Arlington Asset Investment Corp. is a mortgagereal estate investment trust headquartered in McLean, Virginia. It is an investment firm that focuses primarily on investing in mortgage related assets and residential real estate.
On December 14, 2023, the firm completed its merger with NYSE-listed Ellington Financial.[2]
Following the early 2000s recession, FBR Group invested heavily in subprime mortgages. During the subprime mortgage crisis, the company incurred severe losses related to its underperforming mortgage origination platform and widespread problems in subprime mortgage lending, which led to a sale of ownership in FBR's subprime subsidiary, First NLC Financial Services, in the summer of 2007.[4]
From its founding through 2008, FBR Group was taxed as a real estate investment trust. Starting in 2009, the company converted to a C corporation to use its net operating loss carry-forwards and net capital loss carry-forwards to shield substantially all of its income from income taxes.
In May 2009, a month before changing its name to Arlington Asset Investment Corp.,[6][7] it sold a portion of its investment in FBR Capital Markets for $72.5 million.[8] In October 2009, the remaining investment in FBR Capital Markets was sold for $84.1 million.[9]
When he stepped down as CEO in June 2014, Eric Billings became its Executive Chairman. Appointed CEO, J. Rock Tonkel Jr. served as the company's president and Chief Operating Officer.[4]
In 2019, the year Billing retired,[10] the firm converted back to a real estate investment trust after it had used its net operating loss carry-forwards.[11] From the following year onwards, it began to transition the company from primarily a levered agency MBS strategy to one focused on multiple investment channels in mortgage servicing rights, single-family residential rental properties, credit investments and agency MBS.[citation needed]
Investments
The company's investment capital is currently allocated between the following assets classes:
The company's MSR related assets represent investments for which the return is based on the economic performance of a pool of specific MSRs.
An MSR provides a mortgage servicer with the right to service a pool of residential mortgage loans in exchange for a portion of the interest payments made on underlying residential mortgage loans. Its credit investments generally include those in mortgage loans secured by either residential or commercial real property or MBS collateralized by residential or commercial mortgage loans ("non-agency MBS") or asset-backed security ("ABS") collateralized by residential solar panel loans.
The firm 's SFR investment strategy is to acquire, lease and operate single-family residential homes as rental properties. In turn, its MBS agency consist of residential pass-through certificates for which the principal and interest payments are guaranteed by a U.S. government sponsored enterprise ("GSE"), such as Fannie Mae or Freddie Mac.
