Business Context and Reporting Period
This Form 8-K Current Report was filed by Five Oaks Investment Corp. on April 25, 2016. The filing discloses the entry into material definitive agreements related to the securitization of multifamily mortgage-backed securities. Note: While the request metadata references "Lument Finance Trust, Inc.", the filing text explicitly identifies the registrant as "Five Oaks Investment Corp."
Key Financial Metrics and Transactions
The filing details two primary securitization transactions involving the transfer of assets to Re-REMIC trusts:
- Oaks Re-REMIC Trust 2016-FRR7C: The Company transferred multifamily mortgage certificate-backed certificates with a principal balance of approximately $32.1 million to a wholly-owned subsidiary, which subsequently sold them to the FRR7C Trust. The Company's subsidiary, Oaks Holding I LLC, purchased all Class B Certificates issued by this trust.
- BAMLL Re-REMIC Trust 2016-FRR14: The Company sold securities to Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPFS) with a principal balance of approximately $79.7 million (Class C) and a notional amount of approximately $922.0 million (Class X2). These were transferred to the FRR14 Trust. Oaks Holding I LLC purchased all Class D Certificates issued by this trust.
The filing does not provide specific revenue, profit, cash flow, margin, or aggregate debt figures for the reporting period.
Material Changes
The material change reported is the execution of the Security Sale Agreement and Trust Agreements dated April 25, 2016 (and April 21, 2016 for the FRR14 transaction). These agreements facilitate the movement of specific mortgage-backed securities into new trust structures, altering the Company's asset composition and capital structure through the issuance of new certificates.
Outlook, Risks, and Contingencies
Management Commentary: The filing states that Oaks Holding I LLC is not obligated to hold the Class B or Class D Certificates it purchased and may sell them at any time. This indicates a potential liquidity strategy or balance sheet management approach regarding these specific holdings.
Risks and Contingencies: The text does not explicitly list new risks or contingencies beyond the standard nature of securitization transactions. The agreements are qualified in their entirety by reference to the full text of the filed exhibits.
Investor Verification Checklist
- Verify the exact nature of the "Class B" and "Class D" certificates purchased by Oaks Holding I LLC to understand the Company's retained risk exposure.
- Confirm the impact of these transactions on the Company's leverage ratios and capital adequacy, as specific balance sheet totals are not provided in this 8-K.
- Review the full text of Exhibit 10.1 (Security Sale Agreement) and Exhibit 10.2 (Trust Agreement) for covenants or restrictions not summarized in the report.
- Clarify the discrepancy between the request metadata ("Lument Finance Trust") and the filing registrant ("Five Oaks Investment Corp.") to ensure the correct entity is being analyzed.