TPG Mortgage Investment Trust (MITN) risk factors, FY2024 10-K

Risks Related to our Organization and Strategy

1. 01Other Risks Related to Ownership of Our Common Stock

Risks Related to our Company, Business, and Operations

1. 02Our ability to grow our business is dependent upon our Manager's ability to source, acquire and finance a large volume of desirable residential mortgage loans and other target assets on attractive terms
2. 03Disruptive, exogenous geopolitical or other macroeconomic events or large-scale conflicts, including warfare among countries could materially and adversely affect our business
3. 04The mortgage loans we acquire or that underlie our RMBS expose us to significant credit risk that could negatively affect the value of those investments
4. 05We engage in securitization transactions relating to residential mortgage loans which exposes us to potentially material risks
5. 06Our Manager’s due diligence of potential investments may be insufficient, which could lead to investment losses
6. 07Our Manager’s investment models may be incorrect either due to inaccurate models or incorrect third-party data, which could lead to investment losses
7. 08We operate in a highly competitive market
8. 09We may experience periods of significant illiquidity for our assets, which could adversely impact our business
9. 10Valuations of our investments may at times be unavailable or unreliable
10. 11The outbreak of highly infectious or contagious diseases could adversely impact or cause disruption to our financial condition and results of operations
11. 12Increases in interest rates could adversely affect the value of our investments and cause our interest expense to increase, which could negatively affect our profitability and our ability to make distributions
12. 13We may be adversely affected by risks affecting borrowers or the asset or property types in which our investments may be concentrated at any given time, as well as from climate change or other unfavorable changes in the related geographic regions
13. 14Climate change, climate change-related initiatives and regulation and environmental, social and governance (ESG) issues, may adversely affect our business and financial results and damage our reputation
14. 15Cybersecurity risks may cause a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships, all of which could negatively impact our business
15. 16The failure of servicers to effectively service the mortgage loans in our portfolio may materially and adversely affect us, and market disruptions may make it more difficult for the loan servicers to perform a variety of services for us, which may adversely impact our business and financial results
16. 17If Arc Home’s ability to sell loans in the secondary market is impaired, it could affect its volume and margins, which could adversely affect its business and, in turn, would have a negative impact on our results
17. 18Arc Home is subject to extensive licensing requirements and regulation, which could materially and adversely affect us
18. 19An economic slowdown or a deterioration of the housing market could negatively impact Arc Home's lending and servicing businesses
19. 20Our business is subject to extensive regulation
20. 21Failure of the U.S. federal government to avoid a government shutdown may negatively impact the economic environment and adversely impact our results of operations
21. 22We have incurred, and may continue to incur, direct and indirect costs as a result of the WMC acquisition

Risks Related to our Investments

1. 23Our investments in non-agency residential mortgage loans, including Non-QM Loans in particular, subject us to legal, regulatory and other risks
2. 24We invest in Agency-Eligible Loans, which expose us to an increased risk of loss
3. 25We invest in Home Equity Loans and may invest in other second lien mortgage loans, which expose us to an increased risk of loss
4. 26Changes in prepayment rates may adversely affect the return on our investments
5. 27Prepayment rates are difficult to predict, and market conditions may disrupt the historical correlation between interest rate changes and prepayment trends
6. 28Any credit ratings assigned to our investments will be subject to ongoing evaluations and revisions and we cannot assure you that those ratings will not be downgraded

Risks Related to Legacy WMC Commercial Investments

1. 29Commercial real estate-related investments that are secured by commercial real property, which were acquired by us in the WMC acquisition, are subject to delinquency, foreclosure and loss, which could result in losses to us
2. 30If our Manager overestimates the loss-adjusted yields of our CMBS investments, we may experience losses
3. 31If we do not control the special servicing of the mortgage loans included in the CMBS in which we invest and, in such cases, the special servicer may take actions that could adversely affect our interests

Risks Related to U.S. Government Programs

1. 32The federal conservatorship of Fannie Mae and Freddie Mac and related efforts, along with any changes in laws and regulations affecting the relationship between these agencies and the U.S. government, may adversely affect our business
2. 33Mortgage loan modification and refinancing programs may adversely affect the value of, and our returns on, mortgage-backed securities and residential mortgage loans

Risks Related to Financing Activities

1. 34During 2024, we issued an aggregate of $99.5 million principal amount Senior Unsecured Notes, $34.5 million of which are due in February 2029 and the remaining $65.0 million are due in May 2029
2. 35There can be no assurances we will be able to refinance our corporate indebtedness (1) on commercially reasonable terms, (2) on terms, including with respect to interest rates, as favorable as our current debt, or (3) at all
3. 36Our business strategy involves the use of leverage, and we may become overleveraged or not achieve what we believe is optimal leverage, which may materially adversely affect our liquidity, results of operations or financial condition
4. 37The securitization process exposes us to risks, which could result in losses to us
5. 38Our financing arrangements contain restrictive operating covenants
6. 39If a counterparty to a repurchase agreement defaults on its obligation to resell or return the underlying loan or security back to us at the end of the transaction term, we may lose money on such financing arrangement
7. 40Our rights under our repurchase agreements may be subject to the effects of the bankruptcy laws in the event of the bankruptcy or insolvency of us or our lenders under the financing arrangements, which may allow our lenders to repudiate our financing arrangements
8. 41Pursuant to the terms of borrowings under our financing arrangements, we are subject to margin calls that could result in defaults or force us to sell assets under adverse market conditions or through foreclosure

Risks Related to our Management and our Relationship with our Manager and its Affiliates

1. 42We are dependent upon our Manager, its affiliates and their key personnel and may not find a suitable replacement if the management agreement with our Manager is terminated or such key personnel are no longer available to us, which would materially and adversely affect us
2. 43The management agreement was not negotiated on an arm’s length basis and the terms, including the fees payable to our Manager, may not be as favorable to us as if the agreement was negotiated with unaffiliated third-parties
3. 44Our governance and operational structure could result in conflicts of interest
4. 45We may enter into transactions to purchase or sell investments with entities or accounts managed by our Manager or its affiliates
5. 46Our Board of Directors has approved very broad investment policies for our Manager, may change such policies without stockholder consent, and does not review or approve each investment or financing decision made by our Manager
6. 47Our Manager's fee structure may not create proper incentives or may induce our Manager and its affiliates to make riskier or more speculative investments, which increase the risk of our portfolio
7. 48Our Manager will not be liable to us for any acts or omissions performed in accordance with the management agreement, including with respect to the performance of our investments
8. 49Termination of our management agreement would be costly and, in certain cases, not permitted
9. 50Our Manager may terminate our management agreement, which could materially adversely affect our business
10. 51We have engaged Red Creek Asset Management LLC, an affiliate of our Manager (the "Asset Manager"), to manage certain of our residential mortgage loans. The terms of the asset management agreement with the Asset Manager may not be as favorable to us as if the agreement was negotiated with unaffiliated third-parties

Risks Related to Taxation

1. 52Our failure to qualify as a REIT would result in higher taxes and reduced cash available for distribution to our stockholders
2. 53Complying with the REIT requirements can be difficult and may cause us to be forced to liquidate assets or to forego otherwise attractive opportunities
3. 54The REIT distribution requirements could adversely affect our ability to execute our business strategies
4. 55Even if we qualify as a REIT, we may face tax liabilities that reduce our cash flow
5. 56The failure of assets subject to repurchase agreements to be treated as owned by us for U.S. federal income tax purposes could adversely affect our ability to qualify as a REIT
6. 57Our ownership of and relationship with our TRSs will be limited, and a failure to comply with the limits would jeopardize our REIT status and may result in the application of a 100% excise tax
7. 58Uncertainty exists with respect to the treatment of TBAs for purposes of the REIT asset and income tests
8. 59New legislation or administrative or judicial action, in each instance potentially with retroactive effect, could make it more difficult or impossible for us to qualify as a REIT
9. 60Complying with the REIT requirements may limit our ability to hedge effectively
10. 61The tax on prohibited transactions will limit our ability to engage in transactions, including certain methods of securitizing mortgage loans, that would be treated as sales for U.S. federal income tax purposes
11. 62The share ownership limits applicable to us that are imposed by the Code for REITs and our charter may restrict our business combination opportunities
12. 63We could face adverse tax consequences if WMC failed to qualify as a REIT prior to the Merger
13. 64We or our TRS may not be able to fully utilize our respective net operating loss or net capital loss carryforwards

Risks Related to our Organization and Structure

1. 65Loss of our exemption from regulation under the Investment Company Act would impose significant limits on our operations, which would negatively affect the value of shares of our common stock and our ability to distribute cash to our stockholders
2. 66If we were required to register with the CFTC as a Commodity Pool Operator, it could materially adversely affect our business, financial condition and results of operations
3. 67Certain provisions of Maryland law could inhibit a change in our control
4. 68Our rights and the rights of our stockholders to take action against our directors and officers are limited, which could limit your recourse in the event of actions taken not in your best interest
5. 69Investing in our common stock may involve a high degree of risk. Investors in our common stock may experience losses, volatility, and poor liquidity, and we may reduce or stop paying our dividends in a variety of circumstances
6. 70Future sales of our common stock by us or by our officers and directors may have adverse consequences for investors
7. 71We have not established a minimum distribution payment level and we cannot assure you of our ability to pay distributions in the future
8. 72The market price of our common stock has been and may continue to be volatile and holders of our common stock could lose all or a significant portion of their investment due to drops in the market price of our common stock