On April 21, 2020, Western Asset Mortgage Capital Corporation (the “Company”) entered into amendments with respect to certain of its loan warehouse facilities. These amendments mainly served to convert an existing residential whole loan facility into a term facility by removing any mark to market margin requirements, and to consolidate the Company’s Non-Qualified Mortgage loans, which were previously financed by three separate, unaffiliated counterparties, into a single facility.

The target advance rate under the amended and restated facility will be approximately 84% of the aggregate unpaid principal balance of the loans. The term of the facility is 18 months and all income generated by the loans during the term of the facility will be used to incrementally repay all obligations thereunder. Upon the securitization or sale by the Company of any whole loan subject to this amended and restated facility, the counterparty will be entitled to receive an exit fee of 0.50% as well as 30% of all realized and projected cash flow on any whole loans above such counterparty’s amortized basis.

The counterparty will have full recourse to the Company and any relevant subsidiary for obligations incurred under this amended and restated whole loan facility. Amendments were also effected to the existing residential whole loan facility and two other facilities held by the same counterparty group to provide such group with cross-collateralization and cross-default benefits across these three facilities. Upon any default, income from loans sold under any of these three facilities will be applied to repay obligations incurred under all three facilities, in an agreed-upon order of priority. The amendments also provide for a uniform set of financial covenants with respect to equity, leverage and liquidity requirements across the three facilities held by this counterparty group.

The Company’s aggregate borrowings from this counterparty group with respect to its residential whole loans are approximately $385 million and the market value of such loans is approximately $430 million.

About Western Asset Mortgage Capital Corporation (NYSE:WMC)

Western Asset Mortgage Capital Corporation is a real estate investment trust focused on investing in, financing and managing a portfolio of real estate related securities, whole-loans and other financial assets. The Company’s portfolio consists of Agency residential mortgage-backed securities (RMBS) (including To-Be-Announced securities (TBAs)), Non-Agency RMBS, Agency and Non-Agency commercial mortgage-backed securities (CMBS), and Whole-Loans. In addition, the Company also invests in other securities, including certain Agency obligations that are not technically mortgage-backed securities (MBS), as well as in certain Non-United States CMBS and asset-backed securities (ABS) investments secured by a portfolio private student loans. The Company is externally managed and advised by Western Asset Management Company.