Ivan Kaufman: Yes. We like the mezz and pref business not only on helping borrowers reposition some of their balance sheet loans into agency loans but originating new agency loans as well. So we’re one of the few lenders who are very active with the agencies on doing that kind of lending. We expect it to be a growing part of our business and budget accordingly. It’s very stable returns. And it’s a great risk-adjusted return. We like that business with what we’ve been active in that business, and we think there is a great opportunity going forward.
Paul Elenio: Stephen, we’re locking in that fixed rate spread for 5 to 10 years to which we really like.
Stephen Laws: And then I think you mentioned the sale of buyouts for Q4 in February. Were there any in January? Or was that February year to date come back?
Paul Elenio: I think that’s Jan and Feb, but I think both of those that I mentioned, the $90 million actually happened in the beginning of Feb, but that’s the total number to date. For the quarter is 90 million right now.
Stephen Laws: Awesome. Thanks again, and I know it’s a lot of hard work, and we’ll let you get back to it. Talk soon.
Paul Elenio: Thanks, Steve.
Operator: And our next question will come from Crispin Love with Piper Sandler. Please go ahead.
Crispin Love: Thanks. Good morning. I appreciate you taking my questions. First on the servicing book, how much of the servicing book are in programs with GSE risk retention, such as the Fannie DUS program? And how have those loans been performing credit quality-wise, any delinquency stats or expected losses to share there?
Paul Elenio: Sure. So 21.3 billion of the 30.9 billion or 31 billion is in the Fannie Mae DUS world. So that’s probably about 80% of the book is Fannie Mae DUS, which, as you said, has the risk share. Delinquencies have been fairly stable. We did see a little bit of an uptick this quarter. We have 187 million of loans on the agency side that are delinquent we have, I think, 12 million of specific reserves against those and those are in the foreclosure process. We booked another 3 million of specific reserves this quarter, as you may have seen from the press release on the agency business. Freddie Mac delinquencies were flat quarter-over-quarter. We did not see any real increase. So a little bump up in agency on the Fannie Mae side.
But from a context standpoint, traditionally and through the history of the agencies, and we’ve been at this more than 20 years, loss levels on the agency business are very, very minuscule as you know, compared to the rest of the world. So we’re not expecting this number to be anything significant anytime soon, and it will be what it will be, but it will never be real material.
Crispin Love: Okay. Thanks, Paul. That makes sense. And then can you share your current LTVs and DSCRs in the CLOs in the total portfolio?
Paul Elenio: I don’t have the information on the CLOs. We don’t break it out that way for our disclosures. We do have the LTV, which you’ll see in our 10-K when it’s filed is about 78% on our book. Our total book, and that’s balance sheet. And remember, we’re consolidating everything. So we look at everything as one where it’s financed is just a different animal. So our whole book of 12.6 billion has a 78% LTV right now on an as-is basis, some higher, some lower, obviously, depending on — certainly, the SFR business is a much lower LTV right now. Given the nature of that business. But that’s the blended number. I don’t have the DSCR figures because, again, the DSCR figures, you need to factor in your interest reserves, your caps and all those things, but that’s not something I think I have in front of me.
Crispin Love: Okay. And then just one last question for me, kind of later in the year, there was a bunch of articles about potential fraud and the broker Meridian. Can you size any exposure that you have there to Meridian and any ramifications you would expect from that?
Ivan Kaufman: Yes. We really can’t speak to that. And clearly, what we can speak to is that the industry is changing and that the broker interaction for agency lending is being modified dramatically. Brokers were very involved with borrowers creating source documents and the forwarding to lenders that obviously resulted in a problem and the agencies are now changing how is documenting the broker roles and disclosures. Quite frankly, we never fully understood on an agency product, why people will go to a broker pay a fee to get to us when they could come directly to us and get the same result. So we think that there’s going to be a real benefit in our franchise for borrowers to come directly to us rather than through a broker. And we think that our business is going to the agency business should be a very big beneficiary of that change.
Crispin Love: Okay. Thanks, Ivan. I appreciate you both taking my questions.
Ivan Kaufman: Thanks, Crispin.
Operator: And our final question will be a follow-up from Lee Cooperman with Omega Family Office. Please go ahead.
Lee Cooperman: I would just observe Ivan, welcome to the world of short sellers, the 64 million shares short. And these guys are smart and they play a very vicious game. They put out information at times, there’s false and you got to deal with it. Now I’m reminding the expression we are tough — when the going gets tough, the tough get going. I think you’re a very tough guy. And I don’t think that they realize what they’re dealing with. I wish you good luck you could be very…
Ivan Kaufman: Thank you, Lee. This is already four quarters. They’ve been four quarters on it’s created an enormous amount of stress on the organization of tremendous cost because the amount of extra work that has to be done has been very stressful. But we will continue to work hard and provide numbers. Thank you, Lee, and appreciate it.
Paul Elenio: Thanks, everybody. Ivan, you want closing remarks?
Ivan Kaufman: Sure. It was a long call. We had a lot of data to go through. Clearly, it’s been a sustained period of elevated interest rates and elevated distress. As I’ve mentioned previously, the fourth quarter was going to be a difficult quarter. In, the first and second quarter will continue to be similar to the first quarter, even maybe slightly more stressful. If rates remain somewhat elevated as they are right now, the stress can drip into the third quarter. I pay close attention to where the 10-year floats do and where short-term rates go because that will have a significant impact on leaving with stress in the system. But we really appreciate everybody’s commitment to the company and the time on this call. And we look forward to next earnings call. Everybody, have a great weekend. Take care. Bye-bye.
Operator: And thank you, ladies and gentlemen. This concludes today’s teleconference, and you may now disconnect.
