MFA Financial, Inc. (NYSE: MFA) announced today that it has entered into a second Forbearance Agreement with certain counterparties to its various repurchase agreement financing arrangements and provided additional Company updates.

• Extended Forbearance. Under a new Forbearance Agreement that the Company entered into earlier today with certain counterparties holding a significant majority of its outstanding repurchase obligations (the "Second Forbearance Agreement"), such counterparties have agreed to forbear from exercising any rights or remedies under their respective repurchase agreements with the Company, including selling collateral to enforce margin calls, through June 1, 2020 (unless terminated sooner upon the occurrence of certain events). The Second Forbearance Agreement extends the forbearance period agreed to under the previously announced Forbearance Agreement that the Company entered into with counterparties on April 10, 2020, which was set to expire today at 6:30 p.m. ET (the "First Forbearance Agreement").
  • The terms and conditions of the Second Forbearance Agreement are substantially similar to those under the First Forbearance Agreement.
  • Participating counterparties to the Second Forbearance Agreement represent repurchase obligations of an aggregate of $4.4 billion, which represents approximately 84% of the Company's $5.3 billion repurchase obligations outstanding as of April 24, 2020. Since entering into the First Forbearance Agreement on April 10, 2020, the Company's obligations under its and its subsidiaries repurchase agreements have further decreased by approximately 8%. This reduction occurred primarily from ongoing sales of certain assets and the payoff of the associated repurchase obligations and unpaid margin calls.
  • Under the terms of the Second Forbearance Agreement, the Company has also agreed to make a cash payment to the participating counterparties of $150 million, which will be applied to reduce the Company's outstanding repurchase obligation balances with counterparties participating in the Second Forbearance Agreement.

During the period covered by the Second Forbearance Agreement, the Company intends to continue to explore other potential transactions to further reduce its obligations under its existing repurchase agreements, source financing that is generally more durable than existing funding alternatives and raise cash to bolster its liquidity. In addition, the Company will continue to engage in discussions with its counterparties for further forbearance as and if needed.

• Portfolio Update. The Company has continued taking steps to manage and de-lever its portfolio and generate liquidity. In particular, since April 10, 2020, the Company has sold residential mortgage assets at improved levels, as prices have partially recovered from the depressed valuations seen from mid-March through early April. These sales resulted in proceeds of $484.4 million and included, $282.9 million of MSR- related assets, $147.7 million of CRT securities and $51.4 million of Agency MBS.
• Cash and liquidity update. As of April 24, 2020, the Company had total cash balances of $430.9 million, including $143.8 million of cash on deposit with repurchase agreement counterparties to meet margin calls. As described above, cash balances will be reduced by the $150 million payment to repurchase agreement counterparties to reduce outstanding repurchase obligations. Under the Second Forbearance Agreement, the participating counterparties continue to have a secured interest in the Company's previously unencumbered assets, primarily residential whole loans, real estate owned, cash and other assets with an estimated market value of approximately $1.4 billion as of April 24, 2020.

About MFA Financial, Inc.

MFA Financial, Inc. is a real estate investment trust primarily engaged in the business of investing, on a leveraged basis, in residential mortgage assets, including residential whole loans and residential mortgage-backed securities.