The following discussion and analysis of financial condition and results of operations should be read with the consolidated financial statements and the related notes of PennyMac Mortgage Investment Trust (“PMT”) included within this Quarterly Report on Form 10-Q (this “Report”). Statements contained in this Report may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other factors, which may cause actual results to be materially different from those expressed or implied in such statements. You can identify these forward-looking statements by words such as “may,” “will,” “should,” “expect,” “anticipate,” “believe,” “estimate,” “intend,” “plan” and other similar expressions. You should consider our forward-looking statements in light of the risks discussed under the heading “Risk Factors,” as well as our consolidated financial statements, related notes, and the other financial information appearing elsewhere in this Report and our other filings with the United States Securities and Exchange Commission (“SEC”). The forward-looking statements contained in this Report are made as of the date hereof and we assume no obligation to update or supplement any forward-looking statements. The following discussion and analysis provides information that we believe is relevant to an assessment and understanding of our consolidated results of operations and financial condition. Unless the context indicates otherwise, references in this Report to the words “we,” “us,” “our” and the “Company” refer to PMT and its consolidated subsidiaries. Our Company We are a specialty finance company that invests in mortgage-related assets. Our objective is to provide attractive risk-adjusted returns to our investors over the long-term, primarily through dividends and secondarily through capital appreciation. A significant portion of our investment portfolio is comprised of mortgage-related assets that we have created through our aggregation and securitization activities, including mortgage servicing rights (“MSRs”), senior and subordinate mortgage-backed securities (“MBS”), and credit risk transfer (“CRT”) arrangements, which absorb credit losses on certain of the loans we have sold. We also invest in Agency and senior non-Agency MBS, subordinate MBS, interest-only ("IO") and principal-only ("PO") stripped MBS, and Agency floating rate collateralized mortgage obligations ("CMOs"). We are externally managed by Pennymac Capital Management, LLC (“PCM”), an investment adviser that specializes in and focuses on U.S. mortgage assets. Our loan acquisitions related to our acquisitions of correspondent loans for our aggregation and securitization activities are facilitated by PennyMac Loan Services, LLC (“PLS”) which also performs servicing activities for our loans and MSRs. PCM and PLS are both indirect controlled subsidiaries of PennyMac Financial Services, Inc. (“PFSI”), a publicly-traded mortgage banking and investment management company separately listed on the New York Stock Exchange. A significant portion of our operations involves Government-Sponsored Enterprises ("GSEs"), specifically the Federal Home Loan Mortgage Corporation ("Freddie Mac") and the Federal National Mortgage Association ("Fannie Mae"). Freddie Mac and Fannie Mae are each referred to as an “Agency” and, collectively as the "Agencies". We operate our business in three segments: credit sensitive strategies, interest rate sensitive strategies and aggregation and securitization (formerly referred to as correspondent production). Non-segment activities are included in our corporate operations. Our segment and corporate activities are described below. •The credit sensitive strategies segment represents our investments in CRT arrangements referencing loans from our aggregation and securitization activities and subordinate MBS. •The interest rate sensitive strategies segment represents our investments in MSRs, Agency pass through MBS and structured products (including IO and PO MBS and floating rate CMOs), senior non-Agency MBS and the related interest rate hedging activities. •The aggregation and securitization segment represents our operations in purchasing, pooling and reselling, or financing through our private-label securitization activities, newly originated prime credit quality loans either directly or in the form of MBS, using the services of PCM and PLS. We sell the loans we acquire through our aggregation and securitization activities primarily to the Agencies and also sell loans to other non-affiliate entities. We also securitize certain of our loans directly and retain beneficial interests, such as senior and subordinate MBS, from these securitizations. •Our corporate operations include management fees, compensation, professional services, and other amounts attributable to the Company’s corporate operations and certain interest income and expense. 57 Business Trends Recent macroeconomic trends and U.S. federal government administration actions with respect to trade, tariffs, government cost reduction efforts and foreign military action have led to significant volatility in financial markets and uncertainty regarding the economic outlook, including inflation and interest rates. Elevated interest rates in recent years have constrained the mortgage origination market, which is currently projected to increase from $1.9 trillion in 2025 to $2.2 trillion in 2026 according to mortgage industry economists, although recent increases in interest rates may lead to a reduction in origination estimates for 2026. The opportunity for refinancing has been impacted by interest rate volatility and a greater proportion of outstanding mortgages with note rates near current market rates. If such interest rate volatility continues, it may drive greater mortgage production activity and higher prepayment speeds than we have experienced in recent years. Additionally, reductions in the Federal Reserve’s federal funds rate have reduced the costs of floating rate borrowings and placement fees we receive in relation to custodial funds that we manage as compared to prior periods; however, market indicators currently suggest that the Federal Reserve could begin increasing short-term interest rates later in 2026. Furthermore, ongoing economic uncertainty and market volatility could lead to reduced economic activity and slowing home price growth or depreciation. These drivers could increase mortgage delinquencies or defaults, negatively affect the performance of our credit-sensitive assets—including CRT arrangements and subordinate MBS—and increase losses from representations and warranties in our loan sales transactions. However, many of the loans underlying our assets possess favorable credit characteristics such as low loan-to-value ratios, which are likely to moderate the impact of credit performance during an economic downturn. Our current strategy includes decreasing our exposure to MSRs and increasing our exposure to subordinate MBS. To that end, in the second quarter of 2026, we agreed to sell portfolio of conventional MSRs with an aggregate UPB of approximately $13.0 billion, which we expect to settle in the third quarter of 2026, and we may sell additional MSR portfolios in future periods. We also expect to purchase all of PLS' non-Agency correspondent loans and none of PLS's conventional conforming correspondent loans during the third quarter of 2026. We expect to continue investing in subordinate MBS generated from non-Agency securitizations, which is expected to increase our asset-backed financing of VIEs. Our Investment Activities Credit Sensitive Investments CRT Arrangements We have previously entered into loan sales arrangements with Fannie Mae pursuant to which we accepted credit risk relating to the loans sold in exchange for a portion of the interest earned on such loans. These arrangements absorb scheduled or realized credit losses on those loans and comprise our investments in CRT arrangements. We held net CRT-related investments (comprised of deposits securing CRT arrangements, CRT derivatives, CRT strips and an IO security payable) totaling approximately $0.9 billion at June 30, 2026. Subordinate Mortgage-Backed Securities Subordinate MBS provide us with a higher yield than senior MBS. However, we incur credit risk since subordinate MBS are the first securities to absorb credit losses relating to the underlying loans. We purchased $4.0 million of MBS backed by residential transition loans during the six months ended June 30, 2026. As the result of the Company’s consolidation of the variable interest entities ("VIEs") that issued certain of our holdings of subordinate MBS as described in Note 6 – Variable Interest Entities – Subordinate and Senior Non-Agency Mortgage-Backed Securities to the consolidated financial statements included in this Report, we reflect our investments in those securities as loans held for investment and reflect the related securities that we sell to nonaffiliates as asset-backed financings. We invested approximately $309.3 million in such non-Agency subordinate MBS during the six months ended June 30, 2026 and we held approximately $861.0 million of such securities at June 30, 2026. Interest Rate Sensitive Investments Mortgage servicing rights During the six months ended June 30, 2026, we received approximately $71.3 million of MSRs as proceeds from sales of loans held for sale. At June 30, 2026, we held MSRs at fair value of approximately $3.6 billion. During June 2026, the Company entered into an agreement to sell a portfolio of conventional MSRs with an aggregate UPB of approximately $13.0 billion. The transaction is expected to close in August 2026. 58 Agency, non-Agency and structured MBS Our investment portfolio includes REIT-eligible Agency MBS and structured products (IO and PO stripped MBS and floating rate CMOs) and senior non-Agency MBS. During the six months ended June 30, 2026, we purchased approximately $486.4 million of CMOs and sold approximately $477.4 million of our fixed-rate pass-through Agency MBS. At June 30, 2026, the total fair value of our interest rate investments was approximately $4.1 billion. During the six months ended June 30, 2026, we invested approximately $12.1 million in senior non-Agency MBS from our securitizations of loans secured by investment properties. We account for these investments as loans and reflect the securities we sold to nonaffiliates as asset-backed financings as described above. At June 30, 2026, we held senior non-Agency securities totaling approximately $83.8 million from our securitizations of loans secured by investment properties. Aggregation and Securitization Our aggregation and securitization activities involve the acquisition and sale of newly originated prime credit quality residential loans. We acquire loans on a flow basis from correspondent loan sellers facilitated by PLS, as well as through direct bulk purchases of loans from PLS or other nonaffiliate parties. Mortgage aggregation and securitization serves as the source of our investments in MSRs, non-Agency securitizations and, previously, CRT arrangements. Our sales of loans from our aggregation and securitization and investment activities are summarized below: Quarter ended June 30, Six months ended June 30, 2026 2025 2026 2025 (in thousands) Sales of loans held for sale: To nonaffiliates $ 2,102,216 $ 2,369,738 $ 4,319,419 $ 4,983,696 To PennyMac Financial Services, Inc. — 26,944,559 — 47,382,225 $ 2,102,216 $ 29,314,297 $ 4,319,419 $ 52,365,921 Net gains on loans held for sale $ 15,292 $ 17,806 $ 38,202 $ 30,150 Investments resulting from aggregation and securitization: Retention of interests in securitizations of loans, net of associated asset-backed financings (1) $ 120,054 $ 114,564 $ 321,355 $ 208,585 Receipt of MSRs as proceeds from sales of loans 30,981 44,030 71,262 91,039 Total investments resulting from aggregation and securitization activities $ 151,035 $ 158,594 $ 392,617 $ 299,624 (1)The trusts issuing these securities are consolidated on our consolidated balance sheets. Therefore, our investments in these securities are shown as their underlying assets, Loans held for investment at fair value, with the securities held by nonaffiliates being shown as Asset-backed financings of variable interest entities at fair value. Beginning in July 2025, PLS became the initial purchaser of loans from correspondent sellers and began transferring agreed-upon volumes of such loans to us. Accordingly, we no longer purchase government loans, and we have the right to purchase up to 100% of PLS's non-government delegated correspondent production. During the six months ended June 30, 2026, we purchased newly originated prime credit quality residential loans, primarily from PLS, with fair values totaling $10.0 billion as compared to $55.4 billion for the six months ended June 30, 2025, from our aggregation and securitization business. Taxation We believe that we qualify to be taxed as a REIT and as such will not be subject to federal income tax on that portion of our income that is distributed to shareholders as long as we meet applicable REIT asset, income and share ownership tests. If we fail to qualify as a REIT, and do not qualify for certain statutory relief provisions, our profits will be subject to income taxes and we may be precluded from qualifying as a REIT for the four tax years following the year we lose our REIT qualification. A portion of our activities, including our aggregation and securitization business, is conducted in our taxable REIT subsidiary (“TRS”), which is subject to corporate federal and state income taxes. Accordingly, we make a provision for income taxes with respect to the operations of our TRS. We expect that the effective rate for the provision for income taxes may be volatile in future periods. Our goal is to manage the business to take full advantage of the tax benefits afforded to us as a REIT. We evaluate our deferred tax assets quarterly to determine if valuation allowances are required based on the consideration of all available positive and negative evidence using a “more-likely-than-not” standard with respect to whether deferred tax assets will be realized. Our evaluation considers, among other factors, taxable loss carryback availability, expectations of sufficient future taxable income, trends in earnings, existence of taxable income in recent years, the future reversal of temporary differences, and available tax planning strategies that could be implemented, if required. The ultimate realization of our deferred tax assets depends primarily on our ability to generate future taxable income during the periods in which the related deferred tax assets become deductible. 59 Non-Cash Investment Income A substantial portion of our net investment income is comprised of non-cash items, including fair value adjustments and recognition of the fair value of assets created and liabilities incurred in loan sales transactions. Because we have elected, or are required by accounting principles generally accepted in the United States (“GAAP”), to record certain of our financial assets (comprised of MBS, loans held for sale and loans held for investment), our derivatives and CRT strips, our MSRs, and our asset-backed financings and IO security payable at fair value, a substantial portion of the income or loss we record with respect to such assets and liabilities results from non-cash changes in fair value. The amounts of net non-cash investment income items included in net investment income are as follows: Quarter ended June 30, Six months ended June 30, 2026 2025 2026 2025 (dollars in thousands) Net gains (losses) on investments and financings Mortgage-backed securities $ 426 $ 14,564 $ (32,981 ) $ 79,419 Loans held for investment (28,488 ) 13,659 (94,291 ) 42,340 CRT arrangements (910 ) 8,267 (1,520 ) (4,381 ) Interest-only security payable (67 ) (599 ) 3,351 (2,331 ) Asset-backed financings 40,652 (14,793 ) 102,888 (44,216 ) 11,613 21,098 (22,553 ) 70,831 Net gains on loans held for sale (1) 51,704 47,821 75,800 118,127 Net loan servicing fees‒MSR valuation adjustments (2) 38,847 (23,666 ) 94,190 (104,745 ) $ 102,164 $ 45,253 $ 147,437 $ 84,213 Net investment income $ 72,729 $ 70,201 $ 154,863 $ 114,666 Non-cash items as a percentage of net investment income 140 % 64 % 95 % 73 % (1)Amount represents MSRs received, liability for representations and warranties incurred in loan sales transactions and changes in fair value of loans, interest rate lock commitments (“IRLCs") and hedging derivatives held at the end of the quarter. (2)Includes fair value changes due to changes in fair value inputs and fair value changes related to MSR derivative hedging instruments held at the end of the period. We receive or pay cash relating to: •MBS through monthly principal and interest payments from the issuer of such securities or from the sale of the investments; •Loan investments when the loans are paid down, paid off or sold, when payments of principal and interest occur on such loans or when the properties acquired in settlement of loans are sold; •CRT arrangements through a portion of the interest payments collected on loans in the CRT arrangements’ reference pools, interest payments from the investment of the deposits securing the arrangements in short-term investments and the release to us of the deposits securing the arrangements as principal on such loans is repaid; •MSRs in the form of loan servicing fees (including both base servicing and excess servicing spread), ancillary fees and placement fees on the deposits we manage on behalf of the borrowers and investors in the loans we service; •Hedging instruments when we receive or make margin deposits as the fair value of respective instruments change, when the instruments mature or when we effectively cancel the transactions through offsetting trades; and •Our liability for representations and warranties when we repurchase loans or settle loss claims from investors. 60 Results of Operations The following is a summary of our key performance measures: Quarter ended June 30, Six months ended June 30, 2026 2025 2026 2025 (dollar amounts in thousands, except per common share amounts) Net loan servicing fees $ 40,041 $ 23,947 $ 123,627 $ (3,263 ) Loan production income (1) 17,498 21,191 42,783 36,687 Net gains (losses) on investments and financings 22,301 33,680 (762 ) 95,993 Net interest expense (7,095 ) (8,668 ) (10,754 ) (14,714 ) Other (16 ) 51 (31 ) (37 ) Net investment income 72,729 70,201 154,863 114,666 Expenses 55,909 53,195 111,148 103,959 Pretax income 16,820 17,006 43,715 10,707 (Benefit from) provision for income taxes (14,099 ) 9,472 (11,820 ) (6,507 ) Net income 30,919 7,534 55,535 17,214 Dividends on preferred shares 10,455 10,455 20,910 20,910 Net income (loss) attributable to common shareholders $ 20,464 $ (2,921 ) $ 34,625 $ (3,696 ) Pretax income by segment and corporate: Credit sensitive strategies $ 11,248 $ 21,834 $ 27,709 $ 22,942 Interest rate sensitive strategies 8,991 (4,888 ) 16,981 (10,363 ) Aggregation and securitization 11,129 13,721 27,546 23,850 Corporate operations (14,548 ) (13,661 ) (28,521 ) (25,722 ) $ 16,820 $ 17,006 $ 43,715 $ 10,707 Annualized return on average common shareholders' equity 6.2 % (0.9 )% 6.7 % (0.5 )% Earnings (losses) per common share Basic $ 0.23 $ (0.04 ) $ 0.40 $ (0.05 ) Diluted $ 0.23 $ (0.04 ) $ 0.40 $ (0.05 ) Dividends per common share $ 0.40 $ 0.40 $ 0.80 $ 0.80 June 30, 2026 December 31, 2025 (dollar amounts in thousands, except per common share amounts) Total assets $ 25,093,590 $ 21,346,882 Book value per common share $ 14.83 $ 15.25 Closing price per common share $ 11.28 $ 12.55 (1)Includes net gains on sales of loans and loan origination fees. Our results of operations increased by $23.4 million during the quarter ended June 30, 2026, as compared to the quarter ended June 30, 2025, reflecting the effect of decreased income tax expense along with increased gains on our MSRs partially offset by increased losses on MBS and a decrease in gains on our CRT-related investments. The increase in the quarterly pretax results is summarized below: •Our credit sensitive strategies segment recognized a $10.5 million decrease in net gains on our CRT arrangements as market credit spreads (which represent the interest rate premium demanded by investors for instruments over those that are considered “risk free”) tightened to a lesser extent during the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025. •Our interest rate sensitive strategies segment recognized a $16.1 million increase in net servicing fees primarily driven by a reduction in net MSR valuation losses due to a decrease in hedging losses during the quarter ended June 30, 2026 compared to the quarter ended June 30, 2025. These favorable effects were partially offset by a $13.6 million decrease in valuation gains on MBS and $2.9 million increase in net interest expense. •Our aggregation and securitization segment recognized a $2.5 million decrease in gain on sale during the quarter ended June 30, 2026, reflecting a reduction in our volume of sales to nonaffiliates. 61 •Our benefit from income taxes was $14.1 million during the quarter ended June 30, 2026, compared to a $9.5 million tax provision during the quarter ended June 30, 2025, reflecting the effect of reduced profitability in the Company’s taxable REIT subsidiary. Our results of operations increased by $38.3 million during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, reflecting the effect of decreased hedging losses relating to our investment in MSRs partially offset by losses on our investments in MBS. The increase in the six months pretax results is summarized below: •Our credit sensitive strategies segment recognized a $5.2 million increase in net gains on our CRT arrangements as market credit spreads tightened, which resulted in higher fair values during the six months ended June 30, 2026 compared to the same period in 2025. •Our interest rate sensitive strategies segment recognized a $126.9 million increase in net servicing fees primarily driven by a reduction in net MSR valuation losses due to increases in interest rates and improved net hedging performance during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. These benefits were partially offset by a $112.9 million increase in valuation losses on MBS. •Our aggregation and securitization segment recognized an $8.1 million increase in gain on sale during the six months ended June 30, 2026, primarily driven by increased gain on sale margins along with higher interest rate lock volumes, including higher volumes of jumbo loans, as well as favorable non-Agency execution. •Our benefit from income taxes was an $11.8 million benefit during the six months ended June 30, 2026, compared to a $6.5 million benefit from income taxes during the six months ended June 30, 2025, reflecting the effect of reduced profitability in the Company’s taxable REIT subsidiary. Net Investment Income Our net investment income is summarized below: Quarter ended June 30, Six months ended June 30, 2026 2025 2026 2025 (in thousands) Net loan servicing fees $ 40,041 $ 23,947 $ 123,627 $ (3,263 ) Net gains on loans held for sale 15,292 17,806 38,202 30,150 Loan origination fees 2,206 3,385 4,581 6,537 Net gains (losses) on investments and financings 22,301 33,680 (762 ) 95,993 Net interest expense (7,095 ) (8,668 ) (10,754 ) (14,714 ) Other (16 ) 51 (31 ) (37 ) $ 72,729 $ 70,201 $ 154,863 $ 114,666 Net Loan Servicing Fees Our net loan servicing fees have two primary components: fees earned for servicing loans and the effects of MSR valuation changes, net of hedging results, as summarized below: Quarter ended June 30, Six months ended June 30, 2026 2025 2026 2025 (in thousands) Loan servicing fees $ 149,479 $ 158,238 $ 300,438 $ 314,354 Effect of mortgage servicing rights and hedging results (109,438 ) (134,291 ) (176,811 ) (317,617 ) Net loan servicing fees $ 40,041 $ 23,947 $ 123,627 $ (3,263 ) 62 Loan Servicing Fees Following is a summary of our loan servicing fees: Quarter ended June 30, Six months ended June 30, 2026 2025 2026 2025 (in thousands) Contractually specified servicing fees $ 144,403 $ 153,111 $ 291,995 $ 305,310 Ancillary and other fees: Late charges 1,063 1,036 2,134 2,063 Other 4,013 4,091 6,309 6,981 5,076 5,127 8,443 9,044 $ 149,479 $ 158,238 $ 300,438 $ 314,354 Average UPB of underlying loans $ 210,239,293 $ 222,991,951 $ 212,214,382 $ 224,208,538 Loan servicing fees are primarily related to servicing we provide for loans included in Agency securitizations. These fees are contractually established at an annualized percentage of the unpaid principal balance (“UPB”) of the loans serviced and we collect these fees from borrower payments. Other loan servicing fees are comprised primarily of borrower-contracted fees, such as late charges and reconveyance fees, as well as incentive fees we receive from the Agencies for loss mitigation activities and fees charged to correspondent lenders for loans repaid by the borrower shortly after purchase. The change in contractually-specified fees during the quarter and six months ended June 30, 2026 is due primarily to the slight reduction in our MSR servicing portfolio. Effect of Mortgage Servicing Rights and Hedging Results We have elected to carry our MSRs at fair value. Changes in fair value have two components: changes due to realization of the expected servicing cash flows and changes due to changes in the inputs used to estimate fair value. We endeavor to moderate the effects of changes in fair value attributable to changes in fair value inputs (market conditions) primarily by entering into derivative transactions. Changes in fair value of MSRs and hedging results are summarized below: Quarter ended June 30, Six months ended June 30, 2026 2025 2026 2025 (in thousands) Change in fair value of MSRs Changes in valuation inputs used in valuation model $ 18,904 $ 22,713 $ 64,491 $ (33,118 ) Recapture income from PFSI 4,857 1,474 10,664 2,682 Hedging results (32,831 ) (60,637 ) (44,712 ) (100,581 ) (9,070 ) (36,450 ) 30,443 (131,017 ) Realization of expected cash flows (100,368 ) (97,841 ) (207,254 ) (186,600 ) $ (109,438 ) $ (134,291 ) $ (176,811 ) $ (317,617 ) Average balance of mortgage servicing rights $ 3,612,522 $ 3,766,521 $ 3,609,341 $ 3,794,673 Changes in fair value due to changes in valuation inputs used in our valuation model are affected by the magnitude of the interest rate changes and the interest rate and prepayment sensitivities of the MSRs, which are based on the relationship of the interest rates of the underlying mortgages to the level of market interest rates. During the six months ended June 30, 2026, valuation adjustments shifted positively compared to the same period in 2025, driven by rising interest rates that slowed expected prepayments and increased servicing cash flow expectations. For the quarter ended June 30, 2026, these same factors resulted in a favorable valuation adjustment of $18.9 million, though moderated compared to the $22.7 million adjustment in the second quarter of 2025. We have an agreement with PFSI that requires that when PFSI refinances a loan for which we hold the MSRs, we receive a recapture fee. The MSR recapture agreement is summarized in Note 4 ‒ Transactions with Related Parties – Operating Activities to the consolidated financial statements included in this Report. The increase in loan recapture income from PFSI reflects elevated refinancing activity within our MSR portfolio due to the volatility in interest rates during the quarter and six months ended June 30, 2026, compared to the same periods in 2025. Hedging results during the quarter and six months ended June 30, 2026 were primarily driven by the impact of increasing interest rates—which partially offset the positive valuation adjustments on our MSRs—as well as the embedded costs of maintaining our hedge positions. These losses decreased compared to the same periods in 2025. Our hedging activities are intended to manage our net exposure across all interest rate-sensitive strategies, including MSRs, MBS, and related tax effects. 63 Changes in realization of cash flows are influenced by changes in the level of servicing assets and liabilities and changes in estimates of remaining cash flows to be realized as well as realized prepayment performance. Following is a summary of our loan servicing portfolio: June 30, 2026 December 31, 2025 (in thousands) UPB of loans outstanding $ 208,426,764 $ 215,781,639 Collection status (unpaid principal balance) Delinquency: 30-89 days delinquent $ 2,404,640 $ 2,605,536 90 or more days delinquent: Not in foreclosure $ 977,187 $ 1,032,221 In foreclosure $ 144,769 $ 118,768 Bankruptcy $ 386,808 $ 355,808 Following is a summary of characteristics of our MSR servicing portfolio as of June 30, 2026: Average Loan type Unpaid principal balance Loan count Note rate Seasoning (months) Remaining maturity (months) Loan size FICO credit score at origination Original LTV (1) Current LTV (1) 60+ Delinquency (by UPB) (Dollars and loan count in thousands) Agency: Freddie Mac $ 102,678,170 375 3.9 % 54 294 $ 274 762 75 % 54 % 0.6 % Fannie Mae 100,621,268 400 3.8 % 65 286 $ 251 757 76 % 50 % 0.9 % Other (2) 5,127,327 16 5.3 % 40 318 $ 331 765 72 % 59 % 0.7 % $ 208,426,764 791 3.9 % 59 290 $ 264 760 75 % 52 % 0.8 % (1)Loan-to-value. (2)Represents MSRs on conventional loans sold to private investors. 64 Net Gains on Loans Held for Sale Our net gains on loans held for sale are summarized below: Quarter ended June 30, Six months ended June 30, 2026 2025 2026 2025 (in thousands) From nonaffiliates: Cash losses: Sales of loans $ 303 $ (11,618 ) $ (39,954 ) $ (13,533 ) Hedging activities (36,715 ) (21,055 ) 2,356 (79,117 ) (36,412 ) (32,673 ) (37,598 ) (92,650 ) Non-cash gains: Receipt of MSRs in loan sale transactions 30,981 44,030 71,262 91,039 Provision for losses relating to representations and warranties provided in loan sales: Pursuant to loan sales (348 ) (227 ) (658 ) (531 ) Reduction in liability due to change in estimate 245 912 687 2,080 (103 ) 685 29 1,549 Changes in fair value of financial instruments held at end of period: Interest rate lock commitments 6,218 2,904 597 7,078 Loans (13,401 ) (8,515 ) (97 ) (21,959 ) Hedging derivatives 28,009 8,717 4,009 40,420 20,826 3,106 4,509 25,539 51,704 47,821 75,800 118,127 Total from nonaffiliates 15,292 15,148 38,202 25,477 From PFSI—cash — 2,658 — 4,673 $ 15,292 $ 17,806 $ 38,202 $ 30,150 Interest rate lock commitments issued on loans held for sale (unpaid principal balance): To nonaffiliates $ 3,177,280 $ 3,538,623 $ 6,883,658 $ 6,273,979 To PFSI — 28,657,935 — 50,753,290 $ 3,177,280 $ 32,196,558 $ 6,883,658 $ 57,027,269 Acquisition of loans for sale (unpaid principal balance): From nonaffiliates $ 166,540 $ 3,085,840 $ 611,966 $ 5,867,562 From PFSI (1) 4,923,148 26,755,571 9,219,926 46,979,204 $ 5,089,688 $ 29,841,411 $ 9,831,892 $ 52,846,766 (1)Acquisition of loans for sale includes unpaid principal balances of loans to PFSI during the periods presented in 2025. The changes in Net gains on loans held for sale at fair value during the quarter and six months ended June 30, 2026, as compared to the same periods in 2025, were primarily driven by the reduction in our volume of sales to nonaffiliates during the quarter ended June 30, 2026 and higher interest rate lock volumes and margins during the six months ended June 30, 2026, including higher volumes of jumbo loans, as well as favorable non-Agency execution. Non-cash elements of gain on sale of loans: Interest Rate Lock Commitments Our Net gains on loans held for sale include our estimates of gains or losses we expect to realize upon the sale of mortgage loans we have committed to purchase but have not yet purchased or sold. Therefore, we recognize a substantial portion of our net gains before we purchase the loans. These gains are reflected on our balance sheet as IRLC derivative assets and liabilities. We adjust the fair values of our IRLCs as the loan acquisition process progresses until we complete the acquisitions or the commitments are canceled. Such adjustments are included in our Net gains on loans held for sale at fair value. The fair values of our IRLCs become part of the carrying values of our loans when we complete the purchases of the loans. The methods and key inputs we use to measure the fair values of IRLCs are summarized in Note 7 – Fair value – Valuation Techniques and Inputs to the consolidated financial statements included in this Report. The MSRs and liabilities for representations and warranties we recognize represent our estimate of the fair value of future benefits and costs we will realize for years in the future. These estimates change as circumstances change, and changes in these estimates are recognized in our consolidated statements of operations in subsequent periods. Subsequent changes in the fair value of our MSRs significantly affect our income. 65 Mortgage Servicing Rights The methods we use to measure and update the measurements of our MSRs as well as the effect of changes in valuation inputs on MSR fair value are detailed in Note 7 – Fair Value – Valuation Techniques and Inputs to the consolidated financial statements included in this Report. Liability for Losses Under Representations and Warranties We recognize liabilities for losses we expect to incur relating to the representations and warranties we provide to purchasers in our loan sales transactions. The representations and warranties we provide require adherence to purchaser and insurer origination and underwriting guidelines, including but not limited to the validity of the lien securing the loan, property eligibility, borrower credit, income and asset requirements, and compliance with applicable federal, state and local laws. In the event of a breach of our representations and warranties, we may be required to either repurchase the loans with the identified defects, reimburse the investor for its loss or indemnify the investor or insurer against credit losses attributable to the loans with indemnified defects. In such cases, we bear any subsequent credit losses on the loans. Our credit losses may be reduced by any recourse we have to correspondent sellers that, in turn, had sold such loans to us and breached similar or other representations and warranties. In such event, we have the right to seek a recovery of those repurchase losses from that correspondent seller. We recorded a provision for losses relating to representations and warranties relating to current period loan sales of $348,000 and $658,000 for the quarter and six months ended June 30, 2026, respectively, and $227,000 and $531,000 for the quarter and six months ended June 30, 2025, respectively. Following is a summary of the indemnification, repurchase and loss activity and loans subject to representations and warranties: Quarter ended June 30, Six months ended June 30, 2026 2025 2026 2025 (in thousands) Indemnification activity (unpaid principal balance): Loans indemnified at beginning of period $ 16,882 $ 15,782 $ 16,207 $ 15,289 New indemnifications 157 — 832 493 Less: indemnified loans sold, repaid or refinanced — 195 — 195 Loans indemnified at end of period $ 17,039 $ 15,587 $ 17,039 $ 15,587 Indemnified loans indemnified by correspondent lenders at end of period $ 5,772 $ 6,045 UPB of loans with deposits received from correspondent sellers collateralizing prospective indemnification losses at end of period $ 6,108 $ 5,488 Repurchase activity (unpaid principal balance): Loans repurchased $ 52,812 $ 8,251 $ 56,413 $ 13,097 Less: Loans repurchased by correspondent sellers 28,822 5,149 32,433 9,932 Loans resold or repaid by borrowers 9,211 — 10,497 2,703 Net loans (resolved) repurchased with losses chargeable to liability to representations and warranties $ 14,779 $ 3,102 $ 13,483 $ 462 Losses charged to liability for representations and warranties $ 15 $ 206 $ 15 $ 273 At end of period: Loans subject to representations and warranties $ 207,564,556 $ 218,738,822 Liability for representations and warranties $ 5,240 $ 5,064 The losses on representations and warranties we have recorded to date have been moderated by our ability to recover most of the losses inherent in the repurchased loans from the correspondent sellers. As the outstanding balance of loans we purchase and sell subject to representations and warranties increases, as the loans outstanding season, as our investors’ and guarantors’ loss mitigation strategies change and as our correspondent sellers’ ability and willingness to repurchase loans change, we expect that the level of repurchase activity and associated losses may increase. The method we use to estimate the liability for representations and warranties is a function of our estimates of future defaults, loan repurchase rates, severities of loss in the event of default and the probabilities of reimbursement by the correspondent loan sellers. We establish a liability at our estimate of its fair value at the time loans are sold and review the adequacy of our recorded liability on a periodic basis. The amount of the liability for representations and warranties is difficult to estimate and requires considerable judgment. The level of loan repurchase losses is dependent on economic factors, investor and guarantor loss mitigation strategies, our ability to recover any losses inherent in the repurchased loan from the correspondent seller and other external conditions that change over the lives of the 66 underlying loans. We may be required to incur losses related to such representations and warranties for several periods after the loans are sold or liquidated. We record adjustments to our liability for losses on representations and warranties as economic fundamentals change, as investor and Agency evaluations of their loss mitigation strategies (including claims under representations and warranties) change and as economic conditions affect our correspondent sellers’ ability or willingness to fulfill their recourse obligations to us. Such adjustments may be material to our financial position and results of operations in future periods. Adjustments to our liability for representations and warranties are included as a component of our Net gains on loans held for sale at fair value. We recorded a $245,000 and $687,000 reduction in liability for the quarter and six months ended June 30, 2026, respectively, and a $912,000 and $2.1 million reduction in liability for representations and warranties during the quarter and six months ended June 30, 2025, respectively, due to the effects of certain loans reaching specified performance histories identified by the Agencies as sufficient to limit repurchase claims relating to such loans. Loan Origination Fees Loan origination fees represent fees we charge correspondent sellers relating to our purchase of loans from those sellers. Loan origination fees decreased during the quarter and six months ended June 30, 2026, reflecting an overall decrease in our purchase volume of loans for sale. The reduction is related to activity-based expenses, including tax service fees and boarding fees associated with loans held for sale. Net gains (losses) on investments and financings Net gains (losses) on investments and financings are summarized below: Quarter ended June 30, Six months ended June 30, 2026 2025 2026 2025 (in thousands) Mortgage-backed securities $ 426 $ 14,564 $ (32,981 ) $ 79,419 Loans held for investment (28,488 ) 13,659 (94,291 ) 42,340 CRT arrangements 9,711 20,250 23,622 18,450 Asset-backed financings 40,652 (14,793 ) 102,888 (44,216 ) $ 22,301 $ 33,680 $ (762 ) $ 95,993 The decrease in net gains on investments for the quarter and six months ended June 30, 2026, as compared to the same periods in 2025, was primarily due to losses from our investments in MBS as interest rates increased, partially offset by increased gains in our investments in interests we retained in our private label securitization activities as credit spreads tightened during the six months ended June 30, 2026 as compared to the same periods in 2025. Mortgage-Backed Securities During the quarter and six months ended June 30, 2026, we recognized net valuation gains of $0.4 million and losses of $33.0 million, respectively, as compared to valuation gains of $14.6 million and $79.4 million, respectively, for the same periods in 2025. The reduced performance reflects increasing interest rates during the quarter and six months ended June 30, 2026, as compared to decreasing interest rates during the same periods in 2025. Loans Held for Investment at Fair Value – Held in VIEs and Asset-backed Financings at Fair Value Loans held for investment held in VIEs and Asset-backed financings of variable interest entities at fair value recorded combined net valuation gains of $12.2 million and $8.6 million during the quarter and six months ended June 30, 2026, respectively, as compared to a net loss of $1.1 million and $1.9 million during the same periods in 2025, respectively. The net gains during the quarter and six 67 months ended June 30, 2026 are due to interest rate volatility during 2026, which reduced the fair value of the underlying loan assets held for investments to a lesser degree than the decline in the value of the issued asset-backed debt liabilities. CRT Arrangements The activity in and balances relating to our CRT arrangements are summarized below: Quarter ended June 30, Six months ended June 30, 2026 2025 2026 2025 (in thousands) Net investment income: Net gains (losses) on investments and financings Credit risk transfer derivatives and strips: Credit risk transfer derivatives Realized $ 2,044 $ 2,632 $ 4,592 $ 5,435 Valuation changes 215 2,743 (2,201 ) 1,920 2,259 5,375 2,391 7,355 Credit risk transfer strips Realized 8,644 9,950 17,199 19,727 Valuation changes (1,125 ) 5,524 681 (6,301 ) 7,519 15,474 17,880 13,426 Interest-only security payable at fair value — valuation changes (67 ) (599 ) 3,351 (2,331 ) 9,711 20,250 23,622 18,450 Interest income — Deposits securing credit risk transfer arrangements 8,481 11,401 17,373 23,076 $ 18,192 $ 31,651 $ 40,995 $ 41,526 Net payments made to settle losses on credit risk transfer arrangements $ 1,159 $ 1,225 $ 2,527 $ 2,468 June 30, 2026 December 31, 2025 (in thousands) Carrying value of credit risk transfer arrangements: Derivative assets - credit risk transfer derivatives $ 30,301 $ 32,659 Derivative and credit risk transfer liabilities - credit risk transfer strips (5,428 ) (5,999 ) Deposits securing credit risk transfer arrangements 947,900 1,009,334 Interest-only security payable at fair value (34,299 ) (37,650 ) $ 938,474 $ 998,344 Credit risk transfer arrangement assets pledged to secure borrowings: Derivative assets $ 30,301 $ 32,659 Deposits securing credit risk transfer arrangements (1) $ 947,900 $ 1,009,334 Unpaid principal balance of loans underlying credit risk transfer arrangements $ 18,089,855 $ 19,517,530 Collection status (unpaid principal balance): Delinquency Current $ 17,597,227 $ 18,908,261 30-89 days delinquent $ 340,562 $ 413,295 90-179 days delinquent $ 79,095 $ 110,486 180 or more days delinquent $ 51,370 $ 57,798 Foreclosure $ 21,601 $ 27,690 Bankruptcy $ 56,129 $ 68,426 (1)Deposits securing credit risk transfer arrangements also secure $5.4 million and $6.0 million in CRT strip and CRT derivative liabilities at June 30, 2026 and December 31, 2025, respectively. 68 The performance of our investments in CRT arrangements for the quarter ended June 30, 2026 reflected a relatively more stable credit spread and a lower average investment volume compared to the same period in 2025. The performance for the six months ended June 30, 2026 benefited from credit spread tightening compared to the same period in 2025. Net Interest Expense Net interest expense is summarized below: Quarter ended June 30, 2026 Quarter ended June 30, 2025 Interest Interest Interest Interest income/ Average yield/ income/ Average yield/ expense balance cost % expense balance cost % (dollars in thousands) Assets: Cash and short-term investments $ 4,507 $ 486,845 3.71 % $ 5,575 $ 477,506 4.70 % Mortgage-backed securities 50,842 3,648,242 5.59 % 54,761 3,984,945 5.53 % Loans held for sale 43,501 2,666,049 6.54 % 35,917 2,204,825 6.55 % Loans held for investment 160,577 11,633,874 5.54 % 50,694 3,766,027 5.41 % Deposits securing CRT arrangements 8,481 961,496 3.54 % 11,401 1,079,300 4.25 % 267,908 19,396,506 5.54 % 158,348 11,512,603 5.53 % Placement fees relating to custodial funds 35,141 37,736 Other 1,201 397 $ 304,250 $ 19,396,506 6.29 % $ 196,481 $ 11,512,603 6.86 % Liabilities: Assets sold under agreements to repurchase $ 88,076 $ 7,487,136 4.72 % $ 84,336 $ 6,382,670 5.31 % Mortgage loan participation purchase and sale agreements 32 — — 168 9,666 6.99 % Notes payable secured by credit risk transfer and mortgage servicing assets 45,411 2,501,636 7.28 % 53,804 2,714,608 7.97 % Unsecured senior notes 15,991 697,500 9.20 % 15,987 811,731 7.92 % Asset-backed financings 155,854 10,625,848 5.88 % 46,449 3,636,038 5.14 % 305,364 21,312,120 5.75 % 200,744 13,554,713 5.96 % Interest shortfall on repayments of loans serviced for Agency securitizations 3,716 2,455 Interest on loan impound deposits 1,567 1,460 Other 698 490 311,345 $ 21,312,120 5.86 % 205,149 $ 13,554,713 6.09 % $ (7,095 ) $ (8,668 ) 69 Six months ended June 30, 2026 Six months ended June 30, 2025 Interest Interest Interest Interest income/ Average yield/ income/ Average yield/ expense balance cost % expense balance cost % (dollars in thousands) Assets: Cash and short-term investments $ 9,483 $ 529,460 3.61 % $ 11,261 $ 497,438 4.58 % Mortgage-backed securities 107,091 3,956,749 5.46 % 112,995 4,021,995 5.68 % Loans held for sale 83,064 2,640,993 6.34 % 69,152 2,101,729 6.65 % Loans held for investment 294,336 10,670,256 5.56 % 84,373 3,199,308 5.33 % Deposits securing CRT arrangements 17,373 980,458 3.57 % 23,076 1,090,340 4.28 % 511,347 18,777,916 5.49 % 300,857 10,910,810 5.58 % Placement fees relating to custodial funds 66,589 69,765 Other 2,405 1,950 $ 580,341 $ 18,777,916 6.23 % $ 372,572 $ 10,910,810 6.90 % Liabilities: Assets sold under agreements to repurchase $ 179,468 $ 7,633,516 4.74 % $ 165,484 $ 6,282,348 5.33 % Mortgage loan participation purchase and sale agreements 63 — — 320 9,162 7.06 % Notes payable secured by credit risk transfer and mortgage servicing assets 86,671 2,409,401 7.25 % 109,059 2,772,009 7.96 % Unsecured senior notes 36,265 836,644 8.74 % 29,600 760,608 7.87 % Asset-backed financings 276,394 9,731,488 5.73 % 75,164 3,137,311 4.84 % 578,861 20,611,049 5.66 % 379,627 12,961,438 5.92 % Interest shortfall on repayments of loans serviced for Agency securitizations 8,146 3,884 Interest on loan impound deposits 3,263 2,914 Other 825 861 591,095 $ 20,611,049 5.78 % 387,286 $ 12,961,438 6.04 % $ (10,754 ) $ (14,714 ) The effects of changes in the yields and costs and composition of our investments on our net interest expense are summarized below: Quarter ended June 30, 2026 Six months ended June 30, 2026 vs. vs. Quarter ended June 30, 2025 Six months ended June 30, 2025 Increase (decrease) due to changes in Increase (decrease) due to changes in Rate Volume Total Rate Volume Total (in thousands) Assets: Cash and short-term investments $ (1,176 ) $ 108 $ (1,068 ) $ (2,473 ) $ 695 $ (1,778 ) Mortgage-backed securities 632 (4,551 ) (3,919 ) (4,178 ) (1,726 ) (5,904 ) Loans held for sale (39 ) 7,623 7,584 (3,322 ) 17,234 13,912 Loans held for investment 1,175 108,708 109,883 3,806 206,157 209,963 Deposits securing CRT arrangements (1,767 ) (1,153 ) (2,920 ) (3,541 ) (2,162 ) (5,703 ) (1,175 ) 110,735 109,560 (9,708 ) 220,198 210,490 Placement fees relating to custodial funds (2,595 ) (3,176 ) Other 804 455 $ (1,175 ) $ 110,735 $ 107,769 $ (9,708 ) $ 220,198 $ 207,769 Liabilities: Assets sold under agreements to repurchase $ (10,007 ) $ 13,747 $ 3,740 $ (19,343 ) $ 33,327 $ 13,984 Mortgage loan participation purchase and sale agreements (68 ) (67 ) (135 ) (129 ) (129 ) (258 ) Notes payable secured by credit risk transfer and mortgage servicing assets (4,405 ) (3,988 ) (8,393 ) (9,015 ) (13,373 ) (22,388 ) Unsecured senior notes 2,402 (2,398 ) 4 3,503 3,162 6,665 Asset-backed financings 7,675 101,730 109,405 16,056 185,174 201,230 (4,403 ) 109,024 104,621 (8,928 ) 208,161 199,233 Interest shortfall on repayments of loans serviced for Agency securitizations 1,261 4,262 Interest on loan impound deposits 107 349 Other 208 (36 ) (4,403 ) 109,024 106,197 (8,928 ) 208,161 203,808 $ 3,228 $ 1,711 $ 1,572 $ (780 ) $ 12,037 $ 3,961 70 Expenses Our expenses are summarized below: Quarter ended June 30, Six months ended June 30, 2026 2025 2026 2025 (in thousands) Earned by PennyMac Financial Services, Inc.: Loan servicing fees $ 19,640 $ 21,645 $ 39,363 $ 43,374 Management fees 6,810 6,869 13,572 13,881 Loan fulfillment fees 5,023 5,814 10,760 11,104 Professional services 11,627 8,362 25,128 15,344 Compensation 3,390 2,836 6,366 5,806 Loan collection and liquidation 1,680 2,385 3,804 4,354 Safekeeping 931 1,228 1,786 2,338 Loan origination 14 666 227 1,352 Other 6,794 3,390 10,142 6,406 $ 55,909 $ 53,195 $ 111,148 $ 103,959 Expenses increased $2.7 million and $7.2 million, or 5% and 7%, during the quarter and six months ended June 30, 2026, compared to the same periods in 2025, as discussed below. Loan Servicing Fees Loan servicing fees payable to PLS are summarized below: Quarter ended June 30, Six months ended June 30, 2026 2025 2026 2025 (in thousands) Loan servicing fees: Loans held for sale $ 145 $ 285 $ 300 $ 508 Loans held for investment 1,118 226 1,634 394 Mortgage servicing rights 18,377 21,134 37,429 42,472 $ 19,640 $ 21,645 $ 39,363 $ 43,374 Average investment in loans: Held for sale $ 2,666,049 $ 2,204,825 $ 2,640,993 $ 2,101,729 Held for investment $ 11,633,874 $ 3,766,027 $ 10,670,256 $ 3,199,308 Average MSR portfolio unpaid principal balance $ 210,239,293 $ 222,991,951 $ 212,214,382 $ 224,208,538 Mortgage servicing rights recapture fees $ 4,857 $ 1,474 $ 10,664 $ 2,682 Unpaid principal balance of loans recaptured $ 481,158 $ 183,050 $ 1,032,156 $ 342,522 Loan servicing fees decreased by $2.0 million and $4.0 million during the quarter and six months ended June 30, 2026, respectively, as compared to the same periods in 2025, reflecting a decrease in the MSR portfolio as well as reduction in the subservicing fee rate implemented in October 2025, as described in Note 4—Transactions with Related Parties to the consolidated financial statements included in this Report. Management Fees Management fees payable to PCM are summarized below: Quarter ended June 30, Six months ended June 30, 2026 2025 2026 2025 (in thousands) Base fee $ 6,810 $ 6,869 $ 13,572 $ 13,881 Average shareholders' equity amounts used to calculate base management fee expense $ 1,820,944 $ 1,836,690 $ 1,824,591 $ 1,866,238 71 Management fees decreased by $59,000 and $309,000 during the quarter and six months ended June 30, 2026, respectively, as compared to the same periods in 2025. This decrease reflects the effect of the decrease in our average shareholders’ equity on our base management fee. Loan Fulfillment Fees Loan fulfillment fees represent fees we pay to PLS for the services it performs on our behalf in connection with our acquisition, packaging and sale of loans. Fulfillment fees decreased by $0.8 million and $0.3 million during the quarter and six months ended June 30, 2026, respectively, as compared to the same periods in 2025. The decrease was due to the decrease in the volume of loans purchased for sale to nonaffiliates. Our loan fulfillment fee structure is described in Note 4 – Transactions with Related Parties to the consolidated financial statements included in this Report. Professional services Professional services expense increased by $3.3 million and $9.8 million during the quarter and six months ended June 30, 2026, respectively, as compared to the same periods in 2025, due to increased legal and consulting fees in support of the increase in our private label securitization activities. Loan collection and liquidation Loan collection and liquidation expenses decreased by $0.7 million and $0.6 million during the quarter and six months ended June 30, 2026, respectively, as compared to the same periods in 2025, due to decreased servicing costs related to delinquent loans serviced for the Agencies' foreclosure avoidance programs. Other Expenses Other expenses are summarized below: Quarter ended June 30, Six months ended June 30, 2026 2025 2026 2025 (in thousands) Common overhead allocation from PFSI $ 4,022 $ 982 $ 4,971 $ 1,963 Bank service charges 1,200 788 2,215 1,485 Insurance 506 251 992 701 Technology 318 545 807 960 Other 748 824 1,157 1,297 $ 6,794 $ 3,390 $ 10,142 $ 6,406 Income Taxes We have elected to treat PennyMac Corp. (“PMC”) as a taxable REIT subsidiary (“TRS”). Income from a TRS is only included as a component of REIT taxable income to the extent that the TRS makes dividend distributions of income to us. A TRS is subject to corporate federal and state income tax. Accordingly, a provision for income taxes for PMC is included in the accompanying consolidated statements of operations. The Company’s effective tax rate was (83.9)% and (27.0)% with consolidated pretax income of $16.8 million and $43.7 million for the quarter and six months ended June 30, 2026, respectively. The Company’s TRS recognized a tax benefit of $14.1 million on a pretax loss of $55.3 million and tax benefit of $11.2 million on a pretax loss of $54.3 million for the quarter and six months ended June 30, 2026, respectively. For the same periods in 2025, the TRS recognized a tax expense of $9.7 million on a pretax loss of $11.9 million and a tax benefit of $7.5 million on a pretax loss of $87.2 million, respectively. The primary difference between the Company’s effective tax rate and the statutory tax rate is generally attributable to nontaxable REIT income resulting from the dividends paid deduction. The Company assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. On the basis of this evaluation, as of June 30, 2026, the valuation allowance remains zero. The TRS has a significant net deferred tax liability position, which indicates the TRS will utilize all of its deferred tax assets. The amount of deferred tax assets considered realizable could be adjusted in future periods based on future income. In general, cash dividends declared by the Company will be considered ordinary income to the shareholders for income tax purposes. Some portion of the dividends may be characterized as capital gain distributions or a return of capital. The 2017 Tax Cuts and Jobs Act (subject to certain limitations) provides a 20% deduction from taxable income for ordinary REIT dividends which was made permanent under the One Big Beautiful Bill Act of 2025. 72 Balance Sheet Analysis Following is a summary of key balance sheet items as of the dates presented: June 30, 2026 December 31, 2025 (in thousands) Assets Cash and short-term investments $ 420,850 $ 462,488 Mortgage-backed securities at fair value 4,075,660 4,452,859 Loans held for sale 3,195,343 2,699,398 Loans held for investment 12,458,249 8,532,644 Derivative assets 49,423 55,943 Deposits securing credit risk transfer arrangements 947,900 1,009,334 Mortgage servicing rights and servicing advances 3,639,921 3,741,532 24,787,346 20,954,198 Other 306,244 392,684 Total assets $ 25,093,590 $ 21,346,882 Liabilities Debt: Short-term $ 8,395,226 $ 8,018,601 Long-term: Recourse 3,166,407 3,286,428 Non-recourse 11,392,901 7,826,953 14,559,308 11,113,381 22,954,534 19,131,982 Other 285,682 327,569 Total liabilities 23,240,216 19,459,551 Shareholders’ equity 1,853,374 1,887,331 Total liabilities and shareholders’ equity $ 25,093,590 $ 21,346,882 Total assets increased by approximately $3.7 billion, or 18%, from December 31, 2025 to June 30, 2026, primarily due to an increase of $3.9 billion in Loans held for investment at fair value, and a $495.9 million increase in Loans held for sale at fair value offset by a reduction of $377.2 million in Mortgage-backed securities at fair value and a decrease of $101.6 million of Mortgage servicing rights and servicing advances. The increase in Loans held for investments at fair value reflect the Company’s ongoing securitizations of loans in non-Agency securitizations. As described in Note 6 – Variable Interest Entities to the consolidated financial statements included in this Report, such transactions are accounted for as on-balance sheet financings, with the loans included in Loans held for investment at fair value and the securities sold treated as Asset-backed financings of variable interest entities at fair value. Asset Acquisitions Our asset acquisitions are summarized below: Aggregation and Securitization Following is a summary of our acquisitions of mortgage loans for our aggregation and securitization activities at fair value: Quarter ended June 30, Six months ended June 30, 2026 2025 2026 2025 (in thousands) Aggregation and securitization loan purchases: GSE-eligible loans (1) $ 3,753,566 $ 17,537,832 $ 7,410,148 $ 29,731,942 Jumbo 1,126,508 349,738 2,213,820 698,478 Non-qualified 290,423 — 380,038 — Government insured or guaranteed (2) — 13,483,971 — 24,933,006 $ 5,170,497 $ 31,371,541 $ 10,004,006 $ 55,363,426 (1)GSE eligibility refers to the eligibility of loans for sale to Fannie Mae or Freddie Mac. The Company sells or finances a portion of its GSE eligible loan production to or with other investors, including PLS. 73 (2)Through June 30, 2025, the Company sold all of its loans eligible for inclusion in Ginnie Mae securities to PLS. The Company is not approved by Ginnie Mae as an issuer of Ginnie Mae-guaranteed securities which are backed by government-insured or guaranteed loans. The Company earned a sourcing fee for all loans that it purchased from correspondent sellers and subsequently sold to PLS as described in Note 4 – Transactions with Related Parties – Operating Activities – Aggregation and Securitization Activities. During the quarter and six months ended June 30, 2026, we purchased for sale $5.2 billion and $10.0 billion in fair value of loans related to our aggregation and securitization activities, respectively, as compared to $31.4 billion and $55.4 billion during the same periods in 2025. The decrease in loan purchases relates to PFSI's assumption of the role of initial purchaser of correspondent loans starting July 1, 2025 as described in Note 4—Transactions with Related Parties to the consolidated financial statements included in this Report. Other Investment Activities Following is a summary of our net acquisitions (sales) of mortgage-related investments held in our credit sensitive strategies and interest rate sensitive strategies segments: Quarter ended June 30, Six months ended June 30, 2026 2025 2026 2025 (in thousands) Credit sensitive assets: Interest retained in securitization of mortgage loans, net of associated asset-backed financing (subordinate MBS) $ 120,054 $ 87,074 $ 309,294 $ 152,609 Subordinate bond secured by residential transition loans — — 4,000 — 120,054 87,074 313,294 152,609 Interest rate sensitive assets: Mortgage servicing rights received in loan sales 30,981 44,030 71,262 91,039 Floating rate collateralized mortgage obligations 486,407 — 486,407 — Interest retained in securitization of mortgage loans, net of associated asset-backed financing (senior MBS) — 27,490 12,061 55,976 Agency fixed-rate pass-through securities — — (477,360 ) — Senior non-Agency securities — 37,082 — 37,082 517,388 108,602 92,370 184,097 $ 637,442 $ 195,676 $ 405,664 $ 336,706 Our acquisitions during the quarter and six months ended June 30, 2026 and 2025 were financed through the use of a combination of proceeds from borrowings and liquidations of existing investments. We continue to identify additional means of increasing our investment portfolio through cash flow from our business activities, existing investments, borrowings, and transactions that minimize current cash outlays. However, we expect that, over time, our ability to continue our investment portfolio growth will depend on our ability to raise additional equity capital. Investment Portfolio Composition Mortgage-Backed Securities Following is a summary of our MBS holdings: June 30, 2026 December 31, 2025 Average Average Fair value Principal/ notional Life (in years) Coupon Fair value Principal/ notional Life (in years) Coupon (dollars in thousands) Agency pass-through $ 2,178,595 $ 2,159,819 7.2 5.4 % $ 2,850,447 $ 2,805,895 7.6 5.3 % Floating rate collateralized mortgage obligations 1,290,984 1,282,079 7.2 4.7 % 855,997 850,172 6.8 5.0 % Principal-only stripped 404,948 490,817 4.3 0.1 % 521,129 610,256 4.1 0.1 % Senior non-Agency 128,207 132,088 6.1 5.3 % 152,784 155,369 5.4 5.4 % Subordinate residential transition 3,992 4,000 3.7 9.1 % — — — — 4,006,726 $ 4,068,803 4,380,357 $ 4,421,692 Interest-only stripped securities 68,934 $ 320,761 7.5 4.8 % 72,502 $ 344,592 7.7 4.8 % $ 4,075,660 $ 4,452,859 74 Our investment in Mortgage-backed securities at fair value does not include any mortgage-backed securities held from variable interest entities that we consolidate. Credit Risk Transfer Arrangements Following is a summary of our investment in CRT arrangements: June 30, 2026 December 31, 2025 (in thousands) Carrying value of CRT arrangements: Derivative assets – CRT derivatives $ 30,301 $ 32,659 Derivative and credit risk transfer strip liabilities- CRT strips (5,428 ) (5,999 ) Deposits securing CRT arrangements 947,900 1,009,334 Interest-only security payable at fair value (34,299 ) (37,650 ) $ 938,474 $ 998,344 UPB of loans subject to credit guarantee obligations $ 18,089,855 $ 19,517,530 Following is a summary of the composition of the loans underlying our investment in CRT arrangements as of June 30, 2026: Year of origination 2020 2019 2018 2017 2016 2015 Total (dollars in millions) UPB: Outstanding $ 3,852 $ 8,674 $ 2,213 $ 1,856 $ 1,493 $ 2 $ 18,090 Liquidations: Balances $ 2.3 $ 13.9 $ 68.5 $ 180.4 $ 130.2 $ 63.2 $ 458.5 Losses $ 0.2 $ 1.9 $ 7.6 $ 23.3 $ 14.1 $ 7.9 $ 55.0 Modifications (1): Balances $ 131.6 $ 980.8 $ 321.8 $ — $ — $ — $ 1,434.2 Losses $ 2.9 $ 31.3 $ 23.5 $ — $ — $ — $ 57.7 Weighted average: Original debt-to income ratio 33.5 % 35.9 % 39.1 % 36.6 % 35.0 % 36.7 % 35.8 % Origination: FICO credit score 765 754 736 745 751 749 753 Loan-to value ratio 80.6 % 83.3 % 83.6 % 82.4 % 80.6 % 77.0 % 82.4 % Current loan-to value ratio (2) 47.2 % 47.2 % 45.5 % 39.9 % 36.1 % 35.2 % 45.4 % (1)Includes only modifications that generate losses according to the terms of the CRT arrangements. (2)Based on current UPB compared to estimated fair value of the property securing the loan. Year of origination Distribution by state 2020 2019 2018 2017 2016 2015 Total (in millions) California $ 419 $ 885 $ 287 $ 202 $ 301 $ 1 $ 2,095 Florida 418 822 281 191 153 — 1,865 Texas 440 738 175 157 177 — 1,687 Virginia 210 388 82 84 103 — 867 Maryland 153 378 104 110 101 — 846 Other 2,212 5,463 1,284 1,112 658 1 10,730 $ 3,852 $ 8,674 $ 2,213 $ 1,856 $ 1,493 $ 2 $ 18,090 Year of origination Regional geographic distribution (1) 2020 2019 2018 2017 2016 2015 Total (in millions) Southeast $ 1,304 $ 2,940 $ 789 $ 634 $ 461 $ — $ 6,128 West 841 1,837 565 413 437 1 4,094 Southwest 980 1,889 410 365 268 — 3,912 Northeast 369 1,103 262 270 192 1 2,197 Midwest 358 905 187 174 135 — 1,759 $ 3,852 $ 8,674 $ 2,213 $ 1,856 $ 1,493 $ 2 $ 18,090 75 (1)Southeast consists of AL, DC, FL, GA, KY, MD, MS, NC, SC, TN, VA, WV; West consists of AK, CA, GU, HI, ID, MT, NV, OR, WA and WY; Southwest consists of AZ, AR, CO, KS, LA, MO, NM, OK, TX, UT; Northeast consists of CT, DE, ME, MA, NH, NJ, NY, PA, PR, RI, VT, VI and Midwest consists of IL, IN, IA, MI, MN, NE, ND, OH, SD, WI. Year of origination Collection status 2020 2019 2018 2017 2016 2015 Total (in millions) Delinquency Current – 89 Days $ 3,835 $ 8,592 $ 2,170 $ 1,850 $ 1,489 $ 2 $ 17,938 90 – 179 Days 9 43 18 5 4 — 79 180+ Days 5 28 17 1 — — 51 Foreclosure 3 11 8 — — — 22 $ 3,852 $ 8,674 $ 2,213 $ 1,856 $ 1,493 $ 2 $ 18,090 Bankruptcy $ 3 $ 34 $ 12 $ 4 $ 3 $ — $ 56 Cash Flows Our cash flows for the six months ended June 30, 2026 and 2025 are summarized below: Six months ended June 30, 2026 2025 (in thousands) Operating activities $ (5,468,695 ) $ (2,609,863 ) Investing activities 1,591,092 313,144 Financing activities 3,830,871 2,321,925 Net cash flows $ (46,732 ) $ 25,206 Our cash flows resulted in a net decrease in cash of $46.7 million during the six months ended June 30, 2026, as discussed below. Operating activities Cash used in operating activities totaled $5.5 billion during the six months ended June 30, 2026, as compared to cash used in our operating activities of $2.6 billion during the six months ended June 30, 2025. Cash flows from operating activities are influenced by cash flows from loans held for sale as shown below: Six months ended June 30, 2026 2025 (in thousands) Operating cash flows from: Loans held for sale $ (5,693,481 ) $ (3,010,602 ) Other 224,786 400,739 $ (5,468,695 ) $ (2,609,863 ) The primary source of negative operating cash flow from loans held for sale relates to the transfer of loans to held for investment pursuant to our securitization activities. The securitization of portions of our aggregation and securitization activities and cash received from such securitizations is accounted for as a financing activity. We may sell these loans based on market conditions before committing to securitize the loans. Investing activities Net cash provided by our investing activities was $1.6 billion for the six months ended June 30, 2026, driven by cash inflows generated by our investments, as compared to net cash provided by our investing activities of $313.1 million for the six months ended June 30, 2025. Financing activities Net cash provided by our financing activities was $3.8 billion for the six months ended June 30, 2026, as compared to net cash provided by our financing activities of $2.3 billion for the six months ended June 30, 2025. This change primarily reflects the increase in borrowings required to finance newly created investments from our ongoing securitization efforts during the six months ended June 30, 2026. 76 As discussed below in Liquidity and Capital Resources, we continually evaluate and pursue additional sources of financing to provide us with future investing capacity. We do not raise equity or enter into borrowings for the purpose of financing the payment of dividends. We believe that our cash earnings are adequate to fund our operating expenses and dividend payment requirements. However, we manage our liquidity in the aggregate and are reinvesting our cash flows in new investments as well as using such cash to fund our dividend requirements. Liquidity and Capital Resources Our liquidity reflects our ability to meet our current obligations (including the purchase of loans from PLS, our operating expenses and, when applicable, retirement of, and margin calls relating to, our debt and derivatives positions), make investments as our Manager identifies them, pursue our share repurchase program and make distributions to our shareholders. We generally need to distribute at least 90% of our taxable income each year (subject to certain adjustments) to our shareholders to qualify as a REIT under the Internal Revenue Code. This distribution requirement limits our ability to retain earnings and thereby replenish or increase capital to support our activities. We expect our primary sources of liquidity to be cash flows from our investment portfolio, including cash earnings on our investments, cash flows from business activities, liquidation of existing investments and proceeds from borrowings and/or additional equity offerings. When we finance a particular asset, the amount borrowed is less than the asset’s fair value and we must provide the cash in the amount of such difference. Our ability to continue making investments is dependent on our ability to invest the cash representing such difference. We expect to continue investing in subordinate MBS generated from non-Agency securitizations which are also expected to increase our VIEs' asset-backed financings. Debt Financing Our current debt financing strategy is to finance our assets where we believe such borrowing is prudent, appropriate and available. We make collateralized borrowings in the form of sales of assets under agreements to repurchase, loan participation purchase and sale agreements and notes payable, including secured term financing for our MSRs and our CRT arrangements that have allowed us to match the term of our borrowings more closely to the expected lives of the assets securing those borrowings. We have also borrowed money by issuing unsecured senior notes. A substantial portion of our balance sheet includes assets that are shown as their underlying assets as opposed to the securitized form in which they are held. These assets and the reason for their accounting treatment are discussed in Note 6—Variable Interest Entities to the consolidated financial statements included in this Report. The following table adjusts the presentation of our balance sheet to provide investors with a more creditor-aligned view of the relationship of our debt to the assets in the securitized form those assets are financed. The adjusted balance sheet information should not be considered in isolation or as a substitute for an analysis of our results as presented in compliance with GAAP. 77 June 30, 2026 Assets (1) Financing Consolidated Adjustments for VIE Financing (2) Excluding VIE Financing Assets sold under agreements to repurchase Notes payable secured by CRT arrangements and MSRs Total (in thousands except for debt-to equity amounts) Assets Cash and short-term investments $ 420,850 $ — $ 420,850 $ — $ — $ — Mortgage-backed securities at fair value Agency-backed securities 3,943,461 — 3,943,461 3,854,152 — 3,854,152 Senior non-agency securities 128,207 — 128,207 120,863 — 120,863 Subordinate residential transition 3,992 — 3,992 2,795 — 2,795 Credit risk transfer securities relating to consolidated variable interest entities — 938,474 938,474 112,217 582,475 694,692 Non-agency securities relating to consolidated variable interest entities — 944,772 944,772 835,998 — 835,998 4,075,660 1,883,246 5,958,906 4,926,025 582,475 5,508,500 Loans held for sale at fair value 3,195,343 — 3,195,343 2,966,705 — 2,966,705 Loans held for investment at fair value 12,458,249 (12,456,657 ) 1,592 — — — Derivative assets 49,423 (30,301 ) 19,122 — — — Deposits securing credit risk transfer arrangements 947,900 (947,900 ) — — — — Mortgage servicing rights and servicing advances 3,639,921 153,283 3,793,204 502,496 1,898,656 2,401,152 24,787,346 (11,398,329 ) 13,389,017 8,395,226 2,481,131 10,876,357 Other 306,244 — 306,244 — — — Total assets and secured financing $ 25,093,590 $ (11,398,329 ) $ 13,695,261 $ 8,395,226 $ 2,481,131 10,876,357 Unsecured debt 685,276 Debt excluding non-recourse 11,561,633 Debt in consolidated variable interest entities (2) 11,392,901 Total debt (3) $ 22,954,534 Equity $ 1,853,374 Debt-to equity ratio: Excluding non-recourse debt (4) 6.2:1 Total (5) 12.4:1 (1)The balance sheet information depicted under the column captioned “Consolidated” represents information prepared in compliance with GAAP. The subsequent columns reflect non-GAAP adjustments to deconsolidate the assets held in the trusts issuing beneficial interests in those assets and to provide investors with a more creditor-aligned view of how our debt relates to the assets we finance. After adjustment, the assets are shown in the securitized form in which they are financed which excludes non-recourse debt which we refer to as Asset-backed financings of variable interest entities at fair value on our consolidated balance sheet. The adjusted balance sheet information should not be considered in isolation or as a substitute for an analysis of our results as presented in compliance with GAAP. (2)Does not include adjustments for credit risk transfer strip liabilities of $5.4 million. (3)Excludes non-debt liabilities of $285.7 million included in total liabilities on our consolidated balance sheet. (4)Total debt reduced by asset-backed financings and interest-only security payable, divided by shareholders’ equity. (5)Total debt divided by shareholders’ equity. 78 Sales of Assets Under Agreements to Repurchase Our repurchase agreements represent the sales of assets together with agreements for us to buy back the assets at a later date. Following is a summary of the activities in our repurchase agreements financing: Quarter ended June 30, Six months ended June 30, Assets sold under agreements to repurchase 2026 2025 2026 2025 (in thousands) Average balance outstanding $ 7,487,136 $ 6,382,670 $ 7,633,516 $ 6,282,348 Maximum daily balance outstanding $ 8,575,174 $ 7,603,144 $ 9,032,657 $ 7,799,203 Ending balance (UPB) $ 8,398,039 $ 6,833,086 The difference between the maximum and average daily amounts outstanding is primarily due to timing of loan purchases and sales related to our aggregation and securitization activities. The total facility size of our Assets sold under agreements to repurchase was approximately $13.5 billion at June 30, 2026. Because a significant portion of our current debt facilities consists of short-term borrowings, we expect to either renew these facilities in advance of maturity in order to ensure our ongoing liquidity and access to capital or otherwise allow ourselves sufficient time to replace any necessary financing. As discussed above, all of our repurchase agreements, and mortgage loan participation purchase and sale agreements have short-term maturities: •The transactions relating to loans and real estate acquired in settlement of loans under agreements to repurchase generally provide for terms of approximately one to two years; •The transactions relating to loans under mortgage loan participation purchase and sale agreements provide for terms of approximately one year; •The transactions relating to assets under notes payable provide for terms ranging from two to five years; and All repurchase agreements that matured between June 30, 2026 and the date of this Report have been renewed, extended or replaced. The amount at risk (the fair value of the assets pledged plus the related margin deposit, less the amount advanced by the counterparty and accrued interest) relating to our Assets sold under agreements to repurchase is summarized by counterparty below as of June 30, 2026: Counterparty Amount at risk (in thousands) Atlas Securitized Products, L.P. $ 473,643 Santander US Capital 116,326 Bank of America, N.A. 113,420 Citibank, N.A. 84,810 Nomura Holdings America, Inc. 73,784 Goldman Sachs & Co. LLC 61,534 Wells Fargo Securities, LLC 43,335 RBC Capital Markets, L.P. 39,348 Barclays Capital Inc. 39,006 JPMorgan Chase & Co. 35,596 Morgan Stanley & Co. LLC 29,213 BNP Paribas 20,785 Bank of Montreal 11,163 Daiwa Capital Markets America Inc. 4,319 Mizuho Financial Group 3,092 $ 1,149,374 Unsecured Senior Notes Exchangeable Senior Notes In May and June 2024, PMC issued $216.5 million aggregate principal amount of 8.5% Exchangeable Senior Notes due 2029 that mature on June 1, 2029 (the “exchangeable senior notes”). On December 15, 2025 and December 22, 2025, PMC separately issued $75 million principal amount (for a total of $150 million principal amount) of exchangeable senior notes. The exchangeable senior notes 79 issued in the December 2025 offerings were issued as further reopenings of, and are part of the same series with, the exchangeable senior notes that PMC previously issued in May and June 2024. Upon completion of the December 2025 offerings, the aggregate principal amount of outstanding exchangeable senior notes was $366.5 million. Senior Notes In September 2023, the Company issued $53.5 million principal amount of unsecured 8.50% senior notes due September 30, 2028 (the “2028 Senior Notes”). In February 2025, the Company issued $172.5 million principal amount of unsecured 9.00% senior notes due February 15, 2030 and in June 2025, the Company issued $105 million principal amount of unsecured 9.00% senior notes due June 15, 2030 (collectively, the “2030 Senior Notes”). The 2028 Senior Notes may be redeemed on or after September 30, 2025, the 2030 Senior Notes issued in February 2025 may be redeemed on or after February 15, 2027 and the 2030 Senior Notes issued in June 2025 may be redeemed on or after June 15, 2027, in each case at 100% of the principal amount plus accrued and unpaid interest up to, but excluding, the redemption date. The 2028 Senior Notes and the 2030 Senior Notes are referred to collectively as the “Senior Notes”. No “sinking fund” will be provided for the Senior Notes. The Senior Notes are fully and unconditionally guaranteed on a senior unsecured basis by PMC, including the due and punctual payment of principal of and interest on the Senior Notes, whether at stated maturity, upon acceleration, call for redemption or otherwise (the “PMC Guarantee”). PMC’s operations and investing activities are centered in residential mortgage-related assets, including the creation of and investment in MSRs. Under the terms of the PMC Guarantee, holders of the Senior Notes will not be required to exercise their remedies against us before they proceed directly against PMC. PMC’s obligations under the guarantee are limited to the maximum amount that will not, after giving effect to all other contingent and fixed liabilities of PMC, result in the guarantee constituting a fraudulent transfer or conveyance. The PMC Guarantee will: •rank equal in right of payment to any of PMC’s existing and future unsecured and unsubordinated indebtedness and guarantees of PMC; •be effectively subordinated in right of payment to any of PMC’s existing and future secured indebtedness and secured guarantees to the extent of the value of the assets securing such indebtedness or guarantees; and •be structurally subordinated to all existing and future indebtedness and other liabilities (including trade payables) and (to the extent not held by PMC) preferred stock, if any, of PMC’s subsidiaries and of any entity PMC accounts for using the equity method of accounting. The following summarized financial information for PMT and PMC is presented on a combined basis. Intercompany balances and transactions between PMT and PMC have been eliminated: June 30, 2026 (in thousands) Loans held for sale at fair value $ 3,195,343 Mortgage servicing rights at fair value 3,728,574 Other assets From nonaffiliates 610,678 From PFSI 21,633 From non-issuer or non-guarantor subsidiaries (1) 446,658 Total assets $ 8,002,886 Total liabilities Payable to nonaffiliates $ 2,025,765 Payable to PFSI 5,973,125 Payable to non-issuer or non-guarantor subsidiaries 8,502 $ 8,007,392 80 Six months ended June 30, 2026 (in thousands) Net investment income From nonaffiliates $ 223,378 From PFSI 10,664 From non-issuer or non-guarantor subsidiaries (1) (230,070 ) 3,972 Expenses From nonaffiliates 34,722 From PFSI 56,342 91,064 Pre-tax income (87,092 ) Provision for income taxes (22,513 ) Net income $ (64,579 ) (1)Excludes equity in earnings of non-guarantor subsidiaries. Debt Covenants Our debt financing agreements require us and certain of our subsidiaries to comply with various financial covenants. As of the filing of this Report, these financial covenants include the following: •a minimum of $75 million in unrestricted cash and cash equivalents among the Company and/or our subsidiaries; a minimum of $75 million in unrestricted cash and cash equivalents among our Operating Partnership and its consolidated subsidiaries; a minimum of $25 million in unrestricted cash and cash equivalents between PMC and PMH; a minimum of $25 million in unrestricted cash and cash equivalents at PMC; and a minimum of $10 million in unrestricted cash and cash equivalents at PMH; •a minimum tangible net worth for the Company of $1.25 billion; a minimum tangible net worth for our Operating Partnership of $1.25 billion; a minimum tangible net worth for PMH of $250 million; and a minimum tangible net worth for PMC of $300 million; •a maximum ratio of total indebtedness to tangible net worth of less than 10:1 for PMC and PMH and 10:1 for the Company and our Operating Partnership; and •at least two warehouse or repurchase facilities that finance amounts and assets similar to those being financed under our existing debt financing agreements. Although these financial covenants limit the amount of indebtedness we may incur and impact our liquidity through minimum cash reserve requirements, we believe that these covenants currently provide us with sufficient flexibility to successfully operate our business and obtain the financing necessary to achieve that purpose. PLS is also subject to various financial covenants, both as a borrower under its own financing arrangements and as our servicer under certain of our debt financing agreements. The most significant of these financial covenants currently include the following: •a minimum in unrestricted cash and cash equivalents of $100 million; •a minimum tangible net worth of $1.25 billion; •a maximum ratio of total indebtedness to tangible net worth of 10:1; and •at least one other warehouse or repurchase facility that finances amounts and assets that are similar to those being financed under certain of our existing secured financing agreements. Many of our debt financing agreements contain a condition precedent to obtaining additional funding that requires us to maintain positive net income for at least one (1) of the previous two consecutive quarters, or other similar measures. For the most recent fiscal quarter, the Company is compliant with all such conditions. However, we may be required to obtain waivers from certain lenders in the future if this condition precedent is not met. 81 Our debt financing agreements also contain margin call provisions that, upon notice from the applicable lender at its option, require us to transfer cash or, in some instances, additional assets in an amount sufficient to eliminate any margin deficit. A margin deficit will generally result from any decline in the market value (as determined by the applicable lender) of the assets subject to the related financing agreement, although in some instances we may agree with the lender upon certain thresholds (in dollar amounts or percentages based on the market value of the assets) that must be exceeded before a margin deficit will arise. Upon notice from the applicable lender, we will generally be required to satisfy the margin call on the day of such notice or within one business day thereafter, depending on the timing of the notice. Regulatory Capital and Liquidity Requirements In addition to the financial covenants imposed upon us and PLS as our servicer under our debt financing agreements, we, through PMC and/or PLS, as applicable, are also subject to liquidity and net worth requirements established by the Federal Housing Finance Agency (“FHFA”) for Agency seller/servicers and Ginnie Mae for single-family issuers. FHFA and Ginnie Mae have established minimum liquidity and net worth requirements for their approved non-depository single-family sellers/servicers in the case of Fannie Mae, Freddie Mac, and Ginnie Mae for their approved single-family issuers, and Ginnie Mae has also issued risk-based capital requirements. We believe that we and our servicer, PLS, are in compliance with the applicable FHFA and Ginnie Mae requirements as of June 30, 2026. We continue to explore a variety of additional means of financing our business, including debt financing through bank warehouse lines of credit, repurchase agreements, term financing, securitization transactions and unsecured debt and equity offerings. However, there can be no assurance as to how much additional financing capacity such efforts will produce, what form the financing will take or that such efforts will be successful. Off-Balance Sheet Arrangements and Aggregate Contractual Obligations Off-Balance Sheet Arrangements As of June 30, 2026, we have not entered into any off-balance sheet arrangements. Our management, servicing, and loan fulfillment fee agreements are described in Note 4 – Transactions with Related Parties to the consolidated financial statements included in this Report. Critical Accounting Estimates Preparation of financial statements in compliance with GAAP requires us to make estimates that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the reporting period. Certain of these estimates significantly influence the portrayal of our financial condition and results, and they require us to make difficult, subjective or complex judgments. Our critical accounting policies primarily relate to our fair value estimates. Our Annual Report on Form 10-K for the year ended December 31, 2025 contains a discussion of our critical accounting policies, which utilize relevant critical accounting estimates.