the MSRs, PLS is generally required to transfer and convey to the Company cash in an amount equal to:

•

40% of the fair market value of the MSRs relating to the recaptured loans subject to the first 15% of the “recapture rate”;

•

35% of the fair market value of the MSRs relating to the recaptured loans subject to the “recapture rate” in excess of 15% and up to 30%; and

•

30% of the fair market value of the MSRs relating to the recaptured loans subject to the “recapture rate” in excess of 30%.

The “recapture rate” means, during each month, the ratio of (i) the aggregate unpaid principal balance ("UPB") of all recaptured loans, to (ii) the aggregate UPB of all mortgage loans for which the Company held the MSRs and that were refinanced or otherwise paid off in such month. PFSI has further agreed to allocate sufficient resources to target a recapture rate of at least 15%.

The MSR recapture agreement expires, unless terminated earlier in accordance with its terms, on June 30, 2025, subject to automatic renewal for additional 18-month periods, unless terminated in accordance with its terms.

Following is a summary of loan servicing fees and recapture earned by PLS:


	Quarter ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
	(in thousands)
Loan servicing fees:
Loans acquired for sale at fair value	$	94	$	172	$	184	$	457
Loans at fair value		63		31		125		151
Mortgage servicing rights		20,107		20,114		40,217		40,158
	$	20,264	$	20,317	$	40,526	$	40,766
Average investment in loans:
Acquired for sale at fair value	$	854,406	$	1,609,816	$	779,997	$	1,992,706
At fair value	$	1,380,857	$	1,491,357	$	1,403,094	$	1,500,936
Average MSR portfolio unpaid principal balance	$	229,124,554	$	232,008,151	$	229,767,433	$	231,381,212

MSR recapture fees	$	473	$	509	$	826	$	994
UPB of loans recaptured	$	74,208	$	98,126	$	136,281	$	193,317

Correspondent Production Activities

The Company is provided fulfillment and other services for the operation of its correspondent business under an amended and restated mortgage banking services agreement with PLS. These services include: provision of models and technology for the pricing of loans and MSRs; reviews of loan data; documentation and appraisals to assess loan quality and risk; hedging the Company's mortgage pipeline to protect it from fluctuations in value due to movements in interest rates; correspondent seller performance and credit monitoring procedures; and the subsequent sale and securitization of loans through secondary mortgage markets on behalf of the Company.

Fulfillment and sourcing fees are summarized below:

•

Fulfillment fees shall not exceed the following:

(i)

the number of loan commitments issued by the Company multiplied by a pull-through factor of either .99 or .80 depending on whether the loan commitments are subject to a “mandatory trade confirmation” or a “best efforts lock confirmation”, respectively, and then multiplied by $585 for each pull-through adjusted loan commitment up to and including 16,500 per quarter and $355 for each pull-through adjusted loan commitment in excess of 16,500 per quarter, plus

(ii)

$315 multiplied by the number of purchased loans up to and including 16,500 per quarter and $195 multiplied by the number of purchased loans in excess of 16,500 per quarter, plus

(iii)

$750 multiplied by the number of all purchased loans that are sold or securitized to parties other than Fannie Mae and Freddie Mac; provided however, that no fulfillment fee shall be due or payable to PLS with respect to any Ginnie Mae loans and, as of October 1, 2022, designated Fannie Mae or Freddie Mac loans acquired by PLS.

The Company does not hold the Ginnie Mae approval required to issue securities guaranteed by Ginnie Mae for a pool of securitized loans or to act as a servicer for such pool of loans. Accordingly, under the agreement, PLS currently purchases loans saleable in accordance with the Ginnie Mae MBS Guide “as is” and without recourse of any kind from the Company at cost less any administrative fees paid by the correspondent to the Company plus accrued interest and a sourcing fee. The Company may also sell conventional loans to PLS under the same arrangement subject to mutual agreement between the parties. Sourcing fees range from one to two basis points of the loans' UPB, generally based on the average number of calendar days the loans are held by PMT before purchase by PLS.

The mortgage banking services agreement expires, unless terminated earlier in accordance with its terms, on June 30, 2025, subject to automatic renewal for additional 18-month periods, unless terminated in accordance with its terms.

The Company may purchase newly originated conforming balance non-government insured or guaranteed loans from PLS under a mortgage loan purchase and sale agreement.

Following is a summary of correspondent production activity between the Company and PLS:


	Quarter ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
	(in thousands)
Loan fulfillment fees earned by PLS	$	4,427	$	5,441	$	8,443	$	17,364
UPB of loans fulfilled by PLS	$	2,229,397	$	3,029,274	$	4,001,078	$	9,658,084

Sourcing fees received from PLS included in Net gains on loans acquired for sale	$	2,050	$	1,832	$	3,655	$	3,160
UPB of loans sold to PLS:
Government guaranteed or insured	$	10,500,415	$	11,307,342	$	18,357,340	$	20,521,054
Conventional conforming		10,006,706		7,017,890		18,196,636		11,080,764
	$	20,507,121	$	18,325,232	$	36,553,976	$	31,601,818

Tax service fees paid to PLS	$	431	$	701	$	790	$	2,111


	June 30, 2024		December 31, 2023
	(in thousands)
Loans included in Loans acquired for sale at fair value pending sale to PLS	$	281,020	$	168,303

Management Fees

The Company has a management agreement with PCM pursuant to which PMT pays PCM management fees as follows:

•

A base management fee that is calculated quarterly and is equal to the sum of (i) 1.5% per year of average shareholders’ equity up to $2 billion, (ii) 1.375% per year of average shareholders’ equity in excess of $2 billion and up to $5 billion, and (iii) 1.25% per year of average shareholders’ equity in excess of $5 billion.

•

A performance incentive fee that is calculated quarterly at a defined annualized percentage of the amount by which “net income,” on a rolling four-quarter basis and before deducting the incentive fee, exceeds certain levels of return on “equity.”

The performance incentive fee is equal to the sum of:

•

10% of the amount by which “net income” for the quarter exceeds (i) an 8% return on “equity” plus the “high watermark”, up to (ii) a 12% return on “equity”; plus

•

15% of the amount by which “net income” for the quarter exceeds (i) a 12% return on “equity” plus the “high watermark”, up to (ii) a 16% return on “equity”; plus

•

20% of the amount by which “net income” for the quarter exceeds a 16% return on “equity” plus the “high watermark.”

For the purpose of determining the amount of the performance incentive fee:

“Net income” is defined as net income or loss attributable to the Company’s common shares of beneficial interest (“Common Shares”) calculated in accordance with GAAP, and adjusted to exclude one-time events pursuant to changes in GAAP and certain other non-cash charges after discussion between PCM and the Company’s independent trustees and after approval by a majority of the Company’s independent trustees.

“Equity” is the weighted average of the issue price per Common Share of all of the Company’s public offerings, multiplied by the weighted average number of Common Shares outstanding (including restricted share units) in the rolling four-quarter period.

“High watermark” is the quarterly adjustment that reflects the amount by which the “net income” (stated as a percentage of return on "equity") in that quarter exceeds or falls short of the lesser of 8% and the average Fannie Mae 30-year MBS yield (the "Target Yield") for the four quarters then ended. The “high watermark” starts at zero and is adjusted quarterly. If the “net income” is lower than the Target Yield, the “high watermark” is increased by the difference. If the “net income” is higher than the Target Yield, the “high watermark” is reduced by the difference. Each time a performance incentive fee is earned, the “high watermark” returns to zero. As a result, the threshold amounts required for PCM to earn a performance incentive fee are adjusted cumulatively based on the performance of PMT’s “net income” over (or under) the Target Yield, until the “net income” in excess of the Target Yield exceeds the then-current cumulative “high watermark” amount.

The base management fee and the performance incentive fee are both payable quarterly in arrears. The performance incentive fee may be paid in cash or a combination of cash and the Company’s Common Shares (subject to a limit of no more than 50% paid in Common Shares), at the Company’s option.

In the event of termination of the management agreement between the Company and PCM, PCM may be entitled to a termination fee in certain circumstances. The termination fee is equal to three times the sum of (a) the average annual base management fee, and (b) the average annual performance incentive fee earned by PCM, in each case during the 24-month period before termination of the management agreement.

Following is a summary of management fee expenses:


	Quarter ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
	(in thousands)
Base management	$	7,133	$	7,078	$	14,321	$	14,335
Performance incentive		—		—		—		—
	$	7,133	$	7,078	$	14,321	$	14,335
Average shareholders' equity amounts used to calculate base management fee expense	$	1,912,522	$	1,892,505	$	1,919,962	$	1,927,305

Expense Reimbursement

Under the management agreement, PCM is entitled to reimbursement of its organizational and operating expenses, including third-party expenses, incurred on the Company’s behalf, it being understood that PCM and its affiliates shall allocate a portion of their personnel’s time to provide certain legal, tax and investor relations services for the direct benefit of the Company. PCM is reimbursed $165,000 per fiscal quarter for these services, such amount to be reviewed annually and to not preclude reimbursement for any other services performed by PCM or its affiliates.

The Company is required to pay PCM and its affiliates a portion of the rent, telephone, utilities, office furniture, equipment, machinery and other office, internal and overhead expenses of PCM and its affiliates required for the Company’s and its subsidiaries’ operations. These expenses are allocated based on the ratio of the Company’s and its subsidiaries’ proportion of gross assets compared to all remaining gross assets managed or owned by PCM and/or its affiliates as calculated at each fiscal quarter end.

Following is a summary of the Company’s reimbursements to PCM and its affiliates for expenses:


	Quarter ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
	(in thousands)
Reimbursement of:
Expenses incurred on the Company’s behalf, net	$	2,779	$	3,978	$	9,193	$	9,639
Common overhead incurred by PCM and its affiliates		2,000		2,140		3,944		3,961
Compensation		165		165		330		330
	$	4,944	$	6,283	$	13,467	$	13,930
Payments and settlements during the quarter (1)	$	29,263	$	30,872	$	59,348	$	63,256

(1)

Payments and settlements include payments and netting settlements made pursuant to master netting agreements between the Company and PFSI for the operating, investing and financing activities itemized in this Note.

Financing Activities

PFSI held 75,000 of the Company’s Common Shares at both June 30, 2024 and December 31, 2023.

Amounts Receivable from and Payable to PFSI

Amounts receivable from and payable to PFSI are summarized below:


	June 30, 2024		December 31, 2023
	(in thousands)
Due from PFSI-Miscellaneous receivables	$	1	$	56

Due to PFSI:
Correspondent production fees	$	9,145	$	8,288
Management fees		7,133		7,252
Loan servicing fees		6,792		6,809
Allocated expenses and expenses and costs paid by PFSI on PMT’s behalf		5,166		5,612
Fulfillment fees		1,177		1,301
	$	29,413	$	29,262

The Company has also transferred cash to PLS to fund loan servicing advances and REO property acquisition and preservation costs on its behalf. Such amounts are included in various balance sheet items of the Company as summarized below:


Balance sheet line including advance amount	June 30, 2024		December 31, 2023
	(in thousands)
Loan servicing advances	$	98,989	$	206,151
Other assets-Real estate acquired in settlement of loans		1,230		2,003
	$	100,219	$	208,154

Note 5—Loan Sales

The following table summarizes cash flows between the Company and transferees in transfers of loans that are accounted for as sales where the Company maintains continuing involvement with the loans:


	Quarter ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
	(in thousands)
Cash flows:
Proceeds from sales	$	2,240,258	$	4,881,794	$	4,168,594	$	10,469,060
Loan servicing fees received	$	162,127	$	165,499	$	322,484	$	329,713

The following table summarizes for the dates presented collection status information for loans that are accounted for as sales where the Company maintains continuing involvement:


	June 30, 2024		December 31, 2023
	(in thousands)
UPB of loans outstanding	$	224,229,222	$	228,838,471
Collection status (UPB)
Delinquency:
30-89 days delinquent	$	2,334,456	$	2,184,500
90 or more days delinquent:
Not in foreclosure	$	822,290	$	1,029,962
In foreclosure	$	86,934	$	85,045
Bankruptcy	$	241,304	$	185,320
Custodial funds managed by the Company (1)	$	2,704,150	$	1,759,974

(1)

Custodial funds include borrower and investor custodial cash accounts relating to loans serviced under mortgage servicing agreements and are not included on the Company’s consolidated balance sheets. The Company earns placement fees on certain of the custodial funds it manages on behalf of the loans’ borrowers and investors, and these fees are included in Interest income in the Company’s consolidated statements of income.

Note 6—Variable Interest Entities

The Company is a variable interest holder in various VIEs that relate to its investing and financing activities as discussed below.

Credit Risk Transfer Arrangements

The Company has previously entered into certain loan sales arrangements pursuant to which it accepted credit risk relating to the loans sold in exchange for a portion of the interest earned on such loans. These arrangements absorb scheduled or realized credit losses on those loans and comprise the Company’s investments in CRT arrangements.

The Company, through its subsidiary, PennyMac Corp. (“PMC”), entered into CRT arrangements with Fannie Mae, pursuant to which the Company sold pools of loans into Fannie Mae-guaranteed securitizations while retaining recourse obligations as part of the retention of IO ownership interests in such loans and include securities which are structured such that loans that reach a specific number of days delinquent (including loans in forbearance) trigger losses chargeable to the CRT arrangement based on the sizes of the delinquent loans and a contractual schedule of loss severity; and securities which require the Company to absorb losses only when the reference loans realize credit losses.

The Company placed Deposits securing CRT arrangements into subsidiary trust entities to secure its recourse obligations. The Deposits securing CRT arrangements represent the Company’s maximum contractual exposure to claims under its recourse obligations and are the sole source of settlement of losses under the CRT arrangements.

The Company’s exposure to losses under its recourse obligations was initially established at rates ranging from 3.5% to 4.0% of the UPB of the loans sold under the CRT arrangements. As the UPB of the underlying loans subject to each CRT arrangement decreased through repayments, the percentage exposure of each CRT arrangement increased to maximums ranging from 4.5% to 5.0% of outstanding UPB, although the total dollar amount of exposure to losses did not increase.

The Company has concluded that the subsidiary trust entities holding its CRT arrangements are VIEs and the Company is the primary beneficiary of the VIEs as it is the holder of the primary beneficial interests which absorb the variability of the trusts’ income. For CRT arrangements where losses are triggered based on the loans’ delinquency status, the Company recognizes its IO ownership interests and recourse obligations on the consolidated balance sheets as CRT Derivatives in Derivative assets and Derivative and credit risk transfer strip liabilities. For CRT securities where losses are absorbed when the reference loans realize credit losses, the Company recognizes its IO ownership interests and recourse obligations as CRT strips which are also included on the consolidated balance sheet in Derivative and credit risk transfer strip liabilities. Gains and losses on the derivatives and strips (including the IO ownership interest sold to nonaffiliates) included in the CRT arrangements are included in Net (losses) gains on investments and financings in the consolidated statements of income.

Following is a summary of the CRT arrangements:


	Quarter ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
	(in thousands)
Net investment income:
Net (losses) gains on investments and financings:
CRT Derivatives and strips:
CRT derivatives
Realized	$	3,564		$	5,423		$	6,973		$	8,453
Valuation changes		1,475			9,410			8,256			17,506
		5,039			14,833			15,229			25,959
CRT strips
Realized		11,693			11,984			23,378			24,288
Valuation changes		378			34,496			29,718			58,624
		12,071			46,480			53,096			82,912
Interest-only security payable at fair value		(481	)		(855	)		(41	)		(2,135	)
		16,629			60,458			68,284			106,736
Interest income — Deposits securing CRT arrangements		15,383			15,779			31,079			29,991
	$	32,012		$	76,237		$	99,363		$	136,727

Net payments made to settle losses on CRT arrangements	$	128		$	499		$	313		$	1,756


	June 30, 2024			December 31, 2023
	(in thousands)
Carrying value of CRT arrangements:
Derivative assets - CRT derivatives	$	24,305		$	16,160
CRT strip liabilities		(16,974	)		(46,692	)
Deposits securing CRT arrangements		1,163,268			1,209,498
Interest-only security payable at fair value		(32,708	)		(32,667	)
	$	1,137,891		$	1,146,299

CRT arrangement assets pledged to secure borrowings:
Derivative assets	$	24,305		$	16,160
Deposits securing CRT arrangements (1)	$	1,163,268		$	1,209,498

UPB of loans underlying CRT arrangements	$	22,204,806		$	23,152,230
Collection status (UPB):
Delinquency
Current	$	21,638,731		$	22,531,905
30-89 days delinquent	$	403,626		$	411,991
90-180 days delinquent	$	100,882		$	120,011
180 or more days delinquent	$	42,967		$	64,647
Foreclosure	$	18,600		$	23,676
Bankruptcy	$	65,176		$	58,696

(1)

Deposits securing credit risk transfer strip liabilities also secure $17.0 million and $46.7 million in CRT strip liabilities at June 30, 2024 and December 31, 2023, respectively.

Subordinate Mortgage-Backed Securities

The Company retains or purchases subordinate MBS in transactions sponsored by PMC or a nonaffiliate. Cash inflows from the loans underlying these securities are distributed to investors and service providers in accordance with the respective securities' contractual priority of payments and, as such, most of these inflows must be directed first to service and repay the senior securities.

The rights of holders of subordinate securities to receive distributions of principal and/or interest, as applicable, are subordinate to the rights of holders of senior securities. After the senior securities are repaid, substantially all cash inflows will be directed to the subordinate securities, including those held by the Company, until they are fully repaid.

The Company’s retention or purchase of subordinate MBS exposes PMT to the credit risk in the underlying loans because the Company’s investments are among the first beneficial interests to absorb credit losses on those assets. The Company’s exposure to losses from its investments in subordinate MBS is limited to its recorded investment in such securities.

The Company has concluded that the trusts holding the assets underlying these transactions are VIEs. The Company also has concluded that it is the primary beneficiary of certain of the VIEs as it has the power, through PLS, in its role as the servicer or sub-servicer of the underlying loans, to direct the activities of the trusts that most significantly impact the trusts’ economic performance and, as a holder of subordinate securities, that PMT is exposed to losses that could potentially be significant to the VIEs. Therefore, PMT consolidates those VIEs.

The Company recognizes the interest income earned on the loans owned by the VIEs and the interest expense attributable to the asset-backed securities issued to nonaffiliates by its consolidated VIEs on its consolidated statements of income.

Following is a summary of the Company’s investment in subordinate MBS backed by assets held in consolidated VIEs:


	Quarter ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
	(in thousands)
Net investment income:
Net (losses) gains on investments and financings:
Loans at fair value	$	(2,739	)	$	(18,253	)	$	(3,979	)	$	(7,236	)
Asset-backed financings at fair value		1,295			17,794			8,771			7,634
Interest income		13,449			13,644			25,557			28,810
Interest expense		11,402			12,791			24,080			25,144
	$	603		$	394		$	6,269		$	4,064


	June 30, 2024		December 31, 2023
	(in thousands)
Loans at fair value	$	1,375,838	$	1,431,689
Asset-backed financings at fair value	$	1,288,180	$	1,336,731
Retained subordinate MBS at fair value pledged to secure Assets sold under agreements to repurchase	$	78,337	$	85,344

Financing of Mortgage Servicing Assets

The Company entered into a securitization transaction in which VIEs issued variable funding notes, term notes and term loans backed by beneficial interests in Fannie Mae MSRs. The Company acts as guarantor of the variable funding notes, term notes and term loans. The Company determined that it is the primary beneficiary of the VIEs because, as the holder of the variable funding notes and issuer of performance guarantees, it holds the variable interests in the VIEs. Therefore, the Company consolidates the VIEs.

For financial reporting purposes, the MSRs financed by the consolidated VIEs are included in Mortgage servicing rights at fair value, the variable funding notes sold under agreements to repurchase are included in Assets sold under agreements to repurchase and the term notes and term loans are included in Notes payable secured by credit risk transfer and mortgage servicing assets on the Company’s consolidated balance sheets. The financing is described in Note 15 – Long Term Debt.

Note 7— Fair Value

The Company’s consolidated financial statements include assets and liabilities that are measured at or based on their fair values. Measurement at or based on fair value may be on a recurring or nonrecurring basis depending on the accounting principles applicable to the specific asset or liability and whether the Company has elected to carry the item at its fair value as discussed in the following paragraphs.

The Company groups its assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the observability of the inputs used to determine fair value. These levels are:

•

Level 1—Quoted prices in active markets for identical assets or liabilities.

•

Level 2—Prices determined or determinable using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing an asset or liability and are developed based on market data obtained from sources independent of the Company.

•

Level 3—Prices determined using significant unobservable inputs. In situations where significant observable inputs are unavailable, unobservable inputs may be used. Unobservable inputs reflect the Company’s own judgments about the factors that market participants use in pricing an asset or liability, and are based on the best information available in the circumstances.

As a result of the difficulty in observing certain significant valuation inputs affecting “Level 3” fair value assets and liabilities, the Company is required to make judgments regarding these items’ fair values. Different persons in possession of the same facts may reasonably arrive at different conclusions as to the inputs to be applied in valuing these assets and liabilities and their fair values. Such differences may result in significantly different fair value measurements. Likewise, due to the general illiquidity of some of these assets and liabilities, subsequent transactions may be at values significantly different from those reported.

The Company reclassifies its assets and liabilities between levels of the fair value hierarchy when the inputs required to establish fair value at a level of the fair value hierarchy are no longer readily available, requiring the use of lower-level inputs, or when the inputs required to establish fair value at a higher level of the hierarchy become available.

Fair Value Accounting Elections

The Company identified all of PMT’s non-cash financial assets and MSRs to be accounted for at fair value. The Company has elected to account for these assets at fair value so such changes in fair value will be reflected in income as they occur and more timely reflect the results of the Company’s performance.

The Company has also identified its Asset-backed financings at fair value and Interest-only security payable at fair value to be accounted for at fair value to reflect the generally offsetting changes in fair value of these borrowings to changes in fair value of the assets at fair value collateralizing these financings. For other borrowings, the Company has determined that historical cost accounting is more appropriate because under historical cost accounting debt issuance costs are amortized over the term of the debt facility, thereby matching the debt issuance costs to the periods benefiting from the availability of the debt.

Financial Statement Items Measured at Fair Value on a Recurring Basis

Following is a summary of financial statement items that are measured at fair value on a recurring basis:


	June 30, 2024
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Short-term investments	$	336,296	$	—	$	—	$	336,296
Mortgage-backed securities at fair value		—		3,980,496		87,841		4,068,337
Loans acquired for sale at fair value		—		686,397		7,994		694,391
Loans at fair value		—		1,375,838		1,998		1,377,836
Derivative assets:
Call options on interest rate futures purchase contracts		10,324		—		—		10,324
Put options on interest rate futures purchase contracts		4,474		—		—		4,474
Forward purchase contracts		—		3,812		—		3,812
Forward sale contracts		—		26,971		—		26,971
MBS put options		—		1,421		—		1,421
CRT derivatives		—		—		24,305		24,305
Interest rate lock commitments		—		—		2,587		2,587
Total derivative assets before netting		14,798		32,204		26,892		73,894
Netting		—		—		—		16,859
Total derivative assets after netting		14,798		32,204		26,892		90,753
Mortgage servicing rights at fair value		—		—		3,941,861		3,941,861
	$	351,094	$	6,074,935	$	4,066,586	$	10,509,474
Liabilities:
Asset-backed financings at fair value	$	—	$	1,288,180	$	—	$	1,288,180
Interest-only security payable at fair value		—		—		32,708		32,708
Derivative and credit risk transfer strip liabilities:
Forward purchase contracts		—		8,661		—		8,661
Forward sales contracts		—		3,693		—		3,693
Interest rate lock commitments		—		—		1,035		1,035
Total derivative liabilities before netting		—		12,354		1,035		13,389
Netting		—		—		—		(11,471	)
Total derivative liabilities after netting		—		12,354		1,035		1,918
Credit risk transfer strips		—		—		16,974		16,974
Total derivative and credit risk transfer strip liabilities		—		12,354		18,009		18,892
	$	—	$	1,300,534	$	50,717	$	1,339,780


	December 31, 2023
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Short-term investments	$	128,338	$	—	$	—	$	128,338
Mortgage-backed securities at fair value		—		4,742,061		94,231		4,836,292
Loans acquired for sale at fair value		—		662,700		6,318		669,018
Loans at fair value		—		1,431,689		2,131		1,433,820
Derivative assets:
Call options on interest rate futures purchase contracts		41,712		—		—		41,712
Put options on interest rate futures purchase contracts		4,324		—		—		4,324
Forward purchase contracts		—		15,905		—		15,905
Forward sale contracts		—		671		—		671
MBS call options		—		3,218		—		3,218
MBS put options		—		5		—		5
CRT derivatives		—		—		16,160		16,160
Interest rate lock commitments		—		—		7,596		7,596
Total derivative assets before netting		46,036		19,799		23,756		89,591
Netting		—		—		—		88,393
Total derivative assets after netting		46,036		19,799		23,756		177,984
Mortgage servicing rights at fair value		—		—		3,919,107		3,919,107
	$	174,374	$	6,856,249	$	4,045,543	$	11,164,559
Liabilities:
Asset-backed financings at fair value	$	—	$	1,336,731	$	—	$	1,336,731
Interest-only security payable at fair value		—		—		32,667		32,667
Derivative liabilities and credit risk transfer strips:
Call options on interest rate futures purchase contracts		2,005		—		—		2,005
Call options on interest rate futures sell contracts		1,328		—		—		1,328
Forward purchase contracts		—		490		—		490
Forward sales contracts		—		50,363		—		50,363
Interest rate lock commitments		—		—		64		64
Total derivative liabilities before netting		3,333		50,853		64		54,250
Netting		—		—		—		(49,561	)
Total derivative liabilities after netting		3,333		50,853		64		4,689
Credit risk transfer strips		—		—		46,692		46,692
Total derivative and credit risk transfer strip liabilities		3,333		50,853		46,756		51,381
	$	3,333	$	1,387,584	$	79,423	$	1,420,779

The following is a summary of changes in items measured at fair value on a recurring basis using Level 3 inputs that are significant to the estimation of the fair values of the assets and liabilities at either the beginning or end of the periods presented:


	Quarter ended June 30, 2024
Assets (1)	Interest-only stripped mortgage-backed securities			Loans acquired for sale			Loans at fair value			CRT derivatives			Interest rate lock commitments			CRT strips			Mortgage servicing rights			Total
	(in thousands)
Balance, March 31, 2024	$	94,667		$	5,096		$	2,034		$	22,899		$	4,845		$	(17,352	)	$	3,951,737		$	4,063,926
Purchases issuances and (purchase adjustments)		—			4,013			—			—			4,760			—			(13	)		8,760
Repayments and sales		(4,984	)		(1,018	)		(32	)		(3,633	)		—			(11,693	)		—			(21,360	)
Accrual of unearned discount		2,390			—			—			—			—			—			—			2,390
Amounts received pursuant to sales of loans		—			—			—			—			—			—			40,619			40,619
Changes in fair value included in results of operations arising from:
Changes in instrument - specific credit risk		—			—			—			—			—			—			—			—
Other factors		(4,232	)		(97	)		(4	)		5,039			(4,147	)		12,071			(50,556	)		(41,926	)
		(4,232	)		(97	)		(4	)		5,039			(4,147	)		12,071			(50,556	)		(41,926	)
Transfers of:
Interest rate lock commitments to loans acquired for sale (2)		—			—			—			—			(3,906	)		—			—			(3,906	)
Mortgage servicing rights relating to delinquent loans to Agency		—			—			—			—			—			—			74			74
Balance, June 30, 2024	$	87,841		$	7,994		$	1,998		$	24,305		$	1,552		$	(16,974	)	$	3,941,861		$	4,048,577
Changes in fair value recognized during the quarter relating to assets still held at June 30, 2024	$	(4,232	)	$	(112	)	$	(11	)	$	5,039		$	1,552		$	378		$	(50,556	)	$	(47,942	)

(1)

For the purpose of this table, CRT derivative, interest rate lock commitment (“IRLC”), and CRT strip asset and liability positions are shown net.

(2)

The Company had transfers among the fair value levels arising from transfers of IRLCs to loans acquired for sale at fair value upon purchase of the respective loans.


Liabilities	Quarter ended June 30, 2024
	(in thousands)
Interest-only security payable:
Balance, March 31, 2024	$	32,227
Changes in fair value included in income arising from:
Changes in instrument - specific credit risk		—
Other factors		481
		481
Balance, June 30, 2024	$	32,708
Changes in fair value recognized during the quarter relating to liability outstanding at June 30, 2024	$	481


	Quarter ended June 30, 2023
Assets (1)	Loans acquired for sale			Loans at fair value			CRT derivatives			Interest rate lock commitments			CRT strips			Mortgage servicing rights			Total
	(in thousands)
Balance, March 31, 2023	$	10,109		$	3,548		$	(13,860	)	$	8,549		$	(113,065	)	$	3,975,076		$	3,870,357
Purchases and issuances		767			—			—			3,756			—			—			4,523
Repayments and sales		(4,637	)		(4	)		(5,367	)		—			(11,984	)		—			(21,992	)
Amounts received pursuant to sales of loans		—			—			—			—			—			90,747			90,747
Changes in fair value included in results of operations arising from:
Changes in instrument - specific credit risk		—			—			—			—			—			—			—
Other factors		391			(879	)		14,833			(14,355	)		46,480			(87,997	)		(41,527	)
		391			(879	)		14,833			(14,355	)		46,480			(87,997	)		(41,527	)
Transfers of:
Interest rate lock commitments to loans acquired for sale (2)		—			—			—			752			—			—			752
Mortgage servicing rights relating to delinquent loans to Agency		—			—			—			—			—			112			112
Balance, June 30, 2023	$	6,630		$	2,665		$	(4,394	)	$	(1,298	)	$	(78,569	)	$	3,977,938		$	3,902,972
Changes in fair value recognized during the quarter relating to assets still held at June 30, 2023	$	(193	)	$	(879	)	$	9,410		$	(1,298	)	$	34,496		$	(87,997	)	$	(46,461	)

(1)

For the purpose of this table, CRT derivative, IRLC, and CRT strip asset and liability positions are shown net.

(2)

The Company had transfers among the fair value levels arising from transfers of IRLCs to loans acquired for sale at fair value upon purchase of the respective loans.


Liabilities	Quarter ended June 30, 2023
	(in thousands)
Interest-only security payable:
Balance, March 31, 2023	$	23,205
Changes in fair value included in results of operations arising from:
Changes in instrument - specific credit risk		—
Other factors		855
		855
Balance, June 30, 2023	$	24,060
Changes in fair value recognized during the quarter relating to liability outstanding at June 30, 2023	$	855


	Six months ended June 30, 2024
Assets (1)	Interest-only stripped mortgage-backed securities			Loans acquired for sale			Loans at fair value			CRT derivatives			Interest rate lock commitments			CRT strips			Mortgage servicing rights			Total
	(in thousands)
Balance, December 31, 2023	$	94,231		$	6,318		$	2,131		$	16,160		$	7,532		$	(46,692	)	$	3,919,107		$	3,998,787
Purchases and issuances		—			5,497			—			—			7,871			—			29,428			42,796
Repayments and sales		(10,054	)		(3,676	)		(91	)		(7,084	)		—			(23,378	)		—			(44,283	)
Accrual of unearned discounts		4,606			—			—			—			—			—			—			4,606
Amounts received pursuant to sales of loans		—			—			—			—			—			—			71,868			71,868
Changes in fair value included in results of operations arising from:
Changes in instrument - specific credit risk		—			—			—			—			—			—			—			—
Other factors		(942	)		(145	)		(42	)		15,229			(5,002	)		53,096			(78,758	)		(16,564	)
		(942	)		(145	)		(42	)		15,229			(5,002	)		53,096			(78,758	)		(16,564	)
Transfers of:
Interest rate lock commitments to loans acquired for sale (2)		—			—			—			—			(8,849	)		—			—			(8,849	)
Mortgage servicing rights relating to delinquent loans to Agency		—			—			—			—			—			—			216			216
Balance, June 30, 2024	$	87,841		$	7,994		$	1,998		$	24,305		$	1,552		$	(16,974	)	$	3,941,861		$	4,048,577
Changes in fair value recognized during the period relating to assets still held at June 30, 2024	$	(942	)	$	(199	)	$	(52	)	$	8,256		$	1,552		$	29,718		$	(78,758	)	$	(40,425	)

(1)

For the purpose of this table, CRT derivative, IRLC, and CRT strip asset and liability positions are shown net.

(2)

The Company had transfers among the fair value levels arising from transfers of IRLCs to loans acquired for sale at fair value upon purchase of the respective loans.


Liabilities	Six months ended June 30, 2024
	(in thousands)
Interest-only security payable:
Balance, December 31, 2023	$	32,667
Changes in fair value included in income arising from:
Changes in instrument - specific credit risk		—
Other factors		41
		41
Balance, June 30, 2024	$	32,708
Changes in fair value recognized during the period relating to liability outstanding at June 30, 2024	$	41


	Six months ended June 30, 2023
Assets (1)	Loans acquired for sale			Loans at fair value			CRT derivatives			Interest rate lock commitments			CRT strips			Mortgage servicing rights			Total
	(in thousands)
Balance, December 31, 2022	$	10,708		$	3,457		$	(22,098	)	$	(478	)	$	(137,193	)	$	4,012,737		$	3,867,133
Purchases and issuances		4,262			119			—			(3,931	)		—			—			450
Repayments and sales		(8,404	)		(24	)		(8,255	)		—			(24,288	)		—			(40,971	)
Amounts received pursuant to sales of loans		—			—			—			—			—			191,365			191,365
Changes in fair value included in results of operations arising from:
Changes in instrument - specific credit risk		—			—			—			—			—			—			—
Other factors		64			(427	)		25,959			12,677			82,912			(225,441	)		(104,256	)
		64			(427	)		25,959			12,677			82,912			(225,441	)		(104,256	)
Transfers of:
Loans to REO		—			(460	)		—			—			—			—			(460	)
Interest rate lock commitments to loans acquired for sale (2)		—			—			—			(9,566	)		—			—			(9,566	)
Mortgage servicing rights relating to delinquent loans to Agency		—			—			—			—			—			(723	)		(723	)
Balance, June 30, 2023	$	6,630		$	2,665		$	(4,394	)	$	(1,298	)	$	(78,569	)	$	3,977,938		$	3,902,972
Changes in fair value recognized during the period relating to assets still held at June 30, 2023	$	(176	)	$	(886	)	$	17,506		$	(1,298	)	$	58,624		$	(225,441	)	$	(151,671	)

(1)

For the purpose of this table, CRT derivative, IRLC, and CRT strip asset and liability positions are shown net.

(2)

The Company had transfers among the fair value levels arising from transfers of IRLCs to loans acquired for sale at fair value upon purchase of the respective loans.


Liabilities	Six months ended June 30, 2023
	(in thousands)
Interest-only security payable:
Balance, December 31, 2022	$	21,925
Changes in fair value included in results of operations arising from:
Changes in instrument - specific credit risk		—
Other factors		2,135
		2,135
Balance, June 30, 2023	$	24,060
Changes in fair value recognized during the period relating to liability outstanding at June 30, 2023	$	2,135

Financial Statement Items Measured at Fair Value under the Fair Value Option

Following are the fair values and related principal amounts due upon maturity of loans accounted for under the fair value option (including loans acquired for sale, loans held in consolidated VIEs, and distressed loans):


	June 30, 2024							December 31, 2023
	Fair value		Principal amount due upon maturity		Difference			Fair value		Principal amount due upon maturity		Difference
	(in thousands)
Loans acquired for sale at fair value:
Current through 89 days delinquent	$	693,724	$	678,677	$	15,047		$	667,857	$	648,283	$	19,574
90 or more days delinquent:
Not in foreclosure		594		864		(270	)		433		617		(184	)
In foreclosure		73		96		(23	)		728		845		(117	)
		667		960		(293	)		1,161		1,462		(301	)
	$	694,391	$	679,637	$	14,754		$	669,018	$	649,745	$	19,273
Loans at fair value:
Held in consolidated VIEs:
Current through 89 days delinquent	$	1,375,028	$	1,646,940	$	(271,912	)	$	1,430,427	$	1,697,305	$	(266,878	)
90 or more days delinquent:
Not in foreclosure		481		607		(126	)		1,262		1,582		(320	)
In foreclosure		329		423		(94	)		—		—		—
		810		1,030		(220	)		1,262		1,582		(320	)
		1,375,838		1,647,970		(272,132	)		1,431,689		1,698,887		(267,198	)
Distressed:
Current through 89 days delinquent		461		672		(211	)		569		728		(159	)
90 or more days delinquent:
Not in foreclosure		277		1,398		(1,121	)		393		2,023		(1,630	)
In foreclosure		1,260		2,934		(1,674	)		1,169		2,546		(1,377	)
		1,537		4,332		(2,795	)		1,562		4,569		(3,007	)
		1,998		5,004		(3,006	)		2,131		5,297		(3,166	)
	$	1,377,836	$	1,652,974	$	(275,138	)	$	1,433,820	$	1,704,184	$	(270,364	)

Following are the changes in fair value included in current period income by consolidated statement of income line item for financial statement items accounted for under the fair value option:


	Quarter ended June 30, 2024
	Net loan servicing fees			Net gains on loans acquired for sale		Net (losses) gains on investments and financings			Net interest expense			Total
	(in thousands)
Assets:
Mortgage-backed securities at fair value	$	—		$	—	$	(34,925	)	$	6,586		$	(28,339	)
Loans acquired for sale at fair value		—			1,969		—			—			1,969
Loans at fair value		—			—		(2,742	)		(605	)		(3,347	)
Credit risk transfer strips		—			—		12,071			—			12,071
MSRs at fair value		(50,556	)		—		—			—			(50,556	)
	$	(50,556	)	$	1,969	$	(25,596	)	$	5,981		$	(68,202	)
Liabilities:
Interest-only security payable at fair value	$	—		$	—	$	(481	)	$	—		$	(481	)
Asset-backed financing of VIEs at fair value		—			—		1,295			(604	)		691
	$	—		$	—	$	814		$	(604	)	$	210


	Quarter ended June 30, 2023
	Net loan servicing fees			Net gains on loans acquired for sale			Net (losses) gains on investments and financings			Net interest expense			Total
	(in thousands)
Assets:
Mortgage-backed securities at fair value	$	—		$	—		$	(61,621	)	$	(264	)	$	(61,885	)
Loans acquired for sale at fair value		—			(9,424	)		—			—			(9,424	)
Loans at fair value		—			—			(19,130	)		(1,185	)		(20,315	)
Credit risk transfer strips		—			—			46,480			—			46,480
MSRs at fair value		(87,997	)		—			—			—			(87,997	)
	$	(87,997	)	$	(9,424	)	$	(34,271	)	$	(1,449	)	$	(133,141	)
Liabilities:
Interest-only security payable at fair value	$	—		$	—		$	(855	)	$	—		$	(855	)
Asset-backed financings at fair value		—			—			17,794			76			17,870
	$	—		$	—		$	16,939		$	76		$	17,015


	Six months ended June 30, 2024
	Net loan servicing fees			Net gains on loans acquired for sale		Net (losses) gains on investments and financings			Net interest expense			Total
	(in thousands)
Assets:
Mortgage-backed securities at fair value	$	—		$	—	$	(73,123	)	$	9,677		$	(63,446	)
Loans acquired for sale at fair value		—			1,632		—			—			1,632
Loans at fair value		—			—		(4,020	)		(2,740	)		(6,760	)
Credit risk transfer strips		—			—		53,096			—			53,096
MSRs at fair value		(78,758	)		—		—			—			(78,758	)
	$	(78,758	)	$	1,632	$	(24,047	)	$	6,937		$	(94,236	)
Liabilities:
Interest-only security payable at fair value	$	—		$	—	$	(41	)	$	—		$	(41	)
Asset-backed financings at fair value		—			—		8,771			(112	)		8,659
	$	—		$	—	$	8,730		$	(112	)	$	8,618


	Six months ended June 30, 2023
	Net loan servicing fees			Net gains on loans acquired for sale		Net (losses) gains on investments and financings			Net interest expense			Total
	(in thousands)
Assets:
Mortgage-backed securities at fair value	$	—		$	—	$	16,597		$	(2,220	)	$	14,377
Loans acquired for sale at fair value		—			5,891		—			—			5,891
Loans at fair value		—			—		(7,662	)		(1,059	)		(8,721	)
Credit risk transfer strips		—			—		82,912			—			82,912
MSRs at fair value		(225,441	)		—		—			—			(225,441	)
	$	(225,441	)	$	5,891	$	91,847		$	(3,279	)	$	(130,982	)
Liabilities:
Interest-only security payable at fair value	$	—		$	—	$	(2,135	)	$	—		$	(2,135	)
Asset-backed financings at fair value		—			—		7,634			(466	)		7,168
	$	—		$	—	$	5,499		$	(466	)	$	5,033

Financial Statement Item Measured at Fair Value on a Nonrecurring Basis

Following is a summary of the carrying value of assets that were remeasured during the period based on fair value on a nonrecurring basis:


Real estate acquired in settlement of loans	Level 1		Level 2		Level 3		Total
	(in thousands)
June 30, 2024	$	—	$	—	$	713	$	713
December 31, 2023	$	—	$	—	$	753	$	753

The following table summarizes the fair value changes recognized during the periods on assets held at period end that were remeasured at fair value on a nonrecurring basis:


	Quarter ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
	(in thousands)
Real estate acquired in settlement of loans	$	(246	)	$	(124	)	$	(150	)	$	(62	)

The Company remeasures its REO based on fair value when it evaluates the REO properties for impairment. The Company evaluates its REO for impairment with reference to the respective properties’ fair values less costs to sell. REO may be revalued after acquisition due to the Company receiving greater access to the property, the property being held for an extended period or receiving indications that the property’s fair value may not be supported by developing market conditions. Any subsequent change in fair value to a level that is less than or equal to the property’s cost is recognized in Results of real estate acquired in settlement of loans in the Company’s consolidated statements of income.

Fair Value of Financial Instruments Carried at Amortized Cost

Most of the Company’s borrowings are carried at amortized cost. The Company’s Assets sold under agreements to repurchase, Mortgage loan participation purchase and sale agreements, Notes payable secured by credit risk transfer and mortgage servicing assets and the Exchangeable Notes, defined in Note 15 – Long-Term Debt, are classified as “Level 3” fair value liabilities due to the Company’s reliance on unobservable inputs to estimate these instruments’ fair values. The Company classifies the 2028 Senior Notes, defined in Note 15 – Long-Term Debt, as “Level 2” fair value liabilities.

The Company has concluded that the fair values of these borrowings other than term notes and term loans included in Notes payable secured by credit risk transfer and mortgage servicing assets and the Unsecured senior notes approximate the agreements’ carrying values due to the borrowing agreements’ variable interest rates and short maturities.

The Company estimates the fair values of the term notes and term loans included in Notes payable secured by credit risk transfer and mortgage servicing assets using indications of fair value provided by nonaffiliate brokers for the term notes and internal estimates of fair value for the term loans, and uses pricing services for estimates of fair value of its Unsecured senior notes. The fair values and carrying values of these liabilities are summarized below:


	June 30, 2024				December 31, 2023
Instrument	Carrying value		Fair value		Carrying value		Fair value
	(in thousands)
Notes payable secured by credit risk transfer and mortgage servicing assets	$	2,933,845	$	2,942,231	$	2,910,605	$	2,904,678
Unsecured senior notes	$	813,838	$	800,382	$	600,458	$	580,090

Valuation Governance

Most of the Company’s assets, its Asset-backed financings at fair value, Interest-only security payable at fair value and Derivative and credit risk transfer strip liabilities at fair value are carried at fair value with changes in fair value recognized in current period income. A substantial portion of these items are “Level 3” fair value assets and liabilities which require the use of unobservable inputs that are significant to the estimation of the fair values of the assets and liabilities. Unobservable inputs reflect the Company’s own judgments about the factors that market participants use in pricing an asset or liability and are based on the best information available under the circumstances.

Due to the difficulty in estimating the fair values of “Level 3” fair value assets and liabilities, the Company has assigned responsibility for estimating the fair values of these assets and liabilities to specialized staff within PFSI's capital markets group and subjects the valuation process to significant senior management oversight.

With respect to “Level 3” valuations other than IRLCs, the capital markets valuation staff reports to PFSI’s senior management valuation committee, which oversees the valuations. The capital markets valuation staff monitors the models used for valuation of the Company’s “Level 3” fair value assets and liabilities other than IRLCs, including the models’ performance versus actual results, and

reports those results to PFSI’s senior management valuation committee. PFSI’s senior management valuation committee includes the Company’s chief financial and investment officers as well as other senior members of PFSI’s finance, risk management and capital markets staffs.

The capital markets valuation staff is responsible for reporting to PFSI’s senior management valuation committee on the changes in the valuation of the non-IRLC “Level 3” fair value assets and liabilities, including major factors affecting the valuation and any changes in model methods and inputs. To assess the reasonableness of its valuations, the capital markets valuation staff presents an analysis of the effect on the valuation of changes to the significant inputs to the models and, for MSRs, comparisons of its estimates of fair value and key inputs to those procured from nonaffiliate brokers and published surveys.

The fair values of the Company’s IRLCs are developed by PFSI's capital markets risk management staff and are reviewed by its capital markets operations staff.

Valuation Techniques and Inputs

The following is a description of the techniques and inputs used in estimating the fair values of “Level 2” and “Level 3” fair value assets and liabilities:

Mortgage-Backed Securities

The Company’s categorization of its current holdings of MBS is based on whether the respective security is an IO security:

•

The Company categorizes the majority of its current holdings of MBS as “Level 2” fair value assets. Fair value of these securities is established based on quoted market prices for the Company’s MBS holdings or similar securities.

•

The Company categorizes its current holdings of IO securities as “Level 3” fair value assets. The Company uses a discounted cash flow approach to estimate the fair values of its IO securities.

The key inputs used in the estimation of the fair value of IO securities include discount rate (pricing spread) and prepayment speed. Significant changes to those inputs in isolation may result in significant changes in the IO securities' fair value measurements. Changes in these key inputs are not directly related.

Following are the key inputs used in determining the fair value of IO securities:


	June 30, 2024		December 31, 2023
Fair value (in thousands)	$	87,841	$	94,231
Key inputs (1)
Pricing spread (2)
Range	5.9% - 6.4%		5.1% – 5.1%
Weighted average	6.4%		5.1%
Annual total prepayment speed (3)
Range	10.1% - 10.3%		10.9% – 11.0%
Weighted average	10.1%		10.9%
Equivalent life (in years)
Range	4.7 - 7.5		4.7 – 7.2
Weighted average	7.4		7.1

(1)

Weighted-average inputs are based on the UPB of the underlying loans.

(2)

Pricing spread represents a margin that is applied to a reference forward rate to develop periodic discount rates. The Company uses the pricing spread over a derived United States Treasury Securities (“Treasury”) yield curve for the purpose of discounting cash flows relating to IO securities.

(3)

Prepayment speed is measured using life total Conditional Prepayment Rate (“CPR”). Equivalent life is provided as supplementary information.

Changes in the fair value of MBS are included in Net (losses) gains on investments and financings in the consolidated statements of income.

Loans

Fair value of loans is estimated based on whether the loans are saleable into active markets:

•

Loans that are saleable into active markets, comprised of most of the Company’s loans acquired for sale at fair value and all of the loans at fair value held in VIEs, are categorized as “Level 2” fair value assets:

•

For loans acquired for sale, the fair values are established using the loans’ contracted selling prices, quoted market prices or market price equivalents.

•

For the loans at fair value held in VIEs, the quoted indications of fair value of all of the individual securities issued by the securitization trusts are used to derive fair values for the loans. The Company obtains indications of fair value from nonaffiliate brokers based on comparable securities and validates the brokers’ indications of fair value using pricing models and inputs the Company believes are similar to the pricing models and inputs used by other market participants. The Company adjusts the fair values received from brokers to include the fair value of MSRs attributable to the loans included in the VIEs.

•

Loans that are not saleable into active markets, comprised of previously sold loans that the Company repurchased pursuant to the representation and warranties it provided to the purchaser and distressed loans, are categorized as “Level 3” fair value assets:

•

Fair values for loans acquired for sale categorized as “Level 3” assets are estimated using a discounted cash flow approach or the loans' contracted selling prices when applicable. Inputs to the discounted cash flow model include current interest rates, payment statuses, property types, discount rates and forecasts of future interest rates, home prices, prepayment speeds, default speeds and loss severities.

•

Distressed loans’ fair values are estimated based on the expected resolution from the individual asset’s disposition strategy. When a cash flow projection is used to estimate fair values, those cash flows are discounted at annual rates up to 20%.

Derivative and Credit Risk Transfer Strip Assets and Liabilities

CRT Derivatives

The Company categorizes CRT derivatives as “Level 3” fair value assets and liabilities. The fair values of CRT derivatives are based on indications of fair value provided to the Company by nonaffiliate brokers for the certificates representing the beneficial interests in the trusts holding the Deposits securing credit risk transfer arrangements pledged to creditors, the recourse obligations and the IO ownership interests. Together, the recourse obligation and the IO ownership interest comprise the CRT derivative. Fair values of the CRT derivatives are derived by deducting the balance of the Deposits securing credit risk transfer arrangements pledged to creditors from the fair values of the certificates.

The Company assesses the fair values it receives from nonaffiliate brokers using the discounted cash flow approach. The significant unobservable inputs used by the Company in its review and approval of the valuation of CRT derivatives are the discount rates, voluntary and involuntary prepayment speeds and the remaining loss expectations of the reference loans. Changes in fair value of CRT derivatives are included in Net (losses) gains on investments and financings in the consolidated statements of income.

Following is a quantitative summary of key unobservable inputs used in the Company’s review and approval of broker-provided fair values for CRT derivatives:


	June 30, 2024		December 31, 2023
	(dollars in thousands)
Fair value	$	24,305	$	16,160
UPB of loans in reference pools	$	5,198,283	$	5,437,551
Key inputs (1)
Discount rate
Range	9.7% – 11.9%		9.0% – 9.7%
Weighted average	9.9%		9.6%
Voluntary prepayment speed (2)
Range	7.0% – 7.4%		6.9% – 7.6%
Weighted average	7.2%		7.4%
Involuntary prepayment speed (3)
Range	0.1% – 0.1%		0.2% – 0.8%
Weighted average	0.1%		0.3%
Remaining loss expectation
Range	0.0% – 0.2%		0.2% – 0.3%
Weighted average	0.1%		0.3%

(1)

Weighted average inputs are based on fair value amounts of the CRT Agreements, except for remaining loss expectation which is based on the UPB of the loans in the reference pools.

(2)

Voluntary prepayment speed is measured using life voluntary CPR.

(3)

Involuntary prepayment speed is measured using life involuntary CPR.

Interest Rate Lock Commitments

The Company categorizes IRLCs as “Level 3” fair value assets and liabilities. The Company estimates the fair values of IRLCs based on quoted Agency MBS prices, the probability that the loans will be purchased under the commitments (the “pull-through rate”) and the Company’s estimate of the fair values of the MSRs it expects to receive upon sale of the loans.

The significant unobservable inputs used in the fair value measurement of the Company’s IRLCs are the pull-through rates and the estimated MSRs attributed to the mortgage loans subject to the commitments. Significant changes in the pull-through rates or the MSR components of the IRLCs, in isolation, may result in a significant change in the IRLCs’ fair values. The financial effects of changes in these inputs are generally inversely correlated as increasing interest rates have a positive effect on the fair value of the MSR component of an IRLC’s fair value, but also increase the pull-through rate for the loan principal and interest payment cash flow component that has decreased in fair value. Changes in fair value of IRLCs are included in Net gains on loans acquired for sale in the consolidated statements of income.

Following is a quantitative summary of key unobservable inputs used in the valuation of IRLCs:


	June 30, 2024		December 31, 2023
Fair value (in thousands) (1)	$	1,552	$	7,532
Committed amount (in thousands)	$	1,006,730	$	874,017
Key inputs (2)
Pull-through rate
Range	56.5% – 99.0%		50.0% - 98.0%
Weighted average	83.9%		82.5%
MSR fair value expressed as
Servicing fee multiple
Range	3.0 – 7.0		1.7 - 6.5
Weighted average	5.1		4.6
Percentage of unpaid principal balance
Range	0.8% – 2.4%		0.4% - 2.4%
Weighted average	1.9%		1.7%

(1)

For purposes of this table, IRLC asset and liability positions are shown net.

(2)

Weighted-average inputs are based on the committed amounts.

Hedging Derivatives

Fair values of derivative financial instruments actively traded on exchanges are categorized by the Company as “Level 1” fair value assets and liabilities. Fair values of derivative financial instruments based on observable interest rates, volatilities and prices in the MBS or other markets are categorized by the Company as “Level 2” fair value assets and liabilities. Changes in the fair values of hedging derivatives are included in Net loan servicing fees – from nonaffiliates – Mortgage servicing rights hedging results, Net gains on loans acquired for sale, or Net (losses) gains on investments and financings, as applicable, in the consolidated statements of income.

Credit Risk Transfer Strips

The Company categorizes CRT strips as “Level 3” fair value liabilities. The fair values of CRT strips are based on indications of fair value provided to the Company by nonaffiliate brokers for the securities representing the beneficial interests in the trusts holding the Deposits securing credit risk transfer arrangements pledged to creditors, the IO ownership interests and the recourse obligations. Together, the IO ownership interest and the recourse obligation comprise the CRT strip.

Fair values of the CRT strips are derived by deducting the balance of the Deposits securing credit risk transfer arrangements pledged to creditors from the indications of fair value of the securities provided by the nonaffiliate brokers.

The Company assesses the indications of fair value it receives from nonaffiliate brokers using the discounted cash flow approach. The significant unobservable inputs used by the Company in its review and approval of the valuation of the CRT strips are the discount rates, voluntary and involuntary prepayment speeds and the remaining loss expectations of the reference loans. Changes in fair value of CRT strips are included in Net (losses) gains on investments and financings in the consolidated statements of income.

Following is a quantitative summary of key unobservable inputs used in the Company’s review and approval of the broker-provided fair values of the CRT strip liabilities:


	June 30, 2024		December 31, 2023
	(dollars in thousands)
Fair value	$	16,974	$	46,692
Unpaid principal balance of loans in the reference pools	$	17,006,523	$	17,714,679
Key inputs (1)
Discount rate
Range	8.2% – 9.4%		7.9% – 9.6%
Weighted average	9.3%		9.4%
Voluntary prepayment speed (2)
Range	7.3% – 7.4%		6.6% – 8.2%
Weighted average	7.3%		6.8%
Involuntary prepayment speed (3)
Range	0.1% – 0.2%		0.2% – 0.3%
Weighted average	0.1%		0.2%
Remaining loss expectation
Range	0.4% – 1.5%		0.5% – 1.6%
Weighted average	0.5%		0.6%

(1)

Weighted average inputs are based on fair value amounts of the CRT arrangements, except for remaining loss expectation which is based on the UPB of the loans in the reference pools.

(2)

Voluntary prepayment speed is measured using life voluntary CPR.

(3)

Involuntary prepayment speed is measured using life involuntary CPR.

Mortgage Servicing Rights

The Company categorizes MSRs as “Level 3” fair value assets. The Company uses a discounted cash flow approach to estimate the fair values of MSRs. The fair values of MSRs are derived from the net positive cash flows associated with the servicing agreements. The Company receives a servicing fee based on the remaining UPB of the loans subject to the servicing agreements and generally has the right to receive other remuneration including various mortgagor-contracted fees such as late charges and collateral reconveyance charges, and is generally entitled to retain any placement fees earned on certain custodial funds held pending remittance of mortgagor principal, interest, tax and insurance payments.

The key inputs used in the estimation of the fair value of MSRs include the applicable pricing spreads, the prepayment speeds of the underlying loans, and the annual per-loan costs to service the loans, all of which are unobservable. Significant changes to any of those inputs in isolation could result in significant changes in the MSR fair value measurements. Changes in these key inputs are not directly related. Changes in the fair value of MSRs are included in Net loan servicing fees – From nonaffiliates – Change in fair value of mortgage servicing rights in the consolidated statements of income.

MSRs are generally subject to loss in fair value when prepayment speed expectations and experience increase, when returns required by market participants (pricing spreads) increase, or when annual per-loan costs of servicing increase. Reductions in the fair value of MSRs affect income primarily through recognition of the change in fair value.

Following are the key inputs used in determining the fair value of MSRs at the time of initial recognition:


	Quarter ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
MSRs recognized (in thousands)	$	40,619	$	90,747	$	71,868	$	191,365
Unpaid principal balance of underlying loans (in thousands)	$	2,242,511	$	4,856,301	$	4,073,529	$	10,405,626
Weighted average annual servicing fee rate (in basis points)	35		39		35		40
Key inputs (1)
Pricing spread (2)
Range	5.9% – 8.1%		5.5% – 8.8%		5.5% – 8.5%		5.5% – 8.8%
Weighted average	6.0%		5.9%		5.8%		5.9%
Prepayment speed (3)
Range	10.8% – 17.8%		11.8% – 20.2%		10.8% – 17.8%		11.8% – 21.8%
Weighted average	11.5%		11.9%		12.4%		12.6%
Equivalent average life (in years)
Range	3.4 – 7.2		2.9 - 7.1		3.4 – 7.2		2.8 - 7.1
Weighted average	7.1		7.0		6.8		6.7
Annual per-loan cost of servicing
Range	$69 – $87		$68 – $69		$69 – $87		$68 – $69
Weighted average	$69		$69		$70		$69

(1)

Weighted average inputs are based on UPB of the underlying loans.

(2)

The Company uses the pricing spread over a derived Treasury yield curve for the purpose of discounting cash flows relating to MSRs.

(3)

Prepayment speed is measured using life total CPR, which includes both voluntary and involuntary prepayments. Equivalent average life is provided as supplementary information.

Following is a quantitative summary of key inputs used in the valuation of MSRs as of the dates presented, and the effect on the fair value from adverse changes in those inputs:


	June 30, 2024		December 31, 2023
Fair value (in thousands)	$	3,941,861	$	3,919,107
Unpaid principal balance of underlying loans (in thousands)	$	227,842,960	$	230,294,583
Weighted average annual servicing fee rate (in basis points)	28		28
Weighted average note interest rate	3.7%		3.7%
Key inputs (1)
Pricing spread (2)
Range	5.4% - 8.1%		5.5% – 8.5%
Weighted average	5.5%		5.5%
Effect on fair value (in thousands) of (3):
5% adverse change	$(48,117)		$(48,362)
10% adverse change	$(95,095)		$(95,575)
20% adverse change	$(185,782)		$(186,699)
Prepayment speed (4)
Range	6.7% - 17.7%		6.5% – 17.9%
Weighted average	6.8%		7.0%
Equivalent average life (in years)
Range	2.6 - 9.2		2.7 – 9.4
Weighted average	8.5		8.5
Effect on fair value (in thousands) of (3):
5% adverse change	$(54,297)		$(53,964)
10% adverse change	$(106,844)		$(106,144)
20% adverse change	$(207,027)		$(205,509)
Annual per-loan cost of servicing
Range	$68 - $89		$70 – $89
Weighted average	$68		$70
Effect on fair value (in thousands) of (3):
5% adverse change	$(16,566)		$(17,276)
10% adverse change	$(33,131)		$(34,551)
20% adverse change	$(66,262)		$(69,103)

(1)

Weighted-average inputs are based on the UPB of the underlying loans.

(2)

The Company uses a pricing spread over a derived Treasury yield curve for the purpose of discounting cash flows relating to MSRs.

(3)

These sensitivity analyses are limited in that they were performed as of a particular date; only account for the estimated effect of the movements in the indicated inputs; do not incorporate changes in those inputs in relation to other inputs; are subject to the accuracy of the models and inputs used; and do not incorporate other factors that would affect the Company’s overall financial performance in such events, including operational adjustments to account for changing circumstances. For these reasons, these analyses should not be viewed as earnings forecasts.

(4)

Prepayment speed is measured using life total CPR, which includes both voluntary and involuntary prepayments. Equivalent average life is provided as supplementary information.

Real Estate Acquired in Settlement of Loans

REO is measured based on its fair value on a nonrecurring basis and is categorized as a “Level 3” fair value asset. Fair value of REO is established by using a current estimate of fair value from either a broker’s price opinion, a full appraisal, or the price given in a pending contract of sale.

REO fair values are reviewed by PLS staff appraisers when the Company obtains multiple indications of fair value and there is a significant difference between the indications of fair value. PLS staff appraisers will attempt to resolve the difference between the indications of fair value. In circumstances where the staff appraisers are not able to generate adequate data to support a fair value conclusion, the staff appraisers obtain an additional appraisal to determine fair value. Recognized changes in the fair value of REO are included in Results of real estate acquired in settlement of loans in the consolidated statements of income.

Note 8— Mortgage-Backed Securities

Following is a summary of activity in the Company’s holdings of MBS:


	Quarter ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
	(in thousands)
Balance at beginning of period	$	3,949,678		$	4,629,004		$	4,836,292		$	4,462,601
Purchases		239,875			259,725			399,460			3,044,317
Sales		—			—			(941,340	)		(2,629,540	)
Repayments		(92,877	)		(95,504	)		(162,629	)		(160,414	)
Changes in fair value included in income arising from:
Accrual (amortization) of net purchase premiums and discounts		6,586			(263	)		9,677			(2,220	)
Valuation adjustments, net		(34,925	)		(61,621	)		(73,123	)		16,597
		(28,339	)		(61,884	)		(63,446	)		14,377
Balance at end of period	$	4,068,337		$	4,731,341		$	4,068,337		$	4,731,341


	June 30, 2024		December 31, 2023
	(in thousands)
Fair value of mortgage-backed securities pledged to secure Assets sold under agreements to repurchase	$	4,068,337	$	4,836,292

Following is a summary of the Company’s investments in MBS:


	June 30, 2024
Security type (1)	Principal balance or notional amount		Unamortized net purchase premiums (discounts)			Cumulative valuation changes			Fair value
	(in thousands)
Agency fixed-rate pass-through securities	$	3,295,288	$	(1,744	)	$	(52,728	)	$	3,240,816
Principal-only stripped mortgage-backed securities		551,502		(113,872	)		(4,999	)		432,631
Subordinate credit-linked securities		174,813		(3,687	)		25,684			196,810
Senior non-Agency securities		118,248		(3,450	)		(4,559	)		110,239
	$	4,139,851	$	(122,753	)	$	(36,602	)		3,980,496
Interest-only stripped mortgage-backed securities	$	405,346								87,841
									$	4,068,337


	December 31, 2023
Security type (1)	Principal balance or notional amount		Unamortized net purchase premiums (discounts)			Cumulative valuation changes			Fair value
	(in thousands)
Agency fixed-rate pass-through securities	$	4,311,342	$	34		$	(41,320	)	$	4,270,056
Principal-only stripped mortgage-backed securities		65,573		(18,567	)		6,330			53,336
Subordinate credit-linked securities		275,963		(3,633	)		28,850			301,180
Senior non-Agency securities		124,771		(3,567	)		(3,715	)		117,489
	$	4,777,649	$	(25,733	)	$	(9,855	)		4,742,061
Interest-only stripped mortgage-backed securities	$	419,791								94,231
									$	4,836,292

(1)

All MBS have maturities of more than ten years and are pledged to secure Assets sold under agreements to repurchase.

Note 9—Loans Acquired for Sale at Fair Value

Following is a summary of the distribution of the Company’s loans acquired for sale at fair value:


Loan type	June 30, 2024		December 31, 2023
	(in thousands)
Held for sale to nonaffiliates—GSE eligible (1)	$	381,436	$	491,108
Held for sale to PLS
GSE eligible		141,598		62,234
Government insured or guaranteed		139,422		106,069
		281,020		168,303
Jumbo		23,941		3,289
Home equity lines of credit		1,513		1,803
Repurchased pursuant to representations and warranties		6,481		4,515
	$	694,391	$	669,018
Loans pledged to secure:
Assets sold under agreements to repurchase	$	670,978	$	659,751
Mortgage loan participation purchase and sale agreements		14,253		—
	$	685,231	$	659,751

(1)

GSE eligibility refers to the eligibility of loans for sale to Fannie Mae or Freddie Mac. The Company sells or finances a portion of its GSE eligible loan production to other investors, including PLS.

Note 10—Loans at Fair Value

Loans at fair value are comprised primarily of loans held in VIEs securing asset-backed financings as described in Note 6 –Variable Interest Entities – Subordinate Mortgage-Backed Securities.

Following is a summary of the distribution of the Company’s loans at fair value:


Loan type	June 30, 2024		December 31, 2023
	(in thousands)
Loans in VIEs:
Agency-conforming loans secured by investment properties	$	1,329,667	$	1,383,392
Fixed interest rate jumbo loans		46,171		48,297
		1,375,838		1,431,689
Distressed loans		1,998		2,131
	$	1,377,836	$	1,433,820
Loans at fair value pledged to secure:
Asset-backed financings at fair value (1)	$	1,375,838	$	1,431,689
Assets sold under agreements to repurchase		167		207
	$	1,376,005	$	1,431,896

(1)

As discussed in Note 6 ‒ Variable Interest Entities ‒ Subordinate Mortgage-Backed Securities, the Company holds a portion of the securities issued by the VIEs. At June 30, 2024 and December 31, 2023, $78.3 million and $85.3 million, respectively, of such retained securities were pledged to secure Assets sold under agreements to repurchase.

Note 11—Derivative and Credit Risk Transfer Strip Assets and Liabilities

Derivative and credit risk transfer assets and liabilities are summarized below:


	June 30, 2024		December 31, 2023
	(in thousands)
Derivative assets	$	90,753	$	177,984
	$	90,753	$	177,984

Derivative liabilities	$	1,918	$	4,689
Credit risk transfer strip liabilities		16,974		46,692
	$	18,892	$	51,381

The Company records all derivative and CRT strip assets and liabilities at fair value and records changes in fair value in current period income.

Derivative Activities

The Company holds and issues derivative financial instruments in connection with its operating, investing and financing activities. Derivative financial instruments are created as a result of certain of the Company’s operations and the Company also enters into derivative transactions as part of its interest rate risk management activities.

Derivative financial instruments created as a result of the Company’s operations include:

•

IRLCs that are created when the Company commits to purchase loans acquired for sale; and

•

CRT Agreements whereby the Company retained recourse obligations relating to certain loans it sold into Fannie Mae guaranteed securitizations as part of the retention of IO ownership interests in such loans.

The Company engages in interest rate risk management activities in an effort to reduce the variability of earnings caused by the effects of changes in interest rates on the fair values of certain of its assets and liabilities. The Company bears price risk related to its mortgage production, servicing assets and MBS financing activities due to changes in market interest rates as discussed below:

•

The Company is exposed to losses if market mortgage interest rates increase, because market interest rate increases generally cause the fair values of MBS, IRLCs and loans acquired for sale to decrease.

•

The Company is exposed to losses if market mortgage interest rates decrease, because market interest rate decreases generally encourage increased mortgage refinancing activities, which causes the fair values of MSRs to decrease.

To manage the price risk resulting from these interest rate risks, the Company uses derivative financial instruments with the intention of moderating the risk that changes in market interest rates will result in unfavorable changes in the fair values of the Company’s MBS, inventory of loans acquired for sale, IRLCs and MSRs. The Company does not designate and qualify any of its derivative financial instruments for hedge accounting.

Cash flows from derivative financial instruments relating to hedging of IRLCs and loans acquired for sale are included in Cash flows from operating activities in Sale to nonaffiliates and repayment of loans acquired for sale at fair value. Cash flows from derivative financial instruments relating to hedging of MSRs are included in Cash flows from investing activities.

Derivative Notional Amounts and Fair Value of Derivatives

The Company had the following derivative assets and liabilities recorded within Derivative assets and Derivative and credit risk transfer strip liabilities and related margin deposits on the consolidated balance sheets:


	June 30, 2024							December 31, 2023
			Fair value							Fair value
	Notional		Derivative		Derivative			Notional		Derivative		Derivative
Instrument	amount (1)		assets		liabilities			amount (1)		assets		liabilities
	(in thousands)
Hedging derivatives subject to master netting arrangements (2):
Call options on interest rate futures purchase contracts		1,785,000	$	10,324	$	—			2,315,000	$	41,712	$	2,005
Put options on interest rate futures purchase contracts		1,840,000		4,474		—			2,900,000		4,324		—
Call options on interest rate futures sell contracts		—		—		—			500,000		—		1,328
Forward purchase contracts		3,162,559		3,812		8,661			2,789,324		15,905		490
Forward sale contracts		7,460,993		26,971		3,693			7,219,512		671		50,363
MBS call options		—		—		—			500,000		3,218		—
MBS put options		850,000		1,421		—			450,000		5		—
Bond futures		2,384,400		—		—			2,860,500		—		—
Swap futures		951,200		—		—			1,048,800		—		—
Other derivatives not subject to master netting arrangements:
CRT derivatives		5,198,283		24,305		—			5,437,551		16,160		—
Interest rate lock commitments		1,006,730		2,587		1,035			874,017		7,596		64
Total derivative instruments before netting				73,894		13,389					89,591		54,250
Netting				16,859		(11,471	)				88,393		(49,561	)
			$	90,753	$	1,918				$	177,984	$	4,689
Margin deposits placed with derivative counterparties included in derivative balances above, net			$	28,330						$	137,955
Derivative assets pledged to secure:
Notes payable secured by credit risk transfer and mortgage servicing assets			$	24,305						$	16,160

(1) Notional amounts provide an indication of the volume of the Company’s derivative activities.

(2) All hedging derivatives are interest rate derivatives that are used as economic hedges.

Netting of Financial Instruments

The Company has elected to net derivative asset and liability positions, and cash collateral placed with or received from its counterparties when such positions are subject to legally enforceable master netting arrangements and the Company intends to set off. The derivative financial instruments that are not subject to master netting arrangements are CRT derivatives and IRLCs. As of June 30, 2024 and December 31, 2023, the Company was not a party to any reverse repurchase agreements or securities lending transactions that are required to be disclosed in the following tables.

Derivative Assets, Financial Instruments and Collateral Held by Counterparty

The following table summarizes by significant counterparty the amounts of derivative asset positions after considering master netting arrangements and financial instruments or cash pledged that do not meet the accounting guidance qualifying for setoff accounting.


	June 30, 2024								December 31, 2023
	Net amount		Gross amounts						Net amount		Gross amounts
	of assets		not offset in the						of assets		not offset in the
	presented		consolidated						presented		consolidated
	in the		balance sheet						in the		balance sheet
	consolidated				Cash				consolidated				Cash
	balance		Financial		collateral		Net		balance		Financial		collateral		Net
Counterparty	sheet		instruments		received		amount		sheet		instruments		received		amount
	(in thousands)
CRT derivatives	$	24,305	$	—	$	—	$	24,305	$	16,160	$	—	$	—	$	16,160
Interest rate lock commitments		2,587		—		—		2,587		7,596		—		—		7,596
Morgan Stanley & Co. LLC		47,095		—		—		47,095		79,825		—		—		79,825
RJ O’Brien & Associates, LLC		14,798		—		—		14,798		42,703		—		—		42,703
Wells Fargo Securities, LLC		510		—		—		510		7,759		—		—		7,759
Athene Annuity & Life Assurance Company		475		—		—		475		94		—		—		94
Barclays Capital Inc.		295		—		—		295		—		—		—		—
Goldman Sachs & Co. LLC		240		—		—		240		18,701		—		—		18,701
J.P. Morgan Securities LLC		127		—		—		127		997		—		—		997
Bank of America, N.A.		—		—		—		—		3,418		—		—		3,418
Citigroup Global Markets Inc.		—		—		—		—		503		—		—		503
Other		321		—		—		321		228		—		—		228
	$	90,753	$	—	$	—	$	90,753	$	177,984	$	—	$	—	$	177,984

Derivative Liabilities, Financial Liabilities and Collateral Pledged by Counterparty

The following table summarizes by significant counterparty the amounts of derivative liabilities and assets sold under agreements to repurchase after considering master netting arrangements and financial instruments or cash pledged that do not meet the accounting guidance to qualify for setoff accounting. All assets sold under agreements to repurchase represent sufficient collateral or exceed the liability amounts recorded on the consolidated balance sheet.


	June 30, 2024									December 31, 2023
	Net amount		Gross amounts							Net amount		Gross amounts
	of liabilities		not offset in the							of liabilities		not offset in the
	presented		consolidated							presented		consolidated
	in the		balance sheet							in the		balance sheet
	consolidated		Financial			Cash				consolidated		Financial			Cash
	balance		instruments			collateral		Net		balance		instruments			collateral		Net
Counterparty	sheet		(1)			pledged		amount		sheet		(1)			pledged		amount
	(in thousands)
Interest rate lock commitments	$	1,035	$	—		$	—	$	1,035	$	64	$	—		$	—	$	64
J.P. Morgan Securities LLC		1,472,895		(1,472,895	)		—		—		1,521,072		(1,521,072	)		—		—
Wells Fargo Securities, LLC		743,903		(743,903	)		—		—		569,129		(569,129	)		—		—
Bank of America, N.A.		591,021		(590,900	)		—		121		785,756		(785,756	)		—		—
Barclays Capital Inc.		478,021		(478,021	)		—		—		807,404		(803,641	)		—		3,763
Santander US Capital		361,667		(361,667	)		—		—		292,091		(292,091	)		—		—
Citigroup Global Markets Inc.		319,808		(319,748	)		—		60		147,093		(147,093	)		—		—
Daiwa Capital Markets		230,236		(230,236	)		—		—		340,975		(340,975	)		—		—
RBC Capital Markets, L.P.		156,745		(156,745	)		—		—		128,602		(128,602	)		—		—
Mizuho Financial Group		100,218		(99,722	)		—		496		67,637		(67,110	)		—		527
Atlas Securitized Products, L.P.		91,499		(91,499	)		—		—		783,456		(783,456	)		—		—
Goldman Sachs & Co. LLC		71,005		(71,005	)		—		—		145,007		(145,007	)		—		—
Morgan Stanley & Co. LLC		50,911		(50,911	)		—		—		25,814		(25,814	)		—		—
BNP Paribas		28,120		(28,120	)		—		—		10,121		(10,121	)		—		—
Nomura Holdings America, Inc		8,251		(8,205	)		—		46		8,135		(7,940	)		—		195
Other		160		—			—		160		140		—			—		140
	$	4,705,495	$	(4,703,577	)	$	—	$	1,918	$	5,632,496	$	(5,627,807	)	$	—	$	4,689

(1)

Amounts represent the UPB of Assets sold under agreements to repurchase.

Following are the net gains (losses) recognized by the Company on derivative financial instruments and the consolidated statements of income line items where such gains and losses are included:


		Quarter ended June 30,						Six months ended June 30,
Derivative activity	Consolidated statements of income line	2024			2023			2024			2023
		(in thousands)
Interest rate lock commitments	Net gains on loans acquired for sale (1)	$	(3,292	)	$	(9,847	)	$	(5,980	)	$	(820	)
CRT derivatives	Net (losses) gains on investments and financings	$	5,039		$	14,833		$	15,229		$	25,959
Hedged item:
Assets sold under agreements to repurchase	Net (losses) gains on investments and financings	$	—		$	—		$	20,098		$	—
Interest rate lock commitments and loans acquired for sale	Net gains on loans acquired for sale	$	7,163		$	19,394		$	9,773		$	(1,350	)
Mortgage servicing rights	Net loan servicing fees	$	(18,365	)	$	23,996		$	(108,179	)	$	(30,895	)

(1)

Represents net change in fair value of IRLCs from the beginning to the end of the reporting period. Amounts recognized at the date of commitment and fair value changes recognized during the period until purchase of the underlying loan or cancellation of the commitment are shown in the rollforwards of IRLCs for the period in Note 7 – Fair Value – Financial Statement Items Measured at Fair Value on a Recurring Basis.

Note 12—Mortgage Servicing Rights

Following is a summary of MSRs:


	Quarter ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
	(in thousands)
Balance at beginning of period	$	3,951,737		$	3,975,076		$	3,919,107		$	4,012,737
Purchases (price adjustments)		(13	)		—			29,428			—
MSRs resulting from loan sales		40,619			90,747			71,868			191,365
Transfers to Agency of mortgage servicing rights relating to delinquent loans		74			112			216			(723	)
Changes in fair value:
Due to changes in inputs used in valuation model (1)		46,039			15,046			117,609			(30,725	)
Other changes in fair value (2)		(96,595	)		(103,043	)		(196,367	)		(194,716	)
		(50,556	)		(87,997	)		(78,758	)		(225,441	)
Balance at end of period	$	3,941,861		$	3,977,938		$	3,941,861		$	3,977,938


	June 30, 2024		December 31, 2023
	(in thousands)
Fair value of mortgage servicing rights pledged to secure Assets sold under agreements to repurchase and Notes payable secured by credit risk transfer and mortgage servicing assets	$	3,889,087	$	3,871,249

(1)

Primarily reflects changes in pricing spread, prepayment speed, servicing cost, and UPB of underlying loan inputs.

(2)

Represents changes due to realization of expected cash flows.

Servicing fees relating to MSRs are recorded in Net loan servicing fees – from nonaffiliates on the Company’s consolidated statements of income and are summarized below:


	Quarter ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
	(in thousands)
Contractually specified servicing fees	$	162,127	$	165,499	$	322,484	$	329,713
Ancillary and other fees:
Late charges		982		805		1,975		1,564
Other		1,833		6,021		3,851		9,205
		2,815		6,826		5,826		10,769
	$	164,942	$	172,325	$	328,310	$	340,482
Average MSR UPB	$	229,124,554	$	232,008,151	$	229,767,433	$	231,381,212

Note 13— Other Assets

Other assets are summarized below:


	June 30, 2024		December 31, 2023
	(dollars in thousands)
Margin deposits	$	68,969	$	124,293
Interest receivable		37,183		37,305
Servicing fees receivable		11,431		14,603
Correspondent lending receivables		5,842		6,313
Other receivables		11,675		7,199
Real estate acquired in settlement of loans		3,892		4,541
Other		39,492		58,284
	$	178,484	$	252,538
Real estate acquired in settlement of loans pledged to secure Assets sold under agreements to repurchase	$	1,515	$	1,905

Note 14— Short-Term Debt

The borrowing facilities described throughout these Notes 14 and 15 contain various covenants, including financial covenants relating to the Company and its subsidiaries’ net worth, debt-to-equity ratio, and liquidity. The Company believes that it was in compliance with these covenants as of June 30, 2024.

Assets Sold Under Agreements to Repurchase

Following is a summary of financial information relating to assets sold under agreements to repurchase:


	Quarter ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
	(dollars in thousands)
Weighted average interest rate (1)		6.09	%		5.95	%		6.13	%		5.74	%
Average balance	$	5,016,206		$	6,414,368		$	5,080,520		$	6,826,134
Total interest expense	$	77,364		$	96,346		$	157,921		$	196,613
Maximum daily amount outstanding	$	5,525,266		$	8,499,053		$	6,562,795		$	9,330,819

(1)

Excludes the effect of amortization of debt issuance costs of $1.4 million and $3.0 million for the quarter and six months ended June 30, 2024, respectively, and $1.2 million and $2.4 million for the quarter and six months ended June 30, 2023, respectively.


	June 30, 2024			December 31, 2023
	(dollars in thousands)
Carrying value:
Unpaid principal balance	$	4,703,577		$	5,627,807
Unamortized debt issuance costs		(3,352	)		(3,249	)
	$	4,700,225		$	5,624,558
Weighted average interest rate		5.83	%		6.14	%
Available borrowing capacity (1):
Committed	$	909,369		$	634,147
Uncommitted		5,588,880			5,221,706
	$	6,498,249		$	5,855,853
Margin deposits placed with (received from) counterparties included in Other assets (Accounts payable and accrued liabilities), net	$	22,851		$	(116,358	)
Assets securing agreements to repurchase:
Mortgage-backed securities	$	4,068,337		$	4,836,292
Loans acquired for sale at fair value	$	670,978		$	659,751
Loans at fair value:
Securities retained in asset-backed financings	$	78,337		$	85,344
Distressed	$	167		$	207
Deposits securing credit risk transfer arrangements	$	73,883		$	77,417
Mortgage servicing rights (2)	$	2,001,478		$	2,000,574
Servicing advances	$	49,420		$	101,927
Real estate acquired in settlement of loans	$	1,515		$	1,905

(1)

The amount the Company is able to borrow under asset repurchase agreements is tied to the fair value of unencumbered assets eligible to secure those agreements and the Company’s ability to fund the agreements’ margin requirements relating to the assets financed.

(2)

Beneficial interests in Fannie Mae MSRs are pledged to secure both Assets sold under agreements to repurchase and Notes payable secured by credit risk transfer and mortgage servicing assets.

Following is a summary of maturities of outstanding advances under repurchase agreements by maturity date:


Remaining maturity at June 30, 2024 (1)	Unpaid principal balance
	(in thousands)
Within 30 days	$	3,797,413
Over 30 to 90 days		682,420
Over 90 days to 180 days		156,744
Over 180 days to 1 year		57,000
Over 1 year to 2 years		10,000
	$	4,703,577
Weighted average maturity (in months)		1.1

(1)

The Company is subject to margin calls during the period the repurchase agreements are outstanding and therefore may be required to repay a portion of the borrowings before the respective repurchase agreements mature if the fair values (as determined by the applicable lender) of the assets securing those repurchase agreements decrease.

The amount at risk (the fair value of the assets pledged plus the related margin deposit, less the amount advanced by the counterparty and interest payable) and maturity information relating to the Company’s assets sold under agreements to repurchase is summarized by pledged asset and counterparty below as of June 30, 2024:

Loans, REO and MSRs


			Weighted-average maturity
Counterparty	Amount at risk		Advances	Facility
	(in thousands)
Citibank, N.A.	$	35,610	September 8, 2024	June 27, 2025
JPMorgan Chase & Co.	$	3,275	September 8, 2024	June 16, 2025
Atlas Securitized Products, L.P.	$	33,413	September 3, 2024	June 26, 2026
Goldman Sachs & Co. LLC	$	10,798	September 18, 2024	December 8, 2025
Bank of America, N.A.	$	19,043	July 28, 2024	June 10, 2026
Wells Fargo Securities, LLC	$	4,051	September 23, 2024	May 3, 2025
Barclays Capital Inc.	$	3,269	September 19, 2024	March 6, 2026
RBC Capital Markets, L.P.	$	5,535	October 13, 2024	May 9, 2025
Morgan Stanley & Co. LLC	$	3,373	September 22, 2024	May 22, 2026
BNP Paribas	$	817	September 23, 2024	September 30, 2025

Securities


Counterparty	Amount at risk		Weighted average maturity
	(in thousands)
Citibank, N.A.	$	48,619	September 1, 2024
JPMorgan Chase & Co.	$	42,526	July 14, 2024
Bank of America, N.A.	$	13,118	July 15, 2024
Wells Fargo Securities, LLC	$	27,829	July 24, 2024
Barclays Capital Inc.	$	25,179	July 14, 2024
Santander US Capital	$	16,765	July 21, 2024
Daiwa Capital Markets America Inc.	$	5,446	July 1, 2024
Mizuho Financial Group	$	3,820	July 25, 2024
Nomura Holdings America, Inc	$	3,432	August 4, 2024

CRT arrangements

Mortgage Loan Participation Purchase and Sale Agreement

One of the borrowing facilities secured by loans acquired for sale is in the form of a mortgage loan participation purchase and sale agreement. Participation certificates, each of which represents an undivided beneficial ownership interest in a pool of loans that have been pooled with Fannie Mae or Freddie Mac, are sold to the lender pending the securitization of such loans and the sale of the resulting security. The commitment between the Company and a nonaffiliate to sell such security is also assigned to the lender at the time a participation certificate is sold.

The purchase price paid by the lender for each participation certificate is based on the trade price of the security, plus an amount of interest expected to accrue on the security to its anticipated delivery date, minus a present value adjustment, any related hedging costs and a holdback amount. The holdback amount is based on a percentage of the purchase price and is not required to be paid to the Company until the settlement of the security and its delivery to the lender.

The mortgage loan participation purchase and sale agreement is summarized below:


	Quarter ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
	(dollars in thousands)
Average balance	$	11,255		$	23,767		$	11,993		$	20,456
Weighted average interest rate (1)		6.72	%		6.44	%		6.75	%		6.34	%
Total interest expense	$	219		$	413		$	465		$	706
Maximum daily amount outstanding	$	56,423		$	90,565		$	56,423		$	90,565

(1)

Excludes the effect of amortization of debt issuance costs of $31,000 and $63,000 for the quarter and six months ended June 30, 2024 and 2023, respectively.


	June 30, 2024
	(dollars in thousands)
Carrying value:
Amount outstanding	$	13,582
Unamortized debt issuance costs		—
	$	13,582
Weighted average interest rate		6.59	%
Loans acquired for sale pledged to secure mortgage loan participation purchase and sale agreement	$	14,253

Note 15— Long-Term Debt

Notes Payable Secured By Credit Risk Transfer and Mortgage Servicing Assets

CRT Arrangement Financing

The Company, through various wholly-owned subsidiaries, issued secured term notes (the “CRT Term Notes”) to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended (the “Securities Act”). All of the CRT Term Notes rank pari passu with each other.

Following is a summary of the CRT Term Notes outstanding:


CRT Term Notes	Issuance date	Issuance amount		Unpaid principal balance		Annual interest rate spread(1)	Maturity date
		(in thousands)
2024 2R	April 4, 2024	$	247,000	$	240,923	3.35%	March 29, 2027
2024 1R	March 6, 2024	$	306,000		296,723	3.50%	March 1, 2027
2020 1R	February 14, 2020	$	350,000		47,637	3.35%	February 27, 2025
2019 3R	October 16, 2019	$	375,000		44,416	3.70%	October 29, 2024
2019 2R	June 11, 2019	$	638,000		153,538	3.75%	May 28, 2025
				$	783,237

(1)

Interest rates are charged at a spread to the Secured Overnight Financing Rate ("SOFR").

Fannie Mae MSR Financing

The Company, through two subsidiaries, PMT ISSUER TRUST-FMSR and PMT CO-ISSUER TRUST-FMSR (together, the "Issuer Trusts"), finances MSRs owned by PMC and the related Excess Servicing Spread ("ESS") owned by PennyMac Holdings, LLC (“PMH”), another subsidiary of PMT, through a combination of repurchase agreements and term financing.

The repurchase agreements financings for Fannie Mae MSRs and ESS are effected through the issuance of variable funding notes (a Series 2017-VF1 Note and a Series 2024-VF1 Note, and together the "FMSR VFNs") by the Issuer Trusts to PMC and PMH, which are then sold to qualified institutional buyers under agreements to repurchase. The amounts outstanding under the FMSR VFNs are included in Assets sold under agreements to repurchase in the Company’s consolidated balance sheets. The FMSR VFNs have a committed borrowing combined capacity of $1.4 billion under two-year repurchase agreement facilities.

The term financing for Fannie Mae MSRs through the Issuer Trusts is effected through the issuance of term notes (the “FT-1 Term Notes”) to qualified institutional buyers under Rule 144A of the Securities Act and a series of syndicated term loans with various lenders (the “FTL-1 Term Loans").

The FT-1 Term Notes and FTL-1 Term Loans and the FMSR VFN are secured by certain participation certificates relating to Fannie Mae MSRs and ESS and rank pari passu with each other.

Following is a summary of the term financing of the Company’s Fannie Mae MSRs:


		Unpaid		Annual	Maturity date
Issuance	Issuance date	principal balance		interest rate spread(1)	Stated	Optional extension (2)
		(in thousands)
Term Loans
2023	May 25, 2023	$	370,000	3.00%	May 25, 2028	May 25, 2029
Term Notes
2024	June 27, 2024		355,000	2.75%	December 27, 2027	June 26, 2028
2022	June 28, 2022		305,000	4.19%	June 25, 2027	(3)
2021	March 30, 2021		350,000	3.00%	March 25, 2026	March 27, 2028
		$	1,380,000

(1)

Interest rates are charged at a spread to SOFR.

(2)

The indentures relating to these issuances provide the Company with the option of extending the maturity dates of certain of the FT-1 Term Notes and FTL-1 Term Loans under the conditions specified in the respective agreements.

(3)

Either June 26, 2028 or June 25, 2029.

Freddie Mac MSR and Servicing Advance Receivables Financing

The Company, through PMC and PMH, finances certain MSRs relating to loans pooled into Freddie Mac securities through various credit agreements. The total loan amount available under the agreements is approximately $2.0 billion, bearing interest at an annual rate equal to SOFR plus a spread as defined in each agreement. The agreements have a weighted average maturity of
March 2025. The total loan amount available under the agreements may be reduced by other debt outstanding with the counterparties. Advances under the credit agreements are secured by MSRs relating to loans serviced for Freddie Mac guaranteed securities.

On August 10, 2023, the Company, through its- wholly-owned subsidiaries, PMT ISSUER TRUST - FHLMC SAF, PMT SAF Funding, LLC, and PMC, entered into a structured finance transaction that allows PMC to finance Freddie Mac servicing advance receivables (the “Series 2023-VF1”). The maturity date of the related Series 2023-VF1, Class A-VF1 Variable Funding Note is
August 9, 2025 and has a maximum principal amount of $150 million.

Following is a summary of financial information relating to notes payable secured by credit risk transfer and mortgage servicing assets:


	Quarter ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
	(dollars in thousands)
Average balance	$	2,894,850		$	3,074,414		$	2,880,677		$	2,939,303
Weighted average interest rate (1)		9.09	%		8.40	%		8.96	%		8.06	%
Total interest expense	$	67,466		$	66,150		$	132,455		$	121,097
Maximum daily amount outstanding	$	3,277,400		$	3,188,116		$	3,327,400		$	3,188,116

(1)

Excludes the effect of amortization of debt issuance costs of $2.0 million and $4.1 million for the quarter and six months ended June 30, 2024, respectively, and $1.8 million and $3.6 million for the quarter and six months ended June 30, 2023, respectively.


	June 30, 2024			December 31, 2023
	(dollars in thousands)
Carrying value:
Unpaid principal balance:
CRT arrangement financing	$	783,237		$	747,662
Fannie Mae MSR financing		1,380,000			1,025,000
Freddie Mac MSR and servicing advance receivable financing		780,000			1,145,000
		2,943,237			2,917,662
Unamortized debt issuance costs		(9,392	)		(7,057	)
	$	2,933,845		$	2,910,605
Weighted average interest rate		8.59	%		8.73	%
Assets securing notes payable:
MSRs (1)	$	3,889,087		$	3,871,249
Servicing advances	$	29,366		$	79,274
CRT Agreements:
Deposits securing CRT arrangements	$	1,089,385		$	1,132,081
Derivative assets	$	24,305		$	16,160

(1)

Beneficial interests in Freddie Mac MSRs are pledged as collateral for the Notes payable secured by credit risk transfer and mortgage servicing assets. Beneficial interests in Fannie Mae MSRs are pledged for both Assets sold under agreements to repurchase and Notes payable secured by credit risk transfer and mortgage servicing assets.

Unsecured Senior Notes

Exchangeable Senior Notes

PMC has issued, $216.5 million aggregate principal amount of exchangeable senior notes due 2029 (the “2029 Exchangeable Notes”), $345 million aggregate principal amount of exchangeable senior notes due 2026 (the “2026 Exchangeable Notes”) and $210 million aggregate principal amount of exchangeable senior notes due 2024 (the “2024 Exchangeable Notes”). The 2029 Exchangeable Notes, together with the 2026 Exchangeable Notes and the 2024 Exchangeable Notes, are the (“Exchangeable Notes”). The Exchangeable Notes are summarized below:


Initial issuance date		Unpaid principal balance		Annual interest rate	Conversion rates (1)	Maturity date (2)
	(in thousands)
May 24, 2024		$	216,500	8.50%	63.3332	June 1, 2029
March 5, 2021			345,000	5.50%	46.1063	March 15, 2026
November 7, 2019			210,000	5.50%	40.1010	November 1, 2024
		$	771,500

(1)

Common Shares per $1,000 principal amount.

(2)

Unless repurchased or exchanged in accordance with their terms before such date.

Effective June 21, 2024, the Company and PMC entered into a supplemental indenture, pursuant to which PMC made an irrevocable election to eliminate its option to elect physical share settle on any exchange of the 2024 Exchangeable Notes and the 2026 Exchangeable Notes. As a result of entering into the supplemental indenture, the 2024 Exchangeable Notes and the 2026 Exchangeable Notes are exchangeable for: (1) cash for the principal amount of the notes to be exchanged; and (2) cash, PMT Common Shares or a combination of cash and PMT Common Shares, at the Company’s election, for the remainder, if any, of the exchange obligation in excess of the aggregate principal amount of the notes being exchanged, at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.

The Exchangeable Notes are fully and unconditionally guaranteed by the Company.

2028 Senior Notes

In September 2023, the Company issued $53.5 million principal amount of unsecured 8.50% senior notes due

September 30, 2028 (the "2028 Senior Notes”). Interest on the 2028 Senior Notes is payable quarterly.

On or after September 30, 2025, PMT may redeem for cash all or any portion of the 2028 Senior Notes, at its option, at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

The 2028 Senior Notes are fully and unconditionally guaranteed on a senior unsecured basis by PMC, including the due and punctual payment of principal and interest, whether at stated maturity, upon acceleration, call for redemption or otherwise.

Following is financial information relating to the unsecured senior notes:


	Quarter ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
	(in thousands)
Average balance	$	696,731		$	547,264		$	652,615		$	546,890
Weighted average interest rate (1)		6.13	%		5.59	%		5.97	%		5.63	%
Interest expense	$	11,629		$	8,395		$	21,313		$	16,775


	June 30, 2024			December 31, 2023
	(in thousands)
Carrying value:
Unpaid principal balance	$	825,000		$	608,500
Unamortized debt issuance costs		(11,162	)		(8,042	)
	$	813,838		$	600,458

(1)

Excludes the effect of amortization of debt issuance costs of $1.0 million and $1.9 million for the quarter and six months ended June 30, 2024, respectively, and $764,000 and $1.5 million for the quarter and six months ended June 30, 2023. respectively.

Asset-Backed Financing of Variable Interest Entities at Fair Value

Following is a summary of financial information relating to the asset-backed financings of VIEs at fair value described in Note 6 ‒ Variable Interest Entities ‒ Subordinate Mortgage-Backed Securities:


	Quarter ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
	(dollars in thousands)
Average balance	$	1,561,068		$	1,392,667		$	1,571,443		$	1,402,275
Total interest expense	$	11,402		$	12,791		$	24,080		$	25,144
Weighted average interest rate (1)		3.09	%		3.66	%		3.10	%		3.68	%

(1)

Excludes the effect of (accrual) amortization of net issuance premiums and debt issuance costs of $(604,000) and $(112,000) for the quarter and six months ended June 30, 2024, respectively, and $75,000 and $(466,000) for the quarter and six months ended June 30, 2023, respectively.


	June 30, 2024			December 31, 2023
	(dollars in thousands)
Fair value	$	1,288,180		$	1,336,731
Unpaid principal balance	$	1,552,958		$	1,590,003
Weighted average interest rate		3.22	%		3.22	%

The asset-backed financings are non-recourse liabilities and are secured solely by the assets of consolidated VIEs and not by any other assets of the Company. The assets of the VIEs are the only source of funds for repayment of the asset-backed financing.

Maturities of Long-Term Debt

Contractual maturities of long-term debt obligations (based on final maturity dates) are as follows:


			Twelve months ended June 30,
	Total		2025		2026		2027		2028		2029		Thereafter
	(in thousands)
Notes payable secured by credit risk transfer and mortgage servicing assets (1)	$	2,943,237	$	1,000,591	$	375,000	$	842,646	$	725,000	$	—	$	—
Unsecured senior notes		825,000		210,000		345,000		—		—		270,000		—
Asset-backed financings at fair value (2)		1,552,958		—		—		—		—		—		1,552,958
Interest-only security payable at fair value (2)		32,708		—		—		—		—		—		32,708
Total	$	5,353,903	$	1,210,591	$	720,000	$	842,646	$	725,000	$	270,000	$	1,585,666

(1)

Based on stated maturity. As discussed above, certain of the Notes payable secured by credit risk and mortgage servicing assets allow the Company to exercise optional extensions.

(2)

Contractual maturity does not reflect expected repayment as borrowers of the underlying loans generally have the right to repay their loans at any time.

Note 16—Liability for Losses Under Representations and Warranties

Following is a summary of the Company’s liability for losses under representations and warranties:


	Quarter ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
	(in thousands)
Balance, beginning of period	$	19,519		$	39,407		$	26,143		$	39,471
Provision for losses:
Pursuant to loan sales		204			738			458			1,678
Reduction in liability due to change in estimate		(6,540	)		(2,939	)		(13,418	)		(3,555	)
Losses incurred		—			(137	)		—			(525	)
Balance, end of period	$	13,183		$	37,069		$	13,183		$	37,069
UPB of loans subject to representations and warranties at end of period							$	222,907,138		$	230,128,231

Note 17—Commitments and Contingencies

Commitments

The following table summarizes the Company’s outstanding contractual commitments:


	June 30, 2024
	(in thousands)
Commitments to purchase loans acquired for sale	$	1,006,730

Legal Proceedings

From time to time, the Company may be involved in various legal and regulatory proceedings, claims and legal actions arising in the ordinary course of business. The amount, if any, of ultimate liability with respect to such matters cannot be determined, but despite the inherent uncertainties of litigation, management believes that the ultimate disposition of any such proceedings and exposure will not have, individually or taken together, a material adverse effect on the financial condition, income, or cash flows of the Company.

Litigation

On June 14, 2024, a purported shareholder of the Company’s Series A Preferred Shares and Series B Preferred Shares (each, as defined hereafter) filed a complaint in a putative class action in the United States District Court for the Central District of California, captioned Roberto Verthelyi v. PennyMac Mortgage Investment Trust and PNMAC Capital Management, LLC, Case No. 2:24-cv-05028 (the “Verthelyi Action”). The Verthelyi Action alleges, among other things, that the Company (and its external investment advisor, PCM), committed unlawful and unfair acts in violation of California’s Unfair Competition Law by replacing its floating three-month London Inter-bank Offered Rate ("LIBOR") dividend rate for the Series A and Series B Preferred Shares with a fixed rate, in violation of the LIBOR Act, 12 U.S.C. § 5801 et seq., and the LIBOR Rule, 12 C.F.R. § 253 et seq.

The Verthelyi Action seeks injunctive relief requiring the Company to implement SOFR as a replacement to the three-month LIBOR rate and damages for the putative class in the form of restitution, interest, disgorgement and other relief. The Company believes it has interpreted the Articles Supplementary to its Series A and Series B Preferred Shares consistent with their terms and, more specifically, the interest rate fallback provisions contained therein, as applied under the LIBOR Act and the LIBOR rules, and that the Verthelyi Action is without merit. Accordingly, while no assurance can be provided as to the ultimate outcome of this claim, the Company and PCM plan to vigorously defend the matter. Pursuant to the terms of the Third Amended and Restated Management Agreement, dated as of June 30, 2020, by and between the Company and PCM, the Company has assumed the defense of PCM in the Verthelyi Action.

Note 18—Shareholders’ Equity

Preferred Shares of Beneficial Interest

Preferred shares of beneficial interest are summarized below:


										Dividends per share, period ended June 30,
										Quarter				Six months
Preferred Share series	Description (1)	Number of shares		Liquidation preference		Issuance discount		Carrying value		2024		2023		2024		2023
Fixed-rate cumulative redeemable		(in thousands, except dividends per share)
A	8.125% Issued March 2017		4,600	$	115,000	$	3,828	$	111,172	$	0.51	$	0.51	$	1.02	$	1.02
B	8.00% Issued July 2017		7,800		195,000		6,465		188,535	$	0.50	$	0.50	$	1.00	$	1.00
C	6.75% Issued August 2021		10,000		250,000		8,225		241,775	$	0.42	$	0.42	$	0.84	$	0.84
			22,400	$	560,000	$	18,518	$	541,482

(1)

Par value is $0.01 per share.

In accordance with the Articles Supplementary for each of the Series A Fixed-to-Floating Rate Cumulative Redeemable Preferred Shares of Beneficial Interest (the “Series A Preferred Shares”) and the Series B Fixed-to-Floating Rate Cumulative Redeemable Preferred Shares of Beneficial Interest (the “Series B Preferred Shares”), and disregarding the polling provisions contained in the Articles Supplementary for the Series A Preferred Shares and the Series B Preferred Shares that are deemed null and void in accordance with Federal Reserve rules, the applicable dividend rate for dividend periods from and after March 15, 2024, in the case of the Series A Preferred Shares, or June 15, 2024, in the case of the Series B Preferred Shares, are being calculated at the dividend rate in effect for the immediately preceding dividend period. As a result, the Series A Preferred Shares and Series B Preferred Shares will continue to accumulate dividends from and after March 15, 2024, in the case of the Series A Preferred Shares, or June 15, 2024, in the case of the Series B Preferred Shares, at their fixed rate then in effect and will not transition to floating reference rates.

The Series A Preferred Shares became redeemable on March 15, 2024 and the Series B Preferred Shares become redeemable on June 15, 2024. The Series C Cumulative Redeemable Preferred Shares will not be redeemable before August 24, 2026, except in connection with the Company’s qualification as a REIT for U.S. federal income tax purposes or upon the occurrence of a change of control. On or after the date the preferred shares become redeemable, or 120 days after the first date on which such change of control occurs, the Company may, at its option, redeem any or all of the preferred shares at $25.00 per share plus any accumulated and unpaid dividends to, but not including, the redemption date. No preferred shares were redeemed during the quarter and six months ended June 30, 2024.

The preferred shares have no stated maturity, are not subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless redeemed or repurchased by the Company or converted into Common Shares in connection with a change of control by the holders of the Preferred Shares.

Common Shares of Beneficial Interest

“At-The-Market” (“ATM”) Equity Offering Program

On June 14, 2024, the Company filed a shelf registration statement and a prospectus supplement, and entered into separate equity distribution agreements to sell from time to time, through an ATM equity offering program under which the counterparties will act as sales agents and/or principals, the Company’s Common Shares having an aggregate offering price of up to $200 million. As of June 30, 2024, the Company had not sold any Common Shares under the ATM equity offering program.

Common Share Repurchase Program

The Company has a Common Share repurchase program with a repurchase authorization of $500 million before transaction fees.

The following table summarizes the Company’s Common Share repurchase activity:


	Quarter ended June 30,				Six months ended June 30,				Cumulative
	2024		2023		2024		2023		total (1)
	(in thousands)
Common Shares repurchased		—		1,636		—		2,274		29,102
Cost of Common Shares repurchased (2)	$	—	$	19,448	$	—	$	27,011	$	427,229

(1)

Amounts represent the Common Share repurchase program total from its inception in August 2015 through June 30, 2024.

(2)

Cumulative total cost of Common Shares repurchased includes $582,000 of transaction fees.

Note 19— Net Gains on Loans Acquired for Sale

Net gains on loans acquired for sale are summarized below:


	Quarter ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
	(in thousands)
From nonaffiliates:
Cash losses:
Sales of loans	$	(40,228	)	$	(116,647	)	$	(71,405	)	$	(189,592	)
Hedging activities		26,027			29,449			(43,929	)		(22,667	)
		(14,201	)		(87,198	)		(115,334	)		(212,259	)
Non-cash gains:
Receipt of MSRs in mortgage loan sale transactions		40,619			90,747			71,868			191,365
Provision for losses relating to representations and warranties provided in loan sales:
Pursuant to loans sales		(204	)		(738	)		(458	)		(1,678	)
Reduction of liability due to change in estimate		6,540			2,939			13,418			3,555
		6,336			2,201			12,960			1,877
Changes in fair value of loans and derivatives
Interest rate lock commitments		(3,292	)		(9,847	)		(5,980	)		(820	)
Loans		(488	)		16,766			5,807			6,279
Hedging derivatives		(18,864	)		(10,055	)		53,702			21,317
		(22,644	)		(3,136	)		53,529			26,776
		24,311			89,812			138,357			220,018
Total from nonaffiliates		10,110			2,614			23,023			7,759
From PFSI ‒ cash gains		2,050			1,832			3,655			3,160
	$	12,160		$	4,446		$	26,678		$	10,919

Note 20— Net (Losses) Gains on Investments and Financings

Net (losses) gains on investments and financings are summarized below:


	Quarter ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
	(in thousands)
Mortgage-backed securities	$	(34,925	)	$	(61,621	)	$	(73,123	)	$	16,597
Loans:
Held in VIEs		(2,739	)		(18,253	)		(3,979	)		(7,236	)
Distressed		(3	)		(877	)		(41	)		(426	)
CRT arrangements		16,629			60,458			68,284			106,736
Asset-backed financings		1,295			17,794			8,771			7,634
Hedging derivatives		—			—			20,098			—
	$	(19,743	)	$	(2,499	)	$	20,010		$	123,305

Note 21—Net Interest Expense

Net interest expense is summarized below:


	Quarter ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
	(in thousands)
Interest income:
Cash and short-term investments	$	7,085		$	6,712		$	15,277		$	13,023
Mortgage-backed securities		58,418			62,542			118,189			113,681
Loans acquired for sale at fair value		14,958			25,779			26,904			62,767
Loans at fair value:
Held in consolidated variable interest entities		13,449			13,644			25,557			28,810
Distressed		8			31			16			24
Deposits securing CRT arrangements		15,383			15,779			31,079			29,991
Placement fees relating to custodial funds		41,530			37,677			76,970			66,597
Other		1,004			520			1,402			810
		151,835			162,684			295,394			315,703
Interest expense:
Assets sold under agreements to repurchase		77,364			96,346			157,921			196,613
Mortgage loan participation purchase and sale agreements		219			413			465			706
Notes payable secured by credit risk transfer and mortgage servicing assets		67,466			66,150			132,455			121,097
Unsecured senior notes		11,629			8,395			21,313			16,775
Asset-backed financings at fair value		11,402			12,791			24,080			25,144
Interest shortfall on repayments of loans serviced for Agency securitizations		1,805			1,790			3,098			2,819
Interest on loan impound deposits		1,652			1,315			2,999			2,658
Other		304			190			1,037			715
		171,841			187,390			343,368			366,527
	$	(20,006	)	$	(24,706	)	$	(47,974	)	$	(50,824	)

Note 22—Share-Based Compensation

The Company has an equity incentive plan, adopted in 2019, that provides for the issuance of equity based awards based on PMT’s Common Shares that may be made by the Company to its officers and trustees, and the members, officers, trustees, directors and employees of PCM, PFSI, or their affiliates and to PCM, PFSI and other entities that provide services to PMT and the employees of such other entities.

The equity incentive plan is administered by the Company’s compensation committee, pursuant to authority delegated by PMT’s board of trustees, which has the authority to make awards to the eligible participants referenced above, and to determine what form the awards will take, and the terms and conditions of the awards.

The equity incentive plan allows for the grant of restricted and performance-based share and unit awards.

The shares underlying award grants will again be available for award under the equity incentive plan if:

•

any shares subject to an award granted under the equity incentive plan are forfeited, canceled, exchanged or surrendered;

•

an award terminates or expires without a distribution of shares to the participant; or

•

shares are surrendered or withheld by PMT as payment of either the exercise price of an award and/or withholding taxes for an award.

Restricted share units have been awarded to trustees and officers of the Company and to other employees of PFSI and its subsidiaries at no cost to the grantees. Such awards generally vest over a one- to three-year period.

The following table summarizes the Company’s share-based compensation activity:


	Quarter ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
	(in thousands)
Grants:
Restricted share units		6		7		182		172
Performance share units		—		43		140		166
		6		50		322		338
Grant date fair value:
Restricted share units	$	83	$	78	$	2,605	$	2,212
Performance share units		—		507		2,007		2,088
	$	83	$	585	$	4,612	$	4,300
Vestings:
Restricted share units		15		11		164		140
Performance share units (1)		—		—		203		48
		15		11		367		188
Forfeitures:
Restricted share units		3		6		3		6
Performance share units		4		—		4		—
		7		6		7		6
Compensation expense relating to share-based grants	$	827	$	845	$	2,192	$	2,001

(1)

The actual number of performance-based restricted share units (“RSUs”) that vested during the six months ended June 30, 2024 was 203,110 Common Shares, which is approximately 140% of the originally granted performance-based RSUs.


	June 30, 2024
	Restricted share units		Performance share units
Shares expected to vest:
Number of restricted shares units (in thousands)		265		251
Grant date average fair value per unit	$	14.10	$	14.04

Note 23—Income Taxes

The Company’s effective tax rate was 11.1% and (19.8)% with consolidated pretax income of $28.6 million and $61.0 million for the quarter and six months ended June 30, 2024. The Company’s taxable REIT subsidiary (“TRS”) recognized a tax expense of
$3.0 million on pretax income of $9.9 million and a tax benefit of $12.0 million on a pretax loss of $51.0 million for the quarter and six months ended June 30, 2024. For the same periods in 2023, the TRS recognized a tax expense of $21.2 million on pretax income of $77.9 million and a tax benefit of $0.6 million on a pretax loss of $12.2 million. The Company’s reported consolidated pretax income was $46.9 million for the quarter ended June 30, 2023. The primary difference between the Company’s effective tax rate and the statutory tax rate is generally attributable to nontaxable REIT income resulting from the dividends paid deduction.

The Company assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. On the basis of this evaluation, as of June 30, 2024, the valuation allowance remains zero. The conclusion was primarily based on the fact that the TRS has reported cumulative GAAP income over the last three-year period ending June 30, 2024. The amount of deferred tax assets considered realizable could be adjusted in future periods based on future income.

In general, cash dividends declared by the Company will be considered ordinary income to the shareholders for income tax purposes. Some portion of the dividends may be characterized as capital gain distributions or a return of capital. For tax years beginning after December 31, 2017, the 2017 Tax Cuts and Jobs Act (subject to certain limitations) provides a 20% deduction from taxable income for ordinary REIT dividends.

Note 24—Earnings Per Common Share

The Company determines earnings per share using the two-class method. Under the two-class method, all earnings (distributed and undistributed) are allocated to Common Shares and participating securities based on their respective rights to receive dividends. The Company’s participating securities are grants of restricted share units that entitle the recipients to receive dividend equivalents during the vesting period on a basis equivalent to the dividends paid to holders of Common Shares.

Basic earnings per share is determined by dividing net income available to common shareholders (net income reduced by preferred dividends and income attributable to the participating securities) by the weighted average Common Shares outstanding during the quarter.

Diluted earnings per share is determined by dividing net income by the weighted average number of Common Shares and dilutive securities. The Company’s potentially dilutive securities are share-based compensation awards and the Exchangeable Notes. The number of dilutive securities included in diluted earnings per share is calculated using the treasury stock method for share-based compensation awards and the if-converted method for the Exchangeable Notes.

As discussed in Note 15— Long-Term Debt, effective June 21, 2024, the Company entered into a supplemental indenture affecting the terms of conversion of the 2024 Exchangeable Notes and the 2026 Exchangeable Notes. As a result of entering into the supplemental indenture, beginning with the quarter and the six months ended June 30, 2024, the number of shares included in the diluted weighted average shares outstanding will represent the number of shares required to settle the obligation in excess of the unpaid balance of the notes being exchanged.

The following table summarizes the basic and diluted earnings per share calculations:


	Quarter ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
	(in thousands except per share amounts)
Net income	$	25,434		$	24,624		$	73,042		$	85,321
Dividends on preferred shares		(10,455	)		(10,454	)		(20,909	)		(20,909	)
Effect of participating securities—share-based compensation awards		(106	)		(100	)		(217	)		(202	)
Net income attributable to common shareholders		14,873			14,070			51,916			64,210
Interest on Exchangeable Notes, net of income taxes		—			—			—			12,682
Diluted net income attributable to common shareholders	$	14,873		$	14,070		$	51,916		$	76,892
Weighted average basic shares outstanding		86,849			87,269			86,769			88,046
Dilutive securities:
Shares issuable pursuant to exchange of the Exchangeable Notes		—			—			—			24,328
Diluted weighted average shares outstanding		86,849			87,269			86,769			112,374
Basic earnings per share	$	0.17		$	0.16		$	0.60		$	0.73
Diluted earnings per share	$	0.17		$	0.16		$	0.60		$	0.68

Calculation of diluted earnings per share requires certain potentially dilutive shares to be excluded when the inclusion of such shares would be anti-dilutive. The following table summarizes the potentially dilutive shares excluded from the diluted earnings per share calculation:


	Quarter ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
	(in thousands)
Shares issuable under share-based compensation plan		128		114		322		141
Shares issuable pursuant to exchange of the Exchangeable Notes		—		24,328		—		—

Note 25—Segments

The Company operates in four segments as described in Note 1 ‒ Organization.

The Company’s reportable segments are identified based on PMT’s investment strategies. The Company’s chief operating decision maker is its chief executive officer. The following disclosures about the Company’s business segments are presented consistent with the way the Company’s chief operating decision maker organizes and evaluates financial information for making operating decisions and assessing performance.

Financial highlights by operating segment are summarized below:


	Credit			Interest rate
	sensitive			sensitive			Correspondent
Quarter ended June 30, 2024	strategies			strategies			production			Corporate			Total
	(in thousands)
Net investment income:
Net loan servicing fees	$	—		$	96,494		$	—		$	—		$	96,494
Net gains on loans acquired for sale		—			—			12,160			—			12,160
Net (losses) gains on investments and financings		17,410			(37,153	)		—			—			(19,743	)
Net interest expense:
Interest income		22,923			111,316			14,907			2,689			151,835
Interest expense		24,272			131,566			15,006			997			171,841
		(1,349	)		(20,250	)		(99	)		1,692			(20,006	)
Other		(224	)		—			2,517			—			2,293
		15,837			39,091			14,578			1,692			71,198
Expenses:
Loan fulfillment and servicing fees payable to PFSI		21			20,243			4,427			—			24,691
Management fees		—			—			—			7,133			7,133
Other		78			1,972			600			8,115			10,765
		99			22,215			5,027			15,248			42,589
Pretax income	$	15,738		$	16,876		$	9,551		$	(13,556	)	$	28,609
Total assets at end of quarter	$	1,471,470		$	9,421,790		$	719,756		$	467,934		$	12,080,950


	Credit			Interest rate
	sensitive			sensitive			Correspondent
Quarter ended June 30, 2023	strategies			strategies			production			Corporate			Total
	(in thousands)
Net investment income:
Net loan servicing fees	$	—		$	108,833		$	—		$	—		$	108,833
Net gains on loans acquired for sale		—			—			4,446			—			4,446
Net (losses) gains on investments and financings		68,707			(71,206	)		—			—			(2,499	)
Net interest expense:
Interest income		25,146			108,656			25,708			3,174			162,684
Interest expense		21,752			137,987			26,740			911			187,390
		3,394			(29,331	)		(1,032	)		2,263			(24,706	)
Other		(56	)		—			4,434			—			4,378
		72,045			8,296			7,848			2,263			90,452
Expenses:
Loan fulfillment and servicing fees payable to PFSI		32			20,285			5,441			—			25,758
Management fees		—			—			—			7,078			7,078
Other		911			1,183			1,007			7,662			10,763
		943			21,468			6,448			14,740			43,599
Pretax income	$	71,102		$	(13,172	)	$	1,400		$	(12,477	)	$	46,853
Total assets at end of quarter	$	1,638,662		$	10,099,868		$	1,161,519		$	484,873		$	13,384,922


	Credit			Interest rate
	sensitive			sensitive			Correspondent
Six months ended June 30, 2024	strategies			strategies			production			Corporate			Total
	(in thousands)
Net investment income:
Net loan servicing fees	$	—		$	142,199		$	—		$	—		$	142,199
Net gains on loans acquired for sale		—			—			26,678			—			26,678
Net (losses) gains on investments and financings		77,001			(56,991	)		—			—			20,010
Net interest expense:
Interest income		47,132			215,496			26,798			5,968			295,394
Interest expense		47,283			266,389			27,268			2,428			343,368
		(151	)		(50,893	)		(470	)		3,540			(47,974	)
Other		(90	)		—			4,580			—			4,490
		76,760			34,315			30,788			3,540			145,403
Expenses:
Loan fulfillment and servicing fees payable to PFSI		41			40,485			8,443			—			48,969
Management fees		—			—			—			14,321			14,321
Other		155			4,197			1,127			15,644			21,123
		196			44,682			9,570			29,965			84,413
Pretax income	$	76,564		$	(10,367	)	$	21,218		$	(26,425	)	$	60,990
Total assets at end of period	$	1,471,470		$	9,421,790		$	719,756		$	467,934		$	12,080,950


	Credit		Interest rate
	sensitive		sensitive			Correspondent
Six months ended June 30, 2023	strategies		strategies			production		Corporate			Total
	(in thousands)
Net investment income:
Net loan servicing fees	$	—	$	85,140		$	—	$	—		$	85,140
Net gains on loans acquired for sale		—		—			10,919		—			10,919
Net (losses) gains on investments and financings		123,096		209			—		—			123,305
Net interest expense:
Interest income		46,540		200,738			62,635		5,790			315,703
Interest expense		39,554		263,156			61,872		1,945			366,527
		6,986		(62,418	)		763		3,845			(50,824	)
Other		—		—			12,278		—			12,278
		130,082		22,931			23,960		3,845			180,818
Expenses:
Loan fulfillment and servicing fees payable to PFSI		109		40,658			17,363		—			58,130
Management fees		—		—			—		14,335			14,335
Other		1,547		2,472			3,415		15,265			22,699
		1,656		43,130			20,778		29,600			95,164
Pretax income	$	128,426	$	(20,199	)	$	3,182	$	(25,755	)	$	85,654
Total assets at end of period	$	1,638,662	$	10,099,868		$	1,161,519	$	484,873		$	13,384,922

Note 26—Regulatory Capital and Liquidity Requirements

The Company, through PMC, is subject to financial eligibility requirements established by the Federal Housing Finance Agency for sellers/servicers eligible to sell or service mortgage loans with Fannie Mae and Freddie Mac.

The Agencies' applicable capital and liquidity amounts and requirements are summarized below:


	Net worth (1)				Tangible net worth / total assets ratio (1)						Liquidity (1)
Measurement date	Actual		Required		Actual			Required			Actual		Required
	(dollars in thousands)
June 30, 2024	$	839,660	$	577,947		15	%		6	%	$	566,152	$	208,704
December 31, 2023	$	874,628	$	584,131		15	%		6	%	$	450,210	$	210,691

(1)

Calculated in accordance with the Agencies’ requirements.

Noncompliance with the Agencies’ capital and liquidity requirements can result in the Agencies taking various remedial actions up to and including removing the Company’s ability to sell loans to and service loans on behalf of the Agencies.

Note 27—Subsequent Events

Management has evaluated all events and transactions through the date the Company issued these consolidated financial statements. During this period, all agreements to repurchase assets that matured before the date of this Report were extended or renewed.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of financial condition and results of operations should be read with the consolidated financial statements and the related notes of PennyMac Mortgage Investment Trust (“PMT”) included within this Quarterly Report on Form 10-Q (this “Report”).

Statements contained in this Report may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other factors, which may cause actual results to be materially different from those expressed or implied in such statements. You can identify these forward-looking statements by words such as “may,” “will,” “should,” “expect,” “anticipate,” “believe,” “estimate,” “intend,” “plan” and other similar expressions. You should consider our forward-looking statements in light of the risks discussed under the heading “Risk Factors,” as well as our consolidated financial statements, related notes, and the other financial information appearing elsewhere in this Report and our other filings with the United States Securities and Exchange Commission (“SEC”). The forward-looking statements contained in this Report are made as of the date hereof and we assume no obligation to update or supplement any forward-looking statements.

The following discussion and analysis provides information that we believe is relevant to an assessment and understanding of our consolidated income and financial condition. Unless the context indicates otherwise, references in this Report to the words “we,” “us,” “our” and the “Company” refer to PMT and its consolidated subsidiaries.

Our Company

We are a specialty finance company that invests in mortgage-related assets. Our objective is to provide attractive risk-adjusted returns to our investors over the long-term, primarily through dividends and secondarily through capital appreciation. A significant portion of our investment portfolio is comprised of mortgage-related assets that we have created through our correspondent production activities, including mortgage servicing rights (“MSRs”), subordinate mortgage-backed securities (“MBS”), and credit risk transfer (“CRT”) arrangements, which absorb credit losses on certain of the loans we have sold. We also invest in Agency and senior non-Agency MBS, subordinate credit-linked MBS and interest-only ("IO") and principal-only ("PO") stripped MBS. We have also historically invested in distressed mortgage assets (distressed loans and real estate acquired in settlement of loans (“REO”)), which we have substantially liquidated.

We are externally managed by PNMAC Capital Management, LLC (“PCM”), an investment adviser that specializes in and focuses on U.S. mortgage assets. Our loans and MSRs are serviced by PennyMac Loan Services, LLC (“PLS”). PCM and PLS are both wholly-owned subsidiaries of PennyMac Financial Services, Inc. (“PFSI”), a publicly-traded mortgage banking and investment management company separately listed on the New York Stock Exchange.

We operate our business in four segments: Credit sensitive strategies, Interest rate sensitive strategies, Correspondent production and our Corporate operations, as described below:

•

The credit sensitive strategies segment represents our investments in CRT arrangements referencing loans from our own correspondent production and subordinate MBS.

•

The interest rate sensitive strategies segment represents our investments in MSRs, Agency and senior non-Agency MBS and the related interest rate hedging activities.

•

The correspondent production segment represents our operations aimed at serving as an intermediary between lenders and the capital markets by purchasing, pooling and reselling newly originated prime credit quality loans either directly or in the form of MBS, using the services of PCM and PLS.

We primarily sell the loans we acquire through our correspondent production activities to government-sponsored entities ("GSEs") such as the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”) or to PLS for sale into securitizations guaranteed by the Government National Mortgage Association ("Ginnie Mae"), or the GSEs. Fannie Mae, Freddie Mac and Ginnie Mae are each referred to as an “Agency” and, collectively, as the “Agencies.”

•

The corporate segment includes management fees, corporate expense amounts and certain interest income and expense.

Our Investment Activities

Credit Sensitive Investments

CRT Arrangements

We held net CRT-related investments (comprised of deposits securing CRT arrangements, CRT derivatives, CRT strips and an interest-only security payable) totaling approximately $1.1 billion at June 30, 2024.

Subordinate Credit-Linked Mortgage-Backed Securities

Subordinate credit-linked MBS provide us with a higher yield than senior securities. However, we retain credit risk in the subordinate credit-linked MBS since they are the first securities to absorb credit losses relating to the underlying loans. We sold approximately $111.0 million of our holdings of subordinate credit-linked MBS during the six months ended June 30, 2024. We held subordinate credit-linked MBS with fair values totaling approximately $196.8 million at June 30, 2024.

As the result of the Company’s consolidation of the variable interest entities that issued the subordinate MBS as described in Note 6 – Variable Interest Entities – Subordinate Mortgage-Backed Securities to the consolidated financial statements included in this Report, we include loans underlying these and similar transactions with unpaid principal balances (“UPBs”) totaling approximately
$1.7 billion on our consolidated balance sheet as of June 30, 2024.

Interest Rate Sensitive Investments

Our interest rate sensitive investments include:

•

Mortgage servicing rights. During the six months ended June 30, 2024, we received approximately $71.9 million of MSRs as proceeds from sales of loans acquired for sale. We held approximately $3.9 billion of MSRs at fair value at

June 30, 2024.

•

REIT-eligible Agency, senior non-Agency, IO and PO stripped MBS. We purchased approximately $399.5 million of Agency PO stripped MBS and sold $833.4 million of fixed-rate pass-through securities during the six months ended June 30, 2024. We held Agency fixed-rate pass-through, senior non-Agency, IO stripped and PO stripped MBS with fair values totaling approximately $3.9 billion at June 30, 2024.

Correspondent Production

Our correspondent production activities involve the acquisition and sale of newly originated prime credit quality residential loans. Correspondent production has served as the source of our investments in MSRs, private label non-Agency securitizations and CRT arrangements. Our correspondent production and resulting investment activity are summarized below:


	Quarter ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
	(in thousands)
Sales of loans acquired for sale:
To nonaffiliates	$	2,240,258	$	4,881,794	$	4,168,594	$	10,469,060
To PennyMac Financial Services, Inc.		20,859,260		18,636,127		37,161,319		32,087,158
	$	23,099,518	$	23,517,921	$	41,329,913	$	42,556,218
Net gains on loans acquired for sale	$	12,160	$	4,446	$	26,678	$	10,919
Investment activities resulting from correspondent production:
Receipt of MSRs as proceeds from sales of loans	$	40,619	$	90,747	$	71,868	$	191,365

During the six months ended June 30, 2024, we purchased newly originated prime credit quality residential loans with fair values totaling $41.3 billion as compared to $41.9 billion for the six months ended June 30, 2023, in our correspondent production business. To the extent that we purchase loans that are insured by the U.S. Department of Housing and Urban Development through the Federal Housing Administration, or guaranteed by the U.S. Department of Veterans Affairs or U.S. Department of Agriculture, we and PLS have agreed that PLS will fulfill and purchase such loans, as PLS is a Ginnie Mae approved issuer and we are not. This arrangement has enabled us to compete with other correspondent aggregators that purchase both government and conventional loans. We may also sell conventional loans that we purchase to PLS subject to our and PLS's mutual agreement. During the six months ended June 30, 2024, we sold $18.4 billion and $18.2 billion UPB of government guaranteed or insured loans and conventional loans, respectively, to PLS in order to optimize our use and allocation of capital.

Our purchase volume included $37.2 billion and $32.1 billion of loans we sold to PLS during the six months ended June 30, 2024 and 2023, respectively. We receive a sourcing fee from PLS based on the UPB of each loan that we sell to PLS under such arrangement, and earn interest income on the loan for the period we hold it before the sale to PLS. During the six months ended June 30, 2024, we received sourcing fees totaling $3.7 million, relating to $36.6 billion, in UPB of loans that we sold to PLS.

Taxation

We believe that we qualify to be taxed as a REIT and as such will not be subject to federal income tax on that portion of our income that is distributed to shareholders as long as we meet applicable REIT asset, income and share ownership tests. If we fail to qualify as a REIT, and do not qualify for certain statutory relief provisions, our profits will be subject to income taxes and we may be precluded from qualifying as a REIT for the four tax years following the year we lose our REIT qualification.

A portion of our activities, including our correspondent production business, is conducted in our taxable REIT subsidiary (“TRS”), which is subject to corporate federal and state income taxes. Accordingly, we make a provision for income taxes with respect to the operations of our TRS. We expect that the effective rate for the provision for income taxes may be volatile in future periods. Our goal is to manage the business to take full advantage of the tax benefits afforded to us as a REIT.

We evaluate our deferred tax assets quarterly to determine if valuation allowances are required based on the consideration of all available positive and negative evidence using a “more-likely-than-not” standard with respect to whether deferred tax assets will be realized. Our evaluation considers, among other factors, taxable loss carryback availability, expectations of sufficient future taxable income, trends in earnings, existence of taxable income in recent years, the future reversal of temporary differences, and available tax planning strategies that could be implemented, if required. The ultimate realization of our deferred tax assets depends primarily on our ability to generate future taxable income during the periods in which the related deferred tax assets become deductible.

Non-Cash Investment Income

A substantial portion of our net investment income is comprised of non-cash items, including fair value adjustments and recognition of the fair value of assets created and liabilities incurred in loan sales transactions. Because we have elected, or are required by accounting principles generally accepted in the United States (“GAAP”), to record certain of our financial assets (comprised of MBS, loans acquired for sale at fair value, loans at fair value and CRT strips), our derivatives, our MSRs, and our asset-backed financings and interest-only security payable at fair value, a substantial portion of the income or loss we record with respect to such assets and liabilities results from non-cash changes in fair value.

The amounts of net non-cash investment income items included in net investment income are as follows:


	Quarter ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
	(dollars in thousands)
Net gains on investments and financings:
Mortgage-backed securities	$	(34,925	)	$	(61,621	)	$	(73,123	)	$	16,597
Loans:
Held in variable interest entities		(2,739	)		(18,253	)		(3,979	)		(7,236	)
Distressed		(3	)		(878	)		(41	)		(427	)
CRT arrangements		1,853			43,906			37,974			76,130
Interest-only security payable at fair value		(481	)		(855	)		(41	)		(2,135	)
Asset-backed financings at fair value		1,295			17,794			8,771			7,634
		(35,000	)		(19,907	)		(30,439	)		90,563
Net gains on loans acquired for sale (1)		24,311			89,812			138,357			220,018
Net loan servicing fees‒MSR valuation adjustments (2)		57,361			(20,559	)		201,283			(194,418	)
	$	46,672		$	49,346		$	309,201		$	116,163
Net investment income	$	71,198		$	90,452		$	145,403		$	180,818
Non-cash items as a percentage of net investment income		66	%		55	%		213	%		64	%

(1)

Amount represents MSRs received, liability for representations and warranties incurred in loan sales transactions and changes in fair value of loans, interest rate lock commitments (“IRLCs”) and hedging derivatives held at the end of the quarter.

(2)

Includes fair value changes due to changes in fair value inputs and fair value changes related to MSR derivative hedging instruments held at the end of the period.

We receive or pay cash relating to:

•

Our investment in MBS through monthly principal and interest payments from the issuer of such securities or from the sale of the investment;

•

Loan investments when the investments are paid down, paid off or sold, when payments of principal and interest occur on such loans or when the properties acquired in settlement of loans are sold;

•

CRT arrangements through a portion of the interest payments collected on loans in the CRT arrangements’ reference pools, interest payments from the investment of the deposits securing the arrangement in short-term investments and the release to us of the deposits securing the arrangements as principal on such loans is repaid;

•

Hedging instruments when we receive or make margin deposits as the fair value of respective instruments change, when the instruments mature or when we effectively cancel the transactions through offsetting trades;

•

Our liability for representations and warranties when we repurchase loans or settle loss claims from investors; and

•

MSRs in the form of loan servicing fees and placement fees on the deposits we manage on behalf of the borrowers and investors in the loans we service.

Results of Operations

Business Trends

Due to ongoing inflationary pressures, over the last several quarters, the U.S. Federal Reserve has maintained the federal funds rate at its highest level since 2007 and has continued to reduce the federal government’s overall holdings of Treasury and mortgage-backed securities. Elevated interest rates are expected to constrain growth in the size of the mortgage origination market from $1.5 trillion in 2023 to an estimated $1.7 trillion in 2024 according to mortgage lending industry economists.

The limited size of the mortgage origination market and sustained interest rates at higher levels continue to impact our mortgage production activities. Higher interest rates have also increased the costs of floating rate borrowings, increased interest income from placement fees we receive relating to custodial funds that we manage on deposits and loans held for sale and reduced prepayment speeds in our mortgage servicing portfolio as compared to the same time period in the prior year. We have also continued our sales of conventional loans to PLS during the six months ended June 30, 2024, and we intend to continue to sell a portion of our conventional loans to PLS throughout the remainder of 2024 at a reduce rate to optimize our use and allocation of capital.

Elevated interest rates may also lead to a reduction in economic activity and slowing home price growth or depreciation, which could lead to increasing mortgage delinquencies or defaults and increased losses. If these effects are realized, they could negatively affect the performance of our credit-sensitive assets such as our CRT arrangements or subordinate credit-linked notes and increase losses from our representations and warranties. However, many of the loans underlying our assets have favorable credit characteristics including low loan-to-value ratios, which are likely to help moderate the negative effects of credit performance in an economic downturn.

The following is a summary of our key performance measures:


	Quarter ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
	(dollar amounts in thousands, except per common share amounts)
Net loan servicing fees	$	96,494		$	108,833		$	142,199		$	85,140
Loan production income (1)		14,611			8,741			31,137			22,920
Net (losses) gains on investments and financings		(19,743	)		(2,499	)		20,010			123,305
Net interest expense		(20,006	)		(24,706	)		(47,974	)		(50,824	)
Other		(158	)		83			31			277
Net investment income		71,198			90,452			145,403			180,818
Expenses		42,589			43,599			84,413			95,164
Pretax income		28,609			46,853			60,990			85,654
Provision for (benefit from) income taxes		3,175			22,229			(12,052	)		333
Net income		25,434			24,624			73,042			85,321
Dividends on preferred shares		10,454			10,454			20,909			20,909
Net income attributable to common shareholders	$	14,980		$	14,170		$	52,133		$	64,412
Pretax income by segment:
Credit sensitive strategies	$	15,738		$	71,102		$	76,564		$	128,426
Interest rate sensitive strategies		16,876			(13,172	)		(10,367	)		(20,199	)
Correspondent production		9,551			1,400			21,218			3,182
Corporate		(13,556	)		(12,477	)		(26,425	)		(25,755	)
	$	28,609		$	46,853		$	60,990		$	85,654
Annualized return on average common shareholders' equity		4.2	%		4.0	%		7.3	%		9.0	%
Earnings per common share
Basic	$	0.17		$	0.16		$	0.60		$	0.73
Diluted	$	0.17		$	0.16		$	0.60		$	0.68
Dividends per common share	$	0.40		$	0.40		$	0.80		$	0.80

	June 30, 2024			December 31, 2023
Total assets	$	12,080,950		$	13,113,887
Book value per common share	$	15.89		$	16.13
Closing price per common share	$	13.75		$	14.95

(1)

Includes net gains on sales of loans and loan origination fees.

Our consolidated net income increased by $810,000 during the quarter ended June 30, 2024, as compared to the quarter ended June 30, 2023 reflecting decreased losses on MBS and a reduced provision for income taxes offset by reduced CRT-related investment gains:

The decrease in the quarterly pretax results is summarized below:

•

Our credit sensitive strategies segment recognized a $43.8 million decrease in net gains on our CRT arrangements as market credit spreads tightened less compared to the same period in 2023.

•

Our interest rate sensitive strategies segment recognized a $35.2 million decrease in valuation losses on MBS and hedging derivatives caused by a smaller increase in interest rates over the quarter and a $9.1 million decrease in net interest expense in our interest rate sensitive strategies segment, offset by a $12.3 million decrease in net servicing fees resulting from increased net MSR valuation losses compared to the quarter ended June 30, 2023.

•

Our correspondent production segment recognized a $7.7 million increase in our gains on sale of loans during the quarter ended June 30, 2024, reflecting a reduction of our liability for representations and warranties due to the effects of certain loans reaching specified performance histories identified by the Agencies as sufficient to limit repurchase claims relating to such loans, and improved gain on sale margins and increased gain on sale margins for mortgage loans partially offset by reduced volume of sales to nonaffiliates.

Our consolidated net income decreased $12.3 million during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023 reflecting losses on MBS and reduced CRT-related investment gains, partially offset by increased net servicing fees, net gains on sales of loans and benefit from income taxes:

The decrease in the six months pretax results is summarized below

•

Our credit sensitive strategies segment recognized a $38.5 million decrease in net gains on our CRT arrangements as market credit spreads tightened less compared to the same period in 2023.

•

Our interest rate sensitive strategies segment recognized $59.2 million in losses on MBS and hedging derivatives caused by an increase in market interest rates and a $57.1 million increase in net servicing fees reflecting reduced net valuation losses on MSRs, as well as a $11.5 million decrease in net interest expense compared to the six months ended June 30, 2023.

•

Our correspondent production segment recognized a $15.8 million increase in our gains on sales of loans during the six months ended June 30, 2024, reflecting a reduction of our liability for representations and warranties due to the effects of certain loans reaching specified performance histories identified by the Agencies as sufficient to limit repurchase claims relating to such loans, and improved gain on sale margins.

Net Investment Income

Our net investment income is summarized below:


	Quarter ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
	(in thousands)
Net loan servicing fees	$	96,494		$	108,833		$	142,199		$	85,140
Net gains on loans acquired for sale		12,160			4,446			26,678			10,919
Loan origination fees		2,451			4,295			4,459			12,001
Net (losses) gains on investments and financings		(19,743	)		(2,499	)		20,010			123,305
Net interest expense		(20,006	)		(24,706	)		(47,974	)		(50,824	)
Other		(158	)		83			31			277
	$	71,198		$	90,452		$	145,403		$	180,818

Net Loan Servicing Fees

Our net loan servicing fees have two primary components: fees earned for servicing loans and the effects of MSR valuation changes, net of hedging results, as summarized below:


	Quarter ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
	(in thousands)
Loan servicing fees	$	164,942		$	172,325		$	328,310		$	340,482
Effect of MSRs and hedging results		(68,448	)		(63,492	)		(186,111	)		(255,342	)
Net loan servicing fees	$	96,494		$	108,833		$	142,199		$	85,140

Following is a summary of our loan servicing fees:


	Quarter ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
	(in thousands)
Contractually specified servicing fees	$	162,127	$	165,499	$	322,484	$	329,713
Ancillary and other fees:
Late charges		982		805		1,975		1,564
Other		1,833		6,021		3,851		9,205
		2,815		6,826		5,826		10,769
	$	164,942	$	172,325	$	328,310	$	340,482
Average MSR UPB	$	229,124,554	$	232,008,151	$	229,767,433	$	231,381,212

Loan servicing fees relate to our MSRs which are primarily related to servicing we provide for loans included in Agency securitizations. These fees are contractually established at an annualized percentage of the UPB of the loans serviced and we collect these fees from borrower payments. Other loan servicing fees are comprised primarily of borrower-contracted fees, such as late charges

and reconveyance fees, and incentive fees received form the Agencies for loss mitigation activities as well as fees charged to correspondent lenders for loans repaid by the borrower shortly after purchase.

The change in contractually-specified fees during the quarter and six months ended June 30, 2024, as compared to the same periods in 2023, is due primarily to a slight reduction in our MSR servicing portfolio, reflecting the shift of a portion of our loan sales from third party sales with servicing rights retained to sales to PLS which include the transfer of servicing rights to PLS.

We have elected to carry our servicing assets at fair value. Changes in fair value have two components: changes due to realization of the contractual servicing fees and changes due to changes in inputs used to estimate fair value. We endeavor to moderate the effects of changes in fair value attributable to changes in fair value inputs (market conditions) primarily by entering into derivatives transactions.

Changes in fair value of MSRs and hedging results are summarized below:


	Quarter ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
	(in thousands)
Change in fair value of MSRs
Changes in valuation inputs used in valuation model	$	46,039		$	15,046		$	117,609		$	(30,725	)
Recapture income from PFSI		473			509			826			994
Hedging results		(18,365	)		23,996			(108,179	)		(30,895	)
		28,147			39,551			10,256			(60,626	)
Realization of cash flows		(96,595	)		(103,043	)		(196,367	)		(194,716	)
	$	(68,448	)	$	(63,492	)	$	(186,111	)	$	(255,342	)
Average balance of mortgage servicing rights	$	3,980,010		$	3,987,752		$	3,969,941		$	3,986,958

Changes in fair value due to changes in valuation inputs used in our valuation model during the quarter and six months ended June 30, 2024, reflect the effects of expectations for slower future prepayments of the underlying loans and higher earnings on custodial balances as a result of interest rates increasing.

The decrease in loan recapture income from PFSI reflects the decrease in refinancing activity in our MSR portfolio during the quarter and six months ended June 30, 2024, as compared to the same periods in 2023. We have an agreement with PFSI that requires that when PFSI refinances a loan for which we held the MSRs, we receive a recapture fee. The MSR recapture agreement is summarized in Note 4 ‒ Transactions with Related Parties – Operating Activities to the consolidated financial statements included in this Report.

Hedging results reflect valuation losses in hedges against interest rates during the quarter and six months ended June 30, 2024, which is attributable to interest rates increasing as well as the effects of interest rate volatility and elevated hedge costs on the fair value of the hedging instruments.

Changes in realization of cash flows are influenced by changes in the level of servicing assets and liabilities and changes in estimates of remaining cash flows to be realized.

The following table summarizes for the dates presented collection status information for loans that are accounted for as sales where the Company maintains continuing involvement:


	June 30, 2024		December 31, 2023
	(in thousands)
UPB of loans outstanding	$	224,229,222	$	228,838,471
Collection status (UPB)
Delinquency:
30-89 days delinquent	$	2,334,456	$	2,184,500
90 or more days delinquent:
Not in foreclosure	$	822,290	$	1,029,962
In foreclosure	$	86,934	$	85,045
Bankruptcy	$	241,304	$	185,320
Custodial funds managed by the Company (1)	$	2,704,150	$	1,759,974

(1)

Following is a summary of characteristics of our MSR servicing portfolio as of June 30, 2024:


					Average
Loan type	Unpaid principal balance		Loan count		Note rate			Seasoning (months)		Remaining maturity (months)		Loan size		FICO credit score at origination		Original LTV (1)			Current LTV (1)			60+ Delinquency (by UPB)
	(Dollars and loan count in thousands)
Agency:
Fannie Mae	$	114,101,248		437		3.7	%		45		303	$	261		757		75	%		53	%		0.8	%
Freddie Mac		110,009,876		391		3.7	%		36		310	$	281		761		74	%		56	%		0.4	%
Other (2)		3,731,836		15		4.7	%		36		320	$	255		759		72	%		55	%		0.6	%
	$	227,842,960		843		3.7	%		40		307	$	270		759		75	%		54	%		0.6	%

(1)

Loan-to-value.

(2)

Represents MSRs on conventional loans sold to private investors.

Net Gains on Loans Acquired for Sale

Our net gains on loans acquired for sale are summarized below:


	Quarter ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
	(in thousands)
From non-affiliates:
Cash losses:
Sales of loans	$	(40,228	)	$	(116,647	)	$	(71,405	)	$	(189,592	)
Hedging activities		26,027			29,449			(43,929	)		(22,667	)
		(14,201	)		(87,198	)		(115,334	)		(212,259	)
Non-cash gains:
Receipt of MSRs in loan sale transactions		40,619			90,747			71,868			191,365
Provision for losses relating to representations and warranties provided in loan sales:
Pursuant to loan sales		(204	)		(738	)		(458	)		(1,678	)
Reduction in liability due to change in estimate		6,540			2,939			13,418			3,555
		6,336			2,201			12,960			1,877
Changes in fair value of financial instruments during the period:
Interest rate lock commitments		(3,292	)		(9,847	)		(5,980	)		(820	)
Loans		(488	)		16,766			5,807			6,279
Hedging derivatives		(18,864	)		(10,055	)		53,702			21,317
		(22,644	)		(3,136	)		53,529			26,776
		24,311			89,812			138,357			220,018
Total from nonaffiliates		10,110			2,614			23,023			7,759
From PFSI—cash		2,050			1,832			3,655			3,160
	$	12,160		$	4,446		$	26,678		$	10,919

Interest rate lock commitments issued on loans acquired for sale:
To nonaffiliates	$	2,602,246		$	3,322,313		$	5,074,106		$	10,909,900
To PFSI		9,913,553			7,523,348			18,527,843			11,304,200
	$	12,515,799		$	10,845,661		$	23,601,949		$	22,214,100
Acquisition of loans for sale (UPB):
To nonaffiliates	$	2,229,397		$	3,029,274		$	4,001,078		$	9,658,083
To PFSI		20,307,301			18,156,517			36,663,845			31,680,849
	$	22,536,698		$	21,185,791		$	40,664,923		$	41,338,932

The changes in gain on loans acquired for sale during the quarter and six months ended June 30, 2024, as compared to the same periods in 2023, reflect the effect of a reduction in our liability for representations and warranties and increased gain on sale margins for mortgage loans partially offset by reduced volume of sales to nonaffiliates.

Non-cash elements of gain on sale of loans:

Interest Rate Lock Commitments

Our Net gains on loans acquired for sale include our estimates of gains or losses we expect to realize upon the sale of mortgage loans we have committed to purchase but have not yet purchased or sold. Therefore, we recognize a substantial portion of our net gains before we purchase the loans. These gains are reflected on our balance sheet as IRLC derivative assets and liabilities. We adjust the fair value of our IRLCs as the loan acquisition process progresses until we complete the acquisition or the commitment is canceled. Such adjustments are included in our Net gains on loans acquired for sale. The fair values of our IRLCs becomes part of the carrying value of our loans when we complete the purchase of the loans. The methods and key inputs we use to measure the fair value of IRLCs are summarized in Note 7 – Fair value – Valuation Techniques and Inputs to the consolidated financial statements included in this Report.

The MSRs and liability for representations and warranties we recognize represent our estimate of the fair value of future benefits and costs we will realize for years in the future. These estimates change as circumstances change, and changes in these estimates are recognized in our results of operations in subsequent periods. Subsequent changes in the fair value of our MSRs significantly affect our income.

Mortgage Servicing Rights

The methods we use to measure and update the measurements of our MSRs as well as the effect of changes in valuation inputs on MSR fair value are detailed in Note 7 – Fair value – Valuation Techniques and Inputs to the consolidated financial statements included in this Report.

Liability for Losses Under Representations and Warranties

We recognize a liability for losses we expect to incur relating to the representations and warranties we provide to purchasers in our loan sales transactions. The representations and warranties require adherence to purchaser and insurer origination and underwriting guidelines, including but not limited to the validity of the lien securing the loan, property eligibility, borrower credit, income and asset requirements, and compliance with applicable federal, state and local law.

In the event of a breach of our representations and warranties, we may be required to either repurchase the loans with the identified defects or indemnify the investor or insurer against credit losses attributable to the loans with indemnified defects. In such cases, we bear any subsequent credit loss on the loans. Our credit loss may be reduced by any recourse we have to correspondent sellers that, in turn, had sold such loans to us and breached similar or other representations and warranties. In such event, we have the right to seek a recovery of those repurchase losses from that correspondent seller.

We recorded a provision for losses relating to representations and warranties relating to current loan sales of $204,000 and $458,000, respectively, for the quarter and six months ended June 30, 2024 and $738,000 and $1.7 million for the quarter and six months ended June 30, 2023, respectively. The decrease in the provision relating to current loan sales reflects the decrease of our loan sales volume to nonaffiliates and reduced default and loss-given default assumptions.

Following is a summary of the indemnification, repurchase and loss activity and loans subject to representations and warranties:


	Quarter ended June 30,					Six months ended June 30,
	2024		2023			2024		2023
	(in thousands)
Indemnification activity (UPB):
Loans indemnified at beginning of period	$	13,881	$	10,594		$	12,124	$	8,108
New indemnifications		1,297		1,554			3,054		4,788
Less: indemnified loans sold, repaid or refinanced		—		—			—		748
Loans indemnified at end of period	$	15,178	$	12,148		$	15,178	$	12,148
Indemnified loans indemnified by correspondent lenders at end of period						$	5,969	$	3,993
UPB of loans with deposits received from correspondent sellers collateralizing prospective indemnification losses at end of period						$	5,488	$	4,043
Repurchase activity (UPB):
Loans repurchased	$	10,256	$	17,742		$	17,771	$	36,941
Less:
Loans repurchased by correspondent sellers		6,022		16,413			12,001		31,680
Loans resold or repaid by borrowers		669		5,711			3,457		9,612
Net loans repurchased (resolved) with losses chargeable to liability to representations and warranties	$	3,565	$	(4,382	)	$	2,313	$	(4,351	)
Losses charged to liability for representations and warranties	$	—	$	137		$	—	$	525
At end of period:
Loans subject to representations and warranties						$	222,907,138	$	230,128,231
Liability for representations and warranties						$	13,183	$	37,069

The losses on representations and warranties we have recorded to date have been moderated by our ability to recover most of the losses inherent in the repurchased loans from the correspondent sellers. As the outstanding balance of loans we purchase and sell subject to representations and warranties increases, as the loans outstanding season, as our investors’ and guarantors’ loss mitigation strategies change and as our correspondent sellers’ ability and willingness to repurchase loans change, we expect that the level of repurchase activity and associated losses may increase.

The method we use to estimate the liability for representations and warranties is a function of our estimates of future defaults, loan repurchase rates, severity of loss in the event of default and the probability of reimbursement by the correspondent loan sellers. We establish a liability at our estimate of its fair value at the time loans are sold and review our liability estimate on a periodic basis and adjust the liability for estimated losses in excess of the recorded liability.

The amount of the liability for representations and warranties is difficult to estimate and requires considerable judgment. The level of loan repurchase losses is dependent on economic factors, investor loss mitigation strategies, our ability to recover any losses inherent in the repurchased loan from the correspondent seller and other external conditions that change over the lives of the underlying loans. We may be required to incur losses related to such representations and warranties for several periods after the loans are sold or liquidated.

We record adjustments to our liability for losses on representations and warranties as economic fundamentals change, as investor and Agency evaluations of their loss mitigation strategies (including claims under representations and warranties) change and as economic conditions affect our correspondent sellers’ ability or willingness to fulfill their recourse obligations to us. Such adjustments may be material to our financial position and income in future periods.

Adjustments to our liability for representations and warranties are included as a component of our Net gains on loans acquired for sale at fair value. We recorded $6.5 million and $13.4 million reduction in liability for representations and warranties during the quarter and six months ended June 30, 2024, respectively, due to the effects of certain loans reaching specified performance histories identified by the Agencies as sufficient to limit repurchase claims relating to such loans. We recorded $2.9 million and $3.6 million reductions in the liability for representations and warranties during the quarter and six months ended June 30, 2023, respectively, due to the effects of certain loans reaching specified performance histories identified by the Agencies as sufficient to limit repurchase claims relating to such loans.

Net (Losses) Gains on Investments and Financings

Net (losses) gains on investments and financings are summarized below:


	Quarter ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
	(in thousands)
Mortgage-backed securities	$	(34,925	)	$	(61,621	)	$	(73,123	)	$	16,597
Loans at fair value:
Held in consolidated variable interest entities		(2,739	)		(18,253	)		(3,979	)		(7,236	)
Distressed		(3	)		(877	)		(41	)		(426	)
CRT arrangements		16,629			60,458			68,284			106,736
Asset-backed financings at fair value		1,295			17,794			8,771			7,634
Hedging derivatives		—			—			20,098			—
	$	(19,743	)	$	(2,499	)	$	20,010		$	123,305

The decrease in net gains on investments for the quarter and six months ended June 30, 2024, as compared to the same periods in 2023, was primarily due to losses from our investments in MBS as interest rates increased and reduced gains in our CRT arrangements as spreads did not tighten to the same degree.

Mortgage-Backed Securities

During the quarter and six months ended June 30, 2024, we recognized net valuation losses of $34.9 million and $73.1 million, respectively, as compared to net valuation losses of $61.6 million and net valuation gains of $16.6 million for the same periods in 2023.

The reduced losses recognized during the quarter ended June 30, 2024 reflect mixed interest rate performance at the end of the quarter as compared to an increase in interest rates during the quarter ended June 30, 2023. The losses recognized during the six month ended June 30, 2024, reflect more significant increases in interest rates and mortgage and credit spreads during the period as compared to the same period in 2023.

Loans at Fair Value – Held in VIEs and Asset-backed Financings at Fair Value

Loans at fair value held in VIEs and Asset-backed financings at fair value recorded combined net valuation loss of $1.4 million and valuation gain of $4.8 million during the quarter and six months ended June 30, 2024, as compared to a net valuation loss of $459,000 and valuation gain of $398,000 during the quarter and six months ended June 30, 2023. The net loss during the quarter ended June 30, 2024, reflect the effect of interest rate performance during the quarter ended June 30, 2024. The net gain during the six months ended June 30, 2024 reflect the gains on the asset-backed financing exceeding the losses on the underlying assets as the result of credit spreads tightening (a decrease in the interest rate premium demanded by investors for instruments over those that are considered “risk free”), on our net investments secured by jumbo loans and investment properties.

CRT Arrangements

The activity in and balances relating to our CRT arrangements are summarized below:


	Quarter ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
	(in thousands)
Net investment income:
Net (losses) gains on investments and financings:
CRT Derivatives and strips:
CRT derivatives
Realized	$	3,564		$	5,423		$	6,973		$	8,453
Valuation changes		1,475			9,410			8,256			17,506
		5,039			14,833			15,229			25,959
CRT strips
Realized		11,693			11,984			23,378			24,288
Valuation changes		378			34,496			29,718			58,624
		12,071			46,480			53,096			82,912
Interest-only security payable at fair value		(481	)		(855	)		(41	)		(2,135	)
		16,629			60,458			68,284			106,736
Interest income — Deposits securing CRT arrangements		15,383			15,779			31,079			29,991
	$	32,012		$	76,237		$	99,363		$	136,727

Net payments made to settle losses on CRT arrangements	$	128		$	499		$	313		$	1,756


	June 30, 2024			December 31, 2023
	(in thousands)
Carrying value of CRT arrangements:
Derivative assets - CRT derivatives	$	24,305		$	16,160
CRT strip liabilities		(16,974	)		(46,692	)
Deposits securing CRT arrangements		1,163,268			1,209,498
Interest-only security payable at fair value		(32,708	)		(32,667	)
	$	1,137,891		$	1,146,299

CRT arrangement assets pledged to secure borrowings:
Derivative assets	$	24,305		$	16,160
Deposits securing CRT arrangements (1)	$	1,163,268		$	1,209,498

UPB of loans underlying CRT arrangements	$	22,204,806		$	23,152,230
Collection status (UPB):
Delinquency
Current	$	21,638,731		$	22,531,905
30-89 days delinquent	$	403,626		$	411,991
90-180 days delinquent	$	100,882		$	120,011
180 or more days delinquent	$	42,967		$	64,647
Foreclosure	$	18,600		$	23,676
Bankruptcy	$	65,176		$	58,696

(1)

Deposits securing credit risk transfer strip liabilities also secure $17.0 million and $46.7 million in CRT strip and CRT derivative liabilities at June 30, 2024 and December 31, 2023, respectively.

The performance of our investments in CRT arrangements during the quarter and six months ended June 30, 2024 and 2023 reflect credit spread tightening for CRT securities in the credit markets.

Loan Origination Fees

Loan origination fees represent fees we charge correspondent sellers relating to our purchase of loans from those sellers. The decrease in fees during the quarter and six months ended June 30, 2024, as compared to the same periods in 2023, reflects a decrease in our purchases of loans for sale to nonaffiliates.

Net Interest Expense

Net interest expense is summarized below:


	Quarter ended June 30, 2024								Quarter ended June 30, 2023
	Interest					Interest			Interest					Interest
	income/			Average		yield/			income/			Average		yield/
	expense			balance		cost %			expense			balance		cost %
	(dollars in thousands)
Assets:
Cash and short-term investments	$	7,085		$	489,139		5.83	%	$	6,712		$	566,893		4.76	%
Mortgage-backed securities		58,418			3,975,643		5.91	%		62,542			4,628,072		5.44	%
Loans acquired for sale at fair value		14,958			854,406		7.04	%		25,779			1,609,816		6.44	%
Loans at fair value		13,457			1,380,857		3.92	%		13,675			1,491,357		3.69	%
Deposits securing CRT arrangements		15,383			1,178,441		5.25	%		15,779			1,286,987		4.93	%
		109,301			7,878,486		5.58	%		124,487			9,583,125		5.22	%
Placement fees relating to custodial funds		41,530								37,677
Other		1,004								520
	$	151,835		$	7,878,486		7.75	%	$	162,684		$	9,583,125		6.83	%
Liabilities:
Assets sold under agreements to repurchase	$	77,364		$	5,016,206		6.20	%	$	96,346		$	6,414,368		6.04	%
Mortgage loan participation purchase and sale agreements		219			11,255		7.83	%		413			23,767		6.99	%
Notes payable secured by credit risk transfer and mortgage servicing assets		67,466			2,894,850		9.37	%		66,150			3,074,414		8.65	%
Senior notes		11,629			696,731		6.71	%		8,395			547,264		6.17	%
Asset-backed financings at fair value		11,402			1,561,068		2.94	%		12,791			1,392,667		3.69	%
		168,080			10,180,110		6.64	%		184,095			11,452,480		6.47	%
Interest shortfall on repayments of loans serviced for Agency securitizations		1,805								1,790
Interest on loan impound deposits		1,652								1,315
Other		304								190
		171,841		$	10,180,110		6.79	%		187,390		$	11,452,480		6.58	%
	$	(20,006	)						$	(24,706	)


	Six months ended June 30, 2024								Six months ended June 30, 2023
	Interest					Interest			Interest					Interest
	income/			Average		yield/			income/			Average		yield/
	expense			balance		cost %			expense			balance		cost %
	(dollars in thousands)
Assets:
Cash and short-term investments	$	15,277		$	534,614		5.75	%	$	13,023		$	551,776		4.77	%
Mortgage-backed securities		118,189			4,059,328		5.86	%		113,681			4,547,445		5.06	%
Loans acquired for sale at fair value		26,904			779,997		6.94	%		62,767			1,992,706		6.37	%
Loans at fair value		25,573			1,403,094		3.67	%		28,834			1,500,936		3.88	%
Deposits securing CRT arrangements		31,079			1,189,311		5.26	%		29,991			1,300,258		4.66	%
		217,022			7,966,344		5.48	%		248,296			9,893,121		5.08	%
Placement fees relating to custodial funds		76,970								66,597
Other		1,402								810
	$	295,394		$	7,966,344		7.46	%	$	315,703		$	9,893,121		6.45	%
Liabilities:
Assets sold under agreements to repurchase	$	157,921		$	5,080,520		6.25	%	$	196,613		$	6,826,134		5.82	%
Mortgage loan participation purchase and sale agreements		465			11,993		7.80	%		706			20,456		6.98	%
Notes payable secured by credit risk transfer and mortgage servicing assets		132,455			2,880,677		9.25	%		121,097			2,939,303		8.33	%
Unsecured senior notes		21,313			652,615		6.57	%		16,775			546,890		6.20	%
Asset-backed financings at fair value		24,080			1,571,443		3.08	%		25,144			1,402,275		3.63	%
		336,234			10,197,248		6.63	%		360,335			11,735,058		6.21	%
Interest shortfall on repayments of loans serviced for Agency securitizations		3,098								2,819
Interest on loan impound deposits		2,999								2,658
Other		1,037								715
		343,368		$	10,197,248		6.77	%		366,527		$	11,735,058		6.32	%
	$	(47,974	)						$	(50,824	)

The effects of changes in the yields and costs and composition of our investments on our net interest expense are summarized below:


	Quarter ended June 30, 2024									Six months ended June 30, 2024
	vs.									vs.
	Quarter ended June 30, 2023									Six months ended June 30, 2023
	Increase (decrease) due to changes in									Increase (decrease) due to changes in
	Rate			Volume			Total			Rate			Volume			Total
	(in thousands)
Assets:
Cash and short-term investments	$	1,372		$	(999	)	$	373		$	2,663		$	(409	)	$	2,254
Mortgage-backed securities		5,168			(9,292	)		(4,124	)		17,309			(12,801	)		4,508
Loans acquired for sale at fair value		2,217			(13,038	)		(10,821	)		5,227			(41,090	)		(35,863	)
Loans at fair value		827			(1,045	)		(218	)		(1,526	)		(1,735	)		(3,261	)
Deposits securing CRT arrangements		984			(1,380	)		(396	)		3,726			(2,638	)		1,088
		10,568			(25,754	)		(15,186	)		27,399			(58,673	)		(31,274	)
Placement fees relating to custodial funds								3,853									10,373
Other								484									592
	$	10,568		$	(25,754	)	$	(10,849	)	$	27,399		$	(58,673	)	$	(20,309	)
Liabilities:
Assets sold under agreements to repurchase	$	2,520		$	(21,502	)	$	(18,982	)	$	13,899		$	(52,591	)	$	(38,692	)
Mortgage loan participation purchase and sale agreements		45			(239	)		(194	)		76			(317	)		(241	)
Notes payable secured by credit risk transfer and mortgage servicing assets		5,312			(3,996	)		1,316			13,725			(2,367	)		11,358
Senior notes		789			2,445			3,234			1,059			3,479			4,538
Asset-backed financings at fair value		(2,818	)		1,429			(1,389	)		(3,972	)		2,908			(1,064	)
		5,848			(21,863	)		(16,015	)		24,787			(48,888	)		(24,101	)
Interest shortfall on repayments of loans serviced for Agency securitizations								15									279
Interest on loan impound deposits								337									341
Other								114									322
		5,848			(21,863	)		(15,549	)		24,787			(48,888	)		(23,159	)
	$	4,720		$	(3,891	)	$	4,700		$	2,612		$	(9,785	)	$	2,850

The decrease in net interest expense during the quarter and six months ended June 30, 2024, as compared to the same periods in 2023, is due to the increase in earnings from placement fees relating to custodial funds managed for borrowers and investors.

Expenses

Our expenses are summarized below:


	Quarter ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
	(in thousands)
Earned by PennyMac Financial Services, Inc.:
Loan servicing fees	$	20,264	$	20,317	$	40,526	$	40,766
Management fees		7,133		7,078		14,321		14,335
Loan fulfillment fees		4,427		5,441		8,443		17,364
Professional services		2,366		1,881		4,124		3,404
Compensation		1,369		1,279		3,285		2,818
Loan collection and liquidation		671		909		2,040		1,488
Safekeeping		961		1,124		1,893		2,240
Loan origination		533		897		1,006		3,075
Other		4,865		4,673		8,775		9,674
	$	42,589	$	43,599	$	84,413	$	95,164

Expenses decreased $1.0 million and $10.8 million, or 2% and 11%, respectively, during the quarter and six months ended June 30, 2024, as compared to the same periods in 2023, primarily due to decreased expenses relating to our correspondent lending activities as discussed below.

Loan Servicing Fees

Loan servicing fees payable to PLS are summarized below:


	Quarter ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
	(in thousands)
Loan servicing fees:
Loans acquired for sale at fair value	$	94	$	172	$	184	$	457
Loans at fair value		63		31		125		151
Mortgage servicing rights		20,107		20,114		40,217		40,158
	$	20,264	$	20,317	$	40,526	$	40,766
Average investment in loans:
Acquired for sale at fair value	$	854,406	$	1,609,816	$	779,997	$	1,992,706
At fair value	$	1,380,857	$	1,491,357	$	1,403,094	$	1,500,936
Average MSR portfolio unpaid principal balance	$	229,124,554	$	232,008,151	$	229,767,433	$	231,381,212

MSR recapture fees	$	473	$	509	$	826	$	994
UPB of loans recaptured	$	74,208	$	98,126	$	136,281	$	193,317

Loan servicing fees decreased by $53,000 and $240,000 during the quarter and six months ended June 30, 2024, respectively, as compared to the same periods in 2023, due to the decreases in the size of our investment in loans acquired for sale.

Management Fees

Management fees payable to PCM are summarized below:


	Quarter ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
	(in thousands)
Base	$	7,133	$	7,078	$	14,321	$	14,335
Performance incentive		—		—		—		—
	$	7,133	$	7,078	$	14,321	$	14,335
Average shareholders' equity amounts used to calculate base management fee expense	$	1,912,522	$	1,892,505	$	1,919,962	$	1,927,305

Management fees increased by $55,000 and decreased by $14,000 during the quarter and six months ended June 30, 2024, respectively, as compared to the same periods in 2023. Management fees increased due to higher average shareholders’ equity during the quarter ended June 30, 2024, as compared to the quarter ended June 30, 2023. The decrease reflects lower average shareholders’ equity during the six months ended June 30, 2024, as compared to the same period in 2023.

Loan Fulfillment Fees

Loan fulfillment fees represent fees we pay to PLS for the services it performs on our behalf in connection with our acquisition, packaging and sale of loans. Fulfillment fees decreased $1.0 million and $8.9 million during the quarter and six months ended
June 30, 2024, respectively, as compared to the same periods in 2023. The decrease was due to a decrease in the volume of loans purchased for sale to nonaffiliates. Our loan fulfillment fee structure is described in Note 4 – Transactions with Related Parties to the consolidated financial statements included in this Report.

Loan Origination

Loan origination expenses decreased $364,000 and $2.1 million, or 41% and 67%, during the quarter and six months ended June 30, 2024, respectively, as compared to the same periods in 2023, primarily reflecting a decrease in the volume of our loans purchased for sale to nonaffiliates.

Other Expenses

Other expenses are summarized below:


	Quarter ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
	(in thousands)
Common overhead allocation from PFSI	$	2,000	$	2,140	$	3,944	$	3,961
Bank service charges		548		499		1,040		995
Insurance		478		587		954		1,022
Technology		496		372		938		920
Other		1,343		1,075		1,899		2,776
	$	4,865	$	4,673	$	8,775	$	9,674

Income Taxes

We have elected to treat PennyMac Corp. (“PMC”), as a taxable REIT subsidiary (“TRS”). Income from a TRS is only included as a component of REIT taxable income to the extent that the TRS makes dividend distributions of income to us. A TRS is subject to corporate federal and state income tax. Accordingly, a provision for income taxes for PMC is included in the accompanying consolidated statements of income.

The Company’s effective tax rate was 11.1% and (19.8)% with consolidated pretax income of $28.6 million and $61.0 million for the quarter and six months ended June 30, 2024. The Company’s TRS recognized a tax expense of $3.0 million on pretax income of $9.9 million and tax benefit of $12.0 million on a pretax loss of $51.0 million for the quarter and six months ended June 30, 2024. For the same periods in 2023, the TRS recognized a tax expense of $21.2 million on pretax income of $77.9 million and a tax benefit of $0.6 million on a pretax loss of $12.2 million. The Company’s reported consolidated pretax income was $46.9 million for the quarter ended June 30, 2023. The primary difference between the Company’s effective tax rate and the statutory tax rate is generally attributable to nontaxable REIT income resulting from the dividends paid deduction.

The Company assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. On the basis of this evaluation, as of June 30, 2024, the valuation allowance remains zero as a result of cumulative GAAP income at the TRS for the three-year period ended June 30, 2024. The amount of deferred tax assets considered realizable could be adjusted in future periods based on future income.

Balance Sheet Analysis

Following is a summary of key balance sheet items as of the dates presented:


	June 30,		December 31,
	2024		2023
	(in thousands)
Assets
Cash and short-term investments	$	467,030	$	409,423
Mortgage-backed securities at fair value		4,068,337		4,836,292
Loans acquired for sale at fair value		694,391		669,018
Loans at fair value		1,377,836		1,433,820
Derivative assets		90,753		177,984
Deposits securing credit risk transfer arrangements		1,163,268		1,209,498
Mortgage servicing rights		3,941,861		3,919,107
		11,803,476		12,655,142
Other		277,474		458,745
Total assets	$	12,080,950	$	13,113,887
Liabilities
Debt:
Short-term	$	4,713,807	$	5,624,558
Long-term		5,068,571		4,880,461
		9,782,378		10,505,019
Other		358,703		651,778
Total liabilities		10,141,081		11,156,797
Shareholders’ equity		1,939,869		1,957,090
Total liabilities and shareholders’ equity	$	12,080,950	$	13,113,887

Total assets decreased by approximately $1.0 billion, or 8%, during the period from December 31, 2023 through June 30, 2024, primarily due to a $768.0 million reduction in Mortgage-backed securities at fair value partially offset by an increase of $25.4 million in Loans acquired for sale at fair value and a $22.8 million increase in MSRs.

Asset Acquisitions

Our asset acquisitions are summarized below.

Correspondent Production

Following is a summary of our correspondent production acquisitions at fair value:


	Quarter ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
	(in thousands)
Correspondent loan purchases:
GSE-Eligible Loans (1)	$	12,369,791	$	10,156,763	$	22,449,911	$	20,911,835
Government insured or guaranteed (2)		10,516,470		11,368,846		18,844,488		21,030,806
Jumbo loans		34,315		—		36,904		—
Advances to home equity lines of credit		—		4		—		50
	$	22,920,576	$	21,525,613	$	41,331,303	$	41,942,691

(1)

GSE eligibility refers to the eligibility of loans for sale to Fannie Mae or Freddie Mac. The Company sells or finances a portion of its GSE eligible loan production to or with other investors, including PLS.

(2)

The Company sells all of its loans eligible for inclusion in Ginnie Mae securities to PLS. The Company is not approved by Ginnie Mae as an issuer of Ginnie Mae-guaranteed securities which are backed by government-insured or guaranteed loans. The Company earns a sourcing fee for all loans that it purchases from correspondent sellers and subsequently sells to PLS as described in Note 4 – Transactions with Related Parties – Operating Activities – Correspondent Production Activities.

During the quarter and six months ended June 30, 2024, we purchased for sale $22.9 billion and $41.3 billion, respectively, in fair value of correspondent production loans as compared to $21.5 billion and $41.9 billion during the same periods in 2023.

Other Investment Activities

Following is a summary of our net acquisitions (sales) of mortgage-related investments held in our credit rate sensitive strategies and interest rate sensitive strategies segments:


	Quarter ended June 30,					Six months ended June 30,
	2024			2023		2024			2023
	(in thousands)
Credit sensitive assets:
Subordinate credit-linked securities	$	—		$	51,669	$	(111,044	)	$	64,061

Interest rate sensitive assets:
Agency fixed-rate pass-through securities (net of sales)		—			166,082		(830,296	)		308,742
Stripped mortgage-backed securities		239,875			—		399,460			—
Senior non-Agency securities		—			41,974		—			41,974
Mortgage servicing rights:
Purchases (price adjustments)		(13	)		—		29,428			—
Received in loan sales		40,619			90,747		71,868			191,365
		280,481			298,803		(329,540	)		542,081
	$	280,481		$	350,472	$	(440,584	)	$	606,142

Our acquisitions during the quarter and six months ended June 30, 2024 and 2023 were financed through the use of a combination of proceeds from borrowings and liquidations of existing investments. We continue to identify additional means of increasing our investment portfolio through cash flow from our business activities, existing investments, borrowings, and transactions that minimize current cash outlays. However, we expect that, over time, our ability to continue our investment portfolio growth will depend on our ability to raise additional equity capital.

Investment Portfolio Composition

Mortgage-Backed Securities

Following is a summary of our MBS holdings:


	June 30, 2024									December 31, 2023
					Average									Average
	Fair		Principal/		Life					Fair		Principal/		Life
	value		notional		(in years)		Coupon			value		notional		(in years)		Coupon
	(dollars in thousands)
Agency pass-through securities	$	3,240,816	$	3,295,288		8.3		5.4	%	$	4,270,056	$	4,311,342		7.6		5.1	%
Principal-only stripped securities		432,631		551,502		4.8		0.1	%		53,336		65,573		3.3		0.0	%
Subordinate credit-linked securities		196,810		174,813		4.1		13.2	%		301,180		275,963		4.3		12.4	%
Senior non-Agency securities		110,239		118,248		8.7		5.1	%		117,489		124,771		7.0		5.1	%
Interest-only stripped securities		87,841		405,346		7.6		4.9	%		94,231		419,791		7.3		4.9	%
	$	4,068,337	$	4,545,197						$	4,836,292	$	5,197,440

Credit Risk Transfer Arrangements

Following is a summary of our investment in CRT arrangements:


	June 30, 2024			December 31, 2023
	(in thousands)
Carrying value of CRT arrangements:
Derivative assets - CRT derivatives	$	24,305		$	16,160
Derivative and credit risk transfer strip liabilities- CRT strips		(16,974	)		(46,692	)
Deposits securing CRT arrangements		1,163,268			1,209,498
Interest-only security payable at fair value		(32,708	)		(32,667	)
	$	1,137,891		$	1,146,299
UPB of loans subject to credit guarantee obligations	$	22,204,806		$	23,152,230

Following is a summary of the composition of the loans underlying our investment in CRT arrangements as of June 30, 2024:


	Year of origination
	2020			2019			2018			2017			2016			2015			Total
	(in millions)
UPB:
Outstanding	$	4,542		$	10,325		$	2,665		$	2,255		$	1,842		$	576		$	22,205
Liquidations:
Balances	$	0.6		$	7.3		$	58.0		$	161.4		$	121.6		$	61.4		$	410.3
Losses	$	0.0		$	0.6		$	5.6		$	20.0		$	12.9		$	7.5		$	46.6
Modifications:
Balances	$	67.7		$	553.8		$	305.9		$	—		$	—		$	—		$	927.4
Losses	$	1.6		$	17.7		$	13.6		$	—		$	—		$	—		$	32.9
Weighted average:
Original debt-to income ratio		33.5	%		35.9	%		39.0	%		36.5	%		35.0	%		35.7	%		35.7	%
Origination FICO credit score		765			754			736			745			751			743			753
Origination loan-to value ratio		80.7	%		83.3	%		83.5	%		82.5	%		80.6	%		80.9	%		82.4	%
Current loan-to value ratio (1)		51.0	%		50.8	%		48.5	%		43.4	%		39.4	%		36.9	%		48.5	%

(1)

Based on current UPB compared to estimated fair value of the property securing the loan.


	Year of origination
Distribution by state	2020		2019		2018		2017		2016		2015		Total
	(in millions)
California	$	474	$	1,019	$	333	$	241	$	357	$	109	$	2,533
Florida		499		988		342		234		195		51		2,309
Texas		539		894		212		191		228		86		2,150
Virginia		245		461		97		104		128		56		1,091
Maryland		179		441		123		130		121		32		1,026
Other		2,606		6,522		1,558		1,355		813		242		13,096
	$	4,542	$	10,325	$	2,665	$	2,255	$	1,842	$	576	$	22,205


	Year of origination
Regional geographic distribution (1)	2020		2019		2018		2017		2016		2015		Total
	(in millions)
Northeast	$	424	$	1,291	$	315	$	330	$	238	$	86	$	2,684
Southeast		1,540		3,529		956		773		576		177		7,551
Midwest		423		1,087		230		214		167		41		2,162
Southwest		1,180		2,278		499		440		341		119		4,857
West		975		2,140		665		498		520		153		4,951
	$	4,542	$	10,325	$	2,665	$	2,255	$	1,842	$	576	$	22,205

(1)

Northeast consists of CT, DE, ME, MA, NH, NJ, NY, PA, PR, RI, VT, VI; Southeast consists of AL, DC, FL, GA, KY, MD, MS, NC, SC, TN, VA, WV; Midwest consists of IL, IN, IA, MI, MN, NE, ND, OH, SD, WI; Southwest consists of AZ, AR, CO, KS, LA, MO, NM, OK, TX, UT; and West consists of AK, CA, GU, HI, ID, MT, NV, OR, WA and WY.


	Year of origination
Collection status	2020		2019		2018		2017		2016		2015		Total
	(in millions)
Delinquency
Current - 89 Days	$	4,526	$	10,243	$	2,622	$	2,246	$	1,832	$	575	$	22,044
90 - 179 Days		8		49		26		8		9		1		101
180+ Days		6		24		12		—		1		—		43
Foreclosure		2		9		5		1		—		—		17
	$	4,542	$	10,325	$	2,665	$	2,255	$	1,842	$	576	$	22,205
Bankruptcy	$	5	$	32	$	16	$	5	$	7	$	—	$	65

Cash Flows

Our cash flows for the periods ended June 30, 2024 and 2023 are summarized below:


	Six months ended June 30,
	2024			2023
	(in thousands)
Operating activities	$	(98,571	)	$	743,524
Investing activities		763,481			(132,656	)
Financing activities		(815,261	)		(483,929	)
Net cash flows	$	(150,351	)	$	126,939

Our cash flows resulted in a net decrease in cash of $150.4 million during the six months ended June 30, 2024, as discussed below.

Operating activities

Cash used in operating activities totaled $98.6 million during the six months ended June 30, 2024, as compared to cash provided by our operating activities of $743.5 million during the six months ended June 30, 2023. Cash flows from operating activities are influenced by cash flows from loans acquired for sale as shown below:


	Six months ended June 30,
	2024			2023
	(in thousands)
Operating cash flows from:
Loans acquired for sale	$	(19,096	)	$	576,825
Other		(79,475	)		166,699
	$	(98,571	)	$	743,524

Cash flows from loans acquired for sale primarily reflect changes in the level of inventory from the beginning to end of the periods presented. Our inventory of loans held for sale increased during the six months ended June 30, 2024, as compared to a decrease during the same period in 2023.

Investing activities

Net cash provided by our investing activities was $763.5 million for the six months ended June 30, 2024, as compared to net cash used in our investing activities of $132.7 million for the six months ended June 30, 2023, primarily due to our net sale of MBS.

Financing activities

Net cash used in our financing activities was $815.3 million for the six months ended June 30, 2024, as compared to net cash used in our financing activities of $483.9 million for the six months ended June 30, 2023. This change primarily reflects the repayment of financing related to our net sale of MBS.

As discussed below in Liquidity and Capital Resources, our Manager continually evaluates and pursues additional sources of financing to provide us with future investing capacity. We do not raise equity or enter into borrowings for the purpose of financing the payment of dividends. We believe that our cash earnings are adequate to fund our operating expenses and dividend payment requirements. However, we manage our liquidity in the aggregate and are reinvesting our cash flows in new investments as well as using such cash to fund our dividend requirements.

Liquidity and Capital Resources

Our liquidity reflects our ability to meet our current obligations (including the purchase of loans from correspondent sellers, our operating expenses and, when applicable, retirement of, and margin calls relating to, our debt and derivatives positions), make investments as our Manager identifies them, pursue our share repurchase program and make distributions to our shareholders. We generally need to distribute at least 90% of our taxable income each year (subject to certain adjustments) to our shareholders to qualify as a REIT under the Internal Revenue Code. This distribution requirement limits our ability to retain earnings and thereby replenish or increase capital to support our activities.

We expect our primary sources of liquidity to be cash flows from our investment portfolio, including cash earnings on our investments, cash flows from business activities, liquidation of existing investments and proceeds from borrowings and/or additional equity offerings. When we finance a particular asset, the amount borrowed is less than the asset’s fair value and we must provide the cash in the amount of such difference. Our ability to continue making investments is dependent on our ability to invest the cash representing such difference.

On March 15, 2024, the Company, PMT ISSUER TRUST-FMSR and PMT CO-ISSUER TRUST-FMSR (together, the
"Issuer Trusts"), PMT and PennyMac Holdings, LLC (“PMH”) entered into a Series 2024-VF1 Note with Goldman Sachs Bank, USA, as part of the structured finance transaction that PMC uses to finance Fannie Mae mortgage servicing rights and related excess servicing spread and servicing advance receivables. The initial two-year term of the Series 2024-VF1 Note is set to expire on March 15, 2026, at which point the Series 2024-VF1 Note amortizes over 12 months prior to termination.

On April 4, 2024, we issued in a private offering $247 million aggregate principal amount of CRT term notes that mature on March 29, 2027 at a rate of 3.35% over the Secured Overnight Financing Rate.

On May 24, 2024 and June 4, 2024, PMC issued in a private offering $216.5 million aggregate principal amount of exchangeable senior notes due 2029 (the “2029 Exchangeable Notes”) that mature on June 1, 2029 at a rate of 8.500% per year. The 2029 Exchangeable Notes are fully and unconditionally guaranteed by PMT. Upon exchange, PMC will pay cash up to the aggregate principal amount of the Exchangeable Notes to be exchanged and pay or deliver, as the case may be, cash, PMT’s common shares of beneficial interest (“Common Shares”), or a combination thereof, at PMT’s election, in respect of the remainder, if any, of its exchange obligation in excess of the aggregate principal amount of the Exchangeable Notes to be exchanged. The exchange rate initially equals 63.3332 Common Shares per $1,000 principal amount of the 2029 Exchangeable Notes.

On June 27, 2024, the Company, the Issuer Trusts, PMC and PMH issued an aggregate principal amount of $355 million in secured term notes (the “Series 2024-FT1 Term Notes”) as part of the structured finance transaction that PMC and PMH use to finance Fannie Mae mortgage servicing rights and related excess servicing spread and servicing advance receivables. The initial 3.5 year term of the Series 2024-FT1 Term Notes is set to mature on December 27, 2027, unless the Company exercises a six-month optional extension.

Debt Financing

Our current debt financing strategy is to finance our assets where we believe such borrowing is prudent, appropriate and available. We make collateralized borrowings in the form of sales of assets under agreements to repurchase, loan participation purchase and sale agreements and notes payable, including secured term financing for our MSRs and our CRT arrangements that have allowed us to match the term of our borrowings more closely to the expected lives of the assets securing those borrowings. We have also borrowed money by issuing unsecured senior notes.

Our debt financing as of June 30, 2024 is summarized below:


	Assets financed
Financing	MBS		Loans acquired for sale		Loans at fair value		CRT assets		Servicing assets (1)		REO		Total
	(in thousands)
Borrowings
Short term
Assets sold under agreements to repurchase	$	3,890,943	$	633,330	$	59,172	$	51,711	$	65,069	$	—	$	4,700,225
Mortgage loan participation purchase and sale agreements		—		13,582		—		—		—		—		13,582
Long term
Notes payable secured by CRT arrangements and MSRs		—		—		—		780,312		2,153,533		—		2,933,845
Asset-backed financings at fair value		—		—		1,288,180		—		—		—		1,288,180
Interest-only security payable		—		—		—		32,708		—		—		32,708
Total secured borrowings		3,890,943		646,912		1,347,352		864,731		2,218,602		—		8,968,540
Unsecured senior notes														813,838
Total borrowings	$	3,890,943	$	646,912	$	1,347,352	$	864,731	$	2,218,602	$	—		9,782,378
Shareholders' equity														1,939,869
Total financing													$	11,722,247

Assets pledged to secure borrowings	$	4,068,337	$	685,231	$	1,376,005	$	1,187,573	$	3,967,873	$	1,515	$	11,286,534
Debt-to-equity ratio:
Excluding non-recourse debt													4.4:1
Total														5.0:1

(1)

Amounts pledged to secure borrowings include pledged servicing advances.

Sales of Assets Under Agreements to Repurchase

Our repurchase agreements represent the sales of assets together with agreements for us to buy back the assets at a later date. Following is a summary of the activities in our repurchase agreements financing:


	Quarter ended June 30,				Six months ended June 30,
Assets sold under agreements to repurchase	2024		2023		2024		2023
	(in thousands)
Average balance outstanding	$	5,016,206	$	6,414,368	$	5,080,520	$	6,826,134
Maximum daily balance outstanding	$	5,525,266	$	8,499,053	$	6,562,795	$	9,330,819
Ending balance					$	4,703,577	$	5,914,625

The difference between the maximum and average daily amounts outstanding is primarily due to timing of loan purchases and sales in our correspondent production business. The total facility size of our Assets sold under agreements to repurchase was approximately $11.2 billion at June 30, 2024.

Because a significant portion of our current debt facilities consists of short-term borrowings, we expect to either renew these facilities in advance of maturity in order to ensure our ongoing liquidity and access to capital or otherwise allow ourselves sufficient time to replace any necessary financing.

As discussed above, all of our repurchase agreements, and mortgage loan participation purchase and sale agreements have short-term maturities:

•

The transactions relating to loans and REO under agreements to repurchase generally provide for terms of approximately one to two years;

•

The transactions relating to loans under mortgage loan participation purchase and sale agreements provide for terms of approximately one year;

•

The transactions relating to assets under notes payable provide for terms ranging from two to five years; and

•

All repurchase agreements that matured between June 30, 2024 and the date of this Report have been renewed, extended or replaced.

The amount at risk (the fair value of the assets pledged plus the related margin deposit, less the amount advanced by the counterparty and accrued interest) relating to our Assets sold under agreements to repurchase is summarized by counterparty below as of June 30, 2024:


Counterparty	Amount at risk
	(in thousands)
Citibank, N.A.	$	84,229
JPMorgan Chase & Co.		45,801
Atlas Securitized Products, L.P.		33,413
Goldman Sachs & Co. LLC		33,332
Bank of America, N.A.		32,161
Wells Fargo Securities, LLC		31,880
Barclays Capital Inc.		28,448
Santander US Capital		16,765
RBC Capital Markets, L.P.		5,535
Daiwa Capital Markets America Inc.		5,446
Mizuho Financial Group		3,820
Nomura Holdings America, Inc.		3,432
Morgan Stanley & Co. LLC		3,373
BNP Paribas		817
	$	328,452

Unsecured Senior Notes

In September 2023, we issued $53.5 million principal amount of our unsecured 8.50% senior notes due September 30, 2028 (the “2028 Senior Notes”). The 2028 Senior Notes bear interest at a rate of 8.50% per year payable quarterly.

On or after September 30, 2025, we may redeem for cash all or any portion of the 2028 Senior Notes, at our option, at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No “sinking fund” will be provided for the 2028 Senior Notes.

The 2028 Senior Notes are fully and unconditionally guaranteed on a senior unsecured basis by PMC, including the due and punctual payment of principal of and interest on the 2028 Senior Notes, whether at stated maturity, upon acceleration, call for redemption or otherwise (the “PMC Guarantee”). PMC’s operations and investing activities are centered in residential mortgage-related assets, including the creation of and investment in MSRs.

Under the terms of the PMC Guarantee, holders of the 2028 Senior Notes will not be required to exercise their remedies against us before they proceed directly against PMC. PMC’s obligations under the guarantee are limited to the maximum amount that will not, after giving effect to all other contingent and fixed liabilities of PMC, result in the guarantee constituting a fraudulent transfer or conveyance. The PMC Guarantee will:

•

rank equal in right of payment to any of PMC’s existing and future unsecured and unsubordinated indebtedness and guarantees of PMC;

•

be effectively subordinated in right of payment to any of PMC’s existing and future secured indebtedness and secured guarantees to the extent of the value of the assets securing such indebtedness or guarantees; and

•

be structurally subordinated to all existing and future indebtedness and other liabilities (including trade payables) and (to the extent not held by PMC) preferred stock, if any, of PMC’s subsidiaries and of any entity PMC accounts for using the equity method of accounting.

The following summarized financial information for PMT and PMC is presented on a combined basis. Intercompany balances and transactions between PMT and PMC have been eliminated:


	June 30, 2024
	(in thousands)
Loans acquired for sale at fair value	$	694,391
Mortgage servicing rights at fair value		3,951,076
Other assets
From nonaffiliates		716,682
From PFSI		—
From non-issuer or non-guarantor subsidiaries		271,011
Total assets	$	5,633,160

Total liabilities
Payable to nonaffiliates	$	1,459,566
Payable to non-issuer or non-guarantor subsidiaries		3,722,675
Payable to PFSI		20,465
	$	5,202,706


	Quarter ended June 30, 2024
	(in thousands)
Net investment income
From nonaffiliates	$	86,147
From PFSI		4,481
From non-issuer or non-guarantor subsidiaries (1)		(108,529	)
Expenses
From nonaffiliates		9,861
From PFSI		59,383
Pre-tax income		(87,145	)
Provision for income taxes		(21,481	)
Net loss	$	(65,664	)

(1)

Excludes equity in earnings of non-guarantor subsidiaries.

Debt Covenants

Our debt financing agreements require us and certain of our subsidiaries to comply with various financial covenants. As of the filing of this Report, these financial covenants include the following:

•

a minimum of $75 million in unrestricted cash and cash equivalents among the Company and/or our subsidiaries; a minimum of $75 million in unrestricted cash and cash equivalents among our Operating Partnership and its consolidated subsidiaries; a minimum of $25 million in unrestricted cash and cash equivalents between PMC and PMH; a minimum of $25 million in unrestricted cash and cash equivalents at PMC; and a minimum of $10 million in unrestricted cash and cash equivalents at PMH;

•

a minimum tangible net worth for the Company of $1.25 billion; a minimum tangible net worth for our Operating Partnership of $1.25 billion; a minimum tangible net worth for PMH of $250 million; and a minimum tangible net worth for PMC of $300 million;

•

a maximum ratio of total indebtedness to tangible net worth of less than 10:1 for PMC and PMH and 8.5:1 for the Company and our Operating Partnership; and

•

at least two warehouse or repurchase facilities that finance amounts and assets similar to those being financed under our existing debt financing agreements.

Although these financial covenants limit the amount of indebtedness we may incur and impact our liquidity through minimum cash reserve requirements, we believe that these covenants currently provide us with sufficient flexibility to successfully operate our business and obtain the financing necessary to achieve that purpose.

PLS is also subject to various financial covenants, both as a borrower under its own financing arrangements and as our servicer under certain of our debt financing agreements. The most significant of these financial covenants currently include the following:

•

a minimum in unrestricted cash and cash equivalents of $100 million;

•

a minimum tangible net worth of $1.25 billion;

•

a maximum ratio of total indebtedness to tangible net worth of 10:1; and

•

at least one other warehouse or repurchase facility that finances amounts and assets that are similar to those being financed under certain of our existing secured financing agreements.

Many of our debt financing agreements contain a condition precedent to obtaining additional funding that requires us to maintain positive net income for at least one (1) of the previous two consecutive quarters, or other similar measures. For the most recent fiscal quarter, the Company is compliant with all such conditions. However, we may be required to obtain waivers from certain lenders in the future if this condition precedent is not met.

Our debt financing agreements also contain margin call provisions that, upon notice from the applicable lender at its option, require us to transfer cash or, in some instances, additional assets in an amount sufficient to eliminate any margin deficit. A margin deficit will generally result from any decline in the market value (as determined by the applicable lender) of the assets subject to the related financing agreement, although in some instances we may agree with the lender upon certain thresholds (in dollar amounts or percentages based on the market value of the assets) that must be exceeded before a margin deficit will arise. Upon notice from the applicable lender, we will generally be required to satisfy the margin call on the day of such notice or within one business day thereafter, depending on the timing of the notice.

Regulatory Capital and Liquidity Requirements

In addition to the financial covenants imposed upon us and PLS as our servicer under our debt financing agreements, we, through PMC and/or PLS, as applicable, are also subject to liquidity and net worth requirements established by the Federal Housing Finance Agency (“FHFA”) for Agency seller/servicers and Ginnie Mae for single-family issuers. FHFA and Ginnie Mae have established minimum liquidity and net worth requirements for their approved non-depository single-family sellers/servicers in the case of Fannie Mae, Freddie Mac, and Ginnie Mae for its approved single-family issuers.

Ginnie Mae has issued risk-based capital requirements which will be effective December 31, 2024. We believe that PLS is in compliance with the Agency's pending requirements as of June 30, 2024.

Our Manager continues to explore a variety of additional means of financing our business, including debt financing through bank warehouse lines of credit, repurchase agreements, term financing, securitization transactions and unsecured debt and equity offerings. However, there can be no assurance as to how much additional financing capacity such efforts will produce, what form the financing will take or that such efforts will be successful.

Off-Balance Sheet Arrangements and Aggregate Contractual Obligations

Off-Balance Sheet Arrangements

As of June 30, 2024, we have not entered into any off-balance sheet arrangements.

Our management, servicing, and loan fulfillment fee agreements are described in Note 4 – Transactions with Related Parties to the consolidated financial statements included in this Report.

All debt financing arrangements that matured between June 30, 2024 and the date of this Report have been renewed, extended or replaced.

Critical Accounting Estimates

Preparation of financial statements in compliance with GAAP requires us to make estimates that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the reporting period. Certain of these estimates significantly influence the portrayal of our financial condition and results, and they require us to make difficult, subjective or complex judgments. Our critical accounting policies primarily relate to our fair value estimates.

Our Annual Report on Form 10-K for the year ended December 31, 2023 contains a discussion of our critical accounting policies, which utilize relevant critical accounting estimates.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the exposure to loss resulting from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices, real estate values and other market-based risks. The primary market risks that we are exposed to are real estate risk, credit risk, interest rate risk, prepayment risk, inflation risk and market value risk.

Our primary trading asset is our inventory of loans acquired for sale. We believe that such assets’ fair values respond primarily to changes in the market interest rates for comparable recently-originated loans. Our other market-risk assets are a substantial portion of our investments and are primarily comprised of MSRs, CRT arrangements and MBS. We believe that the fair values of MSRs and MBS also respond primarily to changes in the market interest rates for comparable loans or yields on MBS. Changes in interest rates are reflected in the prepayment speeds underlying these investments and in the pricing spread (an element of the discount rate) used in their valuation. We believe that the primary market risks to the fair values of our investment in CRT arrangements are changes in market credit spreads and the fair value of the real estate securing the loans underlying such arrangements.

The following sensitivity analyses are limited in that they were performed at a particular point in time; only contemplate the movements in the indicated variables; do not incorporate changes to other variables; are subject to the accuracy of various models and assumptions used; and do not incorporate other factors that would affect our overall financial performance in such scenarios, including operational adjustments made by management to account for changing circumstances. For these reasons, the following estimates should not be viewed as earnings forecasts.

Mortgage-backed securities at fair value

The following table summarizes the estimated change in fair value of our mortgage-backed securities as of June 30, 2024, given several hypothetical (instantaneous) changes in interest rates and parallel shifts in the yield curve:


Interest rate shift in basis points	-200		-75		-50		50			75			200
	(in thousands)
Change in fair value	$	140,690	$	86,735	$	61,357	$	(72,705	)	$	(112,330	)	$	(327,364	)

Mortgage Servicing Rights

The following tables summarize the estimated change in fair value of MSRs as of June 30, 2024, given several shifts in pricing spread, prepayment speeds and annual per-loan cost of servicing:


Change in fair value attributable to shift in:	-20%		-10%		-5%		+5%			+10%			+20%
	(in thousands)
Pricing spread	$	204,640	$	99,803	$	49,293	$	(48,117	)	$	(95,095	)	$	(185,782	)
Prepayment speed	$	236,680	$	114,228	$	56,142	$	(54,297	)	$	(106,844	)	$	(207,027	)
Annual per-loan cost of servicing	$	66,262	$	33,131	$	16,566	$	(16,566	)	$	(33,131	)	$	(66,262	)

CRT Arrangements

Following is a summary of the effect on fair value of various changes to the pricing spread input used to estimate the fair value of our CRT arrangements given several shifts in pricing spread:


Pricing spread shift in basis points	-100		-50		-25		25			50			100
	(in thousands)
Change in fair value	$	41,084	$	20,236	$	10,043	$	(9,896	)	$	(19,647	)	$	(38,724	)

Following is a summary of the effect on fair value of various instantaneous changes in home values from those used to estimate the fair value of our CRT arrangements given several shifts:


Property value shift in %	-15%			-10%			-5%			5%		10%		15%
	(in thousands)
Change in fair value	$	(10,737	)	$	(6,413	)	$	(2,898	)	$	2,397	$	4,368	$	5,998

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. However, no matter how well a control system is designed and operated, it can provide only reasonable, not absolute, assurance that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth in our periodic reports.

Our management has conducted an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Report as required by paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act. Based on our evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective, as of the end of the period covered by this Report, to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may be involved in various legal actions, claims and proceedings arising in the ordinary course of its business. See Note 17 — Commitments and Contingencies, to the financial statements contained in this report for a discussion of legal actions, claims and proceedings that are incorporated by reference into this Item.

Item 1A. Risk Factors

There are no material changes from the risk factors set forth under Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 22, 2024.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were no sales of unregistered equity securities during the quarter and six months ended June 30, 2024.

The following table provides information about our repurchases of common shares of beneficial interest (“Common Shares”) during the quarter ended June 30, 2024:


Period	Total number of shares purchased		Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs (1)		Amount available for future share repurchases under the plans or programs (1)
	(in thousands, except average price paid per share)
April 1, 2024 – April 30, 2024		—	$	—		—	$	73,353
May 1, 2024 – May 31, 2024		—	$	—		—	$	73,353
June 1, 2024 – June 30, 2024		—	$	—		—	$	73,353

(1)

On October 24, 2022, the Company’s board of trustees approved an increase to the Company’s Common Share repurchase authorization from $400 million to $500 million (the “share repurchase program”). The share repurchase program does not require the Company to purchase a specific number of Common Shares, and the timing and amount of any Common Shares repurchased are based on market conditions and other factors, including price, regulatory requirements and capital availability. Common Share repurchases may be effected through privately negotiated transactions or open market purchases, including pursuant to a trading plan implemented pursuant to Rule 10b5-1 of the Exchange Act. The share repurchase program does not have an expiration date but may be suspended, modified or discontinued at any time without prior notice.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

During the quarter ended June 30, 2024, none of our trustees or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K).

Item 6. Exhibits


		Incorporated by Reference from the Below-Listed Form (Each Filed under SEC File Number 001-34416)
Exhibit No.	Exhibit Description	Form	Filing Date

3.1	Declaration of Trust of PennyMac Mortgage Investment Trust, as amended and restated.	10-Q	November 6, 2009

3.2	Second Amended and Restated Bylaws of PennyMac Mortgage Investment Trust	8-K	March 16, 2018

3.3	Articles Supplementary classifying and designating the 8.125% Series A Fixed-to-Floating Rate Cumulative Redeemable Preferred Shares of Beneficial Interest.	8-A	March 7, 2017

3.4	Articles Supplementary classifying and designating the 8.00% Series B Fixed-to-Floating Rate Cumulative Redeemable Preferred Shares of Beneficial Interest.	8-A	June 30, 2017

3.5	Articles Supplementary classifying and designating the 6.75% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest.	8-A	August 20, 2021

4.1	Fourth Supplemental Indenture, dated as of May 24, 2024, among PennyMac Corp., PennyMac Mortgage Investment Trust and The Bank of New York Mellon Trust Company, N.A.	8-K	May 24, 2024

4.2	Form of 8.500% Exchangeable Senior Notes due 2029 (included in Exhibit 4.2).	8-K	May 24, 2024

4.3	Fifth Supplemental Indenture, dated as of June 21, 2024, among PennyMac Corp., PennyMac Mortgage Investment Trust and The Bank of New York Mellon Trust Company, N.A., to the Indenture, dated as of April 30, 2013, among PennyMac Corp., PennyMac Mortgage Investment Trust and The Bank of New York Mellon Trust Company, N.A.	8-K	June 21, 2024

10.1	Form of Equity Distribution Agreement.	8-K	June 14, 2024

10.2^	Series 2024-FT1 Indenture Supplement, dated as of June 27, 2024, by and among PMT ISSUER TRUST - FMSR, PMT CO-ISSUER TRUST I – FMSR, Citibank, N.A., PennyMac Corp., PennyMac Holdings, LLC, Atlas Securitized Products, L.P., and the noteholders thereto.	8-K	July 3, 2024

10.3	Amendment No. 1 to Amended and Restated Series 2017-VF1 Indenture Supplement, dated as of June 28, 2024, by and among PMT ISSUER TRUST - FMSR, PMT CO-ISSUER TRUST I - FMSR, Citibank, N.A., PennyMac Corp., PennyMac Holdings, LLC, and Atlas Securitized Products, L.P.	*

10.4	Joint Amendment No. 2 to the Series 2017-VF1 Repurchase Agreement and Amendment No. 1 to the Pricing Side Letter, dated as of June 28, 2024, among Atlas Securitized Products, L.P, Nexera Holding LLC, Citibank, N.A., PennyMac Corp., PennyMac Holdings, LLC, and PennyMac Mortgage Investment Trust.	*

10.5^	Joint Assignment, Assumption and Amendment No. 3 to the Series 2017-VF1 Repurchase Agreement, Amendment No. 2 to the Series 2017-VF1 Pricing Side Letter, Amendment No. 2 to the Series 2017-VF1 Side Letter Agreement and Amendment No. 1 to the VFN Repo Guaranty, dated as of June 28, 2024, among Atlas Securitized Products, L.P, Nexera Holding LLC, Citibank, N.A., PennyMac Corp., PennyMac Holdings, LLC, and Atlas Securitized Products Funding 2, L.P.	*

31.1	Certification of David A. Spector pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	*

31.2	Certification of Daniel S. Perotti pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	*

32.1**	Certification of David A. Spector pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	**


32.2**	Certification of Daniel S. Perotti pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	**

101	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023 (ii) the Consolidated Statements of Income for the quarter and six months ended June 30, 2024 and June 30, 2023, (iii) the Consolidated Statements of Changes in Shareholders' Equity for the quarter and six months ended June 30, 2024 and June 30, 2023, (iv) the Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and June 30, 2023 and (v) the Notes to the Consolidated Financial Statements.	*

101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH	Inline XBRL Taxonomy Extension Schema Document

104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed herewith.

^ Portions of the exhibit have been redacted.

** The certifications attached hereto as Exhibits 32.1 and 32.2 are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	Pennymac Mortgage Investment Trust (Registrant)

Dated: August 1, 2024	By:	/s/ David A. Spector
		David A. Spector
		Chairman and Chief Executive Officer (Principal Executive Officer)

Dated: August 1, 2024	By:	/s/ Daniel S. Perotti
		Daniel S. Perotti
		Senior Managing Director and Chief Financial Officer (Principal Financial Officer)

EX-10.3

EXHIBIT 10.3

AMENDMENT NO. 1 TO SERIES 2017-VF1 INDENTURE SUPPLEMENT

This Amendment No. 1 to the Series 2017-VF1 Indenture Supplement (as defined herein) (this “Amendment”) is dated as of June 28, 2024, by and among PMT ISSUER TRUST - FMSR, as issuer (the “Issuer”), PMT CO-ISSUER TRUST I - FMSR, as co-issuer (the “Co-Issuer” and together with the Issuer, the “Issuer Trusts”), CITIBANK, N.A. (“Citibank”), as indenture trustee (the “Indenture Trustee”), PENNYMAC CORP. (“PMC”), as administrator (in such capacity, the “Administrator”) and as servicer (in such capacity, the “Servicer”), PENNYMAC HOLDINGS, LLC (“PMH”), as co-issuer administrator (in such capacity, the “Co-Issuer Administrator”), and ATLAS SECURITIZED PRODUCTS, L.P., as administrative agent (the “Administrative Agent”), and is consented to by NEXERA HOLDING LLC (“Nexera”) and Citibank, together, the noteholders of 100% of Outstanding Notes (the “Noteholders”).

RECITALS

WHEREAS, the Issuer Trusts, the Indenture Trustee, the Administrator, the Co-Issuer Administrator, the Servicer and the Administrative Agent are parties to that certain Amended and Restated Base Indenture, dated as of October 10, 2023 (as may be further amended, restated, supplemented or otherwise modified from time to time, the “Base Indenture”), the provisions of which are incorporated, as modified by that certain Amended and Restated Series 2017-VF1 Indenture Supplement, dated as of October 10, 2023 (as may be further amended, restated, supplement or otherwise modified from time to time, the “Series 2017-VF1 Indenture Supplement”, and together with the Base Indenture, the “Indenture”), among the Issuer Trusts, Citibank, the Servicer, the Administrator, the Co-Issuer Administrator and the Administrative Agent. Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Indenture;

WHEREAS, the Issuer Trusts, the Indenture Trustee, the Administrator, the Co-Issuer Administrator, the Servicer, the Administrative Agent and the Noteholders have agreed, subject to the terms and conditions of this Amendment, that the Series 2017-VF1 Indenture Supplement be amended to reflect certain agreed upon revisions to the terms of the Series 2017-VF1 Indenture Supplement;

WHEREAS, pursuant to Section 12.2 of the Base Indenture, the Issuer Trusts, the Indenture Trustee, the Administrator, the Co-Issuer Administrator, the Servicer and the Administrative Agent, with prior notice to each Note Rating Agency and the consent of the Majority Noteholders of each Series materially and adversely affected by such amendment, by Act of said Noteholders delivered to the Issuer Trusts, the Administrator, the Servicer, the Administrative Agent and the Indenture Trustee, upon delivery of an Issuer Tax Opinion (unless the Noteholders unanimously consent to waive such opinion), for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, any Indenture Supplement;

WHEREAS, pursuant to Section 12.3 of the Base Indenture, in executing or accepting the additional trusts created by any amendment or Indenture Supplement of the Base Indenture permitted by Article XII or the modifications thereby of the trusts created by the Base Indenture, the Indenture Trustee will be entitled to receive, and (subject to Section 11.1 of the Base Indenture) will be fully protected in relying upon, an Opinion of Counsel stating that the execution of such

amendment or Indenture Supplement is authorized and permitted by the Base Indenture and that all conditions precedent thereto have been satisfied (the “Authorization Opinion”); provided, that no such Authorization Opinion shall be required in connection with any amendment or Indenture Supplement consented to by all Noteholders if all of the Noteholders have directed the Indenture Trustee in writing to execute such amendment or Indenture Supplement;

WHEREAS, pursuant to Section 1.3 of the Base Indenture, the Issuer Trusts shall deliver an Officer’s Certificate stating that all conditions precedent, if any, provided for in the Base Indenture relating to a proposed action have been complied with and that the Issuer Trusts reasonably believe that this Amendment will not have a material Adverse Effect, and shall also furnish to the Indenture Trustee an opinion of counsel stating that in the opinion of such counsel all conditions precedent to a proposed action, if any, have been complied with (unless 100% of the Noteholders have consented to the related amendment, modification or action and all of the Noteholders have directed the Indenture Trustee in writing to execute such amendment or supplement, or with respect or with respect to any other modification or action, directed the Indenture Trustee in writing to permit such modification or action without receiving such certificate or opinion);

WHEREAS, pursuant to Section 11.1 of the Trust Agreement, prior to the execution of any amendment to any Transaction Documents to which the Trust is a party, the Owner Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by the Trust Agreement and that all conditions precedent have been met;

WHEREAS, pursuant to Section 4.1(a)(iii) of the Trust Agreement, the consent of each of the Owners (as defined in the Trust Agreement) (unless an Event of Default has occurred and is continuing), the Administrative Agent and the Series Required Noteholders of all Variable Funding Notes is required for the amendment or other change to any Transaction Document in circumstances where the consent of any Noteholder or the Administrative Agent is required (other than an amendment or supplement to the Base Indenture pursuant to Section 12.1 thereof);

WHEREAS, there is currently one Outstanding Series of Notes, the Series 2017-VF1 Note (the “Series 2017-VF1 Note”), which was issued to PMC and PMH, pursuant to the terms of the Series 2017-VF1 Indenture Supplement, and which was purchased by Nexera and Citibank under the Second Amended and Restated Master Repurchase Agreement, dated as of October 10, 2023, by and among the Administrative Agent, Nexera, as a buyer, Citibank, as a buyer, PMC, as a seller, and PMH, as a seller (as amended by Amendment No. 1, dated as of March 15, 2024, and Amendment No. 2, dated as of June 28, 2024, and as may be further amended, restated, supplement or otherwise modified from time to time, the “Series 2017-VF1 Repurchase Agreement”), pursuant to which each of PMC and PMH sold all of its respective rights, title and interest in the Series 2017-VF1 Note to Nexera and Citibank;

WHEREAS, (i) pursuant to the Issuer Trust Agreement, PMC is the sole Owner of the Issuer and pursuant to the Co-Issuer Trust Agreement, PMH is the sole Owner of the Co-Issuer, and (ii) pursuant to the Series 2017-VF1 Indenture Supplement, with respect to the Series 2017-VF1 Note, any Action provided by the Base Indenture or the Series 2017-VF1 Indenture

Supplement to be given or taken by a Noteholder shall be taken by the VFN Repo Buyer, as the buyer of the Series 2017-VF1 Note under the Series 2017-VF1 Repurchase Agreement;

WHEREAS, pursuant to Section 11 of the Series 2017-VF1 Indenture Supplement, the parties hereto may enter into an amendment to supplement, amend or revise any term or provision of the Series 2017-VF1 Indenture Supplement pursuant to the terms and provisions of Section 12.2 of the Base Indenture with the consent of the Noteholders of 100% of the Outstanding Notes; and

WHEREAS, as of the date hereof, the Series 2017-VF1 Note is rated BBB- (sf) by the Note Rating Agency.

NOW, THEREFORE, the Issuer Trusts, Indenture Trustee, the Administrator, the Co-Issuer Administrator, the Servicer and the Administrative Agent hereby agree, in consideration of the amendments, agreements and other provisions herein contained and of certain other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged by the parties hereto, that the Series 2017-VF1 Indenture Supplement is hereby amended as follows:

SECTION 1.

Amendments to the Series 2017-VF1 Indenture Supplement.

(a)

Section 2 of the Series 2017-VF1 Indenture Supplement is hereby amended by deleting the definitions of “Benchmark” and “VFN Repo Buyers” in their entirety and replacing them with the following:

“Benchmark” means, with respect to any date of determination, the Daily Simple SOFR or, if applicable, a Benchmark Replacement Rate. It is understood that the Benchmark shall be adjusted on a daily basis; provided, that, Benchmark for the three (3) Business Days prior to the related Payment Date shall be fixed at Benchmark for the third (3rd) Business Day prior to the related Payment Date.

“VFN Repo Buyers” means Nexera and the buyers named under the Series 2017-VF1 Repurchase Agreement from time to time, and each of their permitted successors and assigns.

(b)

Section 2 of the Series 2017-VF1 Indenture Supplement is hereby amended by deleting the definitions of “Adjusted Daily Simple SOFR” and “Benchmark Adjustment” in their entirety.

SECTION 2.

Note Rating Agency. As of the date hereof and prior to the execution of this Amendment, the Series 2017-VF1 Notes are rated BBB- (sf) by the Note Rating Agency.

SECTION 3.

Conditions to Effectiveness of this Amendment. This Amendment shall become effective upon (i) the execution and delivery of this Amendment by all parties hereto, (ii) delivery of an Opinion of Counsel pursuant to Section 11.1 of the Trust Agreement and (iii) prior notice to the Note Rating Agency pursuant to Section 12.2 of the Base Indenture.

SECTION 4.

Consent, Acknowledgment and Waiver. By execution of this Amendment, each of Nexera and Citibank, in its capacity as Noteholder of the Outstanding Notes, hereby consents to this Amendment. The Noteholders certify that together, they are the sole

Noteholders of the Series 2017-VF1 Note with the right to instruct the Indenture Trustee. In addition, each Noteholder certifies as to itself that (i) it is authorized to execute and deliver this consent and such power has not been granted or assigned to any other person, (ii) the Person executing this Indenture Supplement on behalf of such Noteholder is duly authorized to do so, (iii) the Indenture Trustee may conclusively rely upon such consent and certifications, (iv) the execution by each Noteholder of this Amendment should be considered an “Act” by Noteholders pursuant to Section 1.5 of the Base Indenture, and (v) it acknowledges and agrees that the amendments effected by this Amendment shall become effective on the Amendment Effective Date. The Noteholders further hereby instruct the Indenture Trustee to execute this Amendment, thereby waiving the requirement for the delivery of the Authorization Opinion, the Officer’s Certificate and the Issuer Tax Opinion pursuant to Sections 1.3, 12.2 and 12.3 of the Base Indenture.

SECTION 5.

Representations and Warranties. Each Issuer Trust hereby represents and warrants to the Indenture Trustee, the Administrative Agent and the Noteholders that as of the date hereof it is in compliance with all the terms and provisions set forth in the Indenture on its part to be observed or performed remains bound by the terms thereof, and that no Event of Default has occurred or is continuing, and hereby confirms and reaffirms the representations and warranties contained in Section 9.1 of the Base Indenture.

SECTION 6.

Limited Effect. Except as expressly amended and modified by this Amendment, the Indenture shall continue to be, and shall remain, in full force and effect in accordance with its terms and the execution of this Amendment.

SECTION 7.

No Recourse. It is expressly understood and agreed by the parties hereto that (a) this Amendment is executed and delivered by Wilmington Savings Fund Society, FSB (“WSFS”), not individually or personally but solely as Owner Trustee of each Issuer Trust under the Trust Agreement, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, warranties, covenants, undertakings, obligations and agreements herein made on the part of the Issuer Trusts is made and intended not as personal representations, warranties, undertakings, obligations and agreements by WSFS but is made and intended for the purpose of binding only, and is binding only on, the Issuer Trusts, (c) nothing herein contained shall be construed as creating any liability on WSFS, individually or personally, or as Owner Trustee, to perform any covenant or obligation of either Issuer Trust, either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto, (d) WSFS has made and will make no investigation as to the accuracy or completeness of any representations or warranties made by either Issuer Trust in this Amendment, (e) under no circumstances shall WSFS be personally liable for the payment of any indebtedness, indemnities, fees, costs or expenses of the Issuer Trusts or be liable for the performance, breach or failure of any obligation, duty, representation, warranty or covenant made or undertaken by the Issuer Trusts under this Amendment or any other related documents, as to all of which recourse shall be had solely to the assets of the Issuer Trusts and (f) WSFS shall have the rights, privileges, indemnities and immunities as are set forth in the related Trust Agreement.

SECTION 8.

Successors and Assigns. This Amendment shall be binding upon the parties hereto and their respective successors and assigns.

SECTION 9.

GOVERNING LAW. THIS AMENDMENT AND ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT, TORT OR OTHERWISE) BASED UPON, ARISING UNDER OR RELATED TO OR IN CONNECTION WITH THIS AMENDMENT, THE RELATIONSHIP OF THE PARTIES HERETO, AND/OR THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES HERETO WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, INCLUDING THE STATUTES OF LIMITATIONS AND OTHER PROCEDURAL LAWS THEREOF (WITHOUT REFERENCE TO THE CONFLICT OF LAW PRINCIPLES THEREOF OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, WHICH SHALL APPLY) AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

SECTION 10.

Counterparts. This Amendment may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. The parties agree that this Amendment may be accepted, executed or agreed to through the use of an electronic signature in accordance with the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. § 7001 et seq, Official Text of the Uniform Electronic Transactions Act as approved by the National Conference of Commissioners on Uniform State Laws at its Annual Conference on July 29, 1999, and any applicable state law. Any document accepted, executed or agreed to in conformity with such laws will be binding on all parties hereto to the same extent as if it were physically executed and each party hereby consents to the use of any secure third party electronic signature capture service with appropriate document access tracking, electronic signature tracking and document retention.

SECTION 11.

Entire Agreement. The Indenture, as amended by this Amendment, constitutes the entire agreement among the parties hereto with respect to the subject matter hereof, and fully supersedes any prior or contemporaneous agreements relating to such subject matter.

SECTION 12.

Recitals. The recitals and statements contained in this Amendment shall be taken as the statements of the Issuer Trusts, and the Indenture Trustee does not assume any responsibility for their correctness. The Indenture Trustee does not make any representation as to the validity or sufficiency of this Amendment (except as may be made with respect to the validity of its own obligations hereunder.) In entering into this Amendment, the Indenture Trustee shall be entitled to the benefit of every provision of the Indenture relating to the conduct of, or affecting the liability of or affording protection to it.

[Signature Pages Follow]

IN WITNESS WHEREOF, the undersigned have caused this Amendment to be duly executed as of the date first above written.

PMT ISSUER TRUST – FMSR, as Issuer

By: Wilmington Savings Fund Society, FSB, not in its individual capacity but solely as Owner Trustee

By: /s/ Mark H. Brzoska
Name: Mark H. Brzoska
Title: Vice President

PMT CO-ISSUER TRUST I – FMSR, as Co-Issuer

By: Wilmington Savings Fund Society, FSB, not in its individual capacity but solely as Owner Trustee

By: /s/ Mark H. Brzoska
Name: Mark H. Brzoska
Title: Vice President

PENNYMAC CORP., as Servicer and as Administrator

By: /s/ Pamela Marsh
Name: Pamela Marsh
Title: Senior Managing Director and Treasurer

PENNYMAC HOLDINGS, LLC., as Co-Issuer Administrator

By: /s/ Pamela Marsh
Name: Pamela Marsh
Title: Senior Managing Director and Treasurer

CITIBANK, N.A., as Indenture Trustee, and not in its individual capacity

By: /s/ Valerie Delgado
Name: Valerie Delgado
Title: Senior Trust Officer

ATLAS SECURITIZED PRODUCTS, L.P., as Administrative Agent

By: Atlas Securitized Products GP, LLC, its general partner

By: /s/ Dominic Obaditch
Name: Dominic Obaditch
Title: Managing Director

ATLAS SECURITIZED PRODUCTS, L.P., solely in its capacity as Administrative Agent on behalf of Nexera Holding LLC, as VFN Repo Buyer

By: Atlas Securitized Products GP, LLC, its general partner

By: /s/ Dominic Obaditch
Name: Dominic Obaditch
Title: Managing Director

CONSENTED TO BY:

NEXERA HOLDING LLC, as a VFN Repo Buyer and as a noteholder of the Series 2017-VF1 Note

By: /s/ Steven M. Abreu
Name: Steve Abreu
Title: CEO

CONSENTED TO BY:

CITIBANK, N.A., as a VFN Repo Buyer and as a noteholder of the Series 2017-VF1 Note

By: /s/ James Kessler
Name: James Kessler
Title: Attorney in Fact

EX-10.4

EXHIBIT 10.4

JOINT AMENDMENT NO. 2 TO THE SERIES 2017-VF1 REPURCHASE AGREEMENT AND AMENDMENT NO. 1 TO THE PRICING SIDE LETTER

This Joint Amendment No. 2 to the Series 2017-VF1 Repurchase Agreement (as defined below) and Amendment No. 1 to the Pricing Side Letter (as defined below) is entered into as of June 28, 2024 (this “Amendment”), among ATLAS SECURITIZED PRODUCTS, L.P., as administrative agent (the “Administrative Agent”), NEXERA HOLDING LLC, as a buyer (“Nexera” or a “Buyer”), CITIBANK, N.A., as a buyer (“Citibank” and together with Nexera, the “Buyers”), PENNYMAC CORP. (“PMC”), as a seller (a “Seller”), PENNYMAC HOLDINGS, LLC (“PMH”), as a seller (a “Seller” and together with PMC, the “Sellers”), and PENNYMAC MORTGAGE INVESTMENT TRUST, as guarantor (the “VFN Guarantor”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Indenture (as defined below).

W I T N E S S E T H:

WHEREAS, the Administrative Agent, the Buyers and the Sellers are parties to that certain Second Amended and Restated Master Repurchase Agreement, dated as of October 10, 2023 (as amended by Amendment No. 1, dated as of March 15, 2024, and as may be further amended, restated, supplemented or otherwise modified from time to time, the “Series 2017-VF1 Repurchase Agreement”) and the related Fifth Amended and Restated Pricing Side Letter, dated as of October 10, 2023 (as may be further amended, restated, supplemented or otherwise modified from time to time, the “Pricing Side Letter”);

WHEREAS, the Administrative Agent, the Buyers, the Sellers and the VFN Guarantor have agreed, subject to the terms and conditions of this Amendment, that the Series 2017-VF1 Repurchase Agreement and the Pricing Side Letter be amended to reflect the certain agreed upon revisions to the terms of the Series 2017-VF1 Repurchase Agreement and the Pricing Side Letter;

WHEREAS, the VFN Guarantor is party to that certain Second Amended and Restated Guaranty, dated as of October 10, 2023 (as may be further amended, restated, supplemented or otherwise modified from time to time, the “VFN Repo Guaranty”), by the VFN Guarantor in favor of Buyer;

WHEREAS, as a condition precedent to amending the Series 2017-VF1 Repurchase Agreement and the Pricing Side Letter, Buyers have required the VFN Guarantor to ratify and affirm the VFN Repo Guaranty on the date hereof;

WHEREAS, PMT Issuer Trust – FMSR, as issuer (the “Issuer”), PMT Co-Issuer Trust I – FMSR, as co-issuer (the “Co-Issuer”), Citibank, N.A., as indenture trustee, calculation agent, paying agent and securities intermediary, PMC, as administrator (in such capacity, the “Administrator”) and as servicer (in such capacity, the “Servicer”), PMH, as co-issuer administrator (in such capacity, the “Co-Issuer Administrator”), and the Administrative Agent are parties to that certain Amended and Restated Base Indenture, dated as of October 10, 2023 (as may be further amended, restated, supplemented or otherwise modified from time to time, the “Base Indenture”), the provisions of which are incorporated, as modified by that certain Amended and

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Restated Series 2017-VF1 Indenture Supplement, dated as of October 10, 2023 (as amended by Amendment No. 1, dated as of June 28, 2024, and as may be further amended, restated, supplemented or otherwise modified from time to time, the “Series 2017-VF1 Indenture Supplement,” and together with the Base Indenture, the “Indenture”), among the Issuer, the Co-Issuer, Citibank, N.A., as indenture trustee, calculation agent, paying agent and securities intermediary, the Servicer, the Administrator, the Co-Issuer Administrator and the Administrative Agent;

WHEREAS, pursuant to Section 10.3(e)(iii) of the Base Indenture, so long as any Note is Outstanding and until all obligations have been paid in full, the Sellers shall not consent to any amendment, modification or waiver of any term or condition of any Transaction Document, without the prior written consent of the Administrative Agent; and

WHEREAS, the Series 2017-VF1 Repurchase Agreement and the Pricing Side Letter are Transaction Documents.

NOW THEREFORE, the Administrative Agent, the Buyer, the Sellers and the Guarantor hereby agree, in consideration of the mutual promises and mutual obligations set forth herein, that the Series 2017-VF1 Repurchase Agreement and the Pricing Side Letter are hereby amended as follows:

SECTION 1.

Amendments to the Series 2017-VF1 Repurchase Agreement.

(a)

Section 1.01 of the Series 2017-VF1 Repurchase Agreement is hereby amended by deleting the definition of “Pro Rata Share” in its entirety and replacing it with the following:

“Pro Rata Share” means, (A) with respect to each Buyer, 50%, or (B) with respect to the “Required Buyers” definition, the percentage obtained from the fraction: (i) the numerator of which is the outstanding Purchase Price attributable to such Buyer and (ii) the denominator of which is the aggregate outstanding Purchase Price.

(b)

Section 2.02 of the Series 2017-VF1 Repurchase Agreement is hereby amended by deleting subsection (a) in its entirety and replacing it with the following:

(a) Procedure for Entering into Transactions. (a) Each Seller may enter into Transactions with Buyers under this Agreement on any Purchase Date; provided, that the applicable Seller shall have given Administrative Agent and Buyers irrevocable notice (each, a “Transaction Notice”), which notice (i) shall be substantially in the form of Exhibit A, (ii) shall be signed by a Responsible Officer of the applicable Seller and be received by Administrative Agent and Buyers prior to 1:00 p.m. (New York time) (a) twenty (20) calendar days with respect to any Committed Amount or (b) two (2) Business Days with respect to any amounts other than a Committed Amount, in each case, prior to the related Purchase Date, and (iii) shall specify: (A) the Maximum VFN Principal Balance of the Note; (B) the Initial Note Balance of the Note; (C) the Dollar amount of the requested Purchase Price; (D) the requested Purchase Date; (E) the Repurchase Date; (F) the Pricing Rate or Repurchase Price applicable to the Transaction; and (G) any additional terms or conditions of the Transaction not inconsistent with this Agreement. Each Transaction Notice on any Purchase Date shall be in an amount equal to at least $500,000.

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(c)

Section 2.14 of the Series 2017-VF1 Repurchase Agreement is hereby amended by deleting such section in its entirety and replacing it with the following:

Section 2.14 Commitment Fee and Other Fees. Sellers shall pay the Commitment Fee and any other fees, if any, as specified in any side letter related to this Agreement. Such payment shall be made in Dollars in immediately available funds, without deduction, set off or counterclaim, to Administrative Agent at such account designated in writing by Administrative Agent.

(d)

Section 5.01 of the Series 2017-VF1 Repurchase Agreement is hereby amended by deleting subsection (f) in its entirety and replacing it with the following:

(f) Fees. Administrative Agent and Buyers shall have received payment in full of all fees and Expenses (including the Commitment Fee and any other fees set forth in any side letter related to this Agreement, if any) which are payable hereunder to Administrative Agent and Buyers on or before such date.

(e)

Section 5.02 of the Series 2017-VF1 Repurchase Agreement is hereby amended by deleting subsection (i) in its entirety and replacing it with the following:

(i) Fees. Administrative Agent and Buyers shall have received payment in full of all fees and Expenses (including the Commitment Fee and any other fees set forth in any side letter related to this Agreement, if any) which are payable hereunder to Administrative Agent and Buyers on or before such date.

(f)

Section 6.17 and Section 6.18 of the Series 2017-VF1 Repurchase Agreement are hereby amended by deleting such sections in their entirety and replacing them with “[Reserved].”

(g)

Section 6.24 of the Series 2017-VF1 Repurchase Agreement is hereby amended by adding the following as a new paragraph (8) in subsection (a):

(8) promptly upon the creation, incurrence, assumption or existence of any of the following, notice thereof:

a. any Guarantees, except (x) to the extent reflected in any Seller’s financial statements or notes thereto and (y) to the extent the aggregate Guarantees of such Seller do not exceed $250,000; and

b. additional material Indebtedness other than (w) the Existing Indebtedness specified on Exhibit B hereto; (x) Indebtedness incurred with Buyers or their Affiliates; (y) Indebtedness incurred in connection with new or existing secured lending facilities; and (z) usual and customary accounts payable for a mortgage company.

(h)

Section 7.01 of the Series 2017-VF1 Repurchase Agreement is hereby amended by deleting the references to Section 6.17 and Section 6.18 in subsection (f) in their entirety.

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(i)

Section 7.01 of the Series 2017-VF1 Repurchase Agreement is hereby amended by deleting subsection (j) in its entirety and replacing it with the following:

(j) Judgment. A final judgment or judgments for the payment of money in excess of 5% of either Seller’s Adjusted Tangible Net Worth shall be rendered against either Seller or any of their Affiliates by one or more courts, administrative tribunals or other bodies having jurisdiction and the same shall not be satisfied, discharged (or provision shall not be made for such discharge) or bonded, or a stay of execution thereof shall not be procured, within thirty (30) days from the date of entry thereof.

(j)

Section 11.11 of the Series 2017-VF1 Repurchase Agreement is hereby amended by deleting such section in its entirety and replacing it with the following:

Section 11.11 Non-Confidentiality of Tax Treatment. (a) This Agreement and its terms, provisions, supplements and amendments, and notices hereunder, are proprietary to Buyers or Sellers, as applicable and shall be held by each party hereto, as applicable in strict confidence and shall not be disclosed to any third party without the written consent of the Required Buyers or Sellers, except for (i) disclosure to Buyers’ or Sellers’ direct and indirect Affiliates and Subsidiaries, attorneys or accountants, but only to the extent such disclosure is necessary and such parties agree to hold all information in strict confidence, or (ii) disclosure required by law, rule, regulation or order of a court or other regulatory body. Notwithstanding the foregoing or anything to the contrary contained herein or in any other Program Agreements, the parties hereto may disclose to any and all Persons, without limitation of any kind, the federal, state and local tax treatment of the Transactions, any fact relevant to understanding the federal, state and local tax treatment of the Transactions, and all materials of any kind (including opinions or other tax analyses) relating to such federal, state and local tax treatment and that may be relevant to understanding such tax treatment; provided that Sellers may not disclose the name of or identifying information with respect to Buyers or any pricing terms (including the Pricing Rate, Purchase Price Percentage, Purchase Price and Commitment Fee and any other fees set forth in any side letter related to this Agreement (if any)) or other nonpublic business or financial information (including any sublimits) that is unrelated to the federal, state and local tax treatment of the Transactions and is not relevant to understanding the federal, state and local tax treatment of the Transactions, without the prior written consent of Administrative Agent and Buyers.

(k)

The Series 2017-VF1 Repurchase Agreement is hereby amended by deleting all references to Richard Hetzel, (818) 746-2877, and richard.hetzel@pnmac.com and replacing them in their entirety with Josh Smith, (818) 224-7078, and josh.smith@pennymac.com, respectively.

SECTION 2.

Amendments to the Pricing Side Letter.

(a)

Section 1 of the Pricing Side Letter is hereby amended by deleting the definitions of “Benchmark,” “Committed Amount,” “Side Letter Agreement” and “Termination Date” in their entirety and replacing them with the following:

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“Benchmark” means, with respect to any date of determination, the Daily Simple SOFR or, if applicable, a Benchmark Replacement Rate. It is understood that the Benchmark shall be adjusted on a daily basis; provided, that, Benchmark for the three (3) Business Days prior to the related Price Differential Payment Date shall be fixed at Benchmark for the third (3rd) Business Day prior to the related Price Differential Payment Date.

“Committed Amount” means, with respect to each Buyer, the lesser of (a) Nexera’s “Committed Amount,” (b) Citibank’s “Citi Committed Amount,” or (c) such other Buyer’s “Committed Amount” (as such term is defined in the related Side Letter Agreement), in each case, as may be modified from time to time in accordance with the terms set forth in the applicable Side Letter Agreement. If a Buyer’s Committed Amount is modified (a “Commitment Modification”), each other Buyer’s Committed Amount shall be adjusted by a corresponding amount to maintain equal Pro Rata Shares between the Buyers at all times, and each Buyer’s Committed Amount shall subsequently adjust in equal Pro Rata Shares to the extent permitted under the terms of the applicable Side Letter Agreement; provided, however, that the aggregate Committed Amount for all Buyers shall not exceed $400,000,000 nor shall the individual Committed Amount for any Buyer exceed its Pro Rata Share of such amount at any time. For the avoidance of doubt, the provisions of Section 2.02(b) shall govern in the event that there is a Defaulting Buyer, subject to the terms provided under the Non-Defaulting Buyer’s Side Letter Agreement.

“Side Letter Agreement” means, (i) with respect to Nexera, the Amended and Restated Side Letter Agreement, dated as of October 10, 2023, among Sellers, Nexera, the Administrative Agent and the VFN Guarantor, (ii) with respect to Citibank, the Amended and Restated Side Letter Agreement, dated as of October 10, 2023 between Sellers, Citibank and the VFN Guarantor, and (iii) with respect to any other Buyer who becomes a party to the Repurchase Agreement and this Pricing Side Letter after the date hereof, the Side Letter Agreement between Sellers and such Buyer, in each case, as may be amended, restated, supplemented or otherwise modified from time to time.

“Termination Date” means the earliest of (a) June 26, 2026; (b) the Obligations having become immediately due and payable pursuant to Section 7.03 of the Repurchase Agreement; (c) upon termination of the Indenture; and (d) at each Buyer’s or each Seller’s option pursuant to Section 2.15 of the Repurchase Agreement. The parties hereto will use their best efforts to agree to renewal terms to the Agreement and extend clause (a) of this definition no later than March 2025.

(b)

Section 1 of the Pricing Side Letter is hereby amended by deleting the definitions of “Adjusted Daily Simple SOFR” and “Benchmark Adjustment” in their entirety.

SECTION 3.

Reaffirmation of VFN Repo Guaranty. The VFN Guarantor hereby (i) ratifies and affirms all of the terms, covenants, conditions and obligations of the VFN Repo Guaranty and (ii) acknowledges and agrees that such VFN Repo Guaranty is and shall continue to be in full force and effect.

SECTION 4.

Conditions Precedent. This Amendment shall become effective as of the date hereof upon receipt of this Amendment by the Administrative Agent on behalf of the

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Buyers, executed and delivered by the duly authorized officers of the Administrative Agent, the Buyers, the Sellers and the VFN Guarantor.

SECTION 5.

Representations and Warranties. Each Seller hereby represents and warrants to the Administrative Agent and the Buyers that it is in compliance with all the terms and provisions set forth in the Series 2017-VF1 Repurchase Agreement and the Pricing Side Letter on its part to be observed or performed, and that no Event of Default has occurred or is continuing, and hereby confirms and reaffirms the representations and warranties contained in Article III of the Series 2017-VF1 Repurchase Agreement.

SECTION 6.

Limited Effect. Except as expressly amended and modified by this Amendment, the Series 2017-VF1 Repurchase Agreement and the Pricing Side Letter shall continue to be, and shall remain, in full force and effect in accordance with its terms.

SECTION 7.

Counterparts. This Amendment may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. The parties agree that this Amendment may be accepted, executed or agreed to through the use of an electronic signature in accordance with the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. § 7001 et seq, Official Text of the Uniform Electronic Transactions Act as approved by the National Conference of Commissioners on Uniform State Laws at its Annual Conference on July 29, 1999 and any applicable state law. Any document accepted, executed or agreed to in conformity with such laws will be binding on all parties hereto to the same extent as if it were physically executed and each party hereby consents to the use of any secure third party electronic signature capture service with appropriate document access tracking, electronic signature tracking and document retention.

SECTION 8.

Severability. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement.

SECTION 9.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK. SIGNATURES FOLLOW.]

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IN WITNESS WHEREOF, the undersigned have caused this Amendment to be duly executed as of the date first above written.

ATLAS SECURITIZED PRODUCTS, L.P., as Administrative Agent

By: Atlas Securitized Products GP, LLC, its general partner

By: /s/ Dominic Obaditch
Name: Dominic Obaditch
Title: Authorized Signatory

NEXERA HOLDING LLC, as a Buyer

By: /s/ Steven M. Abreu
Name: Steve Abreu
Title: CEO

CITIBANK, N.A., as a Buyer

By: /s/ James Kessler
Name: James Kessler
Title: Attorney in Fact

PENNYMAC CORP., as a Seller

By: /s/ Pamela Marsh
Name: Pamela Marsh
Title: Senior Managing Director and Treasurer

PENNYMAC HOLDINGS, LLC., as a Seller

By: /s/ Pamela Marsh
Name: Pamela Marsh
Title: Senior Managing Director and Treasurer

PENNYMAC MORTGAGE INVESTMENT TRUST, as VFN Guarantor

By: /s/ Pamela Marsh
Name: Pamela Marsh
Title: Senior Managing Director and Treasurer

EX-10.5

EXHIBIT 10.5

[Information indicated with brackets has been excluded from this exhibit because it is

not material and would be competitively harmful if publicly disclosed]

JOINT ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 3 TO THE SERIES 2017-VF1 REPURCHASE AGREEMENT, AMENDMENT NO. 2 TO THE SERIES 2017-VF1 PRICING SIDE LETTER, AMENDMENT NO. 2 TO THE SERIES 2017-VF1 SIDE LETTER AGREEMENT AND AMENDMENT NO. 1 TO THE VFN REPO GUARANTY

This JOINT ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 3 TO THE SERIES 2017-VF1 REPURCHASE AGREEMENT, AMENDMENT NO. 2 TO THE SERIES 2017-VF1 PRICING SIDE LETTER, AMENDMENT NO. 2 TO THE SERIES 2017-VF1 SIDE LETTER AGREEMENT AND AMENDMENT NO. 1 TO THE VFN REPO GUARANTY (each as defined below) is entered into and effective as of June 28, 2024 (the “Effective Date”) (this “Amendment”), among ATLAS SECURITIZED PRODUCTS, L.P. (“ASP”), as administrative agent (the “Administrative Agent”), NEXERA HOLDING LLC, as assigning buyer (the “Assigning Buyer”), CITIBANK, N.A. (“Citibank”), as a buyer (“Citi Buyer”), PENNYMAC CORP. (“PMC”), as a seller, PENNYMAC HOLDINGS, LLC (“PMH”), as a seller (a “Seller” and together with PMC, the “Sellers”), and ATLAS SECURITIZED PRODUCTS FUNDING 2, L.P., as assignee buyer (the “Assignee Buyer”), and acknowledged by PENNYMAC MORTGAGE INVESTMENT TRUST, as guarantor (the “Guarantor”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Series 2017-VF1 Repurchase Agreement (as defined below).

W I T N E S S E T H:

WHEREAS, the Administrative Agent, the Assigning Buyer, Citi Buyer (solely with respect to the Series 2017-VF1 Repurchase Agreement and the Series 2017-VF1 Pricing Side Letter) and the Sellers are parties to (i) that certain Second Amended and Restated Series 2017-VF1 Master Repurchase Agreement, dated as of October 10, 2023 (as amended by Amendment No. 1, dated as of March 15, 2024, and Amendment No. 2, dated as of June 28, 2024, and as may be further amended, restated, supplemented or otherwise modified from time to time, the “Series 2017-VF1 Repurchase Agreement”), (ii) the related Fifth Amended and Restated Series 2017-VF1 Pricing Side Letter, dated as of October 10, 2023 (as amended by Amendment No. 1, dated as of June 28, 2024, and as may be further amended, restated, supplemented or otherwise modified from time to time, the “Series 2017-VF1 Pricing Side Letter”), and (iii) the related Amended and Restated Series 2017-VF1 Side Letter Agreement, dated as of October 10, 2023 (as amended by Amendment No. 1, dated as of June 28, 2024, and as may be further amended, restated, supplemented or otherwise modified from time to time, the “Series 2017-VF1 Side Letter Agreement”);

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WHEREAS, the Guarantor is party to that certain Second Amended and Restated Guaranty, dated as of October 10, 2023 (as may be further amended, restated, supplemented or otherwise modified from time to time, the “VFN Repo Guaranty” and together with the Series 2017-VF1 Repurchase Agreement, the Series 2017-VF1 Pricing Side Letter and the Series 2017-VF1 Side Letter Agreement, the “Series 2017-VF1 Repurchase Documents”), by the Guarantor in favor of Buyers (as defined in the Series 2017-VF1 Repurchase Agreement);

WHEREAS, as a condition precedent to amending the Series 2017-VF1 Repurchase Documents, the Assigning Buyer and Citi Buyer have required the Guarantor to ratify and affirm the VFN Repo Guaranty on the date hereof;

WHEREAS, PMT Issuer Trust – FMSR, as issuer (the “Issuer”), PMT Co-Issuer Trust I – FMSR, as co-issuer (the “Co-Issuer”), Citibank, as indenture trustee, calculation agent, paying agent and securities intermediary, PMC, as administrator (in such capacity, the “Administrator”) and as servicer (in such capacity, the “Servicer”), PMH, as co-issuer administrator, and the Administrative Agent are parties to that certain Amended and Restated Base Indenture, dated as of October 10, 2023 (as may be further amended, restated, supplemented or otherwise modified from time to time, the “Base Indenture”), the provisions of which are incorporated, as modified by that certain Amended and Restated Series 2017-VF1 Indenture Supplement, dated as of October 10, 2023 (as amended by Amendment No. 1, dated as of June 28, 2024, and as may be further amended, restated, supplemented or otherwise modified from time to time, the “Series 2017-VF1 Indenture Supplement”), among the Issuer, the Co-Issuer, Citibank, the Servicer, the Administrator, the Co-Issuer Administrator and the Administrative Agent;

WHEREAS, upon the Effective Date the Assigning Buyer has agreed to assign, and the Assignee Buyer has agreed to acquire, all of the right, title and interest of the Assigning Buyer in and to the Series 2017-VF1 Repurchase Documents and the other Program Agreements, and the Assignee Buyer has agreed to assume and undertake all obligations of the Assigning Buyer under the Series 2017-VF1 Repurchase Documents and the other Program Agreements;

WHEREAS, pursuant to Section 10.3(e)(iii) of the Base Indenture, so long as any Note is Outstanding and until all obligations have been paid in full, PMC shall not consent to any amendment, modification or waiver of any term or condition of any Transaction Document, without the prior written consent of the Assigning Administrative Agent; and

WHEREAS, the Series 2017-VF1 Repurchase Documents are Transaction Documents.

NOW THEREFORE, the Administrative Agent, the Assigning Buyer, the Sellers, the Guarantor, Citi Buyer and the Assignee Buyer hereby agree, in consideration of the mutual promises and mutual obligations set forth herein, as follows:

SECTION 1. Assignment and Assumption of Series 2017-VF1 Repurchase Documents and other Program Agreements.

(a) The Assigning Buyer hereby irrevocably sells, assigns, grants, conveys and transfers to the Assignee Buyer all of Assigning Buyer’s right, title and interest in and to the Series 2017-VF1 Repurchase Documents and each other Program Agreement (including all Obligations

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held by the Assigning Buyer). As of the Effective Date, the Assignee Buyer unconditionally accepts such assignment and assumes all of the Assigning Buyer’s duties, liabilities, indemnities and obligations under the Series 2017-VF1 Repurchase Documents and the other Program Agreements arising on or after the Effective Date, and agrees to pay, perform and discharge, as and when due, all of the duties, liabilities, indemnities and obligations of the Assigning Buyer under the Series 2017-VF1 Repurchase Documents and the other Program Agreements arising on or after the Effective Date.

(b) As of the Effective Date, the Assignee Buyer shall be substituted for the Assigning Buyer in the Series 2017-VF1 Repurchase Documents and the other Program Agreements (subject to any consent of any Persons who are not parties hereto) and shall acquire all the rights and become obligated to perform all the duties, liabilities, indemnities and obligations of the Assigning Buyer that are hereby fully assigned to the Assignee Buyer.

(c) For the avoidance of doubt, the existing Transactions shall be continuing Transactions and shall not be considered terminated in any respect. The Sellers hereby consent that as of the Effective Date, the Assignee Buyer shall be a Buyer under the Series 2017-VF1 Repurchase Documents and the other Program Agreements and shall have the rights and obligations as a Buyer thereunder and shall be bound by the provisions thereof. The Sellers reaffirm any transfers, or grants of security interests in, any Repurchase Assets and/or any other collateral security pursuant to the Series 2017-VF1 Repurchase Documents and other Program Agreements.

(d) Certain third parties (for example, trustees and servicers) are parties to certain of the Program Agreements that are not Series 2017-VF1 Repurchase Documents (such Program Agreements, “Third Party Program Agreements”). If the requisite parties have not entered into documentation necessary for the Assignee Buyer to acquire and assume the Assigning Buyer’s rights and obligations under any such Third Party Program Agreement on or before the Effective Date, the Assigning Buyer has agreed to assist the Assignee Buyer in order for the Assignee Buyer to indirectly obtain the rights and benefits of such Third Party Program Agreement until such documentation is entered into.

SECTION 2. Release of Assigning Buyer. As of the Effective Date, the Assigning Buyer shall be relieved of all obligations to perform under the Series 2017-VF1 Repurchase Documents and shall be fully relieved of liability to any other party to this Amendment for which the facts and/or circumstances that led to or resulted in such obligation or liability arose on or after the Effective Date, in connection with the Series 2017-VF1 Repurchase Documents. Notwithstanding the foregoing, all indemnities and other protections in favor of the Assigning Buyer as set forth in the Series 2017-VF1 Repurchase Documents shall survive as set forth therein. After the Effective Date, the Sellers release and forever discharge the Assigning Buyer, as well as its shareholders, directors, officers, employees, agents and representatives, from all further obligations, for which the facts and/or circumstances that led to or resulted in such obligations arose on or after the Effective Date, in connection with the Series 2017-VF1 Repurchase Documents and the other Program Agreements, and from all manner of actions, causes of action, suits, debts, damages, expenses, claims and demands whatsoever that such party has or may have against any of the foregoing persons, for which the facts and/or circumstances that led to or resulted in such actions, causes of action, suits, debts, damages, expenses, claims and demands arose on or

‑3‑

after the Amendment Effective Date, in connection with the performance under the Series 2017-VF1 Repurchase Documents or any other Program Agreement.

SECTION 3. Amendments to the Series 2017-VF1 Repurchase Documents. As of the Effective Date, the Series 2017-VF1 Repurchase Agreement, the Series 2017-VF1 Pricing Side Letter, the Series 2017-VF1 Side Letter Agreement and the VFN Repo Guaranty are hereby amended in their entirety to read as set forth on Exhibit A, Exhibit B, Exhibit C and Exhibit D respectively, which are incorporated herein. By way of example, the deleted text will be reflected in the following matter: stricken text; and the added text will be reflected in the following manner: double-underlined text.

SECTION 4. Affirmation of VFN Repo Guaranty. The Guarantor hereby ratifies and affirms all of the terms, covenants, conditions and obligations of the VFN Repo Guaranty and acknowledges and agrees that such VFN Repo Guaranty is and shall continue to be in full force and effect.

SECTION 5. Conditions Precedent. This Amendment shall become effective as of the Effective Date upon execution and delivery of this Amendment by the duly authorized officers of the parties hereto, subject to the satisfaction of the following conditions precedent (or waiver of any of the following conditions precedent by the Administrative Agent in its sole discretion), all of which shall be in form and substance acceptable to the Assigning Buyer and Assignee Buyer:

(a) Delivered Documents. Assigning Parties and Assignee Parties shall have received:

(i) this Amendment, duly executed by authorized signatories of the parties hereto; and

(ii) such other documents as the Administrative Agent or counsel thereto may reasonably request.

SECTION 6. Representations and Warranties.

(a) Each of the Sellers and the Guarantor hereby represents and warrants to the Administrative Agent, the Assignee Buyer and Citi Buyer that it is in compliance with all the terms and provisions set forth in the Series 2017-VF1 Repurchase Agreement, the Series 2017-VF1 Pricing Side Letter, the Series 2017-VF1 Side Letter Agreement and the other Program Agreements on its part to be observed or performed, and that no Event of Default has occurred or is continuing, and hereby confirms and affirms the representations and warranties contained in Article III of the Series 2017-VF1 Repurchase Agreement.

(b) The Assigning Buyer hereby represents and warrants to the Sellers and the Guarantor that:

(i) it has obtained all requisite authorizations, approvals or waivers and fulfilled any conditions precedent, including from Fannie Mae under the Acknowledgment

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Agreement if applicable, in order to execute the assignment contemplated under Section 1 of this Amendment; and

(ii) it has performed all of its duties and obligations as Buyer under each Repurchase Document prior to the Effective Date.

SECTION 7. Further Assurances.

(a) The parties hereto agree, from time to time, to enter into such further agreements and to execute all such further instruments as may be reasonably necessary or desirable to give full effect to the terms of this Amendment and the assignment and assumption contemplated hereby.

SECTION 8. Waiver of Requirements under Series 2017-VF1 Repurchase Documents and other Program Agreements. To the extent any of the Series 2017-VF1 Repurchase Documents or any of the other Program Agreements includes any notice or satisfaction of any condition to any of the transactions contemplated hereby, the requirement for such notice or satisfaction of any condition is hereby waived. By its execution hereof, the Sellers hereby consent to the assignment set forth herein as required pursuant to Section 9.02(b) of the Series 2017-VF1 Repurchase Agreement.

SECTION 9. Limited Effect. Except as expressly amended and modified by this Amendment, the Series 2017-VF1 Repurchase Agreement, the Series 2017-VF1 Pricing Side Letter, the Series 2017-VF1 Side Letter Agreement and the other Program Agreements shall continue to be, and shall remain, in full force and effect in accordance with its terms.

SECTION 10. Counterparts. This Amendment may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. The parties agree that this Amendment may be accepted, executed or agreed to through the use of an electronic signature in accordance with the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. § 7001 et seq, Official Text of the Uniform Electronic Transactions Act as approved by the National Conference of Commissioners on Uniform State Laws at its Annual Conference on July 29, 1999 and any applicable state law. Any document accepted, executed or agreed to in conformity with such laws will be binding on all parties hereto to the same extent as if it were physically executed and each party hereby consents to the use of any secure third party electronic signature capture service with appropriate document access tracking, electronic signature tracking and document retention.

SECTION 11. Severability. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement.

SECTION 12. GOVERNING LAW. THIS AMENDMENT AND ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT, TORT OR OTHERWISE) BASED UPON, ARISING UNDER OR RELATED TO OR IN CONNECTION WITH THIS AMENDMENT, THE TRANSACTIONS CONTEMPLATED BY THIS AMENDMENT, THE RELATIONSHIP

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OF THE PARTIES HERETO, AND/OR THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES HERETO WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, INCLUDING THE STATUTES OF LIMITATIONS AND OTHER PROCEDURAL LAWS THEREOF (WITHOUT REFERENCE TO THE CONFLICT OF LAW PRINCIPLES THEREOF OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, WHICH SHALL APPLY) AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

SECTION 13. Program Agreement. This Amendment is a Program Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK. SIGNATURES FOLLOW.]

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IN WITNESS WHEREOF, the undersigned have caused this Amendment to be duly executed as of the date first above written.

NEXERA HOLDING LLC, as Assigning Buyer

By: /s/ Steven M. Abreu
Name: Steve Abreu
Title: CEO

CITIBANK, N.A., as a Buyer

By: /s/ James Kessler
Name: James Kessler
Title: Attorney in Fact

PENNYMAC CORP., as a Seller

By: /s/ Pamela Marsh
Name: Pamela Marsh
Title: Senior Managing Director and Treasurer

PENNYMAC HOLDINGS, LLC, as a Seller

By: /s/ Pamela Marsh
Name: Pamela Marsh
Title: Senior Managing Director and Treasurer

PENNYMAC MORTGAGE INVESTMENT TRUST, as Guarantor

By: /s/ Pamela Marsh
Name: Pamela Marsh
Title: Senior Managing Director and Treasurer

ATLAS SECURITIZED PRODUCTS, L.P., as Administrative Agent

By: Atlas Securitized Products GP, LLC, its general partner

By: _/s/ Dominic Obaditch_________________

Name: Dominic Obaditch
Title: Managing Director

ATLAS SECURITIZED PRODUCTS FUNDING 2, L.P., as Assignee Buyer

By: Atlas Securitized BKR 2, L.P., its general partner

By: Atlas Securitized FundingCo GP LLC, its general partner

By: /s/ Dominic Obaditch______________
Name: Dominic Obaditch
Title: Managing Director

EXHIBIT A

SERIES 2017-VF1 REPURCHASE AGREEMENT

SECOND AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT

among

ATLAS SECURITIZED PRODUCTS, L.P.,
as Administrative Agent

and

THE BUYERS FROM TIME TO TIME PARTY HERETO,
as Buyers

and

PENNYMAC CORP.,
as a Seller

and

PENNYMAC HOLDINGS, LLC.,
as a Seller

PMT ISSUER TRUST – FMSR AND PMT CO-ISSUER TRUST I – FMSR

MSR COLLATERALIZED NOTES, SERIES 2017‑VF1

Dated as of October 10, 2023

TABLE OF CONTENTS

Page


ARTICLE I DEFINITIONS
Section 1.01	Certain Defined Terms	2
Section 1.02	Other Defined Terms	10
ARTICLE II GENERAL TERMS
Section 2.01	Transactions	10
Section 2.02	Procedure for Entering into Transactions	11
Section 2.03	Repurchase; Payment of Repurchase Price	12
Section 2.04	Price Differential	12
Section 2.05	Margin Maintenance	12
Section 2.06	Payment Procedure	13
Section 2.07	Application of Payments	13
Section 2.08	Use of Purchase Price and Transaction Requests	14
Section 2.09	Recourse	14
Section 2.10	Requirements of Law	14
Section 2.11	Taxes	15
Section 2.12	Indemnity	17
Section 2.13	Additional Balance and Additional Funding	17
Section 2.14	Commitment Fee and Other Fees	17
Section 2.15	Termination	17
ARTICLE III REPRESENTATIONS AND WARRANTIES
Section 3.01	Sellers’ Existence	18
Section 3.02	Licenses	18
Section 3.03	Power	18
Section 3.04	Due Authorization	18
Section 3.05	Financial Statements	18
Section 3.06	No Event of Default	19
Section 3.07	Solvency	20
Section 3.08	No Conflicts	20
Section 3.09	True and Complete Disclosure	20
Section 3.10	Approvals	20
Section 3.11	Litigation	20

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Section 3.12	Material Adverse Change	20
Section 3.13	Ownership	21
Section 3.14	The Note	21
Section 3.15	Taxes	21
Section 3.16	Investment Company	22
Section 3.17	Chief Executive Office; Jurisdiction of Organization	22
Section 3.18	Location of Books and Records	22
Section 3.19	ERISA	22
Section 3.20	Financing of Note and Additional Balances	22
Section 3.21	Agreements	22
Section 3.22	Other Indebtedness	22
Section 3.23	No Reliance	22
Section 3.24	Plan Assets	23
Section 3.25	No Prohibited Persons	23
Section 3.26	Compliance with 1933 Act	23
Section 3.27	Anti-Money Laundering Laws	23
ARTICLE IV CONVEYANCE; REPURCHASE ASSETS; SECURITY INTEREST
Section 4.01	Ownership	24
Section 4.02	Security Interest	24
Section 4.03	Further Documentation	25
Section 4.04	Changes in Locations, Name, etc	25
Section 4.05	Performance by Buyer of Sellers’ Obligations	25
Section 4.06	Proceeds	25
Section 4.07	Remedies	26
Section 4.08	Limitation on Duties Regarding Preservation of Repurchase Assets	27
Section 4.09	Powers Coupled with an Interest	27
Section 4.10	Release of Security Interest	27
Section 4.11	Reinstatement	27
Section 4.12	Subordination	27
ARTICLE V CONDITIONS PRECEDENT
Section 5.01	Initial Transaction	28
Section 5.02	All Transactions	29
Section 5.03	Closing Subject to Conditions Precedent	30

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ARTICLE VI COVENANTS
Section 6.01	Litigation	33
Section 6.02	Prohibition of Fundamental Changes	33
Section 6.03	Monthly Reporting	33
Section 6.04	No Adverse Claims	33
Section 6.05	Assignment	34
Section 6.06	Security Interest	34
Section 6.07	Records	34
Section 6.08	Books	34
Section 6.09	Approvals	34
Section 6.10	Material Change in Business	35
Section 6.11	Distributions	35
Section 6.12	Applicable Law	35
Section 6.13	Existence	35
Section 6.14	Chief Executive Office; Jurisdiction of Organization	35
Section 6.15	Taxes	35
Section 6.16	Transactions with Affiliates	35
Section 6.17	[Reserved]	35
Section 6.18	[Reserved]	35
Section 6.19	True and Correct Information	35
Section 6.20	No Pledge	36
Section 6.21	Plan Assets	36
Section 6.22	Sharing of Information	36
Section 6.23	Modification of the Base Indenture and Series 2017‑VF1 Indenture Supplement	36
Section 6.24	Reporting Requirements	36
Section 6.25	Liens on Substantially All Assets	38
Section 6.26	Litigation Summary	38
Section 6.27	Hedging	39
Section 6.28	MSR Valuation	39
Section 6.29	Most Favored Status	39
Section 6.30	Servicer Administration	39
Section 6.31	Threshold Events and Commitment Modifications	40
ARTICLE VII DEFAULTS/RIGHTS AND REMEDIES OF BUYER UPON DEFAULT
Section 7.01	Events of Default	40
Section 7.02	No Waiver	42
Section 7.03	Due and Payable	42
Section 7.04	Fees	43

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Section 7.05	Default Rate	43
ARTICLE VIII ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS; SEPARATE ACTIONS BY BUYER
Section 8.01	Entire Agreement; Amendments	44
Section 8.02	Waivers, Separate Actions by Buyers	44
ARTICLE IX SUCCESSORS AND ASSIGNS
Section 9.01	Successors and Assigns	44
Section 9.02	Participations and Transfers	44
Section 9.03	Buyer and Participant Register	45
ARTICLE X AGENT PROVISIONS
Section 10.01	Appointment of Administrative Agent	46
Section 10.02	Powers and Duties	46
Section 10.03	General Immunity	47
Section 10.04	Administrative Agent to Act as Buyer	48
Section 10.05	Buyers’ Representations, Warranties and Acknowledgment	48
Section 10.06	Right to Indemnity	48
Section 10.07	Successor Administrative Agent	49
Section 10.08	Delegation of Duties	50
Section 10.09	Right to Realize on Collateral	50
ARTICLE XI MISCELLANEOUS
Section 11.01	Survival	51
Section 11.02	Indemnification	51
Section 11.03	Nonliability of Buyer	51
Section 11.04	Governing Law; Submission to Jurisdiction; Waivers	52
Section 11.05	Notices	53
Section 11.06	Severability	55
Section 11.07	Section Headings	55
Section 11.08	Counterparts	55
Section 11.09	Periodic Due Diligence Review	56
Section 11.10	Hypothecation or Pledge of Repurchase Assets	56

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Section 11.11	Non-Confidentiality of Tax Treatment	56
Section 11.12	Intent	58
Section 11.13	Amendment and Restatement	58
Section 11.14	Reaffirmation of VFN Repo Guaranty	59

Schedule 1 – Responsible Officers of Sellers

Schedule 2 – Asset Schedule

Schedule 3 – Administrative Agent Account

Exhibit A – Form of Transaction Notice

Exhibit B – Existing Indebtedness

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SECOND AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT

This Second Amended and Restated Master Repurchase Agreement (this “Agreement”) is made as of October 10, 2023, among ATLAS SECURITIZED PRODUCTS, L.P., as administrative agent (the “Administrative Agent”), the Buyers (as defined herein) from time to time party hereto, PENNYMAC CORP., as a seller (“PMC Seller” or “PMC”) and PENNYMAC HOLDINGS, LLC, as a seller (“PMH Seller” or “PMH”, and together with PMC Seller, the “Sellers”). Capitalized terms have the meanings specified in Sections 1.01 and 1.02.

W I T N E S S E T H:

WHEREAS, pursuant to the Base Indenture and the Series 2017‑VF1 Indenture Supplement, PMT ISSUER TRUST - FMSR (“Issuer”) and PMT CO-ISSUER TRUST I - FMSR (“Co-Issuer”) have duly authorized the issuance of a Series of Notes, as a single Class of Variable Funding Note, known as the “PMT ISSUER TRUST - FMSR and PMT CO-ISSUER TRUST I - FMSR MSR Collateralized Notes, SERIES 2017‑VF1” (the “Note”);

WHEREAS, from time to time the parties hereto may enter into Transactions;

WHEREAS, the Sellers are the owner of the Note;

WHEREAS, the Sellers wish to sell their interests in the Note to Buyers pursuant to the terms of this Agreement;

WHEREAS, the Administrative Agent, Atlas Securitized Products Funding 2, L.P. (“Funding 2”), as a buyer, Citibank, N.A. (“Citibank”), as a buyer, and PMC, as a seller, previously entered into an amended and restated master repurchase agreement, dated as of June 29, 2018 (such agreement, the “Original Agreement”); and

WHEREAS, the Administrative Agent, Funding 2, Citibank and PMC desire to amend and restate the Original Agreement in its entirety, on the terms and subject to the conditions as set forth herein;

NOW, THEREFORE, in consideration of the mutual agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Administrative Agent, Buyers and the Sellers hereby agree as follows.

SECTION 14.

DEFINITIONS

14.1 Certain Defined Terms. Capitalized terms used herein shall have the indicated meanings:

“Additional Balance” has the meaning set forth in Section 2.13.

“Additional Funding” has the meaning set forth in Section 2.13.

“Additional Repurchase Assets” has the meaning set forth in Section 4.02(c).

“Adjusted Tangible Net Worth” has the meaning set forth in the Pricing Side Letter.

“Administrative Agent” has the meaning given to such term in the preamble to this Agreement.

“Administrative Agent Account” means the account identified on Schedule 3 hereto.

“Advance Verification Agent Report” has the meaning assigned to such term in the Base Indenture.

“Aggregate Committed Amount” means the sum of all Committed Amounts.

“Agreement” has the meaning given to such term in the preamble to this Agreement.

“Amortization Date” has the meaning assigned to the term in the Pricing Side Letter.

“Amortization Payment Amount” has the meaning assigned to the term in the Pricing Side Letter.

“Anti-Money Laundering Laws” shall have the meaning set forth in Section 3.27.

“Applicable Lending Office” means the “lending office” of a Buyer (or of an Affiliate of such Buyer) designated on the signature page hereof or such other office of a Buyer (or of an Affiliate of such Buyer) as such Buyer may from time to time specify to Sellers in writing as the office by which the Transactions are to be made and/or maintained.

“Asset Schedule” means Schedule 2 attached hereto, which lists the Note and the terms thereof, as such schedule shall be updated from time to time in accordance with Section 2.02 hereof, including in connection with Administrative Agent’s approval of any Additional Balances pursuant to Section 2.13.

“Asset Value” has the meaning assigned to such term in the Pricing Side Letter.

“Base Indenture” means the Amended and Restated Base Indenture, dated as of October 10, 2023, among the Issuer, Co-Issuer, Citibank, N.A., as indenture trustee, as calculation agent, as paying agent and as securities intermediary, PMC, as administrator and as servicer, PMH, as co-issuer administrator, and Administrative Agent, as administrative agent, as amended, restated, supplemented or otherwise modified from time to time.

“Base Rate” has the meaning assigned to such term in the Pricing Side Letter.

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“Buyer” means each Person listed on the signature pages to this Agreement as Buyer, together with their successors, and any assignee of and Participant or Transferee of such Person in the Transaction, other than any such Person that ceases to be a Buyer pursuant to this Agreement.

“Capital Event” shall occur if Citi Buyer shall have determined that the adoption of or any change in Citi Buyer’s internal policies regarding capital adequacy, or in the interpretation or application thereof, or compliance by Citi Buyer with any internal directive regarding capital adequacy made subsequent to June 27, 2023, shall have the effect of reducing the rate of return on Citi Buyer’s capital as a consequence of its obligations hereunder to a level below that which Citi Buyer could have achieved but for such adoption, change or compliance in Citi Buyer’s capital adequacy policies by an amount deemed by Citi Buyer to be material.

“Capital Event Amortization Period” means, the three hundred sixty-five (365) day period that commences on and follows a Capital Event Notice Date.

“Capital Event Notice Date” means the date on which Citi Buyer provides written notice to Sellers and Administrative Agent of the occurrence of a Capital Event.

“Citi Amortization Period” shall mean a Rating Trigger Event Amortization Period or a Capital Event Amortization Period, individually or collectively as the context may require.

“Citi Buyer” means Citibank, N.A., as a buyer under this Agreement.

“Closing Date” has the meaning assigned to the term in the Pricing Side Letter.

“Co-Issuer” has the meaning given to such term in the recitals to this Agreement.

“Commitment Fee” has the meaning assigned to the term in the Pricing Side Letter.

“Commitment Modification” shall have the meaning set forth in the definition of Committed Amount.

“Committed Amount” has the meaning assigned to the term in the Pricing Side Letter.

“Confidential Information” has the meaning set forth in Section 11.11(b).

“Defaulting Buyer” has the meaning set forth in Section 2.02.

“Effective Date” has the meaning assigned to the term in the Pricing Side Letter.

“ERISA Event of Termination” means with respect to any Seller or the VFN Guarantor (i) with respect to any Plan, a reportable event, as defined in Section 4043 of ERISA, as to which the PBGC has not by regulation waived the requirement of Section 4043(a) of ERISA that it be notified with thirty (30) days of the occurrence of such event, or (ii) the withdrawal of any Seller, the VFN Guarantor or any ERISA Affiliate thereof from a Plan during a plan year in which it is a substantial employer, as defined in Section 4001(a)(2) of ERISA, or (iii) the failure

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by any Seller, the VFN Guarantor or any ERISA Affiliate thereof to meet the minimum funding standard of Section 412 of the Code or Section 302 of ERISA with respect to any Plan, including the failure to make on or before its due date a required installment under Section 412(m) of the Code (or Section 430(j) of the Code as amended by the Pension Protection Act) or Section 302(e) of ERISA (or Section 303(j) of ERISA, as amended by the Pension Protection Act), or (iv) the distribution under Section 4041 of ERISA of a notice of intent to terminate any Plan or any action taken by any Seller, the VFN Guarantor or any ERISA Affiliate thereof to terminate any plan, or (v) the failure to meet requirements of Section 436 of the Code resulting in the loss of qualified status under Section 401(a)(29) of the Code, or (vi) the institution by the PBGC of proceedings under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or (vii) the receipt by any Seller, the VFN Guarantor or any ERISA Affiliate thereof of a notice from a Multiemployer Plan that action of the type described in the previous clause (vi) has been taken by the PBGC with respect to such Multiemployer Plan, or (viii) any event or circumstance exists which may reasonably be expected to constitute grounds for any Seller, the VFN Guarantor or any ERISA Affiliate thereof to incur liability under Title IV of ERISA or under Sections 412(b) or 430(k) of the Code with respect to any Plan.

“Event of Default” has the meaning assigned to such term in Section 7.01.

“Existing Indebtedness” has the meaning specified in Section 3.22.

“Expenses” means all present and future expenses reasonably incurred by or on behalf of Administrative Agent and Buyers in connection with the negotiation, execution or enforcement of this Agreement or any of the other Program Agreements and any amendment, supplement or other modification or waiver related hereto or thereto, whether incurred heretofore or hereafter, which expenses shall include the reasonable and documented cost of title, lien, judgment and other record searches; reasonable and documented attorneys’ fees; any ongoing audits or due diligence costs in connection with valuation, entering into Transactions or determining whether a Margin Deficit may exist; and costs of preparing and recording any UCC financing statements or other filings necessary to perfect the security interest created hereby.

“Funding 2” means Atlas Securitized Products Funding 2, L.P.

“GLB Act” has the meaning set forth in Section 11.11(b).

“Governmental Actions” means any and all consents, approvals, permits, orders, authorizations, waivers, exceptions, variances, exemptions or licenses of, or registrations, declarations or filings with, any Governmental Authority required under any Governmental Rules.

“Governmental Authority” means any nation or government, any state or other political subdivision thereof, or any entity exercising executive, legislative, judicial, regulatory or administrative functions over Administrative Agent, Sellers or Buyers, as applicable.

“Governmental Rules” means any and all laws, statutes, codes, rules, regulations, ordinances, orders, writs, decrees and injunctions, of any Governmental Authority and any and all legally binding conditions, standards, prohibitions, requirements and judgments of any Governmental Authority.

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“Indenture” means the Base Indenture, together with the Series 2017‑VF1 Indenture Supplement thereto.

“Indenture Trustee” means Citibank, N.A., its permitted successors and assigns.

“Issuer” has the meaning given to such term in the recitals to this Agreement.

“Margin” has the meaning assigned to the term in the Pricing Side Letter.

“Margin Call” has the meaning set forth in Section 2.05(a).

“Margin Deficit” has the meaning set forth in Section 2.05(a).

“Market Value” means, with respect to the Note as of any date of determination, and without duplication, the fair market value of the Note on such date as reasonably determined by Administrative Agent.

“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, condition (financial or otherwise) or prospects of any Seller or any Affiliate that is a party to any Program Agreement taken as a whole; (b) a material impairment of the ability of any Seller or any Affiliate that is a party to any Program Agreement to perform under any Program Agreement and to avoid any Event of Default; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability of any Program Agreement against any Seller or any Affiliate that is a party to any Program Agreement.

“Maximum Purchase Price” has the meaning assigned to the term in the Pricing Side Letter.

“Maximum Purchase Price Modification” shall have the meaning set forth in the definition of Maximum Purchase Price.

“Net Income” has the meaning given to such term in the Pricing Side Letter.

“Non-Excluded Taxes” has the meaning set forth in Section 2.11(a).

“Note” has the meaning given to such term in the recitals to this Agreement.

“Note Rating Agency” has the meaning assigned to such term in the Base Indenture.

“Notice” or “Notices” means all requests, demands and other communications, in writing (including facsimile transmissions and e-mails), sent by overnight delivery service, facsimile transmission, electronic transmission or hand-delivery to the intended recipient at the address specified in Section 11.05 or, as to any party, at such other address as shall be designated by such party in a written notice to the other party.

“Obligations” means (a) all of Sellers’ indebtedness, obligations to pay the outstanding principal balance of the Purchase Price, together with interest thereon on the Termination Date, outstanding interest due on each Price Differential Payment Date, and other

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obligations and liabilities, to Administrative Agent, Buyers and each of their Affiliates arising under, or in connection with, the Program Agreements, whether now existing or hereafter arising; (b) any and all sums reasonably incurred and paid by Administrative Agent or Buyers or on behalf of Administrative Agent or Buyers in order to preserve any Repurchase Asset or its interest therein; (c) in the event of any proceeding for the collection or enforcement of any of Sellers’ indebtedness, obligations or liabilities referred to in this definition, the reasonable expenses of retaking, holding, collecting, preparing for sale, selling or otherwise disposing of or realizing on any Repurchase Asset, or of any exercise by Administrative Agent and Buyers of their respective rights under the Program Agreements, including reasonable attorneys’ fees and disbursements and court costs; and (d) all of Sellers’ indemnity obligations to Administrative Agent and Buyers pursuant to the Program Agreements.

“Officer’s Compliance Certificate” has the meaning assigned to such term in the Pricing Side Letter.

“Other Taxes” has the meaning set forth in Section 2.11(b).

“Participant” has the meaning set forth in Section 9.02(a).

“PMC” has the meaning given to such term in the preamble to this Agreement.

“PMH” has the meaning given to such term in the preamble to this Agreement.

“Price Differential” means with respect to any Transaction as of any date of determination, an amount equal to the product of (A) the Pricing Rate for such Transaction and (B) the Purchase Price for such Transaction, calculated daily on the basis of a 360 day year for the actual number of days during the Price Differential Period.

“Price Differential Payment Date” means, for as long as any Obligations shall remain owing by any Seller to Administrative Agent and Buyers, each Payment Date.

“Price Differential Period” means, the period from and including a Price Differential Payment Date (or the Purchase Date for any date of determination before the first Price Differential Payment Date), up to but excluding the next Price Differential Payment Date.

“Price Differential Statement Date” has the meaning set forth in Section 2.04.

“Pricing Rate” means Base Rate plus the applicable Margin.

“Pricing Side Letter” means the fifth amended and restated pricing side letter, dated as of the Effective Date, by and among Administrative Agent, VFN Guarantor, Buyers and Sellers as amended, restated, supplemented or otherwise modified from time to time.

“Primary Repurchase Assets” has the meaning set forth in Section 4.02(a).

“Program Agreements” means this Agreement, the Pricing Side Letter, each Side Letter Agreement, the VFN Repo Guaranty, the Subservicer Side Letter Agreement, the PC Repurchase Agreement, the PC Repo Guaranty, the Excess Spread Participation Agreement, the

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Retained Excess Spread Participation Agreement, the Base Indenture and the Series 2017-VF1 Indenture Supplement, as each of the same may hereafter be amended, restated, supplemented or otherwise modified from time to time; provided, however, that the Program Agreements shall not include any rights created pursuant to an indenture supplement other than the Series 2017-VF1 Indenture Supplement, or any rights under the Base Indenture or any other Program Agreements relating to such other indenture supplements.

“Purchase Date” means, subject to the satisfaction of the conditions precedent set forth in Article V hereof, each Funding Date on which a Transaction is entered into by Administrative Agent (as agent for Buyers) pursuant to Section 2.02 or such other mutually agreed upon date as more particularly set forth on Exhibit A hereto.

“Purchase Price” means the price at which each Purchased Asset (or portion thereof) is transferred by Sellers to Buyers (or Administrative Agent, as agent and bailee for Buyers), which shall equal on any date of determination, the difference between (i) the sum of (a) the Asset Value of such Purchased Asset on the related Purchase Date, plus (b) the product of the Purchase Price Percentage and the principal amount of any Additional Balances related to such Purchased Asset, minus (ii) the sum of (a) any Repurchase Price paid with respect to such Purchased Asset pursuant to Section 2.03, plus (b) any Additional Note Payment made with respect to such Purchased Asset pursuant to Section 4.4(b) or Section 4.5(e) of the Indenture, plus (c) any Redemption Amount paid pursuant to Section 13.1 of the Indenture, plus (d) any funds applied by Administrative Agent against the Purchase Price pursuant to Section 2.05(c).

“Purchase Price Percentage” has the meaning assigned to the term in the Pricing Side Letter.

“Purchased Assets” means, collectively, the Note (including all outstanding Additional Balances thereunder) together with the Repurchase Assets related to such Note, until such Note has been repurchased by Sellers in accordance with the terms of this Agreement.

“Rating Trigger Event” means any occurrence which results in the failure of the Note to maintain an investment grade rating by a Note Rating Agency.

“Rating Trigger Event Amortization Period” means, the three hundred sixty-five (365) day period that commences on and follows the date on which any Rating Trigger Event occurs.

“Records” means all instruments, agreements and other books, records, and reports and data generated by other media for the storage of information maintained by Sellers, or any other person or entity with respect to the Purchased Assets.

“Register” has the meaning set forth in Section 9.02(b).

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“Repurchase Assets” has the meaning set forth in Section 4.02(c).

“Repurchase Date” means the earlier of (i) the Termination Date or (ii) the date requested by Sellers on which the Repurchase Price is paid pursuant to Section 2.03.

“Repurchase Price” means the price at which Purchased Assets are to be transferred by or on behalf of Buyers to Sellers upon termination of a Transaction, which will be determined in each case (including Transactions terminable upon demand) as the sum of the Purchase Price and the accrued but unpaid Price Differential as of the date of such determination.

“Repurchase Rights” has the meaning set forth in Section 4.02(c).

“Required Buyers” means, at any time (a) Buyers (other than Defaulting Buyers) owning an aggregate of greater than sixty-six and two-thirds percent (66 2/3%) of the Obligations outstanding at such time (excluding the portion of the Obligations owed to a Defaulting Buyer), or (b) at any time there are no Obligations outstanding, “Required Buyers” shall mean the Buyers (other than Defaulting Buyers) holding an aggregate Pro Rata Share of greater than sixty-six and two-thirds percent (66 2/3%) of Committed Amounts (excluding the Committed Amounts of any Defaulting Buyers); provided that notwithstanding anything contained herein to the contrary during a Citi Amortization Period, the Buyers’ Committed Amounts for purposes of calculating the Required Buyers shall be such Buyers’ Committed Amounts as of the commencement of such Citi Amortization Period.

“Responsible Officer” means as to any Person, the chief executive officer or, with respect to financial matters, the chief financial officer or treasurer of such Person. The Responsible Officers of PMH Seller and PMC Seller as of the Effective Date are listed on Schedule 1-A and Schedule 1-B, respectively, hereto.

“Seller” or “Sellers” has the meaning assigned to such term in the preamble to this Agreement and includes PMC’s or PMH’s permitted successors and assigns.

“Seller Termination Option” means (a) (i) a Buyer has or shall incur costs in connection with those matters provided for in Section 2.10 or 2.11 and (ii) Administrative Agent, on behalf of Buyer, requests that Sellers pay to such Buyer those costs in connection therewith or (b) Administrative Agent has declared in writing that an event described in Section 5.02(g)(A) has occurred.

“Series 2017‑VF1 Indenture Supplement” means the Amended and Restated Series 2017‑VF1 Indenture Supplement, dated as of October 10, 2023, among the Issuer, Co-Issuer, Citibank, N.A., as indenture trustee, as calculation agent, as paying agent and as securities intermediary, PMC, as administrator and as servicer, PMH, as co-issuer administrator, and Administrative Agent, as administrative agent, as amended, restated, supplemented or otherwise modified from time to time.

“Side Letter Agreement” has the meaning assigned to such term in the Pricing Side Letter.

“Taxes” has the meaning assigned to such term in Section 2.11(a).

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“Termination Date” has the meaning assigned to such term in the Pricing Side Letter.

“Test Period” has the meaning assigned to such term in the Pricing Side Letter.

“Threshold Event” shall mean with respect to a Buyer, a Transaction Notice submitted by either of the Sellers which, if satisfied as to such Buyer’s Pro Rata Share, would exceed the aggregate maximum purchase price such Buyer has agreed to provide Sellers and their Affiliates pursuant to this Agreement and any other agreement set forth in the related Side Letter Agreement.

“Transaction” means a transaction pursuant to which either Seller transfers a Note or Additional Balances, as applicable, to Buyers (or to Administrative Agent, as agent and bailee for Buyers) against the transfer of funds by Buyers, with a simultaneous agreement by Buyers (or by Administrative Agent, as agent and bailee for Buyers) to transfer such Note or Additional Balances, as applicable, back to Sellers at a date certain or on demand, against the transfer of funds by Sellers.

“Transaction Document” has the meaning assigned to such term in Appendix A to the Indenture.

“Transaction Notice” has the meaning assigned to such term in Section 2.02(a).

“Transaction Register” has the meaning assigned to such term in Section 9.03(b).

“Transferee” has the meaning set forth in Section 9.02(b).

“Uniform Commercial Code” or “UCC” means the Uniform Commercial Code as in effect on the Closing Date in the State of New York or the Uniform Commercial Code as in effect in the applicable jurisdiction.

“VFN Guarantor” means PennyMac Mortgage Investment Trust, in its capacity as guarantor under the VFN Repo Guaranty.

“VFN Repo Guaranty” means the Second Amended and Restated Guaranty, dated as of the Effective Date, pursuant to which VFN Guarantor fully and unconditionally guarantees the obligations of Sellers hereunder, as amended, restated, supplemented or otherwise modified from time to time.

14.2 Other Defined Terms. (a) Any capitalized terms used and not defined herein shall have the meaning set forth in the Base Indenture or the Series 2017‑VF1 Indenture Supplement, as applicable.

(b) The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise specified herein, the term “or” has the inclusive meaning represented by the term “and/or” and the term “including” is not limiting. All references

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to Sections, subsections, Articles and Exhibits shall be to Sections, subsections, and Articles of, and Exhibits to, this Agreement unless otherwise specifically provided.

(c) Reference to and the definition of any document (including this Agreement) shall be deemed a reference to such document as it may be amended, restated, supplemented or otherwise modified from time to time.

(d) In the computation of periods of time from a specified date to a later specified date, unless otherwise specified herein the words “commencing on” mean “commencing on and including,” the word “from” means “from and including” and the words “to” and “until” each means “to but excluding.”

SECTION 15.

GENERAL TERMS

15.1 Transactions. Subject to the terms and conditions hereof, Buyers severally, not jointly, agree to enter into Transactions with Sellers for a Purchase Price outstanding at any one time not to exceed the Aggregate Committed Amount; however, the Buyers may agree from time to time to enter into Transactions with Sellers for a Purchase Price outstanding in excess of the Aggregate Committed Amount but not to exceed the Maximum Purchase Price. No Buyer shall have any commitment or obligation to enter into a Transaction in connection with the Note to the extent (i) the outstanding Purchase Price related to such Buyer after giving effect to such Transaction exceeds the related Committed Amount for such Buyer or (ii) if the Transaction is requested on or after the Amortization Date. During the term of this Agreement, Sellers may request Transactions, Sellers may pay the Repurchase Price in whole or in part at any time during such period without penalty, and additional Transactions may be entered into in accordance with the terms and conditions hereof. Buyers’ obligation to enter into Transactions pursuant to the terms of this Agreement shall terminate on the Termination Date. All Transactions, whether for the Committed Amount or on an uncommitted basis up to the Maximum Purchase Price, shall be effected by Buyers simultaneously and proportionately to their respective Pro Rata Shares, it being understood that (i) an uncommitted Transaction shall not be entered unless both Buyers agree to proportionately fund such Transaction; and (ii) no Buyer shall be responsible for any default by any other Buyer in such other Buyer’s obligation to enter into a Transaction nor shall any Pro Rata Share of any Buyer be increased or decreased as a result of a default by any other buyer in such other Buyer’s obligation to enter into a Transaction hereunder, except to the extent agreed to by the non-Defaulting Buyer pursuant to Section 2.02(b). Following the commencement of the Citi Amortization Period, uncommitted Transactions may be effected by Buyers disproportionately without reference to the related Commitment Share.

15.2 Procedure for Entering into Transactions. (a) Each Seller may enter into Transactions with Buyers under this Agreement on any Purchase Date; provided, that the applicable Seller shall have given Administrative Agent and Buyers irrevocable notice (each, a “Transaction Notice”), which notice (i) shall be substantially in the form of Exhibit A, (ii) shall be signed by a Responsible Officer of the applicable Seller and be received by Administrative Agent and Buyers prior to 1:00 p.m. (New York time) (a) twenty (20) calendar days with respect to any Committed Amount or (b) two (2) Business Days with respect to any amounts other than a

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Committed Amount, in each case, prior to the related Purchase Date, and (iii) shall specify: (A) the Maximum VFN Principal Balance of the Note; (B) the Initial Note Balance of the Note; (C) the Dollar amount of the requested Purchase Price; (D) the requested Purchase Date; (E) the Repurchase Date; (F) the Pricing Rate or Repurchase Price applicable to the Transaction; and (G) any additional terms or conditions of the Transaction not inconsistent with this Agreement. Each Transaction Notice on any Purchase Date shall be in an amount equal to at least $500,000.

(b) If a Seller delivers to the Buyers a Transaction Notice that satisfies the requirements of Section 2.02(a) and all applicable conditions precedent set forth in Article V have been satisfied or waived on or prior to the Purchase Date, then subject to the foregoing, on the Purchase Date, each Buyer shall remit its Pro Rata Share of the requested Purchase Price in U.S. Dollars and in immediately available funds to Administrative Agent at the account specified in Schedule 3 (or such other account designated in writing by the Administrative Agent) no later than 11:00 a.m. (New York time) on the date specified in the Transaction Notice as the Purchase Date, and upon satisfaction or waiver of all applicable conditions set forth herein, the Administrative Agent shall deposit such proceeds into the account of the applicable Seller specified in Schedule 5 to the Base Indenture not later than 3:00 p.m. (New York time) on the Purchase Date (or such other account designated by Sellers in the Transaction Notice).

The failure of any Buyer to advance the proceeds of its Pro Rata Share of any Transaction required to be advanced hereunder shall not relieve any other Buyer of its obligation to advance the proceeds of its Pro Rata Share of any such Transaction required to be advanced hereunder.

If a Buyer does not intend to fund its Pro Rata Share of the requested Purchase Price, such Buyer shall, within one (1) Business Day of the related Purchase Date, notify the Administrative Agent, the other Buyers and the Sellers of its intent not to fund together with a description of the reason for not remitting its Pro Rata Share of the requested Purchase Price.

The liabilities and obligations of each Buyer hereunder shall be several and not joint, and neither the Administrative Agent nor any Buyer shall be responsible for the performance by any other Buyer of its obligations hereunder. Each Buyer shall be liable to Sellers only for the amount of its respective Committed Amount. If a Buyer does not perform its obligations hereunder with respect to its Committed Amount (such Buyer a “Defaulting Buyer”), all or any part of such Defaulting Buyer’s participation in any Transaction shall be reallocated among the non-Defaulting Buyers in accordance with their respective Pro Rata Shares, but only to the extent that (x) such non-Defaulting Buyer has consented to such reallocation, (y) such reallocation does not cause the aggregate Committed Amount held by any non-Defaulting Buyer to exceed such non-Defaulting Buyer’s Committed Amount and (z) to the extent requested in writing by the Administrative Agent, the Sellers shall confirm that the conditions set forth in this Section 2.02 are satisfied at the time of such reallocation.

Any Buyer previously designated as a Defaulting Buyer shall no longer be deemed a Defaulting Buyer once each Buyer’s proportionate share of the outstanding Purchase Price constituting Committed Amounts with respect to the aggregate outstanding Purchase Price constituting Committed Amounts is equal to its respective Commitment Share. For the avoidance

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of doubt, no Buyer shall be designated as a Defaulting Buyer based on such Buyer’s failure to enter into Transactions with Sellers during a Citi Amortization Period.

(c) Upon entering into each Transaction hereunder, the Asset Schedule shall be automatically updated and replaced with the Asset Schedule attached to the related Transaction Notice.

15.3 Repurchase; Payment of Repurchase Price. (a) The Sellers promise, jointly and severally, to repurchase the Purchased Assets and pay all outstanding Obligations on the Termination Date.

(b) On each Price Differential Payment Date following the Amortization Date, Sellers shall pay to Administrative Agent in immediately available funds the Amortization Payment Amount.

(c) By notifying Administrative Agent and each Buyer in writing at least one (1) Business Day in advance, Sellers shall be permitted, at their option, to prepay, subject to Section 2.12, the Purchase Price in whole or in part at any time, together with accrued and unpaid interest on the amount so prepaid.

15.4 Price Differential. On each Price Differential Payment Date, each of the Sellers hereby promises to pay to Administrative Agent all accrued and unpaid Price Differential on the Transactions, as invoiced by Administrative Agent to Sellers three (3) Business Days prior to the related Price Differential Payment Date (the “Price Differential Statement Date”); provided, that on each Price Differential Payment Date prior to the occurrence and continuation of an Event of Default, the estimated Price Differential owed hereunder shall be subject to a true-up of the amount determined by Administrative Agent and agreed by Sellers one (1) Business Day prior to the related Price Differential Payment Date. If Administrative Agent fails to deliver such statement on the Price Differential Statement Date, on such Price Differential Payment Date Sellers shall pay the amount which Sellers calculate as the Price Differential due and upon delivery of the statement, Sellers shall remit to Administrative Agent any shortfall, or Administrative Agent shall refund to Sellers any excess, in the Price Differential paid.

15.5 Margin Maintenance. (a) If at any time the aggregate outstanding amount of the Purchase Price of the Note is greater than the Asset Value or the Maximum Purchase Price for the related Transaction (such excess, a “Margin Deficit”), then Administrative Agent may, and, at the direction of all Buyers, shall, by notice to Sellers require Sellers to transfer to Administrative Agent cash in an amount at least equal to the Margin Deficit (such requirement, a “Margin Call”).

(b) Notice delivered pursuant to Section 2.05(a) may be given by any written or electronic means. With respect to a Margin Call, any notice given before 5:00 p.m. (New York City time) on a Business Day shall be met, and the related Margin Call satisfied, no later than 5:00 p.m. (New York City time) on the following Business Day. With respect to a Margin Call, any notice given after 5:00 p.m. (New York City time) on a Business Day shall be met, and the related Margin Call satisfied, no later than 5:00 p.m. (New York City time) on the second (2nd) Business Day following the date of such notice. The failure of Administrative Agent, on any one or more occasions, to exercise the rights of Buyers hereunder, shall not change or alter the terms and

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conditions to which this Agreement is subject or limit the right of Administrative Agent to do so at a later date. Each of the Sellers, each of the Buyers, and the Administrative Agent each agree that a failure or delay by Administrative Agent to exercise the rights of Buyers hereunder shall not limit or waive Administrative Agent’s rights under this Agreement or otherwise existing by law or in any way create additional rights for the Sellers.

(c) In the event that a Margin Deficit exists, Administrative Agent may retain any funds received by it to which the Sellers would otherwise be entitled hereunder, which funds (i) may be held by Administrative Agent against the related Margin Deficit or (ii) may be applied by Administrative Agent against the Purchase Price. Notwithstanding the foregoing, Administrative Agent retains the right, in its sole discretion, to make a Margin Call in accordance with the provisions of this Section 2.05.

15.6 Payment Procedure. The Sellers absolutely, unconditionally, and irrevocably, shall make, or cause to be made, all payments required to be made by Sellers hereunder. Sellers shall deposit or cause to be deposited all amounts constituting collection, payments and proceeds of the Note (including all fees and proceeds of sale to a third party) to the Administrative Agent Account.

15.7 Application of Payments. (a) On each Price Differential Payment Date prior to the occurrence of an Event of Default, all amounts deposited into the Administrative Agent Account from and after the immediately preceding Price Differential Payment Date (or the Closing Date in connection with the initial Price Differential Payment Date), or received by Administrative Agent from the Issuer and Co-Issuer in Administrative Agent’s capacity as VFN Noteholder on behalf of Buyers, shall be applied by the Administrative Agent as follows:

(i) first, to each Buyer, pro rata, the payment of any accrued and unpaid Price Differential owing;

(ii) second, to each Buyer, pro rata, the payment of Purchase Price outstanding to satisfy any Margin Deficit owing;

(iii) third, to each Buyer, pro rata, the payment of any unpaid Amortization Payment Amount;

(iv) fourth, to payment of all other costs and fees payable pursuant to this Agreement, first to Administrative Agent and then to each Buyer on a pro rata basis;

(v) fifth, to each Buyer, pro rata, the payment of the Purchase Price outstanding as a result of any Additional Note Payment made pursuant to Section 4.4(b) or Section 4.5(e) of the Indenture; and

(vi) sixth, any remainder to each Seller based upon an allocation percentage to be provided by Sellers to the Administrative Agent.

(b) Notwithstanding the preceding provisions, if an Event of Default shall have occurred hereunder, all funds related to the Note shall be applied by the Administrative Agent as follows:

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(i) first, to each Buyer, pro rata, the payment of any accrued and unpaid Price Differential owing;

(ii) second, to each Buyer, pro rata, the payment of Purchase Price until reduced to zero;

(iii) third, to payment of all other costs and fees payable pursuant to this Agreement, first to Administrative Agent and then to each Buyer, on a pro rata basis;

(iv) fourth, to the payment of any other Obligations; and

(v) fifth, any remainder to each Seller based upon an allocation percentage to be provided by Sellers to the Administrative Agent.

15.8 Use of Purchase Price and Transaction Requests. The Purchase Price shall be used by Sellers to satisfy their obligations under the Indenture and for general corporate purposes.

15.9 Recourse. Notwithstanding anything else to the contrary contained or implied herein or in any other Program Agreement, (i) Administrative Agent and Buyers shall have full, unlimited recourse against the Sellers and their assets in order to satisfy the Obligations, and (ii) solely with respect to the Sellers, all obligations of each Seller (excluding PMC’s obligations relating to its servicing functions) hereunder, including payment of any amounts owed on any date, shall be joint and several obligations of the Sellers.

15.10 Requirements of Law. (a) If any Requirement of Law (other than with respect to any amendment made to a Buyer’s certificate of trust and trust agreement or other organizational or governing documents) or any change in the interpretation or application thereof or compliance by such Buyer with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the Closing Date:

(i) shall subject such Buyer to any tax of any kind whatsoever with respect to this Agreement or the Transactions (excluding income taxes, branch profits taxes, franchise taxes or similar taxes imposed on a Buyer as a result of any present or former connection between such Buyer and the United States, other than any such connection arising solely from such Buyer having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement) or change the basis of taxation of payments to such Buyer in respect thereof;

(ii) shall impose, modify or hold any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, or other extensions of credit by, or any other acquisition of funds by, any office of such Buyer which is not otherwise included in the determination of the Price Differential hereunder; or

(iii) shall impose on such Buyer any other condition; and the result of any of the foregoing is to increase the cost to such Buyer, by an amount which such Buyer deems to be material, of entering, continuing or maintaining this Agreement or any other

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Program Agreement, the Transactions or to reduce any amount due or owing hereunder in respect thereof, then, in any such case, Sellers shall promptly pay such Buyer such additional amount or amounts as calculated by such Buyer in good faith as will compensate such Buyer for such increased cost or reduced amount receivable.

(b) If a Buyer shall have determined that the adoption of or any change in any Requirement of Law (other than with respect to any amendment made to such Buyer’s certificate of incorporation and by-laws or other organizational or governing documents) regarding capital adequacy or in the interpretation or application thereof or compliance by such Buyer or any corporation Controlling such Buyer with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the Closing Date shall have the effect of reducing the rate of return on such Buyer’s or such corporation’s capital as a consequence of its obligations hereunder to a level below that which such Buyer or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Buyer’s or such corporation’s policies with respect to capital adequacy) by an amount deemed by such Buyer to be material, then from time to time, Sellers shall promptly pay to such Buyer such additional amount or amounts as will compensate such Buyer for such reduction.

(c) If a Buyer becomes entitled to claim any additional amounts pursuant to this Section 2.10, it shall promptly notify Sellers of the event by reason of which it has become so entitled. A certificate as to any additional amounts payable pursuant to this Section 2.10 submitted by such Buyer to Sellers shall be conclusive in the absence of manifest error.

15.11 Taxes. (a) Any and all payments by or on behalf of any Seller under or in respect of this Agreement or any other Program Agreements to which any Seller is a party shall be made free and clear of, and without deduction or withholding for or on account of, any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities (including penalties, interest and additions to tax) with respect thereto, whether now or hereafter imposed, levied, collected, withheld or assessed by any taxation authority or other Governmental Authority (collectively, “Taxes”), unless required by law. If any Seller shall be required under any applicable Requirement of Law to deduct or withhold any Taxes from or in respect of any sum payable under or in respect of this Agreement or any of the other Program Agreements to Administrative Agent and any Buyer (including for purposes of Section 2.10 and this Section 2.11, any assignee, successor or participant), (i) such Seller shall make all such deductions and withholdings in respect of Taxes, (ii) such Seller shall pay the full amount deducted or withheld in respect of Taxes to the relevant taxation authority or other Governmental Authority in accordance with any applicable Requirement of Law, and (iii) the sum payable by such Seller shall be increased as may be necessary so that after such Seller has made all required deductions and withholdings (including deductions and withholdings applicable to additional amounts payable under this Section 2.11) Administrative Agent and Buyers receive an amount equal to the sum they would have received had no such deductions or withholdings been made in respect of Non-Excluded Taxes. For purposes of this Agreement the term “Non-Excluded Taxes” are Taxes other than, in the case of Administrative Agent and Buyers, Taxes that are (i) imposed on its overall net income (and franchise taxes imposed in lieu thereof) by the jurisdiction under the laws of which Administrative Agent or the related Buyer is organized or of their Applicable Lending Office, or any political subdivision thereof, unless such Taxes are imposed as a result of Administrative

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Agent or the related Buyer having executed, delivered or performed its obligations or received payments under, or enforced, this Agreement or any of the other Program Agreements (in which case such Taxes will be treated as Non-Excluded Taxes) and (ii) imposed pursuant to FATCA.

(b) In addition, the Sellers hereby agree to pay any present or future stamp, recording, documentary, excise, property or value-added taxes, or similar taxes, charges or levies that arise from any payment made under or in respect of this Agreement or any other Program Agreement or from the execution, delivery or registration of, any performance under, or otherwise with respect to, this Agreement or any other Program Agreement (collectively, “Other Taxes”).

(c) The Sellers hereby, jointly and severally, agree to indemnify Administrative Agent and Buyers for, and to hold each of them harmless against, the full amount of Non-Excluded Taxes and Other Taxes, and the full amount of Taxes of any kind imposed by any jurisdiction on amounts payable by any Seller under this Section 2.11 imposed on or paid by Administrative Agent or Buyers and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto. The indemnity by the Sellers provided for in this Section 2.11 shall apply and be made whether or not the Non-Excluded Taxes or Other Taxes for which indemnification hereunder is sought have been correctly or legally asserted. Amounts payable by any Seller under the indemnity set forth in this Section 2.11(c) shall be paid within ten (10) days from the date on which Administrative Agent makes written demand therefor.

(d) Without prejudice to the survival of any other agreement of the Sellers hereunder, the agreements and obligations of the Sellers contained in this Section 2.11 shall survive the termination of this Agreement and the other Program Agreements. Nothing contained in Section 2.10 or this Section 2.11 shall require Administrative Agent or any Buyer to make available any of their tax returns or any other information that they deem to be confidential or proprietary.

(e) Administrative Agent and Buyers will timely furnish Sellers, or any agent of Sellers, any tax forms or certifications (such as an applicable IRS Form W-8, IRS Form W-9 or any successors to such IRS forms) that it is legally entitled to provide and that Sellers or their agents may reasonably request (A) to permit Sellers or their agents to make payments to it without, or at a reduced rate of, deduction or withholding, (B) to enable Sellers or their agents to qualify for a reduced rate of withholding or deduction in any jurisdiction from or through which Sellers or their agents receive payments and (C) to enable Sellers or their agents to satisfy reporting and other obligations under the Code and Treasury Regulations and under any other applicable laws, and shall update or replace such tax forms or certifications as appropriate or in accordance with their terms or subsequent amendments, and acknowledges that the failure to provide, update or replace any such tax forms or certifications may result in the imposition of withholding or back-up withholding upon payments to Administrative Agent and Buyers.

15.12 Indemnity. Without limiting, and in addition to, the provisions of Section 10.02, each of the Sellers, jointly and severally, agrees to indemnify the Administrative Agent and each Buyer and to hold each of them harmless from any loss or expense that Administrative Agent or Buyers may sustain or incur as a consequence of (i) a default by any Seller in payment when due of the Repurchase Price or Price Differential or (ii) a default by any Seller in making any

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prepayment of Repurchase Price after such Seller has given a notice thereof in accordance with Section 2.03.

15.13 Additional Balance and Additional Funding. In the event that any Seller wishes an increase in the VFN Principal Balance, such Seller shall deliver to Administrative Agent and Buyers a copy of the VFN Note Balance Adjustment Request that is delivered under the Indenture. If all the Funding Conditions required pursuant to Section 5.02 hereof and in the Indenture have been satisfied, or if such request is made on or after the Amortization Date, with the consent of the Administrative Agent, in its sole discretion (provided that the consent of the Administrative Agent shall not be required in the event that the aggregate outstanding Purchase Price, after giving effect to the requested increase, does not exceed the Aggregate Committed Amount and if such request occurs prior to the Amortization Date), then such increase in the VFN Principal Balance (such increase, an “Additional Balance”), (i) the outstanding VFN Principal Balance set forth in the Asset Schedule hereof shall be automatically updated and (ii) if requested by Sellers, each Buyer shall thereupon deliver to Administrative Agent in cash its Pro Rata Share of the amount equal to the product of such Additional Balance and the Purchase Price Percentage (the “Additional Funding”).

15.14 Commitment Fee and Other Fees. Sellers shall pay the Commitment Fee and any other fees, if any, as specified in any side letter related to this Agreement. Such payment shall be made in Dollars in immediately available funds, without deduction, set off or counterclaim, to Administrative Agent at such account designated in writing by Administrative Agent.

15.15 Termination. (a) Notwithstanding anything to the contrary set forth herein, if a Seller Termination Option occurs, the Sellers may, upon five (5) Business Days’ prior written notice to Administrative Agent and each Buyer of such event, upon payment of the applicable Repurchase Price and satisfaction of the other termination conditions set forth in the Indenture, terminate this Agreement and the Termination Date shall be deemed to have occurred (upon the expiration of such five (5) Business Day period).

(b) In the event that a Seller Termination Option as described in clause (a) of the definition thereof has occurred and the Sellers have notified Administrative Agent and each Buyer in writing of its option to terminate this Agreement, the affected Buyer shall have the right to withdraw its request for payment within three (3) Business Days of Sellers’ notice of its exercise of Seller Termination Option and the Sellers shall no longer have the right to terminate this Agreement.

(c) For the avoidance of doubt, Sellers shall remain responsible for all costs actually incurred by Administrative Agent or Buyers pursuant to Sections 2.10 and 2.11.

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SECTION 16.

REPRESENTATIONS AND WARRANTIES

Each of the Sellers, solely with respect to itself, represents and warrants to Administrative Agent and Buyers as of the Closing Date, the Effective Date and as of each Purchase Date for any Transaction that:

16.1 Sellers’ Existence. Each of the Sellers has been duly organized and is validly existing as a limited liability company in good standing under the laws of the State of Delaware.

16.2 Licenses. Each of the Sellers is duly licensed or is otherwise qualified in each jurisdiction in which it transacts business for the business which it conducts and is not in default of any applicable federal, state or local laws, rules and regulations unless, in either instance, the failure to take such action is not reasonably likely (either individually or in the aggregate) to cause a Material Adverse Effect and is not in default of such state’s applicable laws, rules and regulations. The Sellers have the requisite power and authority and legal right to own, sell and grant a lien on all of its right, title and interest in and to the Note. Each of the Sellers has the requisite power and authority and legal right to execute and deliver, engage in the transactions contemplated by, and perform and observe the terms and conditions of, this Agreement, each other Program Agreement and any Transaction Notice.

16.3 Power. Each of the Sellers has all requisite corporate or other power, and has all governmental licenses, authorizations, consents and approvals necessary to own its assets and carry on its business as now being or as proposed to be conducted, except where the lack of such licenses, authorizations, consents and approvals would not be reasonably likely to have a Material Adverse Effect.

16.4 Due Authorization. Each of the Sellers has all necessary corporate or other power, authority and legal right to execute, deliver and perform its obligations under each of the Program Agreements, as applicable. This Agreement, any Transaction Notice and the Program Agreements have been (or, in the case of Program Agreements and any Transaction Notice not yet executed, will be) duly authorized, executed and delivered by the Sellers, all requisite or other corporate action having been taken, and each is valid, binding and enforceable against the Sellers in accordance with its terms except as such enforcement may be affected by bankruptcy, by other insolvency laws, or by general principles of equity.

16.5 Financial Statements. (A) Each of the Sellers has heretofore furnished to Administrative Agent and each Buyer a copy of (a) its balance sheet for the fiscal year of such Seller ended December 31, 2022 and the related statements of income for such Seller for such fiscal year, with the opinion thereon of Deloitte & Touche LLP and (b) its balance sheet for the quarterly fiscal period of such Seller ended June 30, 2023 and the related statements of income for such Seller for such quarterly fiscal period. All such financial statements are accurate, complete and correct and fairly present, in all material respects, the financial condition of Sellers (subject to normal year-end adjustments) and the results of such Seller’s operations as at such dates and for such fiscal periods, all in accordance with GAAP applied on a consistent basis, and to the best of

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such Seller’s knowledge, do not omit any material fact as of the date(s) thereof. Since June 30, 2023, there has been no material adverse change in the consolidated business, operations or financial condition of Sellers from that set forth in said financial statements nor are the Sellers aware of any state of facts which (with notice or the lapse of time) would or could result in any such material adverse change. Each of the Sellers has no liabilities, direct or indirect, fixed or contingent, matured or unmatured, known or unknown, or liabilities for taxes, long-term leases or unusual forward or long-term commitments not disclosed by, or reserved against in, said balance sheet and related statements, and at the present time there are no material unrealized or anticipated losses from any loans, advances or other commitments of Sellers except as heretofore disclosed to Administrative Agent and each Buyer in writing.

(B) Sellers have heretofore caused VFN Guarantor to furnish to Administrative Agent and each Buyer a copy of (a) its balance sheet for the fiscal year of VFN Guarantor ended December 31, 2022 and the related statements of income for VFN Guarantor for such fiscal year, with the opinion thereon of Deloitte & Touche LLP and (b) its balance sheet for the quarterly fiscal period of VFN Guarantor ended June 30, 2023 and the related statements of income for VFN Guarantor for such quarterly fiscal period. All such financial statements are accurate, complete and correct and fairly present, in all material respects, the financial condition of VFN Guarantor (subject to normal year-end adjustments) and the results of its operations as at such dates and for such fiscal periods, all in accordance with GAAP applied on a consistent basis, and to the best of Sellers’ knowledge, do not omit any material fact as of the date(s) thereof. Since June 30, 2023, there has been no material adverse change in the consolidated business, operations or financial condition of VFN Guarantor from that set forth in said financial statements nor are Sellers aware of any state of facts which (with notice or the lapse of time) would or could result in any such material adverse change. VFN Guarantor has no liabilities, direct or indirect, fixed or contingent, matured or unmatured, known or unknown, or liabilities for taxes, long-term leases or unusual forward or long-term commitments not disclosed by, or reserved against in, said balance sheet and related statements, and at the present time there are no material unrealized or anticipated losses from any loans, advances or other commitments of VFN Guarantor except as heretofore disclosed to Administrative Agent and each Buyer in writing.

16.6 No Event of Default. There exists no Event of Default under Section 7.01 hereof, which default gives rise to a right to accelerate indebtedness as referenced in Section 7.03 hereof, under any mortgage, borrowing agreement or other instrument or agreement pertaining to indebtedness for borrowed money or to the repurchase of mortgage loans or securities.

16.7 Solvency. Each of the Sellers is solvent and will not be rendered insolvent by any Transaction and, after giving effect to such Transaction, will not be left with an unreasonably small amount of capital with which to engage in its business. Neither of the Sellers intends to incur, nor believes that it has incurred, debts beyond its ability to pay such debts as they mature and is not contemplating the commencement of insolvency, bankruptcy, liquidation or consolidation proceedings or the appointment of a receiver, liquidator, conservator, trustee or

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similar official in respect of such entity or any of its assets. The Sellers are not selling and/or pledging any Repurchase Assets with any intent to hinder, delay or defraud any of its creditors.

16.8 No Conflicts. The execution, delivery and performance by each of the Sellers of this Agreement, any Transaction Notice hereunder and the Program Agreements do not conflict with any term or provision of the organizational documents of the Sellers or any law, rule, regulation, order, judgment, writ, injunction or decree applicable to the Sellers of any court, regulatory body, administrative agency or governmental body having jurisdiction over the Sellers, which conflict would have a Material Adverse Effect and will not result in any violation of any such mortgage, instrument, agreement or obligation to which the Sellers are a party.

16.9 True and Complete Disclosure. All information, reports, exhibits, schedules, financial statements or certificates of the Sellers or any Affiliate thereof or any of their officers furnished or to be furnished to Administrative Agent and Buyers in connection with the initial or any ongoing due diligence of the Sellers or any Affiliate thereof or officer thereof, negotiation, preparation, or delivery of the Program Agreements, taken as a whole, are true and complete in all material respects and do not omit to disclose any material facts necessary to make the statements herein or therein, in light of the circumstances in which they are made, not misleading. All financial statements have been prepared in accordance with GAAP.

16.10 Approvals. No consent, approval, authorization or order of, registration or filing with, or notice to any Governmental Authority or court is required under applicable law in connection with the execution, delivery and performance by the Sellers of this Agreement, any Transaction Notice and the Program Agreements.

16.11 Litigation. There is no action, proceeding or investigation pending with respect to which either of the Sellers has received service of process or, to the best of each of the Sellers’ knowledge threatened against it before any court, administrative agency or other tribunal (A) asserting the invalidity of this Agreement, any Transaction, Transaction Notice or any Program Agreement, (B) seeking to prevent the consummation of any of the transactions contemplated by this Agreement, any Transaction Notice or any Program Agreement, (C) makes a claim individually or in the aggregate in an amount greater than 5% of either of the Sellers’ Adjusted Tangible Net Worth, (D) which requires filing with the SEC in accordance with the 1934 Act or any rules thereunder, (E) which has resulted in the voluntary or involuntary suspension of a license, a cease and desist order, or such other action as could adversely impact Sellers’ business, or (F) which might materially and adversely affect the validity of the Purchased Assets or the performance by it of its obligations under, or the validity or enforceability of, this Agreement, any Transaction Notice or any Program Agreement.

16.12 Material Adverse Change. There has been no material adverse change in the business, operations, financial condition, properties or prospects of Sellers or their Affiliates since the date set forth in the most recent financial statements supplied to Administrative Agent and Byers that is reasonably likely to have a Material Adverse Effect on Sellers.

16.13 Ownership. (a) Each Seller has good title to all of the related Repurchase Assets, free and clear of all mortgages, security interests, restrictions, Liens and encumbrances of any kind other than the Liens created hereby or contemplated herein.

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(b) Each item of the Repurchase Assets was acquired by the Sellers in the ordinary course of its business, in good faith, for value and without notice of any defense against or claim to it on the part of any Person.

(c) There are no agreements or understandings between the Sellers and any other party which would modify, release, terminate or delay the attachment of the security interests granted to Administrative Agent under this Agreement.

(d) The provisions of this Agreement are effective to create in favor of Administrative Agent a valid security interest in all right, title and interest of the related Seller in, to and under the Repurchase Assets.

(e) Upon the filing of financing statements on Form UCC-1 naming Administrative Agent as “Secured Party” and each related Seller as “Debtor”, and describing the Repurchase Assets, in the recording offices of the Secretary of State of Delaware the security interests granted hereunder in the Repurchase Assets will constitute fully perfected first priority security interests under the Uniform Commercial Code in all right, title and interest of the related Seller in, to and under such Repurchase Assets to the extent that such security interests can be perfected by filing under the Uniform Commercial Code.

16.14 The Note. Each of the Sellers has (i) delivered the Note to Administrative Agent, (ii) duly endorsed the Note to Administrative Agent or Administrative Agent’s designee, (iii) notified the Indenture Trustee of such transfer and (iv) completed all documents required to effect such transfer in the Note Register, including receipt by the Note Registrar of the Rule 144A Note Transfer Certificate and such other information and documents that may be required pursuant to the terms of the Indenture. In addition, Administrative Agent has received all other Program Agreements (including all exhibits and schedules referred to therein or delivered pursuant thereto), all amendments thereto, waivers relating thereto and other side letters or agreements affecting the terms thereof and all agreements and other material documents relating thereto, and each Seller hereby certifies that the copies delivered to Administrative Agent by such Seller are true and complete. None of such documents has been amended, supplemented or otherwise modified (including waivers) since the respective dates thereof, except by amendments, copies of which have been delivered to Administrative Agent. Each such document to which each Seller is a party has been duly executed and delivered by such Seller and is in full force and effect, and no default or material breach has occurred and is continuing thereunder.

16.15 Taxes. Each of the Sellers and their Subsidiaries have timely filed all tax returns that are required to be filed by them and have paid all taxes, except for any such taxes as are being appropriately contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves have been provided. The charges, accruals and reserves on the books of each of the Sellers and their Subsidiaries in respect of taxes and other governmental charges are, in the opinion of Sellers, adequate.

16.16 Investment Company. Neither Seller nor any of its Subsidiaries is an “investment company”, or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act.

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16.17 Chief Executive Office; Jurisdiction of Organization. On the Effective Date, each Seller’s chief executive office, is, and has been, located at the address specified in Section 11.05 for notices. On the Effective Date, each Seller’s jurisdiction of organization is the State of Delaware. Each Seller shall provide Administrative Agent with thirty (30) days advance notice of any change in such Seller’s principal office or place of business or jurisdiction. Neither Seller has a trade name. During the preceding five (5) years, each Seller has not been known by or done business under any other name, corporate or fictitious, and has not filed or had filed against it any bankruptcy receivership or similar petitions nor has it made any assignments for the benefit of creditors.

16.18 Location of Books and Records. The location where each Seller keeps its books and records, including all computer tapes and records relating to the Repurchase Assets is its chief executive office.

16.19 ERISA. Each Plan to which the Sellers or their Subsidiaries make direct contributions, and, to the knowledge of the Sellers, each other Plan and each Multiemployer Plan, is in compliance in all material respects with, and has been administered in all material respects in compliance with, the applicable provisions of ERISA, the Code and any other Federal or State law.

16.20 Financing of Note and Additional Balances. Each Transaction will be used to purchase the Note and funding of the Additional Balances as provided herein, which Note will be conveyed and/or sold by Sellers to Buyers.

16.21 Agreements. Neither Sellers nor any Subsidiary of Sellers is a party to any agreement, instrument, or indenture or subject to any restriction materially and adversely affecting its business, operations, assets or financial condition, except as disclosed in the financial statements described in Section 3.05 hereof. Neither Sellers nor any Subsidiary of Sellers is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement, instrument, or indenture which default could have a material adverse effect on the business, operations, properties, or financial condition of Sellers as a whole. No holder of any indebtedness of Sellers or of any of their Subsidiaries has given notice of any asserted default thereunder.

16.22 Other Indebtedness. All Indebtedness (other than Indebtedness evidenced by this Agreement) of Sellers existing on the Effective Date is listed on Exhibit B hereto (the “Existing Indebtedness”).

16.23 No Reliance. Each of the Sellers has made its own independent decisions to enter into the Program Agreements and each Transaction and as to whether such Transaction is appropriate and proper for it based upon its own judgment and upon advice from such advisors (including legal counsel and accountants) as it has deemed necessary. Each of the Sellers is not relying upon any advice from Administrative Agent or Buyers as to any aspect of the Transactions, including the legal, accounting or tax treatment of such Transactions.

16.24 Plan Assets. Neither of the Sellers is an employee benefit plan as defined in Section 3 of Title I of ERISA, or a plan described in Section 4975(e)(1) of the Code, and the Purchased Assets are not “plan assets” within the meaning of 29 CFR § 2510.3 101 as amended

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by Section 3(42) of ERISA, in Sellers’ hands, and transactions by or with Sellers are not subject to any state or local statute regulating investments or fiduciary obligations with respect to governmental plans within the meaning of Section 3(32) of ERISA.

16.25 No Prohibited Persons. Neither the Sellers nor any of their Affiliates, officers, directors, partners or members, (i) is an entity or person (or to the Sellers’ knowledge, owned or controlled by an entity or person) that (A) is currently the subject of any Sanctions or (B) resides, is organized or chartered, or has a place of business in a country or territory that is currently the subject of Sanctions or (ii) is engaging or will engage in any dealings or transactions prohibited by Sanctions or will directly or indirectly use the proceeds of any transactions contemplated hereunder, or lend, contribute or otherwise make available such proceeds to or for the benefit of any person or entity, for the purpose of financing or supporting, directly or indirectly, the activities of any person or entity that is currently the subject of Sanctions.

16.26 Compliance with 1933 Act. Neither the Sellers nor anyone acting on its behalf has offered, transferred, pledged, sold or otherwise disposed of the Note, any interest in the Note or any other similar security to, or solicited any offer to buy or accept a transfer, pledge or other disposition of the Note, any interest in the Note or any other similar security from, or otherwise approached or negotiated with respect to the Note, any interest in the Note or any other similar security with, any person in any manner, or made any general solicitation by means of general advertising or in any other manner, or taken any other action which would constitute a distribution of the Note under the 1933 Act or which would render the disposition of the Note a violation of Section 5 of the 1933 Act or require registration pursuant thereto.

16.27 Anti-Money Laundering Laws. The operations of each Seller and each of their subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements, including the Currency and Foreign Transactions Reporting Act of 1970, as amended, the applicable money laundering statutes of all jurisdictions where such Seller or any of their subsidiaries conduct business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Anti-Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving any Seller or any of their subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the best knowledge of any Seller, threatened.

SECTION 17.

CONVEYANCE; REPURCHASE ASSETS; SECURITY INTEREST

17.1 Ownership. Upon payment of the Purchase Price and delivery of the Note to Administrative Agent on behalf of the Buyers, Buyers shall become the sole owner of the Purchased Assets, free and clear of all liens and encumbrances.

17.2 Security Interest. (a) Although the parties intend (other than for U.S. federal tax purposes) that all Transactions hereunder be sales and purchases and not loans, in the event any such Transactions are deemed to be loans, and in any event, each Seller hereby pledges to Administrative Agent, for the benefit of Buyers, as security for the performance by such Seller of

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its Obligations and hereby grants, assigns and pledges to Administrative Agent a fully perfected first priority security interest in all of such Seller’s right, title and interest in, to and under each of the following items of property, whether now owned or hereafter acquired, now existing or hereafter created and wherever located, is hereinafter referred to as the “Primary Repurchase Assets”:

(i) the Note identified on the Asset Schedule;

(ii) all rights to reimbursement or payment of the Note and/or amounts due in respect thereof under the Note identified on the Asset Schedule;

(iii) all records, instruments or other documentation evidencing any of the foregoing;

(iv) all “general intangibles”, “accounts”, “chattel paper”, “securities accounts”, “investment property”, “deposit accounts” and “money” as defined in the Uniform Commercial Code relating to or constituting any and all of the foregoing (including all of each Seller’s rights, title and interest in and under the Base Indenture and the Series 2017‑VF1 Indenture Supplement); and

(v) any and all replacements, substitutions, distributions on or proceeds of any and all of the foregoing.

(b) Each Seller hereby assigns, pledges, conveys and grants a security interest in all of its right, title and interest in, to and under the related Repurchase Assets to Administrative Agent, for the benefit of Buyers, to secure the Obligations. Each Seller agrees to mark its computer records, tapes and other electronic medium to evidence the interests granted to Administrative Agent hereunder.

(c) Subject to the priority interest of the Indenture Trustee, Administrative Agent, Buyers and Sellers hereby agree that in order to further secure Sellers’ Obligations hereunder, Sellers hereby grant to Administrative Agent, for the benefit of Buyers, a security interest (subject and subordinated to Fannie Mae’s rights under the Acknowledgment Agreement and the Fannie Mae Requirements) in (i) as of the Closing Date with respect to the PMC Seller and as of the Effective Date with respect to the PMH Seller, Sellers’ rights (but not its obligations) under the Program Agreements including any rights to receive payments thereunder or any rights to collateral thereunder whether now owned or hereafter acquired, now existing or hereafter created (collectively, the “Repurchase Rights”) and (ii) all collateral however defined or described under the Program Agreements to the extent not otherwise included under the definitions of Primary Repurchase Assets or Repurchase Rights (such collateral, “Additional Repurchase Assets,” and collectively with the Primary Repurchase Assets and the Repurchase Rights, the “Repurchase Assets”).

(d) [Reserved.]

(e) The foregoing provisions of this Section 4.02 are intended to constitute a security agreement or other arrangement or other credit enhancement related to this Agreement

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and the Transactions hereunder as defined under Sections 101(47)(A)(v) and 741(7)(A)(xi) of the Bankruptcy Code.

17.3 Further Documentation. At any time and from time to time, upon the written request of Administrative Agent, and at the sole expense of the Sellers, the Sellers will promptly and duly execute and deliver, or will promptly cause to be executed and delivered, such further instruments and documents and take such further action as Administrative Agent may reasonably request for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted, including the filing of any financing or continuation statements under the Uniform Commercial Code in effect in any applicable jurisdiction with respect to the Liens created hereby. Each of the Sellers also hereby authorizes Administrative Agent to file any such financing or continuation statement to the extent permitted by applicable law.

17.4 Changes in Locations, Name, etc. Each Seller shall not (a) change the location of its chief executive office/chief place of business from that specified in Section 3.17 or (b) change its name or identity, unless it shall have given Administrative Agent at least thirty (30) days’ prior written notice thereof and shall have delivered to Administrative Agent all Uniform Commercial Code financing statements and amendments thereto as Administrative Agent shall request and taken all other actions deemed necessary by Administrative Agent to continue its perfected status in the Repurchase Assets with the same or better priority.

17.5 Performance by Buyer of Sellers’ Obligations. If any Seller fails to perform or comply with any of its agreements contained in the Program Agreements and Administrative Agent may itself perform or comply, or otherwise cause performance or compliance, with such agreement, the reasonable (under the circumstances) out-of-pocket expenses of Administrative Agent actually incurred in connection with such performance or compliance, together with interest thereon at a rate per annum equal to the Pricing Rate shall be payable by either Seller to Administrative Agent on demand and shall constitute Obligations. Such interest shall be computed on the basis of the actual number of days in each Price Differential Period and a 360‑day year.

17.6 Proceeds. If an Event of Default shall occur and be continuing, (a) all proceeds of Repurchase Assets received by any Seller consisting of cash, checks and other liquid assets readily convertible to cash items shall be held by such Seller in trust for Administrative Agent segregated from other funds of such Seller, and shall forthwith upon receipt by such Seller be turned over to Administrative Agent in the exact form received by such Seller (duly endorsed by such Seller to Administrative Agent, if required) and (b) any and all such proceeds received by Administrative Agent (whether from a Seller or otherwise) may, in the sole discretion of Administrative Agent, be held by Administrative Agent as collateral security for, and/or then or at any time thereafter may be applied by Administrative Agent against, the Obligations (whether matured or unmatured), such application to be in such order as Administrative Agent shall elect. Any balance of such proceeds remaining after the Obligations shall have been paid in full and this Agreement shall have been terminated shall be paid over to the applicable Seller or to whomsoever may be lawfully entitled to receive the same.

17.7 Remedies. If an Event of Default shall occur and be continuing, Administrative Agent may exercise (and at the direction of the Required Buyers shall exercise), in

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addition to all other rights and remedies granted to it in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured party under the Uniform Commercial Code (including Administrative Agent’s rights to a strict foreclosure under Section 9‑620 of the Uniform Commercial Code). Without limiting the generality of the foregoing, Administrative Agent may seek (and at the direction of the Required Buyers shall seek) the appointment of a receiver, liquidator, conservator, trustee, or similar official in respect of the Sellers or any of the Sellers’ property. Without limiting the generality of the foregoing, Administrative Agent may terminate (and at the direction of the Required Buyers shall terminate) the Participation Interest in accordance with the Participation Agreement. Administrative Agent without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required under this Agreement or by law referred to below) to or upon the Sellers or any other Person (each and all of which demands, presentments, protests, advertisements and notices are hereby waived), may (and at the direction of the Required Buyers shall) in such circumstances forthwith collect, receive, appropriate and realize upon the Repurchase Assets, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Repurchase Assets or any part thereof (or contract to do any of the foregoing), in one or more parcels or as an entirety at public or private sale or sales, at any exchange, broker’s board or office of Administrative Agent or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. Administrative Agent shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Repurchase Assets so sold, free of any right or equity of redemption in the Sellers, which right or equity is hereby waived or released. Each Seller further agrees, at Administrative Agent’s request, to assemble the Repurchase Assets and make them available to Administrative Agent at places which Administrative Agent shall reasonably select, whether at either of the Sellers’ premises or elsewhere. Administrative Agent shall apply the net proceeds of any such collection, recovery, receipt, appropriation, realization or sale, after deducting all reasonable (under the circumstances) out-of-pocket costs and expenses of every kind actually incurred therein or incidental to the care or safekeeping of any of the Repurchase Assets or in any way relating to the Repurchase Assets or the rights of Administrative Agent hereunder, including reasonable attorneys’ fees and disbursements of Administrative Agent or Buyers, to the payment in whole or in part of the Obligations, in such order as Administrative Agent may elect (or shall elect at the direction of the Required Buyers), and only after such application and after the payment by Administrative Agent of any other amount required or permitted by any provision of law, including Section 9‑615 of the Uniform Commercial Code, need Administrative Agent account for the surplus, if any, to the related Seller. To the extent permitted by applicable law, each Seller waives all claims, damages and demands it may acquire against Administrative Agent arising out of the exercise by Administrative Agent of any of its rights hereunder, other than those claims, damages and demands arising from the gross negligence or willful misconduct of Administrative Agent. If any notice of a proposed sale or other disposition of Repurchase Assets shall be required by law, such notice shall be deemed reasonable and proper if given at least ten (10) days before such sale or other disposition. Each Seller, jointly and severally, shall remain liable for any deficiency (plus accrued interest thereon as contemplated herein) if the proceeds of any sale or other disposition of the Repurchase Assets are insufficient to pay the Obligations and the fees and disbursements in amounts reasonable under the circumstances, of any attorneys employed by Administrative Agent

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to collect such deficiency. Notwithstanding anything to the contrary herein or in any of the other Program Agreements, the remedies set forth in this Section 4.07 concerning any actions with respect to the MSRs arising under or related to any Servicing Contract shall be subject to the Acknowledgment Agreement entered into with Fannie Mae.

17.8 Limitation on Duties Regarding Preservation of Repurchase Assets. Administrative Agent’s duty with respect to the custody, safekeeping and physical preservation of the Repurchase Assets in its possession, under Section 9‑207 of the Uniform Commercial Code or otherwise, shall be to deal with it in the same manner as Administrative Agent deals with similar property for its own account. Neither Administrative Agent nor any of its directors, officers or employees shall be liable for failure to demand, collect or realize upon all or any part of the Repurchase Assets or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Repurchase Assets upon the request of any Seller or otherwise.

17.9 Powers Coupled with an Interest. All authorizations and agencies herein contained with respect to the Repurchase Assets are irrevocable and powers coupled with an interest.

17.10 Release of Security Interest. Upon the latest to occur of (a) the repayment to Administrative Agent and Buyers of all Obligations hereunder, and (b) the occurrence of the Termination Date, Administrative Agent shall release its security interest in any remaining Repurchase Assets hereunder and shall promptly execute and deliver to the related Seller such documents or instruments as such Seller shall reasonably request to evidence such release.

17.11 Reinstatement. All security interests created by this Article IV shall continue to be effective, or be reinstated, as the case may be, if at any time any payment, or any part thereof, of any Obligation of the Sellers is rescinded or must otherwise be restored or returned by Administrative Agent or Buyers upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Sellers or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Sellers or any substantial part of their property, or otherwise, all as if such release had not been made.

17.12 Subordination. Neither of the Sellers shall seek in any Insolvency Event of the Issuer and Co-Issuer to be treated as part of the same class of creditors as Administrative Agent and Buyers and shall not oppose any pleading or motion by Administrative Agent and Buyers advocating that Administrative Agent and Buyers and such Seller should be treated as separate classes of creditors. Each Seller acknowledges and agrees that its rights with respect to the Repurchase Assets are and shall continue to be at all times while the obligations are outstanding junior and subordinate to the rights of Administrative Agent and Buyers under this Agreement.

SECTION 18.

CONDITIONS PRECEDENT

18.1 Initial Transaction. The obligation of Administrative Agent and Buyers to enter into Transactions with the Sellers hereunder is subject to the satisfaction, immediately prior to or concurrently with the entering into such Transaction, of the condition precedent that

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Administrative Agent and Buyers shall have received all of the following items, each of which shall be satisfactory to Administrative Agent and its counsel in form and substance:

(a) Program Agreements and Note. The Program Agreements and Note, in all instances duly executed and delivered by the parties thereto and being in full force and effect, free of any modification, breach or waiver.

(b) Security Interest. Evidence that all other actions necessary or, in the opinion of Administrative Agent, desirable to perfect and protect Administrative Agent’s interest in the Repurchase Assets have been taken, including duly authorized and filed Uniform Commercial Code financing statements on Form UCC‑1.

(c) Organizational Documents. A certificate of the corporate secretary of each of the Sellers in form and substance acceptable to Administrative Agent, attaching certified copies of each Seller’s certificates of formation, operating agreements and corporate resolutions approving the Program Agreements and transactions thereunder (either specifically or by general resolution) and all documents evidencing other necessary corporate action or governmental approvals as may be required in connection with the Program Agreements.

(d) Good Standing Certificate. A certified copy of a good standing certificate from the jurisdiction of organization of each Seller, dated as of no earlier than the date ten (10) Business Days prior to the Effective Date.

(e) Incumbency Certificate. An incumbency certificate of the corporate secretary of each of Sellers, certifying the names, true signatures and titles of the representatives duly authorized to request transactions hereunder and to execute the Program Agreements.

18.2 All Transactions. The obligation of Administrative Agent and Buyers to enter into each Transaction pursuant to this Agreement is subject to the following conditions precedent:

(a) Transaction Notice and Asset Schedule. In accordance with Section 2.02 hereof, Administrative Agent shall have received from the related Seller a Transaction Notice with an updated Asset Schedule which includes the Note and any Additional Balance, if applicable, related to a proposed Transaction hereunder on such Business Day. Buyers shall have received a copy of the Note and any Additional Balance, if applicable.

(b) No Margin Deficit. After giving effect to each new Transaction, the aggregate outstanding amount of the Purchase Price shall not exceed the Asset Value of the Note then in effect.

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(d) Requirements of Law. Administrative Agent and Buyers shall not have determined that the introduction of or a change in any Requirement of Law or in the interpretation or administration of any Requirement of Law applicable to Administrative Agent and Buyers has made it unlawful, and no Governmental Authority shall have asserted that it is unlawful, for Administrative Agent or Buyers to enter into Transactions with a Pricing Rate based on Base Rate.

(e) Representations and Warranties. Both immediately prior to the related Transaction and also after giving effect thereto and to the intended use thereof, the representations and warranties made by the Sellers in each Program Agreement shall be true, correct and complete on and as of such Purchase Date in all material respects with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).

(f) Note. Administrative Agent shall have received the Note and evidence of the Additional Balances relating to any Purchased Assets, which is in form and substance satisfactory to Administrative Agent in its sole discretion.

(g) Material Adverse Change. None of the following shall have occurred and/or be continuing:

(A) a Buyer’s corporate bond rating as calculated by S&P or Moody’s has been lowered or downgraded to a rating below investment grade by S&P or Moody’s;

(B) an event or events shall have occurred in the good faith determination of Administrative Agent resulting in the effective absence of a “lending market” for financing debt obligations secured by mortgage loans or servicing receivables or securities backed by mortgage loans or servicing receivables or an event or events shall have occurred resulting in Buyers not being able to finance the Note through the “lending market” with traditional counterparties at rates which would have been reasonable prior to the occurrence of such event or events; or

(C) there shall have occurred a material adverse change in the financial condition of a Buyer which affects (or can reasonably be expected to affect) materially and adversely the ability of such Buyer to fund its obligations under this Agreement.

(h) Maintenance of Profitability. VFN Guarantor shall not permit (i) Net Income before taxes, calculated without regard to any market-driven value changes on securities, mortgage servicing rights, other assets owned by VFN Guarantor and any hedge instruments related to such securities, rights and other assets for the Test Period ending June 2022 to be less than $1.00 or (ii) thereafter, Net Income, for each other Test Period, to be less than $1.00 for one of the two prior Test Periods.

(i) Fees. Administrative Agent and Buyers shall have received payment in full of all fees and Expenses (including the Commitment Fee and any other fees set forth in any side

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letter related to this Agreement, if any) which are payable hereunder to Administrative Agent and Buyers on or before such date.

(j) Threshold Event. No Threshold Event shall occur after giving effect to such Transaction.

(k) Rating Trigger Event. No Rating Trigger Event has occurred.

(l) Capital Event. Citi Buyer has not provided written notice to Sellers and Administrative Agent of the occurrence of a Capital Event.

18.3 Closing Subject to Conditions Precedent. The obligation of Buyers to purchase the Note is subject to the satisfaction on or prior to the Effective Date of the following conditions (any or all of which may be waived by Administrative Agent and Buyers):

(a) Performance by the Issuer, Co-Issuer, PMC and PMH. All the terms, covenants, agreements and conditions of the Transaction Documents to be complied with, satisfied, observed and performed by Issuer, Co-Issuer, PMC and PMH on or before the Effective Date shall have been complied with, satisfied, observed and performed in all material respects.

(b) Representations and Warranties. Each of the representations and warranties of Issuer, Co-Issuer, PMC and PMH made in the Transaction Documents shall be true and correct in all material respects as of the Effective Date (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof and except to the extent they expressly relate to an earlier or later time).

(c) Officer’s Certificate. Administrative Agent and Buyers shall have received in form and substance reasonably satisfactory to Administrative Agent and Buyers an officer’s certificate from PMC, an officer’s certificate from PMH, a certificate of an Authorized Officer of Issuer and a certificate of an Authorized Officer of Co-Issuer, dated the Effective Date, each certifying to the satisfaction of the conditions set forth in the preceding paragraphs (a) and (b), in each case together with incumbency, by-laws, resolutions and good standing.

(d) Opinions of Counsel to Issuer, Co-Issuer, PMC and PMH. Counsel to Issuer, Co-Issuer, PMC and PMH shall have delivered to Administrative Agent and Buyers favorable opinions, dated the Effective Date and satisfactory in form and substance to Administrative Agent and Buyers and their respective counsel, relating to corporate matters, enforceability, securities contract, non-consolidation and perfection and an opinion as to which state’s law applies to security interest and perfection matters. In addition to the foregoing, PMC, as servicer, shall have caused its counsel to deliver to Administrative Agent and Buyers an opinion as to certain tax matters dated as of the Effective Date, satisfactory in form and substance to Administrative Agent and Buyers and their respective counsel.

(e) Officer’s Certificate of Indenture Trustee. Administrative Agent and Buyers shall have received in form and substance reasonably satisfactory to Administrative Agent and Buyers an Officer’s Certificate from Indenture Trustee, dated the Effective Date, with respect to the Base Indenture, together with incumbency and good standing.

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(f) Opinions of Counsel to the Indenture Trustee. Counsel to Indenture Trustee shall have delivered to Administrative Agent and Buyers a favorable opinion dated the Effective Date and reasonably satisfactory in form and substance to Administrative Agent and Buyers and their respective counsel related to the enforceability of the Base Indenture.

(g) Opinions of Counsel to the Owner Trustee. Delaware counsel to the Owner Trustee of Issuer and Co-Issuer shall have delivered to Administrative Agent and Buyers favorable opinions regarding the formation, existence and standing of Issuer and Co-Issuer and of Issuer’s and Co-Issuer’s execution, authorization and delivery of each of the Transaction Documents to which it is a party and such other matters as Administrative Agent or Buyers may reasonably request, dated the Effective Date and reasonably satisfactory in form and substance to Administrative Agent and Buyers and their respective counsel.

(h) Filings and Recordations. Administrative Agent and Buyers shall have received evidence reasonably satisfactory to Administrative Agent and Buyers of (i) the completion of all recordings, registrations and filings as may be necessary or, in the reasonable opinion of Administrative Agent or Buyers, desirable to perfect or evidence: (A) the assignment by PMC, as a Seller, and PMH, as a Seller, to Issuer and Co-Issuer, respectively, of the ownership interest in the Collateral conveyed pursuant to the PC Repurchase Agreement and the proceeds thereof and (ii) the completion of all recordings, registrations, and filings as may be necessary or, in the reasonable opinion of Administrative Agent or Buyers, desirable to perfect or evidence the grant of a first priority perfected security interest in Issuer’s and Co-Issuer’s ownership interest in the Collateral in favor of Indenture Trustee, subject to no Liens prior to the Lien created by the Base Indenture.

(i) Documents. Administrative Agent shall have received the Note and Administrative Agent and Buyers shall have received a duly executed counterpart of each of the other Transaction Documents, in form acceptable to Administrative Agent and Buyers and Administrative Agent and each and every document or certification delivered by any party in connection with any such Transaction Documents or the Note, and each such document shall be in full force and effect.

(j) Actions or Proceedings. No action, suit, proceeding or investigation by or before any Governmental Authority shall have been instituted to restrain or prohibit the consummation of, or to invalidate, any of the transactions contemplated by the Transaction Documents, the Note and the documents related thereto in any material respect.

(k) Approvals and Consents. All Governmental Actions of all Governmental Authorities required with respect to the transactions contemplated by the Transaction Documents, the Note and the documents related thereto shall have been obtained or made.

(l) Fees, Costs and Expenses. The fees, costs and expenses payable by Issuer, Co-Issuer, PMC and PMH on or prior to the Effective Date pursuant to this Agreement or any other Transaction Document shall have been paid in full.

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(m) Other Documents. PMC and PMH shall have furnished to Administrative Agent and Indenture Trustee such other opinions, information, certificates and documents as Administrative Agent and Indenture Trustee may reasonably request.

(n) MSR Valuation Agent. PMC shall have engaged the MSR Valuation Agent pursuant to an agreement reasonably satisfactory to Administrative Agent.

(o) Proceedings in Contemplation of Sale of the Note. All actions and proceedings undertaken by Issuer, Co-Issuer, PMC and PMH in connection with the issuance and sale of the Note as herein contemplated shall be satisfactory in all respects to Administrative Agent and its counsel.

(p) Advance Rate Trigger Event, Servicer Termination Events, Events of Default and Funding Interruption Events. No Advance Rate Trigger Event, Servicer Termination Event, Event of Default or Funding Interruption Event shall then be occurring.

(q) Satisfaction of Conditions. Each of the Funding Conditions shall have been satisfied.

(r) Rating Trigger Event. No Rating Trigger Event has occurred.

(s) Capital Event. Citi Buyer has not provided written notice to Seller and Administrative Agent of the occurrence of a Capital Event.

If any condition specified in this Section 5.03 shall not have been fulfilled when and as required to be fulfilled, this Agreement may be terminated by the Administrative Agent and the Buyers by notice to PMC and to PMH at any time at or prior to the Effective Date, and neither the Administrative Agent nor any Buyer shall incur any liability as a result of such termination.

SECTION 19.

COVENANTS

Each of the Sellers covenants and agrees, solely with respect to itself, that until the payment and satisfaction in full of all Obligations, whether now existing or arising hereafter, shall have occurred:

19.1 Litigation. Each of the Sellers will promptly, and in any event within ten (10) days after service of process on any of the following, give to Administrative Agent and each Buyer notice of all litigation, actions, suits, arbitrations, investigations (including any of the foregoing which are threatened or pending) or other legal or arbitrable proceedings affecting either of the Sellers or any of its Subsidiaries or affecting any of the Property of any of them before any Governmental Authority that (i) questions or challenges the validity or enforceability of any of the Program Agreements or any action to be taken in connection with the transactions contemplated hereby, (ii) makes a claim individually or in the aggregate in an amount greater than 5% of either of the Sellers’ Adjusted Tangible Net Worth, or (iii) which, individually or in the aggregate, if adversely determined, could be reasonably likely to have a Material Adverse Effect. On the fifth

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(5th) day of each calendar month (or if such day is not a Business Day, the next succeeding Business Day), Sellers will provide to Administrative Agent and each Buyer a litigation docket listing all litigation, actions, suits, arbitrations, investigations (including any of the foregoing which are threatened or pending) or other legal or arbitrable proceedings affecting Sellers or any of their Subsidiaries or affecting any of the Property of any of them before any Governmental Authority. Sellers will promptly provide to Administrative Agent and each Buyer notice of any judgment, which with the passage of time, could cause an Event of Default hereunder.

19.2 Prohibition of Fundamental Changes. Neither Seller shall enter into any transaction of merger or consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or dissolution) or sell all or substantially all of its assets; provided, that either Seller may merge or consolidate with (a) any wholly owned subsidiary of the related Seller, or (b) any other Person if the related Seller is the surviving entity; and provided further, that if after giving effect thereto, no Default would exist hereunder.

19.3 Monthly Reporting. Sellers shall ensure that each Buyer receives all reports and information that the Administrative Agent and the VFN Noteholders are entitled to receive pursuant to the Indenture (including the Advance Verification Agent Report, as delivered on a quarterly or other periodic basis, and all other reports and information delivered by the Issuer, the Co-Issuer, the Administrator, the Co-Issuer Administrator or the Indenture Trustee relating to the Note). Each Buyer agrees to be bound by any confidentiality provisions reasonably requested by Sellers and upon request of Sellers execute and deliver a separate confidentiality agreement memorializing such provisions.

19.4 No Adverse Claims. Each of the Sellers warrants and will defend the right, title and interest of Administrative Agent and Buyers in and to all Purchased Assets against all adverse claims and demands.

19.5 Assignment. Except as permitted herein, neither Seller shall sell, assign, transfer or otherwise dispose of, or grant any option with respect to, or pledge, hypothecate or grant a security interest in or lien on or otherwise encumber (except pursuant to the Program Agreements), any of the Purchased Assets or any interest therein, provided that this Section 6.05 shall not prevent any transfer of Purchased Assets in accordance with the Program Agreements.

19.6 Security Interest. Each of the Sellers shall do all things necessary to preserve the Purchased Assets so that they remain subject to a first priority perfected security interest hereunder. Without limiting the foregoing, each of the Sellers will comply with all rules, regulations and other laws of any Governmental Authority and cause the Purchased Assets to comply with all applicable rules, regulations and other laws. Neither Seller will allow any default for which each of the Sellers is responsible to occur under any Purchased Assets or any Program Agreement and each of the Sellers shall fully perform or cause to be performed when due all of its obligations under any Purchased Assets and any Program Agreement.

19.7 Records. (a) Each of the Sellers shall collect and maintain or cause to be collected and maintained all Records relating to the Purchased Assets in accordance with industry custom and practice for assets similar to the Purchased Assets, including those maintained pursuant to Section 6.08, and all such Records shall be in the related Seller’s or Administrative Agent’s

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possession unless Administrative Agent otherwise approves. Each of the Sellers will maintain all such Records in good and complete condition in accordance with industry practices for assets similar to the Purchased Assets and preserve them against loss.

(b) For so long as Administrative Agent and Buyers have an interest in or lien on any Purchased Assets, the Sellers will hold or cause to be held all related Records in trust for Administrative Agent and Buyers. The Sellers shall notify, or cause to be notified, every other party holding any such Records of the interests and liens in favor of Administrative Agent and Buyers granted hereby.

(c) Upon reasonable advance notice from Administrative Agent or a Buyer, the Sellers shall (x) make any and all such Records available to Administrative Agent and each Buyer to examine any such Records, either by its own officers or employees, or by agents or contractors, or both, and make copies of all or any portion thereof, and (y) permit Administrative Agent or any Buyer or their authorized agents to discuss the affairs, finances and accounts of each Seller with its chief operating officer and chief financial officer and to discuss the affairs, finances and accounts of each Seller with its independent certified public accountants.

19.8 Books. Each of the Sellers shall keep or cause to be kept in reasonable detail books and records of account of its assets and business and shall clearly reflect therein the transfer of Purchased Assets to Buyers.

19.9 Approvals. Each of the Sellers shall maintain all licenses, permits or other approvals necessary for each of the Sellers to conduct its business and to perform its obligations under the Program Agreements, and each of the Sellers shall conduct its business strictly in accordance with applicable law.

19.10 Material Change in Business. Neither Seller shall make any material change in the nature of its business as carried on at the Closing Date, with respect to the PMC Seller, and the Effective Date, with respect to the PMH Seller.

19.11 Distributions. If an Event of Default has occurred and is continuing, Sellers shall not pay any dividends with respect to any capital stock or other equity interests in such entity, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of Sellers.

19.12 Applicable Law. The Sellers shall comply with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority.

19.13 Existence. The Sellers shall preserve and maintain its legal existence and all of its material rights, privileges, licenses and franchises.

19.14 Chief Executive Office; Jurisdiction of Organization. Each Seller shall not move its chief executive office from the address referred to in Section 3.17 or change its jurisdiction of organization from the jurisdiction referred to in Section 3.17 unless it shall have provided Administrative Agent at least thirty (30) days’ prior written notice of such change.

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19.15 Taxes. Each of the Sellers shall timely file all tax returns that are required to be filed by it and shall timely pay and discharge all taxes, assessments and governmental charges or levies imposed on it or on its income or profits or on any of its property prior to the date on which penalties attach thereto, except for any such tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained.

19.16 Transactions with Affiliates. Other than the purchase of the Note, Sellers will not enter into any transaction, including any purchase, sale, lease or exchange of property or the rendering of any service, with any Affiliate unless such transaction (a) does not result in a Default hereunder, (b) is in the ordinary course of the Sellers’ business and (c) is upon fair and reasonable terms no less favorable to Sellers than they would obtain in a comparable arm’s length transaction with a Person which is not an Affiliate, or make a payment that is not otherwise permitted by this Section 6.16 to any Affiliate.

19.17 [Reserved].

19.18 [Reserved].

19.19 True and Correct Information. All information, reports, exhibits, schedules, financial statements or certificates of Sellers, any Affiliate thereof or any of their officers furnished to Administrative Agent and Buyers hereunder and during Administrative Agent’s and Buyers’ diligence of Sellers are and will be true and complete in all material respects and do not omit to disclose any material facts necessary to make the statements herein or therein, in light of the circumstances in which they are made, not misleading. All required financial statements, information and reports delivered by the related Seller to Administrative Agent and Buyers pursuant to this Agreement shall be prepared in accordance with U.S. GAAP, or, if applicable, to SEC filings, the appropriate SEC accounting regulations.

19.20 No Pledge. Except as contemplated herein, Sellers shall not pledge, grant a security interest or assign any existing or future rights to service any of the Repurchase Assets or pledge or grant to any other Person any security interest in the Note.

19.21 Plan Assets. Neither Seller shall act on behalf of an employee benefit plan as defined in Section 3 of Title I of ERISA, or a plan described in Section 4975(e)(1) of the Code and Sellers shall not use “plan assets” within the meaning of 29 CFR § 2510.3 101, as amended by Section 3(42) of ERISA to engage in this Agreement or any Transaction hereunder. Transactions to or with Sellers shall not be subject to any state or local statute regulating investments of or fiduciary obligations with respect to governmental plans within the meaning of Section 3(32) of ERISA.

19.22 Sharing of Information. Each of the Sellers shall allow Administrative Agent and Buyers to exchange information related to each of the Sellers and the Transactions hereunder with third party lenders and each of the Sellers shall permit each third party lender to share such information with Administrative Agent and Buyers.

19.23 Modification of the Base Indenture and Series 2017‑VF1 Indenture Supplement. Sellers shall not consent with respect to any of the Base Indenture and the Series

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2017‑VF1 Indenture Supplement related to the Purchased Assets, to (i) the modification, amendment or termination of such the Base Indenture and the Series 2017‑VF1 Indenture Supplement, (ii) the waiver of any provision of the Base Indenture and the Series 2017‑VF1 Indenture Supplement, or (iii) the resignation of PMC as servicer under the Base Indenture and the Series 2017‑VF1 Indenture Supplement, or the assignment, transfer, or material delegation of any of its rights or obligations, under such the Base Indenture and the Series 2017‑VF1 Indenture Supplement, without the prior written consent of Administrative Agent and each Buyer exercised in such Person’s sole discretion.

19.24 Reporting Requirements. (a) Sellers shall furnish to Administrative Agent and each Buyer (i) promptly, copies of any material and adverse notices (including notices of defaults, breaches, potential defaults or potential breaches) and any material financial information that is not otherwise required to be provided by Sellers hereunder which is given to Sellers’ lenders, (ii) promptly, notice of the occurrence of (1) any Event of Default hereunder; (2) any default or material breach by any Seller of any obligation under any Program Agreement or any material contract or agreement of such Seller or (3) the occurrence of any event or circumstance that such party reasonably expects has resulted in, or will, with the passage of time, result in, a Material Adverse Effect or an Event of Default and (iii) the following:

(1) as soon as available and in any event within forty (40) calendar days after the end of each calendar month, the unaudited balance sheet of each Seller, as at the end of such period and the related unaudited consolidated statements of income for each Seller for such period and the portion of the fiscal year through the end of such period, accompanied by a certificate of a Responsible Officer of each Seller, which certificate shall state that said consolidated financial statements or financial statements, as applicable, fairly present in all material respects the consolidated financial condition or financial condition, as applicable, and results of operations of each Seller in accordance with GAAP, consistently applied, as at the end of, and for, such period (subject to normal year-end adjustments);

(2) as soon as available and in any event within forty (40) calendar days after the end of each calendar quarter, the unaudited cash flow statements of each Seller, as at the end of such period and the portion of the fiscal year through the end of such period, accompanied by a certificate of a Responsible Officer of each Seller, which certificate shall state that said consolidated financial statements or financial statements, as applicable, fairly present in all material respects the consolidated financial condition or financial condition, as applicable, and results of operations of each Seller, in accordance with GAAP, consistently applied, as at the end of, and for, such period (subject to normal year-end adjustments);

(3) as soon as available and in any event within ninety (90) days after the end of each fiscal year of each Seller, the balance sheet of each Seller, as at the end of such fiscal year and the related consolidated statements of income and retained earnings and of cash flows for each Seller for such year, setting forth in comparative form the figures for the previous

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year, accompanied by an opinion thereon of independent certified public accountants of recognized national standing, which opinion and the scope of audit shall be acceptable to Administrative Agent and each Buyer in their sole discretion, shall have no “going concern” qualification and shall state that said consolidated financial statements or financial statements, as applicable, fairly present the consolidated financial condition or financial condition, as applicable, and results of operations of each Seller as at the end of, and for, such fiscal year in accordance with GAAP;

(4) such other prepared statements that Administrative Agent or a Buyer may reasonably request;

(5) from time to time such other information regarding the financial condition, operations, or business of each Seller as Administrative Agent or a Buyer may reasonably request;

(6) as soon as reasonably possible, and in any event within thirty (30) days after a Responsible Officer of each Seller has knowledge of the occurrence of any ERISA Event of Termination, stating the particulars of such ERISA Event of Termination in reasonable detail;

(7) as soon as reasonably possible, notice of any of the following events:

a. any material dispute, litigation, investigation, proceeding or suspension between any Seller on the one hand, and any Governmental Authority or any Person;

b. any material change in accounting policies or financial reporting practices of any Seller;

c. any material issues raised upon examination of any Seller or such Seller’s facilities by any Governmental Authority;

d. any material change in the Indebtedness of any Seller, including any default, renewal, non-renewal, termination, increase in available amount or decrease in available amount related thereto;

e. promptly upon receipt of notice or knowledge of any lien or security interest (other than security interests created hereby or by the other Program Agreements) on, or claim asserted against, any of the Purchased Assets; and

f. any other event, circumstance or condition that has resulted, or has a reasonable possibility of resulting, in a Material Adverse Effect with respect to any Seller.

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(8) promptly upon the creation, incurrence, assumption or existence of any of the following, notice thereof:

a. any Guarantees, except (x) to the extent reflected in any Seller’s financial statements or notes thereto and (y) to the extent the aggregate Guarantees of such Seller do not exceed $250,000; and

(b) Officer’s Certificates. Each of the Sellers will furnish to Administrative Agent and each Buyer, at the time such Seller furnishes each set of financial statements pursuant to Section 6.24(a)(iii)(1), (2) or (3) above, an Officer’s Compliance Certificate of such Seller.

(c) Other. Each of the Sellers shall deliver to Administrative Agent and each Buyer any other reports or information reasonably requested by Administrative Agent or a Buyer or as otherwise required pursuant to this Agreement and the Indenture (including the Advance Verification Agent Report, as delivered on a quarterly or other periodic basis, and all other reports and information delivered by the Issuer, the Co-Issuer, the Administrator, the Co-Issuer Administrator or the Indenture Trustee relating to the Note).

(d) Regulatory Reporting Compliance. The PMC Seller shall, on or before the last Business Day of the fifth (5th) month following the end of each of the PMC Seller’s fiscal years (December 31), beginning with the fiscal year ending in 2022, deliver to Administrative Agent and each Buyer a copy of the results of any Uniform Single Attestation Program for Mortgage Bankers or an Officer’s Certificate that satisfies the requirements of Item 1122(a) of Regulation AB, an independent public accountant’s report that satisfies the requirements of Item 1123 of Regulation AB, or similar review conducted on the PMC Seller by its accountants, and such other reports as the PMC Seller may prepare relating to its servicing functions as Seller.

19.25 Liens on Substantially All Assets. Neither of the Sellers shall grant a security interest to any Person other than Administrative Agent or an Affiliate of Administrative Agent in substantially all assets of the related Seller unless Sellers have entered into an amendment to this Agreement that grants to Administrative Agent a pari passu security interest on such assets.

19.26 Litigation Summary. On each date on which the Officer’s Compliance Certificate is delivered, Sellers shall provide to Administrative Agent and each Buyer a true and correct summary of all material actions, notices, proceedings and investigations pending with respect to which each of the Sellers has received service of process or other form of notice or, to the best of the related Seller’s knowledge, threatened against it, before any court, administrative or governmental agency or other regulatory body or tribunal.

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19.27 Hedging. On each date on which the Officer’s Compliance Certificate is delivered, each of the Sellers shall provide to the Administrative Agent and each Buyer, with respect to its respective portfolio, a report comparing the change in mark to market of hedging contracts to the change in mark to market of MSRs across such Seller’s entire portfolio for the prior calendar month.

19.28 MSR Valuation. Sellers shall provide to Administrative Agent and each Buyer a detailed summary of the fair market value and Market Value Percentage of MSRs from the most recently delivered Market Value Report in accordance with the timing requirements of Section 3.3(g) of the Base Indenture.

19.29 Most Favored Status. Sellers, Administrative Agent and Buyers each agree that should any Seller or any Affiliate thereof enter into a repurchase agreement or credit facility with any Person other than Administrative Agent or a Buyer or an Affiliate of Administrative Agent or a Buyer which by its terms provides any of the following (each, a “More Favorable Agreement”):

(a) more favorable terms with respect to any guaranties or financial covenants of either PMC Seller or PMH Seller, including covenants covering the same or similar subject matter set forth or referred to in Section 6.11 hereof and Section 2 of the Pricing Side Letter;

(b) a security interest to any Person other than Administrative Agent or an Affiliate of Administrative Agent in substantially all assets of Sellers or any Affiliate thereof; or

(c) a requirement that each of the Sellers has added or will add any Person other than Administrative Agent or an Affiliate of Administrative Agent as a loss payee under the related Seller’s Fidelity Insurance;

then the terms of this Agreement shall be deemed automatically amended to include such more favorable terms contained in such More Favorable Agreement, such that such terms operate in favor of Administrative Agent, Buyers or an Affiliate of Administrative Agent or Buyers; provided, that in the event that such More Favorable Agreement is terminated, upon notice by Sellers to Administrative Agent of such termination, the original terms of this Agreement shall be deemed to be automatically reinstated. Administrative Agent, Sellers and Buyers further agree to execute and deliver any new guaranties, agreements or amendments to this Agreement evidencing such provisions, provided that the execution of such amendment shall not be a precondition to the effectiveness of such amendment, but shall merely be for the convenience of the parties hereto. Promptly upon Sellers or any Affiliate thereof entering into a repurchase agreement or other credit facility with any Person other than Administrative Agent or a Buyer, Sellers shall deliver to Administrative Agent and each Buyer a true, correct and complete copy of such repurchase agreement, loan agreement, guaranty or other financing documentation.

19.30 Servicer Administration. If at any time PMC intends to service the Mortgage Loans directly without a subservicer, PMC shall not less than 120 days prior to the anticipated servicing transfer date, provide notice to Administrative Agent of such intention and solicit Administrative Agent’s prior written consent, which Administrative Agent shall have sixty (60) days from the receipt of the notice to provide and which consent may not be unreasonably

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withheld. If Administrative Agent denies the request for consent in writing, then PMC shall repurchase the Note not later than the later of (x) the sixtieth (60th) day following receipt of Administrative Agent’s denial letter or (y) such anticipated servicing transfer date.

19.31 Threshold Events and Commitment Modifications. Sellers shall not request any Transaction that would cause a Threshold Event for any Buyer. Sellers shall provide prompt notice of any Commitment Modification and/or Maximum Purchase Price Modification for any Buyer to Administrative Agent and each Buyer.

SECTION 20.

DEFAULTS/RIGHTS AND REMEDIES OF BUYER UPON DEFAULT

20.1 Events of Default. Each of the following events or circumstances shall constitute an “Event of Default”:

(a) Payment Failure. Failure of any Seller to (i) make any payment (which failure continues for a period of two (2) Business Days following written notice (which may be in electronic form) from Administrative Agent) of Price Differential or Repurchase Price or any other sum which has become due, on a Price Differential Payment Date or a Repurchase Date or otherwise, whether by acceleration or otherwise, under the terms of this Agreement, any other warehouse and security agreement or any other document, in each case evidencing or securing Indebtedness of Sellers to Administrative Agent or Buyers to any Affiliate of Administrative Agent or Buyers, or (ii) cure any Margin Deficit when due pursuant to Section 2.05 hereof.

(b) Cross Default. Any Seller or Affiliates thereof shall be in default under (i) any Program Agreement or any Other Financing Agreement; provided that any such default under the Indenture shall constitute an “Event of Default” only if it continues unremedied for a period of two (2) Business Days after a Responsible Officer of either Seller obtains actual knowledge of such failure, or receives written notice from Administrative Agent of such default; (ii) any Indebtedness, in the aggregate, in excess of $1 million of either Seller or any Affiliate thereof which default (1) involves the failure to pay a matured obligation, or (2) permits the acceleration of the maturity of obligations by any other party to or beneficiary with respect to such Indebtedness, or (iii) any other contract or contracts, in the aggregate in excess of $1 million to which either Seller or any Affiliate thereof is a party which default (1) involves the failure to pay a matured obligation, or (2) permits the acceleration of the maturity of obligations by any other party to or beneficiary of such contract.

(c) Assignment. Assignment or attempted assignment by any Seller of this Agreement or any rights hereunder without first obtaining the specific written consent of Administrative Agent, or the granting by any Seller of any security interest, lien or other encumbrances on any Purchased Assets to any person other than Administrative Agent.

(d) Insolvency. An Act of Insolvency shall have occurred with respect to any Seller or any Affiliate thereof.

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(e) Material Adverse Change. Any material adverse change in the Property, business, financial condition or operations of any Seller or any of its Affiliates shall occur, in each case as determined by Administrative Agent in its sole good faith discretion, or any other condition shall exist which, in Administrative Agent’s sole good faith discretion, constitutes a material impairment of such Seller’s ability to perform its obligations under this Agreement or any other Program Agreement.

(f) Immediate Breach of Representation or Covenant or Obligation. A breach by any Seller of any of the representations, warranties or covenants or obligations set forth in Section 3.01 (Seller Existence), Section 3.07 (Solvency), Section 3.12 (Material Adverse Change), Section 3.22 (Other Indebtedness), Section 6.02 (Prohibition of Fundamental Changes), Section 6.13 (Existence), Section 6.20 (No Pledge) or Section 6.21 (Plan Assets) of this Agreement.

(g) Additional Breach of Representation or Covenant. A material breach by any Seller of any other material representation, warranty or covenant set forth in this Agreement (and not otherwise specified in Section 7.01(f) above), if such breach is not cured within five (5) Business Days or, in the case of a breach of Section 6.02, three (3) Business Days, and in the case of a breach of Section 2 of the Pricing Side Letter (Financial Covenants), one (1) Business Day.

(h) Change in Control. The occurrence of a Change in Control.

(i) Failure to Transfer. Either of the Sellers fails to transfer the Note or a material portion of the other Purchased Assets to Administrative Agent on the applicable Purchase Date (provided Administrative Agent has tendered the related Purchase Price on behalf of Buyers).

(k) Government Action. Any Governmental Authority or any person, agency or entity acting or purporting to act under governmental authority shall have taken any action to condemn, seize or appropriate, or to assume custody or control of, all or any substantial part of the Property of any Seller or any Affiliate thereof, or shall have taken any action to displace the management of any Seller or any Affiliate thereof or to curtail its authority in the conduct of the business of any Seller or any Affiliate thereof, or takes any action in the nature of enforcement to remove, limit or restrict the approval of Sellers or Affiliate as an issuer, buyer or a seller/servicer of mortgage loans or securities backed thereby, and such action provided for in this subparagraph (k) shall not have been discontinued or stayed within thirty (30) days.

(l) Inability to Perform. A Responsible Officer of any Seller or VFN Guarantor shall admit its inability to, or its intention not to, perform any of the Seller’s Obligations or VFN Guarantor’s obligations hereunder or the VFN Repo Guaranty.

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(m) Security Interest. This Agreement shall for any reason cease to create a valid, first priority security interest in any material portion of the Repurchase Assets purported to be covered hereby.

(n) Financial Statements. Any Seller’s audited annual financial statements or the notes thereto or other opinions or conclusions stated therein shall be qualified or limited by reference to the status of such Seller as a “going concern” or a reference of similar import.

(o) Validity of Agreement. For any reason, this Agreement at any time shall not be in full force and effect in all material respects or shall not be enforceable in all material respects in accordance with its terms, or any Lien granted pursuant thereto shall fail to be perfected and of first priority, or any Seller or any Affiliate of such Seller shall seek to disaffirm, terminate, limit or reduce its obligations hereunder or VFN Guarantor’s obligations under the VFN Repo Guaranty.

(p) VFN Guarantor Breach. A breach by VFN Guarantor of any material representation, warranty or covenant set forth in the VFN Repo Guaranty or any other Program Agreement, any “event of default” by VFN Guarantor under the VFN Repo Guaranty, any repudiation of the VFN Repo Guaranty by VFN Guarantor, or if the VFN Repo Guaranty is not enforceable against VFN Guarantor.

(q) Rating Trigger Event. To the extent a Rating Trigger Event has occurred and Seller fails to pay the Obligations outstanding on the date of such Rating Trigger Event in full on or before the conclusion of the Rating Trigger Event Amortization Period.

(r) Capital Event. To the extent a Capital Event has occurred and Seller fails to pay the Obligations outstanding on the date of such Capital Event in full on or before the conclusion of the Capital Event Amortization Period.

20.2 No Waiver. An Event of Default shall be deemed to be continuing unless expressly waived by Administrative Agent, at the direction of the Required Buyers, in writing.

20.3 Due and Payable.

(a) Event of Default. Upon the occurrence of any Event of Default which has not been waived in writing by Administrative Agent, Administrative Agent may (or shall, at the direction of the Required Buyers), by notice to the Sellers, declare all Obligations to be immediately due and payable, and any obligation of Administrative Agent and Buyers to enter into Transactions with the Sellers shall thereupon immediately terminate. Upon such declaration, the Obligations shall become immediately due and payable, both as to Purchase Price outstanding and Price Differential, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived, anything contained herein or other evidence of such Obligations to the contrary notwithstanding, except with respect to any Event of Default set forth in Section 7.01(d), in which case all Obligations shall automatically become immediately due and payable without the necessity of any notice or other demand, and any obligation of Administrative Agent and Buyers to enter into Transactions with the Sellers shall immediately terminate. Administrative Agent may (or shall at the direction of the Required Buyers) enforce payment of the same and exercise any or all of the rights, powers and remedies possessed by Administrative Agent and

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Buyers, whether under this Agreement or any other Program Agreement or afforded by applicable law.

(b) Rating Trigger Event. Upon the occurrence of a Rating Trigger Event, (i) the Obligations outstanding as of such date shall be immediately due and payable in full and the Sellers shall pay such amounts to the related Buyer on or before the conclusion of the Rating Trigger Event Amortization Period, and (ii) any obligations of any Buyer to enter into any Transactions with the Sellers shall thereupon immediately terminate. Upon the conclusion of the Rating Trigger Event Amortization Period, any outstanding Obligations as of such date owed to either Buyer shall become immediately due and payable, both as to Purchase Price outstanding and Price Differential, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived, anything contained herein or other evidence of such Obligations to the contrary notwithstanding. Each Buyer may enforce payment of the same and exercise any or all of the rights, powers and remedies possessed by such buyer, whether under this Agreement or any other Program Agreement or afforded by applicable law.

(c) Capital Event. On a Capital Event Notice Date, (i) the Obligations outstanding as of such date shall be immediately due and payable in full and the Sellers shall pay such amounts to the related Buyer on or before the conclusion of the Capital Event Amortization Period, and (ii) any obligation of any Buyer to enter into any Transactions with the Sellers shall thereupon immediately terminate. Upon the conclusion of the Capital Event Amortization Period, any outstanding Obligations as of such date owed to either Buyer, shall become immediately due and payable, both as to Purchase Price outstanding and Price Differential, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived, anything contained herein or other evidence of such Obligations to the contrary notwithstanding. Each Buyer may enforce payment of the same and exercise any or all of the rights, powers and remedies possessed by such Buyer, whether under this Agreement or any other Program Agreement or afforded by applicable law.

20.4 Fees. The remedies provided for herein are cumulative and are not exclusive of any other remedies provided by law. In addition to each Seller’s obligations contained in Section 3 of the Pricing Side Letter, each Seller, jointly and severally, agrees to pay to Administrative Agent reasonable attorneys’ fees and reasonable legal expenses incurred in enforcing Administrative Agent’s and Buyers’ rights, powers and remedies under this Agreement and each other Program Agreement.

20.5 Default Rate. Without regard to whether Administrative Agent has exercised any other rights or remedies hereunder, if an Event of Default shall have occurred and be continuing, the applicable Margin in respect of the Pricing Rate shall be increased, to the extent permitted by law, as set forth in clause (ii) of the definition of “Margin”.

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SECTION 21.

ENTIRE AGREEMENT; AMENDMENTS
AND WAIVERS; SEPARATE ACTIONS BY BUYER

21.1 Entire Agreement; Amendments. This Agreement (including the Schedules and Exhibits hereto) constitutes the entire agreement of the parties hereto and supersedes any and all prior or contemporaneous agreements, written or oral, as to the matters contained herein, and no modification or waiver of any provision hereof or any of the Program Agreements, nor consent to the departure by the Sellers therefrom, shall be effective unless the same is in writing, and then such waiver or consent shall be effective only in the specific instance, and for the purpose, for which it is given. This Agreement may not be amended, modified or supplemented except by a writing executed by the Sellers, Administrative Agent and Required Buyers.

21.2 Waivers, Separate Actions by Buyers. Any amendment or waiver effected in accordance with this Article VIII shall be binding upon Administrative Agent, Buyers and the Sellers; and Administrative Agent’s or a Buyer’s failure to insist upon the strict performance of any term, condition or other provision of this Agreement or any of the Program Agreements, or to exercise any right or remedy hereunder or thereunder, shall not constitute a waiver by Administrative Agent or such Buyer of any such term, condition or other provision or Default or Event of Default in connection therewith, nor shall a single or partial exercise of any such right or remedy preclude any other or future exercise, or the exercise of any other right or remedy; and any waiver of any such term, condition or other provision or of any such Default or Event of Default shall not affect or alter this Agreement or any of the Program Agreements, and each and every term, condition and other provision of this Agreement and the Program Agreements shall, in such event, continue in full force and effect and shall be operative with respect to any other then existing or subsequent Default or Event of Default in connection therewith. An Event of Default hereunder or under any of the Program Agreements shall be deemed to be continuing unless and until waived in writing by Administrative Agent and Buyers.

SECTION 22.

SUCCESSORS AND ASSIGNS

22.1 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, any portion thereof, or any interest therein. The Sellers shall not have the right to assign all or any part of this Agreement or any interest herein without the prior written consent of Administrative Agent and Buyers.

22.2 Participations and Transfers. (a) A Buyer may in accordance with applicable law at any time sell to one or more banks or other entities (“Participants”) participating interests in all or a portion of such Buyer’s rights and obligations under this Agreement and the other Program Agreements; provided, that (i) each Seller has consented to such sale; provided, however, any such Seller’s consent shall not be required in the event that (A) such Participant is an Affiliate of such Buyer or (B) an Event of Default has occurred; (ii) each such sale shall represent an interest in a Transaction in a Purchase Price of $1,000,000 or more and (iii) other than

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with respect to a participating interest consisting of a pro rata interest in all payments due to such Buyer under this Agreement and prior to an Event of Default such Buyer receives an opinion of a nationally recognized tax counsel experienced in such matters that such sale will not result in Issuer or Co-Issuer being subject to tax on its net income as an association (or publicly traded partnership) taxable as a corporation or a taxable mortgage pool taxable as a corporation, each for U.S. federal income tax purposes. In the event of any such sale by a Buyer of participating interests to a Participant, such Buyer shall remain a party to the Transaction for all purposes under this Agreement and Sellers shall continue to deal solely and directly with such Buyer in connection with its rights and obligations under this Agreement.

(b) A Buyer may in accordance with applicable law at any time assign, pledge, hypothecate, or otherwise transfer to one or more banks, financial institutions, investment companies, investment funds or any other Person (each, a “Transferee”) all or a portion of such Buyer’s rights and obligations under this Agreement and the other Program Agreements; provided, that (i) each Seller has consented to such assignment, pledge, hypothecation, or other transfer; provided, however, any such Seller’s consent shall not be required in the event that (A) such Transferee is an Affiliate of such Buyer or (B) an Event of Default has occurred; (ii) absent an Event of Default, such Buyer shall give at least ten days’ prior notice thereof to the Sellers; and (iii) that each such sale shall represent an interest in the Transactions in an aggregate Purchase Price of $1,000,000 or more and (iv) other than with respect to an assignment, pledge, hypothecation or transfer consisting of a pro rata interest in all payments due to such Buyer under this Agreement and prior to an Event of Default such Buyer received an opinion of a nationally recognized tax counsel experienced in such matters that such assignment, pledge, hypothecation or transfer will not result in either of the Issuer or Co-Issuer being subject to tax on its net income as an association (or publicly traded partnership) taxable as a corporation or a taxable mortgage pool taxable as a corporation, each for U.S. federal income tax purposes. In the event of any such assignment, pledge, hypothecation or transfer by a Buyer of its rights under this Agreement and the other Program Agreements, the Sellers shall continue to deal solely and directly with such Buyer in connection with its rights and obligations under this Agreement. Administrative Agent (acting as agent for the Sellers) shall maintain at its address referred to in Section 11.05 a register (the “Register”) for the recordation of the names and addresses of Transferees, and the Purchase Price outstanding and Price Differential in the Transactions held by each thereof. The entries in the Register shall be prima facie conclusive and binding, and the Sellers may treat each Person whose name is recorded in the Register as the owner of the Transactions recorded therein for all purposes of this Agreement. No assignment shall be effective until it is recorded in the Register.

(c) All actions taken by a Buyer pursuant to this Section 9.02 shall be at the expense of such Buyer. A Buyer may distribute to any prospective assignee any document or other information delivered to such Buyer by the Sellers.

22.3 Buyer and Participant Register.

(a) Subject to acceptance and recording thereof pursuant to paragraph (b) of this Section 9.03, from and after the effective date specified in each assignment and acceptance the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such assignment and acceptance, have the rights and obligations of a Buyer under this Agreement. Any assignment or transfer by a Buyer of rights or obligations under this Agreement that does not

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comply with this Section 9.03 shall be treated for purposes of this Agreement as a sale by such Buyer of a participation in such rights and obligations in accordance with Section 9.02.

(b) The Sellers or an agent of the Sellers shall maintain a register (the “Transaction Register”) on which it will record the Transactions entered into hereunder, and each assignment and acceptance and participation. The Transaction Register shall include the names and addresses of Buyers (including all assignees, successors and Participants), and the Purchase Price of the Transactions entered into by Buyers. Failure to make any such recordation, or any error in such recordation shall not affect the Sellers’ obligations in respect of such Transactions. If a Buyer sells a participation in any Transaction, it shall provide the Sellers, or maintain as agent of the Sellers, the information described in this paragraph and permit the Sellers to review such information as reasonably needed for Sellers to comply with its obligations under this Agreement or under any applicable law or governmental regulation or procedure.

SECTION 23.

AGENT PROVISIONS

23.1 Appointment of Administrative Agent. (a) Each Buyer hereby irrevocably appoints Atlas Securitized Products, L.P., as Administrative Agent hereunder and under the other Program Agreements, and each Buyer hereby authorizes Atlas Securitized Products, L.P., in such capacity, to act as its agent in accordance with the terms hereof. The provisions of this Article X are solely for the benefit of Administrative Agent and Buyers, and Sellers shall not have any rights as a third party beneficiary of any of the provisions thereof. In performing its functions and duties hereunder, Administrative Agent shall act solely as an agent of Buyers and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency or trust with or for Sellers.

(b) The Required Buyers may, to the extent permitted by applicable law, and with the consent of Sellers (such consent not to be required if an Event of Default has occurred and is continuing and not to be unreasonably withheld), by notice in writing to such Person remove such Person as Administrative Agent and, with the consent of Sellers (such consent not to be required if an Event of Default has occurred and is continuing and not to be unreasonably withheld), appoint a successor Administrative Agent. If no such successor Administrative Agent shall have been so appointed by the Required Buyers and shall have accepted such appointment within thirty (30) days (or such earlier day as shall be agreed by the Required Buyers and Sellers), then such removal shall nonetheless become effective in accordance with such notice on the date thirty (30) days (or such earlier day as shall be agreed by the Required Buyers and Sellers) after the Administrative Agent’s receipt of such notice of removal.

23.2 Powers and Duties. Each Buyer irrevocably authorizes Administrative Agent to take such action on such Buyer’s behalf and to exercise such powers, rights and remedies hereunder and under the other Program Agreements as are specifically delegated or granted to Administrative Agent by the terms hereof and thereof, together with such powers, rights and remedies as are reasonably incidental thereto. Administrative Agent shall have only those duties and responsibilities that are expressly specified herein and the other Program Agreements. Administrative Agent may exercise such powers, rights and remedies and perform such duties by

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or through its agents or employees. Administrative Agent shall not have, by reason hereof or any of the other Program Agreements, a fiduciary relationship in respect of any Buyer; and nothing herein or any of the other Program Agreements, expressed or implied, is intended to or shall be so construed as to impose upon Administrative Agent any obligations in respect hereof or any of the other Program Agreements except as expressly set forth herein or therein.

23.3 General Immunity.

(a) No Responsibility for Certain Matters. Except for Administrative Agent’s failure to perform a specifically required task set forth herein (and which failure constitutes gross negligence, bad faith or willful misconduct, as determined by a court of competent jurisdiction in a final, non-appealable order), Administrative Agent shall not be responsible for the execution, effectiveness, genuineness, validity, enforceability, collectability or sufficiency hereof or any other Program Agreement or with respect to any other party for any representations, warranties, recitals or statements made herein or therein or made in any written or oral statements or in any financial or other statements, instruments, reports or certificates or any other documents furnished or made by or on behalf of Buyers or any other party in connection with the Program Agreements and the transactions contemplated thereby or for the financial condition or business affairs of Sellers or any other Person liable for the payment of any Obligations, nor shall Administrative Agent be required (except as set forth herein or in the Program Agreements) to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained in any of the Program Agreements or as to the use of the proceeds of the Transactions or as to the existence or possible existence of any Event of Default or Default.

(b) Exculpatory Provisions. Neither Administrative Agent nor any of its officers, partners, directors, employees or agents shall be liable for any action taken or omitted by Administrative Agent under or in connection with any of the Program Agreements except to the extent caused by Administrative Agent’s gross negligence, bad faith or willful misconduct, as determined by a court of competent jurisdiction in a final, non-appealable order. Administrative Agent shall be entitled to refrain from any act or the taking of any action (including the failure to take an action) in connection herewith or any of the other Program Agreements or from the exercise of any power, discretion or authority vested in it hereunder or thereunder unless and until Administrative Agent shall have received instructions in respect thereof from Buyers and, upon receipt of such instructions from the Required Buyers, Administrative Agent shall be entitled to act or (where so instructed) refrain from acting, or to exercise such power, discretion or authority, in accordance with such instructions. Without prejudice to the generality of the foregoing, (i) Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any communication, instrument or document believed by it to be genuine and correct and to have been signed or sent by the proper Person or Persons, and shall be entitled to rely and shall be protected in relying on opinions and judgments of attorneys (who may be attorneys for Sellers), accountants, experts and other professional advisors selected by it; (ii) no Buyer shall have any right of action whatsoever against Administrative Agent as a result of Administrative Agent acting or (where so instructed) refraining from acting hereunder or any of the other Program Agreements in accordance with the instructions of the Required Buyers; and (iii) no action taken or omitted by Administrative Agent shall be considered to have resulted from Administrative Agent’s gross negligence, bad faith or willful misconduct if such action or omission was done at the direction of the Required Buyers.

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23.4 Administrative Agent to Act as Buyer. The agency hereby created shall in no way impair or affect any of the rights and powers of, or impose any duties or obligations upon, Administrative Agent in its individual capacity as a Buyer, to the extent it becomes a Buyer hereunder. To the extent that it becomes a Buyer hereunder, Administrative Agent shall have the same rights and powers as any other Buyer and may exercise the same as if it were not performing the duties and functions delegated to it hereunder, and the term “Buyer” shall, unless the context clearly otherwise indicates, include Administrative Agent in its individual capacity. Administrative Agent and its Affiliates may accept deposits from, lend money to, own securities of, and generally engage in any kind of banking, trust, financial advisory or other business with Sellers or any of their Affiliates as if it were not performing the duties specified herein, and may accept fees and other consideration from Sellers for services in connection herewith and otherwise without having to account for the same to Buyers.

23.5 Buyers’ Representations, Warranties and Acknowledgment. (a) Each Buyer represents and warrants that it has made its own independent investigation of the financial condition and affairs of Sellers in connection with the Transactions hereunder and that it has made and shall continue to make its own appraisal of the creditworthiness of Sellers. Administrative Agent shall not have any duty or responsibility, either initially or on a continuing basis, to make any such investigation or any such appraisal on behalf of Buyers or to provide any Buyer with any credit or other information with respect thereto, whether coming into its possession before the making of the Transactions or at any time or times thereafter, and Administrative Agent shall not have any responsibility with respect to the accuracy of or the completeness of any information provided to Buyers.

(b) Unless otherwise agreed to by Buyers and Sellers, each Buyer, by delivering its signature page to this Agreement and entering into Transactions with Sellers hereunder shall be deemed to have acknowledged receipt of, and consented to and approved, each Program Agreement and each other document required to be approved by Administrative Agent or Buyers, as applicable on the Closing Date, the Effective Date or such other funding date. Each Buyer acknowledges that by agreeing to remit its Pro Rata Share of the Purchase Price on any Purchase Date, such Buyer agrees that all conditions precedent to entering into such Transaction have been met on such Purchase Date.

23.6 Right to Indemnity. (a) Each Buyer, pro rata based on its outstanding Purchase Price, severally, but not jointly, shall, and hereby agrees to indemnify Administrative Agent, any Affiliate of the Administrative Agent, and their respective directors, officers, agents and employees (each, an “Indemnitee Agent Party”), and hold such Indemnitee Agent Party harmless to the extent that such Indemnitee Agent Party shall not have been reimbursed by Sellers, from and against any and all losses, claims, damages, liabilities, deficiencies, judgments or expenses incurred by any of them (except to the extent that it has resulted from the gross negligence or willful misconduct of such Indemnitee Agent Party) which may be imposed on, incurred by or asserted against such Indemnitee Agent Party in exercising its powers, rights and remedies or performing its duties hereunder or under the other Program Agreements or otherwise in its capacity as an Indemnitee Agent Party in any way relating to or arising out of this Agreement or the other Program Agreements, including amounts paid in settlement, court costs and reasonable fees and disbursements of counsel incurred in connection with any such litigation, investigation, claim or proceeding or any advice rendered in connection with any of the foregoing. If any indemnity

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furnished to any Indemnitee Agent Party for any purpose shall, in the opinion of such Indemnitee Agent Party, be insufficient or become impaired, such Indemnitee Agent Party may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished; provided, in no event shall this sentence require any Buyer to indemnify any Indemnitee Agent Party against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement in excess of such Buyer’s pro rata portion of the outstanding Purchase Price thereof; and provided, further, this sentence shall not be deemed to require any Buyer to indemnify any Indemnitee Agent Party against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement described in the proviso in the immediately preceding sentence.

(b) Promptly after receipt by the Indemnitee Agent Party of notice of the commencement of any action regarding which a claim in respect thereof is to be made against Buyers, the Indemnitee Agent Party shall notify Buyers in writing of the commencement thereof, but the omission to so notify will not relieve Buyers from any liability which they may have under this Agreement or from any other liability which they may have, except to the extent that they have been prejudiced in any material respect by the failure by the Indemnitee Agent Party to provide prompt notice. Upon receipt of notice by Buyers, Buyers will be entitled to participate in the related action, and they may elect by written notice delivered to the Indemnitee Agent Party to assume the defense thereof. Upon receipt of notice by the Indemnitee Agent Party of the Buyers’ election to assume the defense of such action, Buyers shall not be liable to the Indemnitee Agent Party for legal expenses incurred by such party in connection with the defense thereof unless (i) Buyers shall not have employed counsel to represent the Indemnitee Agent Party within a reasonable time after receipt of notice of commencement of the action, (ii) Buyers have authorized in writing the employment of separate counsel for the Indemnitee Agent Party, or (iii) the Indemnitee Agent Party has previously engaged counsel and reasonable legal expenses are necessary (a) to transfer the file to the Buyers’ designated counsel, or (b) to pursue immediate legal action necessary to preserve the legal rights or defenses of the Indemnitee Agent Party as against a third party claimant, and such legal action must occur prior to said transfer. Buyers shall not settle any suit or claim without the Indemnitee Agent Party’s written consent unless such settlement solely involves the payment of money by parties other than the Indemnitee Agent Party and includes unconditional release of the Indemnitee Agent Party from all liability on all matters that are the subject of such proceeding or claim.

23.7 Successor Administrative Agent. (a) Administrative Agent may resign at any time by giving thirty (30) days’ prior written notice thereof to Buyers. Upon any such notice of resignation, Buyers shall have the right to appoint a successor administrative agent; provided, that the retiring Administrative Agent shall continue to hold the Collateral and all liens and security interest therein for the benefit of Buyers until a successor administrative agent is appointed.

(b) Upon the acceptance of any appointment as Administrative Agent hereunder by a successor administrative agent, that successor administrative agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent and the retiring Administrative Agent shall promptly (i) transfer to such successor administrative agent all sums and items of Collateral held under the Program Agreements, together with all records and other documents necessary or appropriate in connection with the performance of the duties of the successor administrative agent under the Program

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Agreements, and (ii) execute and deliver to such successor administrative agent such amendments to financing statements, and take such other actions, as may be necessary or appropriate in connection with the assignment to such successor administrative agent of the security interests created under the Program Agreements, whereupon such retiring Administrative Agent shall be discharged from its duties and obligations hereunder. After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Article X and Section 11.02 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent hereunder.

(c) Notwithstanding anything herein to the contrary, Administrative Agent may assign its rights and duties as Administrative Agent hereunder to an Affiliate without written notice to, the Buyers; provided, that Sellers and Buyers may deem and treat such assigning Administrative Agent as Administrative Agent for all purposes hereof, unless and until such assigning Administrative Agent provides written notice to Sellers and Buyers of such assignment. Upon such assignment such Affiliate shall succeed to and become vested with all rights, powers, privileges and duties as Administrative Agent hereunder and under the other Program Agreements.

23.8 Delegation of Duties. Administrative Agent may perform any of its duties and exercise its rights and powers hereunder or under any other Program Agreement by or through (i) any one or more of its Affiliates or (ii) any one or more sub agents appointed by Administrative Agent with the prior consent of the Required Buyers. Administrative Agent and any such sub agent may perform any and all of its duties and exercise its rights and powers by or through their respective Affiliates and their respective officers, partners, directors, trustees, employees and agents. The exculpatory provisions of this Article X shall apply to any such Affiliate or sub agent and to such other parties as are listed above provided that notwithstanding this Section 10.08, no such delegation relieves the Administrative Agent of its duties or obligations under this Agreement.

23.9 Right to Realize on Collateral. Anything contained in any of the Program Agreements to the contrary notwithstanding, Sellers, Administrative Agent and each Buyer hereby agree that (i) no Buyer shall have any right individually to realize upon any of the Collateral, it being understood and agreed that all powers, rights and remedies hereunder may be exercised solely by Administrative Agent, on behalf of Buyers in accordance with the terms hereof and all powers, rights and remedies under the Program Agreements may be exercised solely by Administrative Agent, and (ii) in the event of a foreclosure by Administrative Agent on any of the Collateral pursuant to a public or private sale, Administrative Agent or any Buyer may be the purchaser of any or all of such Collateral at any such sale and Administrative Agent, as agent for and representative of Buyers (but not any Buyer or Buyers in its or their respective individual capacities unless Buyers shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any collateral payable by Administrative Agent at such sale.

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SECTION 24.

MISCELLANEOUS

24.1 Survival. This Agreement and the other Program Agreements and all covenants, agreements, representations and warranties herein and therein and in the certificates delivered pursuant hereto and thereto, shall survive the entering into of the Transaction and shall continue in full force and effect so long as any Obligations are outstanding and unpaid.

24.2 Indemnification. Sellers shall, and hereby agree to, jointly and severally, indemnify, defend and hold harmless Administrative Agent, each Buyer, any Affiliate of Administrative Agent, any Affiliate of any Buyer and their respective directors, officers, agents and employees from and against any and all losses, claims, damages, liabilities, deficiencies, judgments or expenses incurred by any of them (except to the extent that it is finally judicially determined to have resulted from their own gross negligence or willful misconduct) as a consequence of, or arising out of or by reason of any litigation, investigations, claims or proceedings which arise out of or are in any way related to, (i) this Agreement or any other Program Agreement or the transactions contemplated hereby or thereby, (ii) the PMC Seller’s servicing practices or procedures; (iii) any actual or proposed use by the related Seller of the proceeds of the Purchase Price, and (iv) any Default, Event of Default or any other breach by the related Seller of any of the provisions of this Agreement or any other Program Agreement, including amounts paid in settlement, court costs and reasonable fees and disbursements of counsel incurred in connection with any such litigation, investigation, claim or proceeding or any advice rendered in connection with any of the foregoing. If and to the extent that any Obligations are unenforceable for any reason, Sellers hereby agree to make the maximum contribution to the payment and satisfaction of such Obligations which is permissible under applicable law. Sellers’ obligations set forth in this Section 11.02 shall survive any termination of this Agreement and each other Program Agreement and the payment in full of the Obligations, and are in addition to, and not in substitution of, any other of its obligations set forth in this Agreement or otherwise. In addition, Sellers shall, upon demand, pay to Administrative Agent and the Buyers all costs and expenses (including the reasonable fees and disbursements of counsel) paid or incurred by Administrative Agent and Buyers in (i) enforcing or defending its rights under or in respect of this Agreement or any other Program Agreement, (ii) collecting the Purchase Price outstanding, (iii) foreclosing or otherwise collecting upon any Repurchase Assets and (iv) and obtaining any legal, accounting or other advice in connection with any of the foregoing.

24.3 Nonliability of Buyer. The parties hereto agree that, notwithstanding any affiliation that may exist between or among Administrative Agent, the Sellers and Buyers, the relationship between and among Administrative Agent, Sellers and Buyers shall be solely that of arms-length participants. Neither Administrative Agent nor any Buyer shall have any fiduciary responsibilities to Sellers. Each Seller (i) agrees that neither Administrative Agent nor any Buyer shall have any liability to such Seller (whether sounding in tort, contract or otherwise) for losses suffered by such Seller in connection with, arising out of, or in any way related to, the transactions contemplated and the relationship established by this Agreement, the other loan documents or any other agreement entered into in connection herewith or any act, omission or event occurring in connection therewith, unless it is determined by a judgment of a court that is binding on Administrative Agent and Buyers (which judgment shall be final and not subject to review on

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appeal), that such losses were the result of acts or omissions on the part of Administrative Agent or Buyers constituting gross negligence or willful misconduct and (ii) waives, releases and agrees not to sue upon any claim against Administrative Agent or any Buyer (whether sounding in tort, contract or otherwise), except a claim based upon gross negligence or willful misconduct. Whether or not such damages are related to a claim that is subject to such waiver and whether or not such waiver is effective, neither Administrative Agent nor any Buyer shall have any liability with respect to, and each Seller hereby waives, releases and agrees not to sue upon any claim for, any special, indirect, consequential or punitive damages suffered by such Seller in connection with, arising out of, or in any way related to the transactions contemplated or the relationship established by this Agreement, the other loan documents or any other agreement entered into in connection herewith or therewith or any act, omission or event occurring in connection herewith or therewith, unless it is determined by a judgment of a court that is binding on Administrative Agent and Buyers (which judgment shall be final and not subject to review on appeal), that such damages were the result of acts or omissions on the part of Administrative Agent or Buyers, as applicable, constituting willful misconduct or gross negligence.

24.4 Governing Law; Submission to Jurisdiction; Waivers. (a) This Agreement shall be binding and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Each Seller acknowledges that the obligations of the Administrative Agent and Buyers hereunder or otherwise are not the subject of any VFN Repo Guaranty by, or recourse to, any direct or indirect parent or other Affiliate of Buyers. THIS AGREEMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO OR IN CONNECTION WITH THIS AGREEMENT, THE RELATIONSHIP OF THE PARTIES HERETO, AND/OR THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES HERETO WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO THE CONFLICT OF LAW PRINCIPLES THEREOF OTHER THAN SECTIONS 5‑1401 AND 5‑1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

(b) EACH OF THE PARTIES HERETO AND THE BUYERS HEREBY IRREVOCABLY AND UNCONDITIONALLY:

(i) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;

(ii) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT

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OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;

(iii) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH HEREIN OR AT SUCH OTHER ADDRESS OF WHICH EACH OTHER PARTY HERETO SHALL HAVE BEEN NOTIFIED IN WRITING; PROVIDED THAT, AT THE TIME OF SUCH MAILING AN ELECTRONIC COPY OF SUCH SERVICE OF PROCESS IS ALSO SENT BY ELECTRONIC MAIL TO THE PERSONS SPECIFIED IN THE ADDRESS FOR NOTICES FOR SUCH PARTY ON THE SIGNATURE PAGE HERETO (OR SUCH OTHER PERSONS OF WHICH THE OTHER PARTIES HERETO SHALL HAVE BEEN NOTIFIED);

(iv) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND

(v) WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE INDENTURE OR THE TRANSACTIONS CONTEMPLATED THEREBY AND HEREBY.

24.5 Notices. Any and all notices (with the exception of Transaction Notices, which shall be delivered via facsimile only), statements, demands or other communications hereunder may be given by a party to the other by mail, email, facsimile, messenger or otherwise to the address specified below, or so sent to such party at any other place specified in a notice of change of address hereafter received by the other. All notices, demands and requests hereunder may be made orally, to be confirmed promptly in writing, or by other communication as specified in the preceding sentence.

If to PMC Seller:

PennyMac Corp.
3043 Townsgate Road, Suite 300
Westlake Village, CA 91361
Attention: Pamela Marsh/Josh Smith
Phone Number: (805) 330-6059/ (818) 746-2877
Email: pamela.marsh@pennymac.com; josh.smith@pennymac.com;
contract.finance@pennymac.com

with a copy to:

PennyMac Corp.
3043 Townsgate Road, Suite 300

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Westlake Village, CA 91361
Attention: Derek Stark

Phone Number: (818) 746-2289

Email: derek.stark@pennymac.com

If to PMH Seller:

PennyMac Holdings, LLC
3043 Townsgate Road, Suite 310
Westlake Village, CA 91361
Attention: Pamela Marsh/Josh Smith
Phone Number: (805) 330-6059/ (818) 746-2877
Email: pamela.marsh@pennymac.com; josh.smith@pennymac.com;
contract.finance@pennymac.com

with a copy to:

PennyMac Corp.
3043 Townsgate Road, Suite 300
Westlake Village, CA 91361
Attention: Jeff Grogin
Phone Number: (818) 224-7050
Email: jeff.grogin@pnmac.com

If to Administrative Agent:

Atlas Securitized Products, L.P.
230 Park Avenue, Suite 800
New York, NY 10169
Phone Number: (212) 317-4500
Email: AtlasSPGeneralCounsel@Atlas-SP.com

If to Funding 2:

Atlas Securitized Products Funding 2, L.P.
230 Park Avenue, Suite 800
New York, NY 10169
Phone Number: (212) 317-4500
Email: AtlasSPGeneralCounsel@Atlas-SP.com

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If to Citibank, N.A., as a Buyer:

CITIBANK, N.A.
388 Greenwich Street Trading, 6th Floor
New York, NY 10013
Attention: Bobbie Theibakumaran
Phone Number: (212) 723-6753
Email: bobbie.theivakumaran@citi.com

with a copy to:

CITIBANK, N.A.

388 Greenwich Street Trading, 6th Floor

New York, NY 10013

Attention: James Kessler

Phone Number: (212) 723-6377

Email: james.kessler@citi.com

24.6 Severability. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement. In case any provision in or obligation under this Agreement or any other Program Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

24.7 Section Headings. The Article and Section headings in this Agreement are inserted for convenience of reference only and shall not in any way affect the meaning or construction of any provision of this Agreement.

24.8 Counterparts. This Agreement may be executed in counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same instrument. The words “executed,” “signed,” “signature,” and words of like import as used above and elsewhere in this Agreement or in any other certificate, agreement or document related to this transaction shall include, in addition to manually executed signatures, images of manually executed signatures transmitted by facsimile or other electronic format (including, without limitation, “pdf,” “tif” or “jpg”) and other electronic signatures (including, without limitation, any electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record). The use of electronic signatures and electronic records (including, without limitation, any contract or other record created, generated, sent, communicated, received, or stored by electronic means) shall be of the same legal effect, validity, enforceability and admissibility as a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable law, including the federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act and any other applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act or the Uniform Commercial Code. Each party to this Agreement hereby consents

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to the use of any secure third party electronic signature capture service providers (including, without limitation, DocuSign), as long as such service providers use system logs and audit trails that establish a temporal and process link between the presentation of identity documents and the electronic signing, together with identifying information that can be used to verify the electronic signature and its attribution to the signer’s identity and evidence of the signer’s agreement to conduct the transaction electronically and of the signer’s execution of each electronic signature. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or other electronic means shall be effective as delivery of a manually executed counterpart of this Agreement.

24.9 Periodic Due Diligence Review. Each of the Sellers acknowledges that Administrative Agent and Buyers have the right to perform continuing due diligence reviews with respect to Sellers and the Purchased Assets, for purposes of verifying compliance with the representations, warranties and specifications made hereunder, or otherwise, and each of the Sellers agrees that upon reasonable (but no less than five (5) Business Days’) prior written notice unless an Event of Default shall have occurred, in which case no notice is required, to Sellers, Administrative Agent or its authorized representatives will be permitted during normal business hours, and in a manner that does not unreasonably interfere with the ordinary conduct of the related Seller’s business, to examine, inspect, and make copies and extracts of, any and all documents, records, agreements, instruments or information relating to such Purchased Assets in the possession or under the control of Sellers. Each of the Sellers also shall make available to Buyers and Administrative Agent a knowledgeable financial or accounting officer for the purpose of answering questions respecting the Purchased Assets. Without limiting the generality of the foregoing, each of the Sellers acknowledges that Buyers may enter into a Transaction related to any Purchased Assets from Sellers based solely upon the information provided by Sellers to Buyers in the Asset Schedule and the representations, warranties and covenants contained herein, and that Administrative Agent, at its option or upon the request of Buyers, has the right at any time to conduct a partial or complete due diligence review on some or all of the Purchased Assets related to a Transaction. Each of the Sellers agrees to cooperate with Administrative Agent and Buyers and any third party underwriter in connection with such underwriting, including providing Administrative Agent and Buyers and any third party underwriter with access to any and all documents, records, agreements, instruments or information relating to such Purchased Assets in the possession, or under the control, of Sellers.

24.10 Hypothecation or Pledge of Repurchase Assets. Buyers shall have free and unrestricted use of all Repurchase Assets and nothing in this Agreement shall preclude Buyers from engaging in repurchase transactions with all or part of its pro rata portion of the Repurchase Assets or otherwise pledging, repledging, transferring, hypothecating, or rehypothecating all or a portion of its pro rata portion of the Repurchase Assets; provided that prior to an Event of Default, such pledge, repledge, transfer, hypothecation or rehypothecation is treated as a financing or hedging transaction for U.S. federal income tax purposes or a pro rata interest in all payments due to Buyers under this Agreement; provided, further that other than with respect to a pro rata interest in all payments due to Buyers under this Agreement and prior to an Event of Default Buyers receive an opinion of a nationally recognized tax counsel experienced in such matters that such repurchase transaction, pledge, repledge, transfer, hypothecation or rehypothecation will not result in Issuer or Co-Issuer being subject to tax on its net income as an association (or publicly traded

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partnership) taxable as a corporation or a taxable mortgage pool taxable as a corporation, each for U.S. federal income tax purposes.

24.11 Non-Confidentiality of Tax Treatment. (a) This Agreement and its terms, provisions, supplements and amendments, and notices hereunder, are proprietary to Buyers or Sellers, as applicable and shall be held by each party hereto, as applicable in strict confidence and shall not be disclosed to any third party without the written consent of the Required Buyers or Sellers, except for (i) disclosure to Buyers’ or Sellers’ direct and indirect Affiliates and Subsidiaries, attorneys or accountants, but only to the extent such disclosure is necessary and such parties agree to hold all information in strict confidence, or (ii) disclosure required by law, rule, regulation or order of a court or other regulatory body. Notwithstanding the foregoing or anything to the contrary contained herein or in any other Program Agreements, the parties hereto may disclose to any and all Persons, without limitation of any kind, the federal, state and local tax treatment of the Transactions, any fact relevant to understanding the federal, state and local tax treatment of the Transactions, and all materials of any kind (including opinions or other tax analyses) relating to such federal, state and local tax treatment and that may be relevant to understanding such tax treatment; provided that Sellers may not disclose the name of or identifying information with respect to Buyers or any pricing terms (including the Pricing Rate, Purchase Price Percentage, Purchase Price and Commitment Fee and any other fees set forth in any side letter related to this Agreement (if any)) or other nonpublic business or financial information (including any sublimits) that is unrelated to the federal, state and local tax treatment of the Transactions and is not relevant to understanding the federal, state and local tax treatment of the Transactions, without the prior written consent of Administrative Agent and Buyers.

(b) Notwithstanding anything in this Agreement to the contrary, Sellers shall comply with all applicable local, state and federal laws, including all privacy and data protection law, rules and regulations that are applicable to the Repurchase Assets and/or any applicable terms of this Agreement (the “Confidential Information”). Each of the Sellers understands that the Confidential Information may contain “nonpublic personal information”, as that term is defined in Section 509(4) of the Gramm-Leach Bliley Act (the “GLB Act”), and each of the Sellers agrees to maintain such nonpublic personal information that it receives hereunder in accordance with the GLB Act and other applicable federal and state privacy laws. Sellers shall implement such physical and other security measures as shall be necessary to (a) ensure the security and confidentiality of the “nonpublic personal information” of the “customers” and “consumers” (as those terms are defined in the GLB Act) of Administrative Agent, Buyers or any Affiliate of Administrative Agent or Buyers which Sellers hold, (b) protect against any threats or hazards to the security and integrity of such nonpublic personal information, and (c) protect against any unauthorized access to or use of such nonpublic personal information. Each of the Sellers represents and warrants that it has implemented appropriate measures to meet the objectives of Section 501(b) of the GLB Act and of the applicable standards adopted pursuant thereto, as now or hereafter in effect. Upon request, Sellers will provide evidence reasonably satisfactory to allow Administrative Agent to confirm that the providing party has satisfied its obligations as required under this Section 11.11. Without limitation, this may include Administrative Agent’s review of audits, summaries of test results, and other equivalent evaluations of Sellers. Sellers shall notify Administrative Agent and Buyers immediately following discovery of any breach or compromise of the security, confidentiality, or integrity of nonpublic personal information of the customers and consumers of Administrative Agent, Buyers or any Affiliate of Administrative Agent or Buyers

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provided directly to Sellers by Administrative Agent, Buyers or any Affiliate of Administrative Agent or Buyers. Sellers shall provide such notice to Administrative Agent by personal delivery, by facsimile with confirmation of receipt, or by overnight courier with confirmation of receipt to the applicable requesting individual.

(c) Set-off. In addition to any rights and remedies of Administrative Agent and Buyers hereunder and by law, Administrative Agent and Buyers shall have the right, without prior notice to Sellers, any such notice being expressly waived by Sellers to the extent permitted by applicable law to set-off and appropriate and apply against any Obligation from Sellers or any Affiliate thereof to Administrative Agent, Buyers or any of their Affiliates any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other obligation (including to return funds to Sellers), credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by or due from Administrative Agent, Buyers or any Affiliate thereof to or for the credit or the account of Sellers or any Affiliate thereof. Administrative Agent agrees promptly to notify Sellers after any such set off and application made by a Buyer; provided that the failure to give such notice shall not affect the validity of such set off and application.

24.12 Intent. (a) The parties recognize that this Agreement and each Transaction hereunder is a “master netting agreement” as that term is defined in Section 101(38A) of the Bankruptcy Code, and a “securities contract” as that term is defined in Section 741 the Bankruptcy Code, and that all payments hereunder are deemed “margin payments” or “settlement payments” as defined in the Bankruptcy Code.

(b) It is understood that any party’s right to liquidate Purchased Assets delivered to it in connection with Transactions hereunder or to exercise any other remedies pursuant to Section 7.03 hereof is a contractual right to liquidate such Transaction as described in Sections 555 and Section 561 of the Bankruptcy Code.

(c) The parties agree and acknowledge that if a party hereto is an “insured depository institution,” as such term is defined in the Federal Deposit Insurance Act, as amended (“FDIA”), then each Transaction hereunder is a “qualified financial contract,” as that term is defined in FDIA and any rules, orders or policy statements thereunder (except insofar as the type of assets subject to such Transaction would render such definition inapplicable).

(d) It is understood that this Agreement constitutes a “netting contract” as defined in and subject to Title IV of the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) and each payment entitlement and payment obligation under any Transaction hereunder shall constitute a “covered contractual payment entitlement” or “covered contractual payment obligation”, respectively, as defined in and subject to FDICIA (except insofar as one or both of the parties is not a “financial institution” as that term is defined in FDICIA).

(e) This Agreement is intended to be a “securities contract,” within the meaning of Section 555 under the Bankruptcy Code, and a “master netting agreement,” within the meaning of Section 561 under the Bankruptcy Code.

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(f) It is the intention of the parties that, for U.S. federal income tax purposes and for accounting purposes, each Transaction constitute a financing, and that Sellers be (except to the extent that Administrative Agent shall have exercised its remedies following an Event of Default) the owner of the Purchased Assets for such purposes. Unless prohibited by applicable law, Administrative Agent, Sellers and Buyers shall treat the Transactions as described in the preceding sentence (including on any and all filings with any U.S. federal, state, or local taxing authority and agree not to take any action inconsistent with such treatment).

24.13 Amendment and Restatement. The Administrative Agent, Buyers and PMC entered into the Original Agreement. The Administrative Agent, Buyers and Sellers desire to enter into this Agreement in order to amend and restate the Original Agreement in its entirety. The amendment and restatement of the Original Agreement shall become effective on the Effective Date, and each of the Administrative Agent, the Buyers and Sellers shall hereafter be bound by the terms and conditions of this Agreement and the other Program Agreements. This Agreement amends and restates the terms and conditions of the Original Agreement, and is not a novation of any of the agreements or obligations incurred pursuant to the terms of the Original Agreement. Accordingly, all of the agreements and obligations incurred pursuant to the terms of the Original Agreement are hereby ratified and affirmed by the parties hereto and remain in full force and effect. For the avoidance of doubt, it is the intent of the Administrative Agent, Buyers and Sellers that the security interests and liens granted in the Purchased Assets or Repurchase Assets pursuant to Original Agreement shall continue in full force and effect. All references to the Original Agreement in any Program Agreement or other document or instrument delivered in connection therewith shall be deemed to refer to this Agreement and the provisions hereof.

24.14 Reaffirmation of VFN Repo Guaranty. VFN Repo Guarantor hereby (i) agrees that the benefits of the VFN Repo Guaranty are hereby extended to all Buyers under this Agreement, (ii) agrees that amending and restating of the Original Agreement shall not be a defense to the liability of VFN Repo Guarantor or impair the rights of Buyers under the VFN Repo Guaranty, (iii) ratifies and affirms all of the terms, covenants, conditions and obligations of the VFN Guaranty and (iv) acknowledges and agrees that such VFN Guaranty is and shall continue to be in full force and effect.

[Signature Pages Follow]

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IN WITNESS WHEREOF, Administrative Agent, Sellers and Buyers have caused this Second Amended and Restated Master Repurchase Agreement to be executed and delivered by their duly authorized officers or trustees as of the date first above written.

ATLAS SECURITIZED PRODUCTS, L.P., as Administrative Agent

By: Atlas Securitized Products GP, LLC, its

general partner

By:
Name:
Title:

PENNYMAC CORP.,
as a Seller

By:
Name: Pamela Marsh
Title: Senior Managing Director and Treasurer

PENNYMAC HOLDINGS, LLC,
as a Seller

By:
Name: Pamela Marsh
Title: Senior Managing Director and Treasurer

PENNYMAC MORTGAGE INVESTMENT TRUST, solely with respect to Section 11.14, as VFN Guarantor

By:
Name: Pamela Marsh
Title: Senior Managing Director and Treasurer

[Signature Page to Second A&R Master Purchase Agreement]

ATLAS SECURITIZED PRODUCTS FUNDING 2, L.P., as Buyer

By: Atlas Securitized BKR 2, L.P., its general partner

By: Atlas Securitized FundingCo GP LLC, its general partner

By:
Name:
Title:

CITIBANK, N.A.,
as Buyer

By:
Name: Arunthathi Theivakumaran
Title: Vice President

[Signature Page to Second A&R Master Purchase Agreement]

SCHEDULE 1-A

RESPONSIBLE OFFICERS – PMC

PMC AUTHORIZATIONS

Any of the persons whose signatures and titles appear below are authorized, acting singly, to act for PMC under this Agreement:

Responsible Officers for execution of Program Agreements and amendments:


Name	Title	Signature
Pamela Marsh	Senior Managing Director and Treasurer

Responsible Officers for execution of Transaction Notices and day-to-day operational functions:


Name	Title	Signature
Pamela Marsh	Senior Managing Director and Treasurer
Maurice Watkins	Senior Managing Director, Capital Markets Operations
Thomas Rettinger	Senior Managing Director, Head of Portfolio Risk Management
Josh Smith	Authorized Representative
Ryan Huddleston	Authorized Representative
Adeshola Makinde	Authorized Representative
Kevin Chamberlain	Executive Vice President, Treasury
Virginia Movsessian	Executive Vice President, Secondary Marketing Operations

Sch. 1-A


Name	Title	Signature
Angela Everest	Authorized Representative
Adriana Villalobos	Authorized Representative

Sch. 1-A

SCHEDULE 1-B

RESPONSIBLE OFFICERS – PMH

PMH AUTHORIZATIONS

Any of the persons whose signatures and titles appear below are authorized, acting singly, to act for PMH under this Agreement:

Responsible Officers for execution of Program Agreements and amendments:


Name	Title	Signature
Pamela Marsh	Senior Managing Director and Treasurer

Responsible Officers for execution of Transaction Notices and day-to-day operational functions:


Name	Title	Signature
Pamela Marsh	Senior Managing Director and Treasurer
Maurice Watkins	Senior Managing Director, Capital Markets Operations
Thomas Rettinger	Senior Managing Director, Head of Portfolio Risk Management
Josh Smith	Authorized Representative
Ryan Huddleston	Authorized Representative
Adeshola Makinde	Authorized Representative
Kevin Chamberlain	Authorized Representative
Angela Everest	Authorized Representative

Sch. 2-1

SCHEDULE 2

ASSET SCHEDULE


Note	Initial Note Balance	Additional Balance(s)	Outstanding VFN Principal Balance	Maximum VFN Principal Balance
PMT ISSUER TRUST – FMSR and PMT CO-ISSUER TRUST I – FMSR, Class A-VF1 Variable Funding Note	$548,603,517.10	$0	$548,603,517.10	$1,000,000,000
Funding 2 Pro Rata Share	$274,301,758.55	$0	$274,301,758.55	$500,000,000
Citibank Pro Rata Share	$274,301,758.55	$0	$274,301,758.55	$500,000,000

Sch. 2-2

SCHEDULE 3

ADMINISTRATIVE AGENT’S ACCOUNT

 Name of Bank: Citibank, N.A.

 ABA Number of Bank: 021000089

 Name of Account: Atlas Sec Prod Funding 2 LP – Resi

 Ref: Residential

 Account Number: [********]

Sch. 3-1

EXHIBIT A

FORM OF TRANSACTION NOTICE

Dated: []

[BUYERS’ ADDRESSES]

TRANSACTION NOTICE

Ladies and Gentlemen:

We refer to the Second Amended and Restated Master Repurchase Agreement, dated as of October 10, 2023 (the “Agreement”), among PennyMac Corp. (“PMC”), PennyMac Holdings, LLC (“PMH”, and together with PMC, the “Sellers”), the buyers party thereto (“Buyers”) and Atlas Securitized Products, L.P. (“Administrative Agent”). Each capitalized term used but not defined herein shall have the meaning specified in the Agreement. This notice is being delivered by the [PMC][PMH][Sellers] pursuant to Section 2.02 of the Agreement.

Please be notified that [PMC][PMH][each of the Sellers] hereby irrevocably requests that the Buyers enter into the following Transaction(s) with [PMC][PMH][Sellers] as follows:

1. Maximum VFN Principal Balance: $[]

2. Initial Note Balance/Purchase Price requested: $[]

3. Additional Balance/Purchase Price requested: $[]

4. Purchase Date: []

5. Repurchase Date: []

6. Pricing Rate / Repurchase Price: $[]

[PMC][PMH][Each of the Sellers] requests that the proceeds of the Purchase Price be deposited in [PMC][PMH][Sellers]’s account at [], ABA Number [], account number [], References: [], Attn: [].

Each of the Sellers hereby represents and warrants that each of the representations and warranties made by such Seller in each of the Program Agreements to which it is a party is true and correct in all material respects, in each case, on and as of the date hereof, except to the extent such representations and warranties expressly relate to an earlier date. Attached hereto is a true and complete updated copy of the Asset Schedule.

PennyMac Corp., as a Seller

By:

Exh. A-1

PennyMac Holdings, LLC, as a Seller

By:

Exh. A-2

Asset Schedule


Note	Initial Note Balance	Additional Balance(s)	Outstanding VFN Principal Balance	Maximum VFN Principal Balance
PMT ISSUER TRUST – FMSR and PMT CO-ISSUER TRUST I– FMSR, Class A-VF1 Variable Funding Note	$[________]	$[________]	$[________]	$[________]

Exh. A-3

EXHIBIT B

EXISTING INDEBTEDNESS
[See Attached]

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EXHIBIT B

SERIES 2017-VF1 PRICING SIDE LETTER

Atlas Securitized Products, L.P.
230 Park Avenue, Suite 800
New York, NY 10169

October 10, 2023

PennyMac Corp.

3043 Townsgate Road, Suite 300

Westlake Village, CA 91361

Attention: Pamela Marsh

Phone Number: (805) 330-6059

Email: pamela.marsh@pennymac.com

PennyMac Holdings, LLC

3043 Townsgate Road, Suite 310

Westlake Village, CA 91361

Attention: Pamela Marsh/Josh Smith

Phone Number: (805) 330-6059/(818) 224-7078

E-mail: pamela.marsh@pennymac.com;

josh.smith@pennymac.com

PennyMac Mortgage Investment Trust, as VFN Guarantor

3043 Townsgate Road, Suite 300

Westlake Village, CA 91361

Attention: Pamela Marsh

Phone Number: (805) 330-6059

Email: pamela.marsh@pennymac.com

Re: Fifth Amended and Restated Pricing Side Letter

Ladies and Gentlemen:

Reference is hereby made to, and this fifth amended and restated pricing side letter (as amended, restated, supplemented or otherwise modified from time to time, the “Pricing Side Letter”) is hereby incorporated by reference into, the Second Amended and Restated Master Repurchase Agreement, dated as of October 10, 2023 (the “Effective Date”) (as may be amended, restated, supplemented or otherwise modified from time to time, the “Repurchase Agreement”), among Atlas Securitized Products, L.P., as administrative agent (the “Administrative Agent”), Atlas Securitized Products Funding 2, L.P. (“Funding 2”), as a buyer (a “Buyer”), Citibank, N.A. (“Citibank”), as a buyer (a “Buyer”), the other buyers who become party hereto from time to time after executing a Side Letter Agreement, each a buyer (a “Buyer” and together with Funding 2 and Citibank, the “Buyers”), PennyMac Corp. (“PMC”), as a seller

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(a “Seller”), PennyMac Holdings, LLC (“PMH”), as a seller (a “Seller”, and collectively with PMC, the “Sellers”), and PennyMac Mortgage Investment Trust, as guarantor (the “VFN Guarantor”). Any capitalized term used but not defined herein shall have the meaning assigned to such term in the Repurchase Agreement.

The Buyers, Administrative Agent and PMC previously entered into the Fourth Amended and Restated Pricing Side Letter, dated as of December 29, 2022 (as amended by Amendment No. 1, dated as of March 16, 2023, and Amendment No. 2, dated as of June 27, 2023, the “Existing Pricing Side Letter”).

The parties hereto have requested that the Existing Pricing Side Letter be amended and restated in its entirety on the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

Section 1. Definitions. The following terms shall have the meanings set forth below.

1.1 “Additional Term Note Offering” means the issuance of at least $200,000,000 in Term Notes on or after the date hereof to third party investors in accordance with the Base Indenture.

1.2 “Adjusted Tangible Net Worth” means, for any Person, Net Worth of such Person plus Subordinated Debt (provided that Subordinated Debt shall not be taken into account to the extent that it would cause Adjusted Tangible Net Worth to be comprised of greater than 25% Subordinated Debt), minus (a) intangibles; (b) goodwill and (c) receivables from Affiliates. Notwithstanding the foregoing, mortgage servicing rights and excess servicing spread shall not be deducted from the calculation of Net Worth. For the avoidance of doubt, the term “Affiliate” as used in this definition to refer to Sellers or VFN Guarantor shall include only PennyMac Mortgage Investment Trust and its subsidiaries.

1.3 “Amortization Date” has the meaning assigned to the term in Section 4 hereof.

1.4 “Amortization Payment Amount” means with respect to any Price Differential Payment Date following the Amortization Date, an amount equal to the product of (i) the outstanding principal balance of the Purchase Price as of the Amortization Date and (ii) one-thirty-sixth (1/36).

1.5 “Anniversary Date” has the meaning assigned to the term in Section 4 hereof.

1.6 “Asset Value” means, with respect to the Note and each Additional Balance, (i) the applicable Purchase Price Percentage multiplied by (ii) the lesser of (A) the Market Value of such Note or (B) the value of the Note as calculated pursuant to the terms of the Base Indenture; provided, however, in no event shall the Asset Value exceed the product of (i) 70% and (ii) the

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difference between (A) the Collateral Value (assuming the Stop-Loss Cap is $0) and (B) the aggregate Term Note Series Invested Amount.

1.7 “Base Rate” means the greater of (a) the Benchmark or (b) [****]%.

1.8 “Benchmark” means, with respect to any date of determination, the Daily Simple SOFR or, if applicable, a Benchmark Replacement Rate. It is understood that the Benchmark shall be adjusted on a daily basis; provided, that, Benchmark for the three (3) Business Days prior to the related Price Differential Payment Date shall be fixed at Benchmark for the third (3rd) Business Day prior to the related Price Differential Payment Date.

1.9 “Benchmark Administration Changes” means, with respect to the Benchmark (including any Benchmark Replacement Rate), any technical, administrative or operational changes (including without limitation changes to the timing and frequency of determining rates and making payments of interest, length of lookback periods, and other administrative matters as may be appropriate, in the sole and good faith discretion of Administrative Agent, to reflect the adoption and implementation of such Benchmark and to permit the administration thereof by Administrative Agent in a manner substantially consistent with market practice (or, if Administrative Agent determines that adoption of any portion of such market practice is not administratively feasible or that no market practice for the administration of such Benchmark exists, in such other manner of administration as Administrative Agent decides is reasonably necessary in connection with the administration of this Pricing Side Letter).

1.10 “Benchmark Replacement Rate” means with respect to any Benchmark Transition Event, the sum of: (i) the alternate benchmark rate that has been selected in the sole and good faith discretion of Administrative Agent, giving due consideration to (A) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (B) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement to the then-current Benchmark for Dollar-denominated repurchase facilities and (ii) the related Benchmark Administration Changes; provided that, no such Benchmark Replacement Rate as so determined would be less than 0%.

1.11 “Benchmark Transition Event” means a determination by Administrative Agent in its sole and good faith discretion that, by reason of circumstances affecting the relevant market, (i) adequate and reasonable means do not exist for ascertaining the Benchmark, (ii) the applicable Benchmark is permanently or indefinitely no longer in existence, (iii) continued implementation of the Benchmark is no longer administratively feasible or no significant market practice for the administration of the Benchmark exists, (iv) the Benchmark will not adequately and fairly reflect the cost to Buyer of purchasing or maintaining Purchased Assets going forward or (v) the administrator of the applicable Benchmark or a Relevant Governmental Body having jurisdiction over Buyer or Administrative Agent has made a public statement identifying a specific date after which the Benchmark shall no longer be made available or used for determining the interest rate of loans or other extensions of credit.

1.12 “Cash Equivalents” means (a) securities with maturities of ninety (90) days or less from the date of acquisition issued or fully guaranteed or insured by the United States Government or any agency thereof, (b) certificates of deposit and eurodollar time deposits with

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maturities of ninety (90) days or less from the date of acquisition and overnight bank deposits of Administrative Agent or its Affiliate or of any commercial bank having capital and surplus in excess of $500,000,000, (c) repurchase obligations of Administrative Agent or its Affiliate or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than seven (7) days with respect to securities issued or fully guaranteed or insured by the United States Government, (d) commercial paper of a domestic issuer rated at least A-1 or the equivalent thereof by S&P or P-1 or the equivalent thereof by Moody’s and in either case maturing within ninety (90) days after the day of acquisition, (e) securities with maturities of ninety (90) days or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody’s, (f) securities with maturities of ninety (90) days or less from the date of acquisition backed by standby letters of credit issued by Administrative Agent or its Affiliate or any commercial bank satisfying the requirements of clause (b) of this definition or (g) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition.

1.13 “Closing Date” means, June 29, 2018.

1.14 “Commitment Fee” means, with respect to each Buyer, as set forth in the applicable Side Letter Agreement.

1.15 “Committed Amount” means, with respect to each Buyer, the lesser of (a) Funding 2’s “Committed Amount,” (b) Citibank’s “Citi Committed Amount,” or (c) such other Buyer’s “Committed Amount” (as such term is defined in the related Side Letter Agreement), in each case, as may be modified from time to time in accordance with the terms set forth in the applicable Side Letter Agreement. If a Buyer’s Committed Amount is modified (a “Commitment Modification”), each other Buyer’s Committed Amount shall be adjusted by a corresponding amount to maintain equal Pro Rata Shares between the Buyers at all times, and each Buyer’s Committed Amount shall subsequently adjust in equal Pro Rata Shares to the extent permitted under the terms of the applicable Side Letter Agreement; provided, however, that the aggregate Committed Amount for all Buyers shall not exceed $400,000,000 nor shall the individual Committed Amount for any Buyer exceed its Pro Rata Share of such amount at any time. For the avoidance of doubt, the provisions of Section 2.02(b) shall govern in the event that there is a Defaulting Buyer, subject to the terms provided under the Non-Defaulting Buyer’s Side Letter Agreement.

1.16 “Daily Simple SOFR” means, for any day, SOFR, with conventions (including, without limitation, a lookback) established by the Administrative Agent in its sole and good faith discretion; provided that, if the Administrative Agent determines that any such convention is not administratively, operationally, or technically feasible for the Administrative Agent, then the Administrative Agent may establish another convention in its sole and good faith discretion.

1.17 “Federal Reserve Bank of New York’s Website” means the website of the Federal Reserve Bank of New York at http://www.newyorkfed.org, or any successor source.

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1.18 “Margin” means, with respect to the Note, (a) prior to the occurrence of an Event of Default, (i) [****]% per annum or (ii) upon the occurrence of an Additional Term Note Offering, the related “Margin” in effect for the Term Notes subject to such Additional Term Note Offering plus [****]%; provided, however, any Margin calculated pursuant to clause (a)(ii) hereof shall not be less than [****]% or greater than [****]%, and (b) following the occurrence of an Event of Default, an amount equal to (i) the Margin otherwise applicable to the Note, plus (ii) [****]% per annum.

1.19 “Maximum Purchase Price” means, with respect to each Buyer the lesser of (a) Funding 2’s “Maximum Purchase Price,” (b) Citibank’s “Citi Maximum Purchase Price,” or (c) such other Buyer’s “Maximum Purchase Price” (as such term is defined in the related Side Letter Agreement), in each case, as may be modified from time to time in accordance with the terms set forth in the applicable Side Letter Agreement. If a Buyer’s Maximum Purchase Price is modified (a “Maximum Purchase Price Modification”), each other Buyer’s Maximum Purchase Price shall be adjusted by a corresponding amount to maintain equal Pro Rata Shares between the Buyers at all times, and each Buyer’s Maximum Purchase Price shall subsequently adjust in equal Pro Rata Shares to the extent permitted under the terms of the applicable Side Letter Agreement; provided, however, that the aggregate Maximum Purchase Price for all Buyers shall not exceed $1,000,000,000 nor shall the individual Maximum Purchase Price for any Buyer exceed its Pro Rata Share of such amount at any time. For the avoidance of doubt, the provisions of Section 2.02(b) shall govern in the event that there is a Defaulting Buyer, subject to the terms provided under the Non-Defaulting Buyer’s Side Letter Agreement.

1.20 “Net Income” means, for any period and any Person, the net income of such Person for such period as determined in accordance with GAAP.

1.21 “Net Worth” means, with respect to any Person, an amount equal to, on a consolidated basis, such Person’s stockholder equity (determined in accordance with GAAP).

1.22 “Non-Recourse Debt” means Indebtedness payable solely from the assets sold or pledged to secure such Indebtedness and under which Indebtedness no party has recourse to Sellers, VFN Guarantor or any of their Affiliates if such assets are inadequate or unavailable to pay off such Indebtedness, and none of the Sellers, VFN Guarantor or any of their Affiliates effectively has any obligation to directly or indirectly pay any such deficiency.

1.23 “Officer’s Compliance Certificate” means the certificate attached hereto as Exhibit A.

1.24 “Purchase Price Percentage” means 90% with respect to the Note.

1.25 “Restricted Cash” means, for any Person, any amount of cash of such Person that is contractually required to be set aside, segregated or otherwise reserved.

1.26 “Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto.

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1.27 “Side Letter Agreement” means, (i) with respect to Funding 2, the Amended and Restated Side Letter Agreement, dated as of October 10, 2023, among Sellers, Funding 2, the Administrative Agent and the VFN Guarantor, (ii) with respect to Citibank, the Amended and Restated Side Letter Agreement, dated as of October 10, 2023 between Sellers, Citibank and the VFN Guarantor, and (iii) with respect to any other Buyer who becomes a party to the Repurchase Agreement and this Pricing Side Letter after the date hereof, the Side Letter Agreement between Sellers and such Buyer, in each case, as may be amended, restated, supplemented or otherwise modified from time to time.

1.28 “SOFR” means, with respect to any day, the secured overnight financing rate published for such day by the Federal Reserve Bank of New York, as the administrator of the benchmark (or a successor administrator) on the Federal Reserve Bank of New York’s Website.

1.29 “Subordinated Debt” means, Indebtedness of Sellers which is (i) unsecured, (ii) no part of the principal of such Indebtedness is required to be paid (whether by way of mandatory sinking fund, mandatory redemption, mandatory prepayment or otherwise) prior to the date which is one year following the Termination Date and (iii) the payment of the principal of and interest on such Indebtedness and other obligations of Sellers in respect of such Indebtedness are subordinated to the prior payment in full of the principal of and interest (including post-petition obligations) on the Transactions and all other obligations and liabilities of Sellers to Administrative Agent and Buyers hereunder on terms and conditions approved in writing by Administrative Agent at the direction of the Required Buyers and all other terms and conditions of which are satisfactory in form and substance to Administrative Agent at the direction of the Required Buyers.

1.30 “Termination Date” means the earliest of (a) June 26, 2026; (b) the Obligations having become immediately due and payable pursuant to Section 7.03 of the Repurchase Agreement; (c) upon termination of the Indenture; and (d) at each Buyer’s or each Seller’s option pursuant to Section 2.15 of the Repurchase Agreement. The parties hereto will use their best efforts to agree to renewal terms to the Agreement and extend clause (a) of this definition no later than March 2025.

1.31 “Test Period” means any calendar quarter.

Section 2. Financial Covenants.

(i) PMC shall at all times comply with any and all financial covenants and/or financial ratios set forth below:

(a) Adjusted Tangible Net Worth. PMC shall maintain an Adjusted Tangible Net Worth of at least equal to $300,000,000.

(b) Indebtedness to Adjusted Tangible Net Worth Ratio. PMC’s ratio of Indebtedness (on and off balance sheet and excluding (A) Non-Recourse Debt, including any securitization debt, and (B) any intercompany debt eliminated in consolidation) to Adjusted Tangible Net Worth shall not exceed 10:1.

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(c) Maintenance of Liquidity. PMC shall ensure that, as of the end of each calendar month, it has cash and Cash Equivalents other than Restricted Cash on a consolidated basis in an amount not less than $25,000,000.

(ii) PMH shall at all times comply with any and all financial covenants and/or financial ratios set forth below:

(a) Adjusted Tangible Net Worth. PMH shall maintain an Adjusted Tangible Net Worth of at least equal to $250,000,000.

(b) Indebtedness to Adjusted Tangible Net Worth Ratio. PMH’s ratio of Indebtedness (on and off balance sheet and excluding (A) Non-Recourse Debt, including any securitization debt, and (B) any intercompany debt eliminated in consolidation) to Adjusted Tangible Net Worth shall not exceed 10:1.

(c) Maintenance of Liquidity. PMH shall ensure that, as of the end of each calendar month, it has cash and Cash Equivalents other than Restricted Cash on a consolidated basis in an amount not less than $10,000,000.

(iii) VFN Guarantor shall at all times comply with any and all financial covenants and/or financial ratios set forth below:

(a) Adjusted Tangible Net Worth. VFN Guarantor shall maintain an Adjusted Tangible Net Worth of at least equal to $1,250,000,000.

(b) Indebtedness to Adjusted Tangible Net Worth Ratio. VFN Guarantor’s ratio of Indebtedness (on and off balance sheet and excluding (A) Non-Recourse Debt, including any securitization debt, and (B) any intercompany debt eliminated in consolidation) to Adjusted Tangible Net Worth shall not exceed 8.5:1.

(c) Maintenance of Liquidity. VFN Guarantor shall ensure that, as of the end of each calendar month, it has cash and Cash Equivalents other than Restricted Cash on a consolidated basis in an amount not less than $75,000,000.

Section 3. Payment of Fees in Connection with the Pricing Side Letter. Sellers agree to pay as and when billed by Buyers all of the reasonable fees, disbursements and expenses of counsel to Buyers in connection with the development, preparation and execution of this Pricing Side Letter or any other documents prepared in connection herewith in accordance with Article V of the Repurchase Agreement and receipt of payment thereof shall be a condition precedent to each Buyer entering into any Transaction pursuant hereto.

Section 4. Optional Extension. At any time within 30 days prior to the Termination Date (such date, the “Anniversary Date”), each of the Sellers and each Buyer, by mutual consent (as evidenced by a written agreement) may extend the Termination Date; provided, however, if the Termination Date is not extended on an Anniversary Date (such date, the “Amortization Date”), the Termination Date shall be fixed at twelve (12) months from the Amortization Date.

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Section 5. Severability. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement.

Section 6. Governing Law. THIS PRICING SIDE LETTER AND ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT, TORT OR OTHERWISE) BASED UPON, ARISING UNDER OR RELATED TO OR IN CONNECTION WITH THIS PRICING SIDE LETTER, THE RELATIONSHIP OF THE PARTIES HERETO, AND/OR THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES HERETO WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, INCLUDING THE STATUTES OF LIMITATIONS AND OTHER PROCEDURAL LAWS THEREOF (WITHOUT REFERENCE TO THE CONFLICT OF LAW PRINCIPLES THEREOF OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, WHICH SHALL APPLY) AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

Section 7. Counterparts. This Pricing Side Letter may be executed in counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same instrument. The words “executed,” “signed,” “signature,” and words of like import as used above and elsewhere in this Pricing Side Letter or in any other certificate, agreement or document related to this transaction shall include, in addition to manually executed signatures, images of manually executed signatures transmitted by facsimile or other electronic format (including, without limitation, “pdf,” “tif” or “jpg”) and other electronic signatures (including, without limitation, any electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record). The use of electronic signatures and electronic records (including, without limitation, any contract or other record created, generated, sent, communicated, received, or stored by electronic means) shall be of the same legal effect, validity, enforceability and admissibility as a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable law, including the federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act and any other applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act or the Uniform Commercial Code. Each party to this Pricing Side Letter hereby consents to the use of any secure third party electronic signature capture service providers (including, without limitation, DocuSign), as long as such service providers use system logs and audit trails that establish a temporal and process link between the presentation of identity documents and the electronic signing, together with identifying information that can be used to verify the electronic signature and its attribution to the signer’s identity and evidence of the signer’s agreement to conduct the transaction electronically and of the signer’s execution of each electronic signature. Delivery of an executed counterpart of a signature page to this Pricing Side Letter by facsimile or other electronic means shall be effective as delivery of a manually executed counterpart of this Pricing Side Letter.

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Section 8. Amendments. None of the terms or provisions of this Pricing Side Letter may be waived, amended, supplemented or otherwise modified except by a written instrument executed by the Administrative Agent, Sellers and each Buyer.

Section 9. Conflict of Terms. If there is any inconsistency between the terms of this Pricing Side Letter and those in the Repurchase Agreement, the terms of this Pricing Side Letter will prevail.

Section 10. Amendment and Restatement. The terms and provisions of the Existing Pricing Side Letter are hereby amended and restated in their entirety by the terms and provisions of this Pricing Side Letter and shall supersede all provisions of the Existing Pricing Side Letter as of the date hereof. From and after the date hereof, all references made to the Existing Pricing Side Letter in any Program Agreement or in any other instrument or document shall, without more, be deemed to refer to this Pricing Side Letter.

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IN WITNESS WHEREOF, the undersigned have caused this Pricing Side Letter to be duly executed as of the date first above written.

ATLAS SECURITIZED PRODUCTS, L.P., as Administrative Agent

By: Atlas Securitized Products GP, LLC, its general partner

By:
Name:
Title:

ATLAS SECURITIZED PRODUCTS FUNDING 2, L.P., as a Buyer

By: Atlas Securitized BKR 2, L.P., its general partner

By: Atlas Securitized FundingCo GP LLC, its general partner

By:
Name:
Title:

Signature Page to Fifth Amended and Restated Pricing Side Letter

CITIBANK, N.A., as a Buyer

By:
Name: Arunthathi Theivakumaran
Title: Vice President

PENNYMAC CORP., as a Seller

By:

Name: Pamela Marsh

Title: Senior Managing Director and Treasurer

PENNYMAC HOLDINGS, LLC, as a Seller

By:

Name: Pamela Marsh

Title: Senior Managing Director and Treasurer

PENNYMAC MORTGAGE INVESTMENT TRUST, as VFN Guarantor

By:

Name: Pamela Marsh

Title: Senior Managing Director and Treasurer

Signature Page to Fifth Amended and Restated Pricing Side Letter

EXHIBIT A

OFFICER’S COMPLIANCE CERTIFICATE

I, ___________________, do hereby certify that I am the [duly elected, qualified and authorized] [CFO/TREASURER/FINANCIAL OFFICER] of PennyMac Corp. (“PMC”), PennyMac Holdings, LLC (“PMH”) and PennyMac Mortgage Investment Trust (“PMIT”). This Certificate is delivered to you in connection with Section 6.24(b) of the Second Amended and Restated Master Repurchase Agreement, dated as of October 10, 2023, among Atlas Securitized Products, L.P., as administrative agent (the “Administrative Agent”), PMC, as a seller (a “Seller”), PMH, as a seller (a “Seller”, and collectively with PMC, the “Sellers”), Atlas Securitized Products Funding 2, L.P. (“Funding 2”), as a buyer (a “Buyer”), Citibank, N.A. (“Citibank”), as a buyer (a “Buyer”), the other buyers who become party hereto from time to time after executing a Side Letter Agreement, each a buyer (a “Buyer” and together with Funding 2, the “Buyers”), and PMIT, as guarantor (the “VFN Guarantor”) (as amended from time to time, the “Series 2017-VF1 Repurchase Agreement”). I hereby certify that, as of the date of the financial statements attached hereto and as of the date hereof, each of PMC, PMH and PMIT (each an “Applicable Party” and collectively, the “Applicable Parties”) is and has been in compliance with all the terms of the Series 2017-VF1 Repurchase Agreement and, without limiting the generality of the foregoing, I certify on behalf of the Applicable Party that:

Adjusted Tangible Net Worth.

(i) PMC has maintained at all times an Adjusted Tangible Net Worth of at least equal to $300,000,000.

(ii) PMH has maintained at all times an Adjusted Tangible Net Worth of at least equal to $250,000,000.

(iii) VFN Guarantor has maintained at all times an Adjusted Tangible Net Worth of at least equal to $1,250,000,000.

Indebtedness to Adjusted Tangible Net Worth Ratio.

(i) PMC’s ratio of Indebtedness (on and off balance sheet and excluding (A) Non-Recourse Debt, including any securitization debt, and (B) any intercompany debt eliminated in consolidation) to Adjusted Tangible Net Worth has not exceeded 10:1 at any time.

(ii) PMH’s ratio of Indebtedness (on and off balance sheet and excluding (A) Non-Recourse Debt, including any securitization debt, and (B) any intercompany debt eliminated in consolidation) to Adjusted Tangible Net Worth has not exceeded 10:1 at any time.

(iii) VFN Guarantor’s ratio of Indebtedness (on and off balance sheet and excluding (A) Non-Recourse Debt, including any securitization debt, and (B) any

intercompany debt eliminated in consolidation) to Adjusted Tangible Net Worth has not exceeded 8.5:1 at any time.

Maintenance of Liquidity.

(i) PMC has ensured that, as of the end of each calendar month, it has maintained cash and Cash Equivalents other than Restricted Cash on a consolidated basis in an amount not less than $25,000,000.

(ii) PMH has ensured that, as of the end of each calendar month, it has maintained cash and Cash Equivalents other than Restricted Cash on a consolidated basis in an amount not less than $10,000,000.

(iii) VFN Guarantor has ensured that, as of the end of each calendar month, it has maintained cash and Cash Equivalents other than Restricted Cash on a consolidated basis in an amount not less than $75,000,000.

Maintenance of Profitability. VFN Guarantor has not permitted (i) Net Income before taxes, calculated without regard to any market-driven value changes on securities, mortgage servicing rights, other assets owned by VFN Guarantor and any hedge instruments related to such securities, rights and other assets for the Test Period ending September 2022 to be less than $1.00 or (ii) thereafter, Net Income, for each other Test Period, to be less than $1.00 for one of the two prior Test Periods.

Financial Statements. The financial statements attached hereto as Schedule 1 are accurate and complete, accurately reflect the financial condition of the Applicable Parties, and do not omit any material fact as of the date(s) thereof.

Compliance. The Applicable Party has observed or performed in all material respects all of its covenants and other agreements, and satisfied every condition, contained in the Series 2017-VF1 Repurchase Agreement and the other Program Agreements to be observed, performed and satisfied by it. [If a covenant or other agreement or condition has not been complied with, the Applicable Party shall describe such lack of compliance and provide the date of any related waiver thereof.]

No Advance Rate Reduction Event, Servicer Termination Events, Events of Default or Funding Interruption Events. No Advance Rate Reduction Event, Servicer Termination Event, Event of Default or Funding Interruption Event has occurred or is continuing. [If any Advance Rate Reduction Event, Servicer Termination Event, Event of Default or Funding Interruption Event has occurred and is continuing, the Applicable Party shall describe the same in reasonable detail and describe the action Applicable Party has taken or proposes to take with respect thereto, and if such Advance Rate Reduction Event, Servicer Termination Event, Event of Default or Funding Interruption Event has been expressly waived by Buyers in writing, Applicable Party shall describe the Advance Rate Reduction Event, Servicer Termination Event, Event of Default or Funding Interruption Event, as applicable, and provide the date of the related waiver.]

Indebtedness. All Indebtedness (including, without limitation, all Subordinated Debt) (other than Indebtedness evidenced by the Applicable Agreement) of the Applicable Party existing on the date hereof is listed on Schedule 2 hereto.

Hedging. With respect to the Series 2017-VF1 Repurchase Agreement, attached hereto as Schedule 3 is a true and correct summary of all interest rate protection agreements entered into or maintained by the Applicable Party.

MSR Valuation. A detailed summary of the fair market value and Market Value Percentage of MSRs from the most recently delivered Market Value Report has been provided to Buyers in accordance with the timing requirements of Section 3.3(g) of the Base Indenture.

Litigation Summary. Attached hereto as Schedule 4 is a true and correct summary of all actions, notices, proceedings and investigations pending with respect to which the Applicable Party has received service of process or other form of notice or, to the best of Applicable Party’s knowledge, threatened against it, before any court, administrative or governmental agency or other regulatory body or tribunal.

IN WITNESS WHEREOF, I have set my hand this _____ day of ________, 20___.

PENNYMAC CORP.

By: _________________________________

Name: ______________________________

Title: _______________________________

PENNYMAC HOLDINGS, LLC

By: _________________________________

Name: ______________________________

Title: _______________________________

PENNYMAC MORTGAGE INVESTMENT TRUST

By: _________________________________

Name: ______________________________

Title: _______________________________

Schedule 1

Financial Statements

Schedule 2

Existing Indebtedness

Schedule 3

Interest Rate Protection Agreement

Schedule 4

Litigation Summary

EXHIBIT C

SERIES 2017-VF1 SIDE LETTER AGREEMENT

[ON FILE WITH ASSIGNEE BUYER AND SELLERS]

EXHIBIT D

VFN REPO GUARANTY

SECOND AMENDED AND RESTATED GUARANTY

PennyMac Mortgage Investment Trust, as guarantor

Dated as of October 10, 2023

Table of Contents

Page


1. Defined Terms	- 1 -
2. Guaranty	- 2 -
3. Right of Set-off	- 2 -
4. Subrogation	- 3 -
5. Amendments, etc. with Respect to the Obligations	- 3 -
6. Guaranty Absolute and Unconditional	- 3 -
7. Reinstatement	- 5 -
8. Payments	- 5 -
9. Event of Default	- 5 -
10. Severability	- 5 -
11. Headings	- 6 -


12. No Waiver; Cumulative Remedies	- 6 -
13. Waivers and Amendments; Successors and Assigns; Governing Law	- 6 -
14. Notices	- 6 -
15. Jurisdiction	- 6 -
16. Integration	- 7 -
17. Third Party Beneficaries	- 8 -

18. Acknowledgments 8

19. Events of Default 8

20. Amendment and Restatement 8

SECOND AMENDED AND RESTATED GUARANTY

This SECOND AMENDED AND RESTATED GUARANTY, dated as of October 10, 2023 (as may be amended, restated, supplemented or otherwise modified from time to time, this “Guaranty”), is made by PennyMac Mortgage Investment Trust (“Guarantor”), in favor of, and consented and agreed to by, the buyers from time to time party to the VF1 Repurchase Agreement (as defined herein) (each a “Buyer”, and collectively, the “Buyers”).

RECITALS

WHEREAS, Guarantor has entered into that certain Amended and Restated Guaranty, dated as of June 29, 2018 (as amended, restated, supplemented or otherwise modified from time to time, the “Original Guaranty”), in favor of Atlas Securitized Products Funding 2, L.P. and Citibank, N.A., as Buyers;

WHEREAS, pursuant to Section 13 of the Original Guaranty, the Original Guaranty may be amended, supplemented or otherwise modified by a written instrument executed by Guarantor and Buyers;

WHEREAS, pursuant to the Second Amended and Restated Master Repurchase Agreement, dated as of October 10, 2023 (as may be amended, restated, supplemented or otherwise modified from time to time, the “VF1 Repurchase Agreement”), among PennyMac Corp., as a seller (“PMC Seller”), PennyMac Holdings LLC, as a seller (“PMH Seller” and, together with PMC Seller, the “Sellers”), the buyers from time to time party thereto and Atlas Securitized Products, L.P., as administrative agent (the “Administrative Agent”), the Buyers have agreed from time to time to enter into Transactions with Sellers;

WHEREAS, it is a condition precedent to the obligation of the Buyers to enter into Transactions with Sellers under the VF1 Repurchase Agreement that Guarantor shall have executed and delivered this Guaranty to the Buyers;

WHEREAS, as a condition precedent to entering into the VF1 Repurchase Agreement, the Guarantor is required to execute and deliver this Guaranty;

WHEREAS, the Guarantor will receive a benefit, either directly or indirectly from the Sellers for entering into this Guaranty; and

NOW, THEREFORE, in consideration of the foregoing premises, to induce the Buyers to enter into the VF1 Repurchase Agreement and to enter into Transactions thereunder, Guarantor hereby agrees with the Buyers, as follows:

1. Defined Terms. (a) Unless otherwise defined herein, terms which are defined in the VF1 Repurchase Agreement and used herein are so used as so defined.

(b) For purposes of this Guaranty, “Obligations” shall mean all obligations and liabilities of Sellers to the Buyers, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under,

or out of or in connection with the VF1 Repurchase Agreement and any other Program Agreements and any other document made, delivered or given in connection therewith or herewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including, without limitation, all fees and disbursements of counsel to Buyers that are required to be paid by Sellers pursuant to the terms of the Program Agreements and costs of enforcement of this Guaranty reasonably incurred) or otherwise.

2. Guaranty. (a) Guarantor hereby unconditionally and irrevocably guarantees to the Buyers the prompt and complete payment and performance by Sellers when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations.

(b) Guarantor further agrees to pay any and all expenses (including, without limitation, all fees and disbursements of counsel) which may be paid or incurred by the Buyers in enforcing, or obtaining advice of counsel in respect of, any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, Guarantor under this Guaranty. This Guaranty shall remain in full force and effect until the later of (i) the termination of the VF1 Repurchase Agreement and (ii) the Obligations are paid in full, notwithstanding that from time to time prior thereto Sellers may be free from any Obligations.

(c) No payment or payments made by Sellers or any other Person or received or collected by the Buyers from Sellers or any other Person by virtue of any action or proceeding or any set-off or appropriation or application, at any time or from time to time, in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of Guarantor hereunder which shall, notwithstanding any such payment or payments, remain liable for the amount of the outstanding Obligations until the outstanding Obligations are paid in full.

(d) Guarantor agrees that whenever, at any time, or from time to time, Guarantor shall make any payment to the Buyers on account of Guarantor’s liability hereunder, Guarantor will notify the Buyers in writing that such payment is made under this Guaranty for such purpose.

3. Right of Set-off. The Buyers are hereby irrevocably authorized at any time and from time to time without notice to Guarantor, any such notice being hereby waived by Guarantor, to set-off and appropriate and apply any and all monies and other property of Guarantor, deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Buyers or any Affiliate thereof to or for the credit or the account of Guarantor, or any part thereof in such amounts as the Buyers may elect, on account of the Obligations and liabilities of Guarantor hereunder and claims of every nature and description of the Buyers against Guarantor, in any currency, whether arising hereunder, under the VF1 Repurchase Agreement or otherwise, as the Buyers may elect, whether or not the Buyers have made any demand for payment and although such Obligations and liabilities and claims may be contingent or unmatured. The Buyers shall notify Guarantor promptly of any such set-off and the application made by the Buyers, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Buyers under this

paragraph are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Buyers may have.

4. Subrogation. Notwithstanding any payment or payments made by Guarantor hereunder or any set-off or application of funds of Guarantor by the Buyers, Guarantor shall not be entitled to be subrogated to any of the rights of the Buyers against Sellers or any other guarantor or any collateral security or guarantee or right of offset held by Buyer for the payment of the Obligations, nor shall Guarantor seek or be entitled to seek any contribution or reimbursement from Sellers or any other guarantor in respect of payments made by Guarantor hereunder, until all amounts owing to the Buyers by Sellers on account of the Obligations are paid in full and the VF1 Repurchase Agreement is terminated. If any amount shall be paid to Guarantor on account of such subrogation rights at any time when all of the Obligations shall not have been paid in full, such amounts shall be held by Guarantor for the benefit of the Buyers, segregated from other funds of Guarantor, and shall, forthwith upon receipt by Guarantor, be turned over to the Buyers in the exact form received by Guarantor (duly indorsed by Guarantor to the Buyers, if required), to be applied against the Obligations, whether matured or unmatured, in such order as Buyers may determine.

5. Amendments, etc. with Respect to the Obligations. Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against Guarantor, and without notice to or further assent by Guarantor, any demand for payment of any of the Obligations made by the Buyers may be rescinded by the Buyers, and any of the Obligations continued, and the Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Buyers, and the VF1 Repurchase Agreement, and the other Program Agreements and any other document in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, pursuant to its terms and as the Buyers may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by the Buyers for the payment of the Obligations may be sold, exchanged, waived, surrendered or released. The Buyers shall have no obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Obligations or for this Guaranty or any property subject thereto. When making any demand hereunder against Guarantor, the Buyers may, but shall be under no obligation to, make a similar demand on Sellers and any failure by Buyers to make any such demand or to collect any payments from Sellers or any release of Sellers shall not relieve Guarantor of its obligations or liabilities hereunder, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of Buyer against Guarantor. For the purposes hereof “demand” shall include, but is not limited to, the commencement and continuance of any legal proceedings.

6. Guaranty Absolute and Unconditional. (a) Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by Buyers upon this Guaranty or acceptance of this Guaranty; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived in reliance upon this Guaranty; and all dealings between Sellers or Guarantor, on the one hand, and Buyers, on the other, shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guaranty. Guarantor waives

diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon Sellers or the Guaranty with respect to the Obligations. This Guaranty shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (i) the validity or enforceability of the VF1 Repurchase Agreement, the other Program Agreements, any of the Obligations or any collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by Buyers, (ii) any defense, set-off or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by Sellers against Buyers, or (iii) any other circumstance whatsoever (with or without notice to or knowledge of Sellers or Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of Sellers for the Obligations, or of Guarantor under this Guaranty, in bankruptcy or in any other instance. When pursuing its rights and remedies hereunder against Guarantor, Buyer may, but shall be under no obligation, to pursue such rights and remedies that they may have against Sellers or any other Person or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by Buyers to pursue such other rights or remedies or to collect any payments from Sellers or any such other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of Sellers or any such other Person or any such collateral security, guarantee or right of offset, shall not relieve Guarantor of any liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of Buyers against Guarantor. This Guaranty shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon Guarantor and their successors and assigns thereof, and shall inure to the benefit of Buyers, and successors, indorsees, transferees and assigns, until all the Obligations and the obligations of Guarantor under this Guaranty shall have been satisfied by payment in full, notwithstanding that from time to time during the term of the VF1 Repurchase Agreement Sellers may be free from any Obligations.

(b) Without limiting the generality of the foregoing, Guarantor hereby agrees, acknowledges, and represents and warrants to Buyers as follows:

(i) Guarantor hereby waives any defense arising by reason of, and any and all right to assert against Buyers any claim or defense based upon, an election of remedies by Buyers which in any manner impairs, affects, reduces, releases, destroys and/or extinguishes Guarantor’s (x) subrogation rights, (y) rights to proceed against Sellers or any other guarantor for reimbursement or contribution, and/or (z) any other rights of Guarantor to proceed against Sellers, against any other guarantor, or against any other person or security.

(ii) Guarantor is presently informed of the financial condition of Sellers and of all other circumstances which diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations. Guarantor hereby covenants that it will make its own investigation and will continue to keep itself informed of each Seller’s financial condition, the status of other guarantors, if any, of all other circumstances which bear upon the risk of nonpayment and that it will continue to rely upon sources other than Buyers for such information and will not rely upon Buyers for any such information. Absent a written request for such information by Guarantor to Buyers, Guarantor hereby waives its right, if any, to require Buyers to disclose to Guarantor any information which Buyers may now or

hereafter acquire concerning such condition or circumstances including, but not limited to, the release of or revocation by any other guarantor.

(iii) Guarantor has independently reviewed the VF1 Repurchase Agreement and related agreements and has made an independent determination as to the validity and enforceability thereof, and in executing and delivering this Guaranty to Buyers, Guarantor is not in any manner relying upon the validity, and/or enforceability, and/or attachment, and/or perfection of any Liens or security interests of any kind or nature granted by Sellers or any other guarantor to Buyers, now or at any time and from time to time in the future.

(iv) Guarantor is not required to register as an “investment company” under the Investment Company Act of 1940, as amended from time to time.

(c) Guarantor hereby covenants that it shall not merge, consolidate, amalgamate, liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or dissolution) or sell all or substantially all of its assets; provided that Guarantor may merge or consolidate with (i) any wholly owned subsidiary of Guarantor, (ii) any other Person if Guarantor is the surviving entity; or (iii) with the prior written consent of the Buyers and the Administrative Agent, so long that, in each case, after giving effect thereto, no Default would exist hereunder.

7. Reinstatement. This Guaranty shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by a Buyer upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of either Seller or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, either Seller or any substantial part of its property, or otherwise, all as though such payments had not been made.

8. Payments. Guarantor hereby agrees that the Obligations will be paid to Buyer without set-off or counterclaim in U.S. Dollars.

9. Event of Default. If an Event of Default under the VF1 Repurchase Agreement shall have occurred and be continuing, Guarantor agrees that, as between Guarantor and the Buyers, the Obligations may be declared to be due in accordance with the terms of the VF1 Repurchase Agreement for purposes of this Guaranty notwithstanding any stay, injunction or other prohibition which may prevent, delay or vitiate any such declaration as against the Sellers and that, in the event of any such declaration (or attempted declaration), such Obligations shall forthwith become due by Guarantor for purposes of this Guaranty.

10. Severability. Any provision of this Guaranty which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

11. Headings. The paragraph headings used in this Guaranty are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.

12. No Waiver; Cumulative Remedies. Buyers shall not by any act (except by a written instrument pursuant to Section 13 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default or in any breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of Buyers, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by Buyers of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which Buyers would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law.

13. Waivers and Amendments; Successors and Assigns; Governing Law. None of the terms or provisions of this Guaranty may be waived, amended, supplemented or otherwise modified except by a written instrument executed by Guarantor and Buyers, provided that any provision of this Guaranty may be waived by Buyers in a letter or agreement executed by Buyers or by facsimile or electronic transmission from Buyers to the Guarantor. This Guaranty shall be binding upon the personal representatives, successors and assigns of Guarantor and shall inure to the benefit of Buyers and their successors and assigns.

14. Notices. Notices delivered in connection with this Guaranty shall be given in accordance with Section 10.05 of the VF1 Repurchase Agreement.

15. Governing Law; Jurisdiction; Waivers.

(a) THIS GUARANTY AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO OR IN CONNECTION WITH THIS GUARANTY, THE RELATIONSHIP OF THE PARTIES HERETO, AND/OR THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES HERETO WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO THE CONFLICT OF LAW PRINCIPLES THEREOF OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

(b) THE GUARANTOR SUBMITS ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;

(c) THE GUARANTOR CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;

(d) THE GUARANTOR AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH HEREIN OR AT SUCH OTHER ADDRESS OF WHICH EACH OTHER PARTY HERETO SHALL HAVE BEEN NOTIFIED IN WRITING, EXCEPT THAT WITH RESPECT TO THE INDENTURE TRUSTEE, CALCULATION AGENT, PAYING AGENT AND SECURITIES INTERMEDIARY, SERVICE OF PROCESS MAY ONLY BE MADE AS REQUIRED BY APPLICABLE LAW;

(e) THE GUARANTOR AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND

(f) THE GUARANTOR WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY.

16. Integration; Counterparts. This Guaranty represents the agreement of Guarantor with respect to the subject matter hereof and there are no promises or representations by Buyer relative to the subject matter hereof not reflected herein. This Guaranty may be executed in any number of counterparts and all of such counterparts shall together constitute one and the same instrument. The parties agree that this Guaranty, any addendum or amendment hereto or any other document necessary for the consummation of the transactions contemplated by this Guaranty may be accepted, executed or agreed to through the use of an electronic signature in accordance with the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. § 7001 et seq, Official Text of the Uniform Electronic Transactions Act as approved by the National Conference of Commissioners on Uniform State Laws at its Annual Conference on July 29, 1999 and any applicable state law. Any document accepted, executed or agreed to in conformity with such laws will be binding on all parties hereto to the same extent as if it were physically executed and each party hereby consents to the use of any secure third party electronic signature capture service with appropriate document access tracking, electronic signature tracking and document retention, including but not limited to DocuSign.

17. Third Party Beneficiaries. Each of the Secured Parties and the Administrative Agent shall be a third party beneficiary of this Guaranty and shall be entitled to enforce the Guarantor’s Obligations hereunder to the same extent as if it was a signatory hereto.

18. Acknowledgments. Guarantor hereby acknowledges that:

(a) Guarantor has been advised by counsel in the negotiation, execution and delivery of this Guaranty and the other Program Agreements;

(b) Buyers do not have any fiduciary relationship to Guarantor, Guarantor does not have any fiduciary relationship to Buyers and the relationship between Buyers and Guarantor is solely that of surety and creditor;

(d) this Guaranty is “a security agreement or arrangement or other credit enhancement” that is “related to” and provided “in connection with” the PC Repurchase Agreement and each Transaction thereunder and is within the meaning of Sections 101(38A)(A) and 741(7)(A)(xi) of the Bankruptcy Reform Act of 1978, 11 U.S.C. §§ 101 et seq., as amended (the “Bankruptcy Code”) and is, therefore to the extent of damages in connection with the PC Repurchase Agreement, measured in accordance with Section 562 of the Bankruptcy Code (i) a “securities contract” as that term is defined in Section 741(7)(A)(xi) of the Bankruptcy Code and (ii) a “master netting agreement” as that term is defined in Section 101(38A) of the Bankruptcy Code; and

(e) Buyers’ right to cause the termination, liquidation or acceleration of, or to offset or net termination values, payment amounts or other transfer obligations arising under or in connection with the PC Repurchase Agreement and this Guaranty is in each case a contractual right to cause the termination, liquidation or acceleration of, or to offset or net termination values, payment amounts or other transfer obligations arising under or in connection with this Guaranty as described in Sections 362(b)(6), 362(b)(27), 555 and/or 561 of the Bankruptcy Code.

19. Events of Default. Each of the following events or circumstances shall constitute an “Event of Default” under this Guaranty:

(a) For any reason, this Guaranty at any time shall not be in full force and effect in all material respects or shall not be enforceable in all material respects in accordance with its terms, or Guarantor or any Affiliate of Guarantor shall seek to disaffirm, terminate, limit or reduce its obligations hereunder.

(b) A material breach by Guarantor of the representation or warranty in Section 6(b)(iv) hereof, if not cured within thirty (30) days following the occurrence of such breach, or breach of the covenant in Section 6(c) hereof.

20. Amendment and Restatement. The Guarantor entered into the Original Guaranty. The Buyers and the Guarantor desire to enter into this Guaranty in order to amend and restate the Original Guaranty in its entirety. The amendment and restatement of the Original Guaranty shall become effective on the date hereof, and each of the Buyers and the Guarantor shall hereafter be bound by the terms and conditions of this Guaranty and the other Program Agreements. All references to the Original Guaranty in any Program Agreement or other

document or instrument delivered in connection therewith shall be deemed to refer to this Guaranty and the provisions hereof.

[Signature page follows]

IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be duly executed and delivered as of the date first above written.

PennyMac Mortgage Investment Trust, as Guarantor

By:

Name: Pamela Marsh

Title: Senior Managing Director and Treasurer

CONSENTED AND AGREED TO BY:

ATLAS SECURITIZED PRODUCTS FUNDING 2, L.P., as a buyer

By: Atlas Securitized BKR 2, L.P., its general partner

By: Atlas Securitized FundingCo GP LLC, its general partner

By:

Name:

Title:

CITIBANK, N.A., as a buyer

By:

Name:

Title:

EX-31.1

Exhibit 31.1

CERTIFICATION

I, David A. Spector, certify that:

I have reviewed this Quarterly Report on Form 10-Q of PennyMac Mortgage Investment Trust;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Trustees (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

    Date: August 1, 2024

   

    /s/ David A. Spector

   

    David A. Spector

   

    Chairman and Chief Executive Officer

   

A signed original of this written statement required by Section 302 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Daniel S. Perotti, certify that:

I have reviewed this Quarterly Report on Form 10-Q of PennyMac Mortgage Investment Trust;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

    Date: August 1, 2024

   

    /s/ Daniel S. Perotti

   

    Daniel S. Perotti

   

    Senior Managing Director and Chief Financial Officer

   

nt> EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of PennyMac Mortgage Investment Trust (the “Company”) for the quarter ended June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David A. Spector, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

    /s/ David A. Spector

   

    David A. Spector

   

    Chairman and Chief Executive Officer

   

    August 1, 2024

   

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to PennyMac Mortgage Investment Trust and will be retained by PennyMac Mortgage Investment Trust and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of PennyMac Mortgage Investment Trust (the “Company”) for the quarter ended June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Daniel S. Perotti, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

    /s/ Daniel S. Perotti

   

    Daniel S. Perotti

   

    Senior Managing Director and Chief Financial Officer

   

    August 1, 2024

   