MFA Financial, Inc. (NYSE: MFA), a New York-based real estate investment trust primarily engaged in the business of investing, on a leveraged basis, in residential mortgage assets, including residential mortgage-backed securities and residential whole loans, announced Tuesday that as of Monday, it has been unable to meet margin calls.
In a press release, the company said, “In recent weeks, due to the turmoil in the financial markets resulting from the global pandemic of the COVID-19 virus, the company and its subsidiaries have received an unusually high number of margin calls from financing counterparties, and have also experienced higher funding costs in respect of its repurchase agreements. Further, on March 23, 2020, the company notified its financing counterparties that it does not expect to be in a position to fund the anticipated volume of future margin calls under its financing arrangements in the near term as a result of market disruptions created by the COVID-19 pandemic. The company estimates that, as of March 20, 2020, the company’s aggregate obligations under its various financing arrangements is approximately $9.5 billion.”
The company said it is engaged in discussions with its financing counterparties with regard to entering into forbearance agreements but that it cannot predict whether its financing counterparties will enter into a forbearance agreement, the timing of any such agreement, or the terms thereof.
If the Company fails to deliver additional collateral or otherwise meet margin calls when due, the counterparties may demand immediate payment by the company of its aggregate outstanding financing obligations and/or take ownership of the securities securing the company’s financing obligations.
MFA Financial has engaged Hunton Andrews Kurth LLP and Quinn Emanuel Urquhart & Sullivan, LLP as legal counsel and FTI LLC as financial advisor.
