MFA Financial's CEO Discusses Q2 2011 Results - Earnings Call Transcript

Frames

Alexandra Gelardi (ph)

Stewart Zimmerman - President and CEO

Craig Knutson - EVP

Ron Freydberg - EVP

Goodmunder Christiansen (PH) - EVP

Bill Gorin - President

Analysts

Jason Weaver - Sterne Agee

Steve Delaney - JMP Securities

Bose George - KBW

Jason Arnold - RBC Capital

Douglas Harter - Credit Suisse

Daniel Furtado - Jefferies

Mike Widner - Stifel Nicolaus

Henry Coffey - Sterne Agee

MFA Financial, Inc. ( MFA ) Q2 2011 Earnings Call August 3, 2011 10:00 AM ET

Operator

Ladies and gentlemen, thank you for standing by and welcome to the MFA Financial, Inc. second quarter 2011 earnings call. At this time, all participants are in a listen-only mode. And later, we will conduct a question-and-answer session with instructions being given at that time. (Operator Instructions). As a reminder, this conference is being recorded today.

I would like to turn the conference over to Alexandra Gelardi (ph) for opening remarks. Please go ahead.

Alexandra Gelardi (ph)

Good morning. The information discussed on this conference call today may contain or refer to forward-looking statements regarding MFA Financial, Inc. that reflect management’s beliefs, expectations, and assumptions as to MFA’s future performance and operations.

When used, statements which are not historical in nature, including those containing words such as believe, expect, anticipate, estimate, plan, continue, intend, should, may or similar expressions, are intended to identify forward-looking statements. All forward-looking statements speak only as of the date on which they are made.

These types of statements are subject to various known and unknown risks, uncertainties, assumptions, and other factors including, but not limited to, those relating to changes in interest rates and the market value of MFA’s investment securities; changes in the prepayment rates on the mortgage loans securing MFA’s investment securities; MFA’s ability to borrow to finance its assets; implementation of or changes in government regulations or programs affecting MFA’s business; MFA’s ability to maintain its qualification as a real estate investment trust for federal income tax purposes; MFA’s ability to maintain its exemption from registration under the Investment Company Act of 1940; and risks associated with investing in real estate related assets, including changes in business conditions and the general economy.

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BROKER VS. THE BANK

Typically, a mortgage broker offers more types of financing than traditional banks. While the bank can only offer loan programs from their institution, the mortgage broker represents a number of banks and other lenders, which results in more financing options for the borrower. Even though brokers have more options to meet your needs, we recommend that you start looking for financing at the bank first. While their options are more limited, if they have an option that meets your needs you will save money because banks can offer financing with cheaper initializing costs than the broker.

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MORTGAGES AND TRUST DEEDS

A mortgage is a voluntary lien on a piece of real estate. In other words, when a person borrows money to buy a property, the borrower gives the lender the right to take that property if the borrower fails to repay the loan. The real estate acts as collateral for the debt. However, the specific rights the mortgagor (borrower) gives the mortgagee (lender) vary from state to state.

What most people refer to as a mortgage is really a trust deed or a deed of trust. Sometimes, lenders prefer to use a trust deed rather than a mortgage. A trust deed coveys naked title or bare legal title (title without the right of possession) as security for the loan to a third party, called the trustee. The trustee holds the bare title on behalf of the lender, who is known as the beneficiary. The beneficiary is the holder of the note. The conveyance establishes the actions that the trustee may take if the borrower (or trustor) defaults under any of the deed of trust terms.

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