We did have, as you saw a little bit of a move, but not much in the substandard and doubtful which is related to the non-performing loans we put on the books this quarter and a little more stress. But the special mention doesn’t give us a level of concern that there is going to be a loss or a default. It’s just things we look at when we look at the loans to highlight more of a focus on the loan.
Jay McCanless: Okay. Sounds great. Thank you. The second question, could you please repeat the comments you made about moving bridge loans into agency volume? I guess how much of that are you doing and what type of mezzanine financing would Arbor be putting in to make those deals happen?
Ivan Kaufman: Sure. So, we had a fairly effective reduction in our balance sheet and a conversion into fixed rate loans with the agencies. A lot of that is the loan property get condition they got out of price they get stabilized and with the tenure being so volatile, the lower the tenure, the greater the opportunity there is and with an inverted yield curve, it’s a natural shift from floating rate loans into fixed rate loans, and that’s something we have been doing consistently from time-to-time, and I don’t have the numbers, Paul may have it, we will be – we do put some mezzanine lending on some of those loans, not that much [Technical Difficulty] a lot of those loans are 65% loan to value and have a certain coverage and sometimes when the borrowers paying down those loans, putting more equity, we will also put some mezzanine lending into that to facilitate those transactions.
We like that kind of lending. We think the returns are extraordinarily healthy and is a simple part of our business, but it’s not a very big part of our business. And Paul, maybe you can comment on how much money we put out in the quarter for that kind of business.
Paul Elenio: Yes. I think it’s exactly what Ivan said. It’s not a big part of our business, but it is some of our business, and it was pretty benign this quarter. We had $685 million of balance sheet runoff. We recaptured $435 million of that into the agencies, which was 64% recapture rate very high, and we only gave $1.5 million of mezz behind one of those agency loans. In the first quarter, we had like $1.2 billion of runoff. We were captured just under 50% of that, and we put $5 million in mezz behind the agency. So, it’s not been a very big part of our business. It’s helpful, but we have seen a really, really nice recapture rate almost about 50% for the first two quarters here in runoff that we brought over to our agency book, which is the way we model our business.
Ivan Kaufman: We happen to like that mezzanine lending, we know the collateral, we know the cash flow of the yields we generally run 13%, and it’s long dated. So, it’s a good part of our book. But at the end of the day, even though it’s something that borrowers look into, sometimes they just change their mind and say it’s better to raise the equity and pay down the loan themselves. So, we are not putting out as much as we thought we would.
Jay McCanless: Okay. That sounds great. Thanks for taking my questions.
Operator: Thank you. We will take our next question from Jade Rahmani with KBW.
Jade Rahmani: Thank you very much. A follow-up to the last question from Jay. You said the better for the borrowers to raise equity, so I assume that means they are raising preferred equity because in the refi, the GSEs or another lender would consider the preferred equity as equity, is Arbor providing any preferred equity? And is that an attractive opportunity? You all have had these loans on your balance sheet, so would know the credit pretty well.
