The principal amount paid by Issuer Trust for the participation
certificates under the PC Repurchase Agreement is based upon a
percentage of the market value of the underlying MSRs
(inclusive of the ESS).Upon PLS repurchase of the participation
certificates, PLS is required to repay Issuer Trust the
principal amount relating thereto plus accrued interest (at a
rate reflective of the current market and consistent with the
weighted average note rate of the VFN and any outstanding Term
Notes) to the date of such repurchase.

The PC Repurchase Agreement contains margin call provisions
that provide the Issuer Trust with certain rights in the event
of a decline in the market value of the MSRs and ESS. Under
these provisions, the Issuer Trust may require PLS to
(i)transfer cash to the Issuer Trust, or (ii)apply additional
note payments to the VFN in an amount sufficient to eliminate
any margin deficit resulting from such a decline.

The PC Repurchase Agreement requires PLS to make certain
representations and warranties and to maintain various
financial and other covenants, which include maintaining (i)a
minimum adjusted tangible net worth of $200 million, as of the
last day of each calendar month, (ii)a minimum of unrestricted
cash and cash equivalents at all times greater than or equal to
$20 million, and (iii)a maximum ratio of total liabilities to
adjusted tangible net worth of 10:1.

In addition, the PC Repurchase Agreement contains events of
default (subject to certain materiality thresholds and grace
periods), including payment defaults, breaches of covenants
and/or certain representations and warranties, cross-defaults,
guarantor defaults, bankruptcy or insolvency proceedings and
other events of default customary for this type of transaction.
The remedies for such events of default include the
acceleration of the principal amount outstanding under the PC
Repurchase Agreement and the liquidation of the MSRs and ESS by
the Indenture Trustee on behalf of and with the written consent
of the majority noteholders of any series of notes issued by
the Issuer Trust.

The obligations of PLS under the PC Repurchase Agreement are
guaranteed in full by PNMAC (the PNMAC Guaranty). The Company
is a holding corporation and its primary asset is an equity
interest in PNMAC.

The PMH Repurchase Agreement

PennyMac Holdings, LLC, a wholly-owned subsidiary of PennyMac
Mortgage Investment Trust (NYSE: PMT) (PMT), initially acquires
certain of the participation certificates backed by ESS to the
terms of a second amended and restated master spread
acquisition and MSR servicing agreement, by and between PLS and
PMH and dated as of December19, 2016 (the Spread Acquisition
Agreement). PMH then pledges the acquired ESS to PLS under a
master repurchase agreement, dated as of December19, 2016, by
and between PLS and PMH (the PMH Repurchase Agreement), and
PLS, in turn, re-pledges such participation certificates to
Issuer Trust under the PC Repurchase Agreement. The PMH
Repurchase Agreement was approved by a committee of the
Companys board of directors comprised solely of independent
members thereof.

The principal amount paid by PLS for the participation
certificates under the PMH Repurchase Agreement is based upon a
percentage of the market value of the underlying ESS.Upon PMHs
repurchase of the participation certificates, PMH is required
to repay PLS the principal amount relating thereto plus accrued
interest (at a rate reflective of the current market and
consistent with the weighted average note rate of the VFN and
any outstanding Term Notes) to the date of such repurchase.

The PMH Repurchase Agreement contains margin call provisions
that provide PLS with certain rights in the event of a decline
in the market value of the purchased ESS. Under these
provisions, PLS may require PMH to transfer cash to PLS or
include additional mortgage loans in the purchased ESS in an
amount sufficient to eliminate any margin deficit resulting
from such a decline.

The PMH Repurchase Agreement requires PMH to make certain
representations and warranties and to maintain various
financial and other covenants, which include maintaining (i)a
minimum adjusted tangible net worth of $200 million, as of the
last day of each calendar month, (ii)a minimum of unrestricted
cash and cash equivalents at all times greater than or equal to
$10 million, and (iii)a maximum ratio of total liabilities to
adjusted tangible net worth of 10:1.

In addition, the PMH Repurchase Agreement contains events of
default (subject to certain materiality thresholds and grace
periods), including payment defaults, breaches of covenants
and/or certain representations and warranties,

guarantor defaults, bankruptcy or insolvency proceedings and
other events of default customary for this type of transaction.
The remedies for such events of default include the
acceleration of the principal amount outstanding under the PMH
Repurchase Agreement and the enforcement by PLS of other
remedies available.

to the PMH Repurchase Agreement, PMH grants to PLS a security
interest in all of its right, title and interest in, to and
under the participation certificates and underlying ESS subject
to transactions thereunder. The obligations of PMH under the
PMH Repurchase Agreement are guaranteed in full by PMT (the PMT
Guaranty). to the PC Repurchase Agreement, PLS assigns all of
its rights in the PMT Guaranty to Issuer Trust.

In connection with the execution of the PMH Repurchase
Agreement, PLS and PMH terminated that certain Loan and
Security Agreement (the LSA), dated as of April30, 2015, by and
between the parties. PMH had previously used the LSA for the
purpose of financing through PLS the ESS that is now being
financed under the PMH Repurchase Agreement.

The Spread Acquisition Agreement

On December19, 2016, the Company, through PLS, entered into the
Spread Acquisition Agreement with PMH. The Spread Acquisition
Agreement was approved by a committee of the Companys board of
directors comprised solely of independent members thereof.

to the Spread Acquisition Agreement, PLS may sell to PMH, from
time to time, participation certificates representing
beneficial ownership in ESS arising from MSRs acquired by PLS,
in which case PLS generally would be required to service or
subservice the related mortgage loans for Ginnie Mae.

To the extent PLS refinances any of the mortgage loans relating
to the ESS acquired by PMH, the Spread Acquisition Agreement
contains recapture provisions requiring that PLS transfer to
PMH, at no cost, the ESS relating to a certain percentage of
the unpaid principal balance of the newly originated mortgage
loans. In any month where the transferred ESS relating to such
newly originated mortgage loans is not equivalent to at least
90% of the product of the excess servicing fee rate and the
unpaid principal balance of the refinanced mortgage loans, the
Spread Acquisition Agreement also contains provisions that
require PLS to transfer additional ESS or cash in the amount of
such shortfall. Similarly, in any month where the transferred
ESS relating to modified Ginnie Mae mortgage loans is not
equivalent to at least 90% of the product of the excess
servicing fee rate and the unpaid principal balance of the
modified mortgage loans, the Spread Acquisition Agreement
contains provisions that require PLS to transfer additional ESS
or cash in the amount of such shortfall. To the extent the fair
market value of the aggregate ESS to be transferred for the
applicable month is less than $200,000, PLS may, at its option,
wire cash to PMH in an amount equal to such fair market value
in lieu of transferring such ESS.

The Spread Acquisition Agreement contains customary
representations, warranties and covenants between PLS and PMH,
as well as indemnities in favor of each party as a result of
losses caused by certain actions or inactions of the other
party. As a condition to its acquisition of the ESS, PMH is
also required to subordinate its rights to the ESS and its
rights under the Spread Acquisition Agreement to the rights and
interests of Ginnie Mae in the MSRs as a whole, inclusive of
the acquired ESS. The specific terms of each transaction under
the Spread Acquisition Agreement will be subject to the terms
of such agreement as modified and supplemented by the terms of
a confirmation executed in connection with such transaction.

The Spread Acquisition Agreement amends and restates that
certain amended and restated spread acquisition and MSR
servicing agreement originally entered into by and between PLS
and PMH on April30, 2015. The primary purpose of the amendment
and restatement was to facilitate the continued financing of
the ESS owned by PMH in connection with the parties
participation in the GNMA MSR Facility.

The Subordination, Acknowledgment and Pledge Agreement

On December19, 2016, PMH and Issuer Trust entered into a
subordination, acknowledgement and pledge agreement (the
Subordination Agreement), to which PMH pledged all of its
rights and interest in its ESS to Issuer Trust. Because PMH
has, and in the future may have, under the Spread Acquisition
Agreement an interest in a portion of the ESS pledged under the
PC Repurchase Agreement,Issuer Trust requires such interest to
be subject to Issuer Trusts continuing lien on such ESS, the
pledge and acknowledgement of which were effected to the
Subordination Agreement. Issuer Trusts lien on such ESS remains
subordinate to the rights and

interests of Ginnie Mae to the provisions of the Spread
Acquisition Agreement and the terms of the acknowledgement
agreement by and among Ginnie Mae, the Indenture Trustee and
PLS.

The Subordination Agreement contains representations,
warranties and covenants by PMH that are customary for
financing transactions. To the extent there exists an event of
default under the PC Repurchase Agreement or a trigger event
(as defined in the Subordination Agreement),Issuer Trust would
be entitled to liquidate any and all of the collateral securing
the PC Repurchase Agreement, including the ESS subject to the
PMH Repurchase Agreement.

The VFN Repurchase Agreement

On December19, 2016, PLS also entered into a master repurchase
agreement (the VFN Repurchase Agreement) with CSFB, as
administrative agent, and Credit Suisse AG, Cayman Islands
Branch (CSCIB), as purchaser, to which PLS sold the VFN to
CSCIB with an agreement to repurchase such VFN at a later date.
The VFN Repurchase Agreement has a term of one year and
provides for a maximum loan amount of $407 million, all of
which is committed.

The principal amount paid by CSCIB for the VFN is based upon a
percentage of the market value of such VFN. Upon PLS repurchase
of the VFN, PLS is required to repay CSCIB the principal amount
relating thereto plus accrued interest (at a rate reflective of
the current market) to the date of such repurchase.

Under the VFN Repurchase Agreement, in the event any such
transactions are deemed to be loans and not sales and
purchases, PLS granted to CSCIB a security interest in all of
its right, title and interest in, to and under the VFN and all
rights to reimbursement or payment of the VFN and/or amounts
due in respect thereof.

The VFN Repurchase Agreement contains margin call provisions
that provide CSCIB with certain rights in the event of a
decline in the market value of the purchased VFN. Under these
provisions, CSCIB may require PLS to transfer cash or
additional eligible assets into the Issuer Trust for the
benefit of CSCIB with an aggregate market value in an amount
sufficient to eliminate any margin deficit resulting from such
a decline.

The VFN Repurchase Agreement requires that PLS make certain
representations, warranties and covenants customary for this
type of transaction, including certain financial covenants
consistent with PLS other credit facilities. The VFN pledged
under the VFN Repurchase Agreement also serves as
cross-collateral for PLS obligations under separate repurchase
agreements with CSFB, CSCIB and their affiliates.

The VFN Repurchase Agreement contains events of default
(subject to certain materiality thresholds and grace periods),
including payment defaults, breaches of covenants and/or
certain representations and warranties, cross-defaults,
guarantor defaults, bankruptcy or insolvency proceedings and
other events of default customary for this type of transaction.
The remedies for such events of default include the
acceleration of the principal amount outstanding under the VFN
Repurchase Agreement and the liquidation by CSCIB of the VFN.

PLS pays CSFB a fee for the structuring of the GNMA MSR
Facility, as well as certain other administrative costs and
expenses in connection with CSFBs management and ongoing
administration of the GNMA MSR Facility.

The foregoing descriptions of the Base Indenture, the VFN
Supplemental Indenture, the PC Repurchase Agreement, the PNMAC
Guaranty, the PMH Repurchase Agreement, the PMT Guaranty, the
Spread Acquisition Agreement, the Subordination Agreement, and
the VFN Repurchase Agreement do not purport to be complete and
are qualified in their entirety by reference to the full text
of such agreements, which have been filed with this Current
Report on Form8-K as Exhibit10.1, Exhibit10.2, Exhibit10.3,
Exhibit10.4, Exhibit10.5, Exhibit10.6, Exhibit10.7, Exhibit10.8
and Exhibit10.9, respectively.

Repurchase Agreements with Credit Suisse First
Boston Mortgage Capital LLC

On December19, 2016, the Company, through PLS and PNMAC, also
entered into amendments (the DecemberAmendments) to the terms
of (i)its Second Amended and Restated Master Repurchase
Agreement, dated as of March31, 2016, by and among CSFB, acting
as administrative agent for its affiliated buyers
(collectively, the CS Buyers), PLS and PNMAC (the CS Repurchase
Agreement), to which PLS may sell to, and later repurchase
from, the CS Buyers certain newly originated or recently
acquired residential and small balance

multifamily mortgage loans; and (ii)its Master Repurchase
Agreement (Participation Certificates and Servicing) by and
among CSFB, the CS Buyers, PLS and PNMAC and dated as of
November10, 2015 (the MSR Repo), to which PLS may finance
certain of its mortgage servicing rights and related
participation interests and loan servicing advance receivables.

The original terms of the CS Repurchase Agreement and the MSR
Repo collectively provided for a maximum combined purchase
price of $907 million. Of this amount, $700 million was
committed and available for purchases under the CS Repurchase
Agreement to the extent not reduced by purchased amounts
outstanding under the MSR Repo, while $407 million was
committed and available for purchases under the MSR Repo to the
extent not reduced by purchased amounts outstanding under the
CS Repurchase Agreement. On October26, 2016, CSFB and the CS
Buyers previously agreed to increase the maximum combined
purchase price provided for under the CS Repurchase Agreement
and the MSR Repo from $907 million to $1.207 billion until
December23, 2016, at which time the maximum combined purchase
price would be reset to $907 million.

to the terms of the DecemberAmendments, CSFB and the CS Buyers
agreed to extend such increase in the maximum combined purchase
price to March30, 2017. The DecemberAmendments further provide
that, of the maximum combined purchase price, $700 million is
committed and available for purchases under the CS Repurchase
Agreement to the extent not reduced by purchased amounts
outstanding under the MSR Repo and the VFN Repurchase
Agreement, while $20 million is currently available for
purchases under the MSR Repo to the extent not reduced by
purchased amounts outstanding under the CS Repurchase Agreement
and the VFN Repurchase Agreement. The MSR Repo was further
amended to limit purchases thereunder to servicing advances
relating to Ginnie Mae early buyout loans.

The purpose of the DecemberAmendments was to reflect the
transition of MSR financing from the MSR Repo to the GNMA MSR
Facility. All other terms and conditions of the CS Repurchase
Agreement and the MSR Repo remain the same in all material
respects.

The foregoing descriptions of the CS Repurchase Agreement and
the MSR Repo do not purport to be complete and are qualified in
their entirety by reference to (i)the description of the CS
Repurchase Agreement in the Companys Current Report on Form8-K
as filed on April6, 2016, the full text of the CS Repurchase
Agreement attached thereto as Exhibit10.1 and any amendments
filed thereafter, and (ii)the description of the MSR Repo in
the Companys Current Report on Form8-K as filed on November16,
2015, the full text of the MSR Repo attached thereto as
Exhibit10.1 and any amendments filed thereafter.

Item 2.03Creation of a Direct Financial Obligation or
an Obligation under an Off-Balance Sheet Arrangement of a
Registrant.

The information set forth under Item 1.01 of this report
(excluding the information under the headings
GNMA MSR
Facility – The Spread Acquisition
Agreement and GNMA MSR
Facility The Subordination,
Acknowledgment and Pledge Agreement) is incorporated
herein by reference.

Item9.01Financial Statements and
Exhibits.

(d)Exhibits.