CHIMERA INVESTMENT CORP

As a result of the HomeXpress Acquisition, we have acquired leases for HomeXpress’ two primary facilities located in 1936 E Deere Ave, Suite 200, Santa Ana, California 92705, and 4902 Eisenhower Blvd, Suite 155, Tampa, Florida , 33634. HomeXpress’ corporate office is in Santa Ana, California. In 2025, HomeXpress renewed its Santa Ana, California lease and extended it to September 2027. HomeXpress’ lease for Tampa, Florida is active through August 2029.

Our Investment Portfolio segment utilizes the New York City, Wappingers Falls, Norwalk, Austin, and Evanston offices and facilities. Our Residential Origination segment utilizes the Santa Ana and Tampa offices.

• •Our use of repurchase agreements to borrow money may give our lenders greater rights in the event of bankruptcy.
• •A recharacterization of the repurchase agreements as sales for tax purposes rather than as secured lending transactions would adversely affect our ability to maintain our qualification as a REIT and to maintain our 1940 Act exemption.
• •Our financing facilities may contain covenants that restrict our operations.
• We may have difficulty accessing or be unable to access capital markets.
• Interest rate fluctuations, including as a result of the Federal Reserve's monetary policy, may have various negative effects on us and may reduce the market value of our investments and negatively affect our book value, earnings and cash available for distribution, as well as increasing volatility.
• Changes in the yield curve may cause differences in timing between interest rate adjustments on our interest-earning assets and our borrowings, adversely affecting our net interest spread, and may impact our assets and liabilities differently, adversely affecting our book value if our assets are negatively impacted or the value of our liabilities increase.
• The impact of inflation and related monetary policy efforts may adversely affect our financial performance.
• The nature of the mortgage loans we acquire and that underlie the RMBS and MSRs we acquire exposes us to credit risk that could negatively affect the value of those assets and investments.
• Lower Underwriting Standards Risk.
• A significant portion of our investments are in Non-Agency RMBS that are the most subordinate securities in securitizations, making us the first-loss security holder, which means these securities are subject to significant credit risk, are illiquid, and are difficult to value.
• Our interests in MSR financing receivables expose us to risk of loss if the related master servicer is unable to satisfy its obligations to the GSEs and/or to us.
• Our interests in MSR financing receivables may expose us to additional financing-related risks, and we may be reliant on acknowledgement agreements with the GSEs and a master servicer's cooperation with its financing sources and its compliance with covenants in its MSR financing facility.
• We may have to fund amounts equal to the servicing advances due under our interests in MSR financing receivables, which could adversely impact our business, financial condition and results of operations, and our ability to pay dividends to our stockholders.
• Our interests in MSR financing receivables may involve complex or novel structures.
• We do not have legal title to the underlying MSRs.
• The value of our MSR investments may vary substantially with changes in interest rates.
• Changes in prepayment rates could negatively affect the value of our investment portfolio, which could result in reduced earnings, losses, book value impairments and/or negatively affect the cash available for distribution to our stockholders.
• A significant portion of our investment portfolio is secured by properties in a small number of geographic areas and may be disproportionately affected by economic or housing downturns, natural disasters, including natural disasters exacerbated by climate change, terrorist events, regulatory changes, or other adverse events specific to those markets.
• We may change our investment strategy or asset allocation or enter other operating businesses or financing plans without stockholder consent, which may result in riskier investments or subject us to new or increased regulatory risks and have an adverse effect on our business, results of operations and financial condition.
• Changes in the fair values of our assets, liabilities, and derivatives can have various negative effects on us, including reduced earnings, less liquidity, increased earnings volatility, and variability in our book value.
• Our calculations of the fair value of the assets we own or consolidate are based upon assumptions that are inherently subjective and involve a high degree of management judgment, and such assumptions may be more difficult to calculate during times of severe market disruption in the mortgage, housing, rates or other financial market related sectors.
• Any deterioration or uncertainty in broader U.S. and global economic conditions could materially adversely affect our business and financial condition.
• We may fail to realize the expected benefits of the HomeXpress Acquisition.
• Our loan origination and acquisition volume and ability to sell loans are highly dependent on macroeconomic and U.S. residential real estate market conditions which are outside of our control, and which may impact our ability to originate or acquire quality and profitable loans at an appropriate and consistent cost.
• A disruption in the secondary home loan market, our ability to sell the loans that we originate or acquire, or loan compliance issues could have a negative effect on our business.
• Our subsidiary, HomeXpress, relies on warehouse facilities, structured as repurchase agreements, to finance its loan originations and acquisitions. These facilities are short-term and subject us to various risks different from other types of credit facilities.
• Our business is dependent on our ability to maintain and expand our relationships with our clients, the independent mortgage brokers and bankers.
• Our mortgage loans are primarily initiated by third parties, which exposes us to business, competitive and underwriting risks.
• The conduct of the independent mortgage brokers and bankers through whom we originate mortgage loans could subject us to fines or other penalties.
• The mortgage lending industry can be very cyclical, with loan origination volumes varying materially based on macroeconomic conditions. If we are unable to effectively manage our team members during periods of volatility, it could adversely affect our current business operations and our growth.
• We operate in a heavily regulated industry, and our mortgage loan origination activities as a result of our acquisition of HomeXpress, exposes us to risks of noncompliance with an increasing and inconsistent body of complex laws and regulations, including federal and state consumer lending regulations.
• Our investment management and advisory services involve certain risks, which could adversely affect our business, financial condition and results of operations.
• Our failure to appropriately manage or address conflicts of interest could damage our reputation and adversely affect our business, financial condition and results of operations.
• Two of our subsidiaries are currently required to be registered as an investment adviser or a relying adviser, subjecting us to extensive regulation and examination by the SEC that could adversely affect our ability to manage our business.
• Our asset management and advisory services business has significant client concentration, with a limited number of clients accounting for a significant portion of fees. Failure to attract, grow, and retain a diverse and balanced client base could adversely affect our asset management and advisory services business.
• Hedging interest rate exposure may not be successful in mitigating the risks associated with interest rates and may reduce our cash available for distribution to our stockholders and adversely affect our financial condition and result of operations.
• We may enter into hedging instruments that could expose us to contingent liabilities in the future, which could materially adversely affect our results of operations.
• The characteristics of hedging instruments present various concerns, including illiquidity, enforceability, and counterparty risks, which could adversely affect our business and results of operations.
• Through certain of our wholly owned subsidiaries, we have engaged in the past, and expect to continue to engage in, securitization transactions relating to residential mortgage loans. These types of transactions and investments expose us to potentially material risks.
• •Financing at Unfavorable Terms Risk
• Our ability to profitably execute or participate in future securitization transactions depends, in part, on our ability to compete with other purchasers of residential mortgage loans and the cost and availability of short-term debt, which may be negatively impacted by adverse market conditions beyond our control.
• Competition may affect our ability to source our target assets at attractive prices and grow our investment management and advisory services, which may have a material adverse effect on our business, financial condition and results of operations.
• We rely on third parties to perform certain services particularly as it relates to loan servicing, comply with applicable laws and regulations, and carry out contractual covenants and terms, the failure of which by any of these third parties may adversely impact our business and financial results.
• The expanding body of federal, state and local regulations and the investigations of servicers may increase their cost of compliance and the risks of noncompliance and may adversely affect their ability to perform their servicing obligations.
• We utilize third-party analytical models and data to value our investments, and any incorrect, misleading or incomplete information used in connection therewith would subject us to potential risks.
• We are dependent on information technology and systems, including those of third parties, and their failure, including through a cyber-attack, could significantly disrupt our business or result in the disclosure or misuse of confidential or other information, including personal information, which could damage our reputation, result in regulatory sanctions, subject us to litigation and/or increase our costs and cause losses that have a material adverse impact on our business, financial results and financial condition.
• The development, proliferation, and use of artificial intelligence could give rise to legal and/or regulatory action, damage our reputation or otherwise materially impact our business, financial condition, and liquidity.
• Our executive officers and other key personnel are critical to our success and the loss of any executive officer or key employee may materially adversely affect our business.
• legal requirements, including changes in their interpretation and enforcement by lawmakers and regulators, could materially and adversely affect our business and our financial condition, liquidity, and results of operations.
• The need to operate within the parameters that allow us to be excluded from regulation as a commodity pool operator could limit the use of swaps by us below the level we would otherwise consider optimal or may lead to the registration of us or our directors as commodity pool operators, which will subject us to additional regulatory oversight, compliance and costs.
• We may be required to obtain various state licenses to purchase mortgage loans in the secondary market and there is no assurance we will be able to obtain or maintain those licenses.
• Our GAAP financial results may not be an accurate indicator of taxable income and dividend distributions.
• Changes in accounting rules could occur at any time and could impact us in significantly negative ways that we are unable to predict or protect against.
• Loss of our 1940 Act exemption would adversely affect us and negatively affect the market price of shares of our capital stock and our ability to distribute dividends.
• U.S. Federal Income Tax Risks and Risks Related to Our REIT Status
• Complying with REIT requirements may cause us to forego otherwise attractive opportunities or to liquidate otherwise attractive investments.
• Complying with REIT requirements may limit our ability to hedge effectively.
• We may invest in TBAs, which have some uncertainty in their treatment under the REIT asset and income tests.
• Failure to qualify as a REIT would subject us to U.S. federal income tax, which would reduce the cash available for distribution to our stockholders.
• The ability of our Board of Directors to revoke our REIT election without stockholder approval may cause adverse consequences to our stockholders.
• Distributions may be treated as unrelated business taxable income to tax-exempt investors.
• Classification of our securitizations or financing arrangements as a taxable mortgage pool could subject us or certain of our stockholders to increased taxation.
• Failure to make required distributions would subject us to tax, which would reduce the cash available for distribution to our stockholders.
• Our 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.
• The 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.
• The interest apportionment rules may affect our ability to comply with the REIT asset and gross income tests.
• Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flow.
• The failure of excess MSRs held by us to qualify as real estate assets, or the failure of the income from excess MSRs to qualify as interest from mortgages, could adversely affect our ability to qualify as a REIT.