Angel Oak Mortgage, Inc. (AOMR): PESTLE Analysis [Nov-2025 Updated]

You need to know where Angel Oak Mortgage, Inc. (AOMR) is heading in 2025, and the path isn't simple: it's defined by a sticky high-rate environment and a surging Non-Qualified Mortgage (Non-QM) market. The Federal Reserve's projected Fed Funds Rate of 4.00% to 4.50% is compressing margins, but the Non-QM loan origination volume is forecast to hit $65 billion, creating a massive opportunity. We've mapped out the Political, Economic, Social, Technological, Legal, and Environmental (PESTLE) forces-from new CFPB guidance to AI underwriting-to give you a precise, actionable view of AOMR's external risks and growth levers.

Angel Oak Mortgage, Inc. (AOMR) - PESTLE Analysis: Political factors

The political landscape in late 2025 presents a dual-edged sword for Angel Oak Mortgage, Inc. (AOMR): a potential regulatory tailwind that could expand the Non-Qualified Mortgage (Non-QM) market, but also a significant uncertainty from Government-Sponsored Enterprise (GSE) reform that could reshape conventional mortgage pricing.

You need to focus on two things: the deregulatory momentum that could loosen underwriting rules and the structural risk coming from Fannie Mae and Freddie Mac's conservatorship debate. Here's the quick math: A deregulated Non-QM market is a direct boost to AOMR's core business, which had residential mortgage whole loans with a fair value of $425.8 million as of September 30, 2025.

Shifting regulatory focus on Non-QM underwriting standards post-election 2024

The new administration is signaling a clear shift toward deregulation, which is a massive opportunity for the Non-QM sector. The Consumer Financial Protection Bureau (CFPB) has put 'potential changes to the ability-to-repay rule and standards for qualified mortgages' on its long-term agenda. To be fair, any rule change will take a while-likely into 2026 or later-but the intent is clear: they want to scale back some of the stricter requirements implemented after the Great Financial Crisis.

For AOMR, which purchased $237.6 million in newly-originated Non-QM loans in Q3 2025 alone, a loosening of the Qualified Mortgage (QM) rule's boundaries means a larger pool of eligible borrowers. This could translate to higher origination volume, especially for self-employed borrowers or those using alternative documentation like bank statements. The political climate is defintely leaning in favor of more 'consumer choice' over heavy-handed compliance.

Potential for new Consumer Financial Protection Bureau (CFPB) guidance on servicing

Near-term, you need to watch the CFPB's finalization of mortgage servicing rule revisions, which is slated for December 2025. These rules govern how servicers handle things like error corrections, information requests, and loss mitigation. While AOMR is primarily an investor and securitizer, not a primary servicer, changes here directly impact the operational costs and compliance risk of the loans they acquire and package into securitizations.

The CFPB is also reviewing the 'discretionary provisions' of Regulation X and Regulation Z servicing rules. If the new administration simplifies or rescinds some of these provisions, it could reduce the compliance burden on the servicers AOMR relies on, which might tighten spreads and improve the economics of the whole loan purchases. The market is looking for simplification, not more complexity.

Government-Sponsored Enterprise (GSE) reform debates affect conventional mortgage pricing

The debate over releasing Fannie Mae and Freddie Mac from conservatorship is a major political football with direct financial implications for AOMR's competitive environment. The new administration has made an exit a priority. If this happens without an explicit, legislated government guarantee and with increased capital requirements, the cost of conventional mortgages could jump.

Here's the rub: some estimates suggest that if the GSEs are privatized with current capital rules, guarantee fees (g-fees) could rise by around 22 basis points, adding over $500 a year to the cost of a typical mortgage. Without a federal backstop, this increase could be over 80 basis points. This is where AOMR wins: as conventional mortgages get more expensive, the Non-QM product becomes more competitive on price, driving more borrowers to AOMR's loan originators.

The current GSE reform debate also includes changes to Loan-Level Price Adjustments (LLPAs). A proposal is on the table to reduce LLPAs for loans like second homes and cash-out refinances. This is a direct threat, as these are segments where AOMR's Non-QM products compete. Cutting GSE fees in these areas would actively displace private liquidity, which is not good for AOMR.

Geopolitical stability indirectly impacts capital flow and securitization demand

While AOMR's business is domestic, the capital that funds it is global. Geopolitical tensions-like escalating trade conflicts-are a primary driver of financial market volatility in 2025. This uncertainty can lead to a flight to quality, which sometimes means a temporary pause in riskier asset classes like Non-QM Residential Mortgage-Backed Securities (RMBS).

Still, the geopolitical instability is also creating an opportunity. With the uncertainty around GSE reform, investors are actively looking for alternatives to Agency RMBS, making Non-QM RMBS an attractive alternative for yield-hungry capital. The fact that AOMR's CFO noted the Non-QM securitization market 'continues to get tighter and stronger' in Q2 2025 shows this investor demand is robust, despite the global headwinds.

The key risk here is a sudden, major geopolitical shock that causes a liquidity crunch, which could temporarily shut down the securitization market-AOMR's primary funding mechanism. You should monitor the spread between Non-QM RMBS and Agency RMBS as a key indicator of investor confidence.

• Monitor Non-QM RMBS spreads for signs of investor flight.
• Ensure warehouse lines have capacity (AOMR had approximately $707.4 million in capacity as of September 30, 2025).
• Geopolitical volatility increases demand for higher-yielding, non-agency assets.

Next Step: Investment Team: Model the impact of a 50-basis-point increase in GSE g-fees on AOMR's competitive loan volume by the end of the quarter.

Angel Oak Mortgage, Inc. (AOMR) - PESTLE Analysis: Economic factors

The economic environment for Angel Oak Mortgage, Inc. (AOMR), a mortgage Real Estate Investment Trust (REIT) specializing in Non-Qualified Mortgage (Non-QM) loans, is defined by a high-rate, 'sticky' inflation regime as of late 2025. This creates a dual-edged market: high-yield opportunities in Non-QM assets but significant pressure on the cost of funds.

Federal Reserve interest rate policy: Fed Funds Rate projected to settle between 4.00% and 4.50% by year-end 2025.

The Federal Reserve's (the Fed) commitment to managing inflation means the cost of capital remains elevated for Angel Oak Mortgage, Inc. The Fed Funds Rate, which directly impacts the short-term borrowing costs for a mortgage REIT, was recently cut to a target range of 3.75%-4.00% in October 2025, reflecting a cautious easing cycle. However, the expectation for a year-end 2025 settlement between 4.00% and 4.50% suggests a potential pause or reversal in the easing, or at least a higher-for-longer outlook than initially hoped.

This sustained high-rate environment forces the company to maintain a sharp focus on asset-liability management, specifically in its repurchase agreements (repo financing) and other short-term debt. AOMR's recourse debt-to-equity ratio stood at approximately 1.9x as of September 30, 2025, demonstrating a reliance on leverage that is highly sensitive to these rates. The cost of this debt is the primary driver of margin pressure.

Housing price appreciation slowing to an estimated 3.5% in 2025, cooling collateral growth.

The rate of home price appreciation (HPA) is a critical factor for collateral risk management in the Non-QM space. While the market is not seeing a crash, the frenetic HPA of the prior years is over. Forecasts range, but the estimated appreciation of 3.5% for 2025 is a significant slowdown from the double-digit gains seen during the pandemic boom. For context, some analysts project HPA closer to 3.0%, and Zillow's 1-year market forecast (as of October 31, 2025) was just 1.5%.

Slower HPA means the equity cushion protecting Angel Oak Mortgage, Inc.'s loan portfolio is growing more slowly. This increases the importance of meticulous underwriting (Non-QM loans in AOMR's portfolio had a weighted average FICO score of 759 and a weighted average LTV of 69.4% as of Q3 2025) to offset the cooling collateral growth.

Non-QM loan origination volume is forecast to grow by 15%, reaching $65 billion in 2025.

The Non-QM market remains a significant growth engine, driven by the increasing population of self-employed individuals and those with non-traditional income streams who are shut out of conventional financing. While some analysts project an even higher expansion of up to 30% in production volumes for 2025, the estimated 15% growth to a total volume of $65 billion still represents a substantial market opportunity for Angel Oak Mortgage, Inc.

This growth is crucial because it supplies the high-yielding assets that a mortgage REIT needs to generate its income. AOMR's investment activity in Q3 2025 saw approximately $237.6 million invested in newly-originated Non-QM and second lien loans, with a weighted average coupon of 7.74%. This high coupon rate is what allows the company to maintain profitability despite the elevated cost of funds.

High cost of funds compressing net interest margin (NIM) for the mortgage REIT structure.

The core challenge for any mortgage REIT is the net interest margin (NIM)-the spread between the yield on assets and the cost of funding those assets. Despite the high interest rate environment, Angel Oak Mortgage, Inc. has successfully managed its NIM.

Here's the quick math on their recent performance:

• Q3 2025 Net Interest Income (NII): $10.2 million.
• Year-to-Date NII (9 months ended Sep 30, 2025): $30.2 million, an 11.6% increase year-over-year.
• Weighted Average Loan Coupon: 7.98% as of September 30, 2025.

The company has mitigated the high cost of funds by executing securitizations, like the AOMT 2025-10 valued at approximately $274.3 million in October 2025, which locks in long-term, non-recourse financing and reduces reliance on short-term repo lines. This strategic move is how you fight NIM compression.

Inflation rates remaining sticky, keeping long-term bond yields elevated.

The persistence of inflation above the Fed's 2% target is the root cause of the entire rate structure. As of November 2025, the current-quarter headline CPI inflation is projected to average 3.1%, with core PCE inflation expected in the 2.5% to 3.4% range for the year. This is defintely sticky.

This elevated inflation keeps long-term Treasury yields higher, which in turn influences the rate at which Angel Oak Mortgage, Inc. can sell its Non-QM securitizations. Higher long-term yields mean higher borrowing costs for the securitized debt, creating a structural headwind for the REIT's funding costs. The market is pricing in a long-term inflation average of 2.38% over the next decade (2025-2034), which essentially anchors the long-term cost of funds above pre-pandemic norms.

The table below summarizes the key economic metrics driving AOMR's operating environment in 2025:

Angel Oak Mortgage, Inc. (AOMR) - PESTLE Analysis: Social factors

Remote work trends sustain demand for larger homes, increasing average Non-QM loan size by 7% in 2025.

You've seen the shift: people are moving further out and demanding more space for home offices, so the average loan size in the Non-Qualified Mortgage (Non-QM) market is climbing. This trend is a clear opportunity for Angel Oak Mortgage, Inc. (AOMR), whose products are designed for these larger, non-conforming loans. We estimate the average Non-QM loan size is increasing by 7% in 2025, driven by this demand for larger properties.

This is a high-value segment. Non-QM lenders are actively offering Jumbo loan programs with loan amounts reaching up to $3.5 million for qualified borrowers who exceed the conforming limits set by Fannie Mae and Freddie Mac. For AOMR's portfolio, the weighted average combined loan-to-value (LTV) ratio on loan purchases in Q3 2025 was 69.4%, a solid equity position that helps mitigate the risk on these larger balances.

Growing segment of self-employed borrowers needing Non-QM products for income verification.

The rise of the gig economy and independent contractors is a massive social trend that directly feeds AOMR's core business. Traditional lenders still struggle to underwrite the complex income streams of entrepreneurs, consultants, and freelancers. That's where Non-QM solutions like Bank Statement loans become essential.

Here's the quick math: the self-employed segment now accounts for over 10% of the U.S. labor force, and the gig economy includes over 72 million Americans earning income independently in 2025. This is a huge, creditworthy population that needs an alternative path to homeownership. AOMR is positioned perfectly here, with bank statement loans making up 33.7% of the Non-QM volume in July 2025.

This borrower base is strong, too. The average FICO score for a Non-QM borrower is typically high, with some peer lenders reporting averages of 730+. This isn't the subprime market of the past; it's a prime borrower with non-traditional documentation.

Demographic shift: Millennial and Gen Z buyers entering the market with non-traditional credit profiles.

The next generation of homebuyers-Millennials and Gen Z-are finally entering the market, but they often don't fit the old W-2 mold. Many have non-traditional credit histories due to student debt, a lack of established credit history, or relying on alternative data for scoring.

This cohort is a key driver of Non-QM demand. While Millennials and Gen Z accounted for roughly 40% of the mortgage market in 2024, many still face barriers. For instance, 51% of renters cite a low credit score as a barrier to homeownership. Non-QM products, which can look at bank statements or asset depletion instead of just FICO scores, provide the necessary flexibility.

• Gen Z and Millennial share of the mortgage market is expected to shift to 52% by 2028.
• Nearly a quarter (23%) of renters report being denied a mortgage due to their credit score.
• Non-QM programs offer minimum credit scores as low as 660 in some cases, opening the door for this segment.

Increased public scrutiny on affordable housing and fair lending practices.

The industry is under the microscope, and that scrutiny is a permanent fixture. Regulators like the Department of Justice (DOJ) and the Consumer Financial Protection Bureau (CFPB) have been active, kicking off 2025 with significant fair lending actions, including complaints alleging redlining. This puts pressure on all lenders to demonstrate a commitment to fair access to credit.

For AOMR, this is a double-edged sword. On one hand, the Non-QM market's entire premise is to serve creditworthy borrowers whom traditional lenders have overlooked-a positive social impact. On the other hand, the complexity of Non-QM underwriting means the company must be defintely vigilant about its compliance with the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHA).

Here's what AOMR must manage:

The concrete next step is for the Compliance team to draft a memo detailing how the Bank Statement and Investor Cash Flow loan programs are reviewed to ensure fair lending across all protected classes, using Q3 2025 HMDA data by the end of the month.

Angel Oak Mortgage, Inc. (AOMR) - PESTLE Analysis: Technological factors

You're operating in a Non-QM (Non-Qualified Mortgage) space where speed and efficiency are the new currency, so Angel Oak Mortgage, Inc. (AOMR)'s ability to integrate technology is critical for maintaining its competitive edge and strong margins. The near-term opportunity lies in AI-driven automation to cut costs, but the long-term risk comes from decentralized finance (DeFi) models that could disrupt the securitization process itself.

Increased use of Artificial Intelligence (AI) in automating loan underwriting, boosting speed.

The shift from manual review to Artificial Intelligence (AI) in underwriting is moving from theory to necessity in 2025. For a company like Angel Oak Mortgage, Inc. (AOMR), which deals with complex, non-standard borrower profiles, AI-driven risk assessment is key to scaling without sacrificing quality. AI models can analyze documents like bank statements and tax returns in seconds, turning what used to be a multi-day review into a near-instant pre-approval.

This speed is vital for loan officers and borrowers in a fast-moving housing market. Honestly, if your competitors are offering near-instant pre-approvals, you can't afford to be stuck in a paper-based process. Fannie Mae projects that the percentage of lenders using AI will rise to 55% by the end of 2025, showing just how mainstream this technology has become.

Digitalization of loan origination reduces AOMR's operational cost per loan by an estimated 10%.

While the industry sees massive gains from digitalization-with some platforms reporting up to a 96% reduction in loan application processing time-Angel Oak Mortgage, Inc. (AOMR) is already seeing the impact on its bottom line through broader cost-efficiency initiatives. Here's the quick math: the company's year-to-date operating expenses (excluding securitization costs and stock compensation) for 2025 were 19% lower than in 2024.

This substantial reduction is directly tied to streamlining processes like loan origination (LOS) and document management, which digitalization makes possible. The focus isn't just on the loan officer, but on integrating systems across the entire loan lifecycle, from application to servicing, which reduces errors and the need for manual intervention.

Cybersecurity risks are rising due to increased reliance on third-party data aggregators.

The move to digital means relying on third-party vendors for everything from cloud storage to credit data, and that's a major vulnerability. Angel Oak Mortgage, Inc. (AOMR) is externally managed and relies on a dedicated third-party managed information technology service provider for its cybersecurity program.

This reliance on external partners introduces supply chain risk. Verizon reported that nearly 30% of data breaches in 2025 involved third-party suppliers. Plus, when a breach originates from a third-party system, the average cost to remediate it is now nearly $4.8 million. You have to defintely factor the cost of robust vendor risk management into your technology budget.

Key Cybersecurity Risks in 2025 for Mortgage Lenders:

• Ransomware attacks freezing critical loan pipelines.
• AI-enhanced phishing scams targeting employee credentials.
• Supply chain compromises through less-protected vendors.

Blockchain technology remains nascent but poses a long-term threat to traditional securitization.

Blockchain technology (Distributed Ledger Technology or DLT) is not just a threat; it's a tool Angel Oak Mortgage, Inc. (AOMR) is already using. The firm's affiliate, Angel Oak Capital Advisors, has leveraged a blockchain-powered data management platform (Brightvine) for a non-agency Residential Mortgage-Backed Security (RMBS) securitization, AOMT 2023-7, to improve data quality and investor transparency.

But the long-term threat is still real. The concept of tokenized mortgage-backed securities (MBS) and real estate assets allows for fractional ownership and automated, low-cost deal closing by cutting out many traditional intermediaries. The global tokenized asset market, which was estimated at $10-$15 billion as of June 2025, is predicted by some analysts to grow to $3 trillion by 2030. This growth could eventually bypass the complex, expensive, and centralized securitization model that is core to AOMR's business strategy.

Next Step: Management: Initiate a quarterly review of third-party vendor SOC 2 reports and cyber-risk policies by month-end.

Angel Oak Mortgage, Inc. (AOMR) - PESTLE Analysis: Legal factors

The legal environment in 2025 presents Angel Oak Mortgage, Inc. (AOMR) with a mix of structural tax certainty and rising operational complexity, particularly from state-level consumer protection laws and the inherent risk in Non-Qualified Mortgage (Non-QM) securitization. You need to focus your risk management efforts on state-specific compliance, especially in high-growth markets where new usury laws are taking effect.

State-level usury laws and foreclosure moratoriums create localized operational risk.

While the large-scale, federal COVID-19 foreclosure moratoriums are a thing of the past, the legal landscape is now fragmented, creating localized risk. Foreclosure activity is trending higher, with 93,953 properties having foreclosure filings in Q1 2025, an 11% increase from the previous quarter. This rise, coupled with targeted disaster-related moratoriums, means AOMR must manage default timelines on a state-by-state basis.

For instance, the Federal Housing Administration (FHA) imposed moratoriums for FHA-insured mortgages in areas affected by natural disasters, such as those related to Hurricanes Helene and Milton, which runs through July 10, 2025. Plus, usury laws (which cap the maximum legal interest rate on loans) are getting more aggressive at the state level. Virginia's Senate Bill 1252, passed in March 2025, expands anti-evasion provisions to strictly uphold its 12% annual interest rate cap, directly affecting how Non-QM loans are priced and structured in that state. You have to be defintely on top of these local nuances.

Here's the quick math on the localized risk:

Continued litigation risk related to repurchase obligations on securitized Non-QM loans.

The core of AOMR's business-originating and securitizing Non-QM loans (mortgages that don't meet the strict Qualified Mortgage (QM) standards)-carries an unavoidable litigation risk: the repurchase obligation. This is your promise to buy back a loan from a securitization trust if it breaches a representation or warranty, typically due to early payment default or fraud.

While the company's credit management appears sound, with portfolio-wide 90-plus-day delinquencies declining to 2.35% as of Q2 2025, the risk is not zero. The latest securitization, AOMT 2025-10, has a collateral pool that credit rating agencies, like S&P Global Ratings, characterize as weaker than an archetypal prime pool. This is normal for Non-QM, but it means the credit enhancement is critical. The 'AAA' loss coverage requirement for this pool is a substantial 17.95%, which is the amount of credit support needed to protect senior bondholders.

This high coverage requirement shows the market is still pricing in significant underlying risk. Plus, AOMR is actively managing its financing lines, including a new $200.0 million repurchase facility executed in October 2025. This facility is a financing tool, but it also formalizes the repurchase risk with the counterparty.

Tax law changes affecting REIT structure and dividend distribution requirements.

The biggest legal certainty for AOMR in 2025 comes from the tax side. The passage of the One Big Beautiful Bill Act (OBBBA) in July 2025 provided long-term stability for Real Estate Investment Trusts (REITs) and their investors.

The key takeaway is that the favorable tax treatment for shareholders is now permanent.

• Made the Section 199A deduction permanent, which was set to expire at the end of 2025.
• Preserves the maximum effective top federal tax rate on ordinary REIT dividends for individual shareholders at 29.6%.
• Increased the limit for assets held in a Taxable REIT Subsidiary (TRS) from 20% to 25% of total assets, effective for the 2026 tax year.

This increased TRS limit gives AOMR more flexibility to hold assets that generate non-qualifying REIT income, which is helpful for managing the Non-QM business. Also, in October 2025, the IRS issued proposed regulations that would simplify the 'domestically controlled' status for REITs by revoking the 'look-through rule' for foreign-controlled domestic corporations. This is a positive move that helps maintain the tax-exempt status for non-U.S. investors on the sale of AOMR shares.

Compliance costs rising due to stricter data privacy regulations (e.g., CCPA expansion).

The cost of doing business is rising due to the expansion of data privacy laws, particularly the California Consumer Privacy Act (CCPA) and its enforcement by the California Privacy Protection Agency (CPPA). These rules are not just for tech companies; they hit mortgage lenders hard because of the sensitive personal financial information they handle.

New regulations, finalized in September 2025, mandate detailed risk assessments and cybersecurity audits for businesses meeting specific thresholds. This means a significant, fixed compliance cost. For the average bank, the estimated CCPA compliance cost is around $880,000. Lenders, including AOMR, will pass these costs to consumers; research suggests this makes the average prime mortgage costlier by about $4,350 per loan. This isn't just a legal headache; it's a direct operational expense that impacts profitability and loan pricing.

Angel Oak Mortgage, Inc. (AOMR) - PESTLE Analysis: Environmental factors

Increasing investor demand for Environmental, Social, and Governance (ESG) compliant mortgage-backed securities (MBS).

The institutional appetite for assets screened against environmental, social, and governance (ESG) criteria is no longer a niche trend; it's a core driver of capital allocation, even in the non-Qualified Mortgage (Non-QM) space where Angel Oak Mortgage, Inc. (AOMR) operates. While AOMR's primary focus is credit risk, the secondary market for its securitizations-the Non-Agency Residential Mortgage-Backed Securities (RMBS)-is increasingly scrutinized by ESG-mandated funds.

The growth trajectory of this market segment is clear: S&P Global predicts that Non-QM loans will make up nearly 30% of all non-agency mortgage-backed securities in 2025. This means the pools of loans AOMR sells must eventually meet the ESG standards of major buyers like BlackRock or Vanguard, who are under pressure to show their portfolios are resilient to climate risk and socially responsible. This is an indirect but powerful market force.

• Non-QM MBS issuance volume is strong in 2025.
• Green MBS issuance is increasing in the USD asset-backed market.
• Investor demand stabilizes Non-QM rates.

Climate-related risks (e.g., floods, wildfires) impacting collateral value in high-risk zones.

Climate risk is a direct financial risk for AOMR because their collateral is residential real estate. If a home is destroyed or devalued by a natural disaster, the loan's recovery value drops, increasing the risk of loss on the mortgage-backed security (MBS) bonds AOMR retains or sells. A February 2025 study estimates that climate-related risks could reduce US real estate values by $1.47 trillion over the next 30 years. That's a massive headwind for the entire housing market.

The risk is concentrated in specific areas, which drives up insurance costs-a key factor in borrower default risk, especially for Non-QM borrowers with potentially tighter cash flow. For instance, major metro areas are seeing dramatic insurance premium spikes, with Miami facing a projected increase of 322%, Jacksonville at 226%, and Tampa at 213%. This rising cost of homeownership in high-risk zones directly threatens the performance of AOMR's underlying loans.

Here is a snapshot of the collateral value at major risk, according to a March 2025 Zillow analysis:

Disclosure requirements for physical climate risk on real estate assets are tightening.

As a publicly traded Real Estate Investment Trust (REIT), AOMR is subject to the new U.S. Securities and Exchange Commission (SEC) Climate Disclosure Rules. The largest companies must start complying in 2025, which means your annual reports and 10-Ks will require new, specific disclosures.

The SEC rules mandate that you disclose the material expenditures incurred and estimated impacts on financial estimates resulting from 'physical' and 'transition' risks. For AOMR, this means quantifying the financial impact of severe weather events on your mortgage portfolio. You can't just talk about climate change; you have to put a number on the risk to your assets and financial condition. This level of transparency will allow investors to directly compare AOMR's climate risk exposure against peers.

Limited direct impact, but indirect pressure to fund energy-efficient home loans.

AOMR does not directly originate loans, but the pressure to fund energy-efficient (green) home loans is building up the value chain. The US home loan market is already seeing a growing emphasis on sustainable and green mortgages. More importantly, the Government-Sponsored Enterprises (GSEs) like Fannie Mae have a 2025 mission that explicitly includes promoting efforts that further 'energy efficiency and resilience.'

While AOMR focuses on Non-QM, the broader market shift means that loans on energy-efficient homes will likely become a more liquid and desirable asset class for securitization. Your origination partners will eventually face pressure to offer these products, and AOMR will need to be ready to purchase them to maintain a competitive edge for future securitization deals.

Here's the quick math: AOMR's current portfolio weighted average coupon is approximately 8.7%, and the securitization funding cost is around 4.2%, giving a net spread of 4.5%. If climate-related losses or stricter underwriting due to new SEC disclosures force your cost of funds to rise by just 50 basis points (0.50%), your net spread shrinks to 4.0%. That's a direct hit to your net interest margin (NIM) from an environmental factor.

Next step: Finance: Draft a sensitivity analysis showing NIM impact for every 25 basis point rate hike and for a 25 basis point increase in expected credit losses (ECL) on loans in FEMA-designated high-risk zones by Friday.