10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013

Or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number: 001-34416

PennyMac Mortgage Investment Trust

(Exact name of registrant as specified in its charter)

Maryland	27-0186273
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
6101 Condor Drive, Moorpark, California	93021
(Address of principal executive offices)	(Zip Code)

(818) 224-7442

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

Class	Outstanding at May 7, 2013
Common Shares of Beneficial Interest, $0.01par value	58,990,717

PENNYMAC MORTGAGE INVESTMENT TRUST

FORM 10-Q

March 31, 2013

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION			1
Item 1.	Financial Statements (Unaudited):		1
	Consolidated Balance Sheets		1
	Consolidated Statements of Income		2
	Consolidated Statements of Changes in Shareholders’ Equity		3
	Consolidated Statements of Cash Flows		4
	Notes to Consolidated Financial Statements		5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		52
	Observations on Current Market Opportunities		53
	Results of Operations		54
	Net Investment Income		55
	Expenses		66
	Balance Sheet Analysis		69
	Asset Acquisitions		69
	Investment Portfolio Composition		70
	Cash Flows		75
	Liquidity and Capital Resources		76
	Off-Balance Sheet Arrangements and Aggregate Contractual Obligations		78
	Quantitative and Qualitative Disclosures About Market Risk		81
	Factors That May Affect Our Future Results		83
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		86
Item 4.	Controls and Procedures		86
PART II. OTHER INFORMATION			87
Item 1.	Legal Proceedings		87
Item 1A.	Risk Factors		87
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		87
Item 3.	Defaults Upon Senior Securities		87
Item 4.	Mine Safety Disclosures		87
Item 5.	Other Information		87
Item 6.	Exhibits		88

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except share data)

	March 31, 2013		December 31, 2012
ASSETS
Cash	$	19,376	$	33,756
Short-term investments		45,024		39,017
Mortgage loans acquired for sale at fair value		1,123,348		975,184
Mortgage loans at fair value		1,366,922		1,189,971
Real estate acquired in settlement of loans		84,486		88,078
Mortgage servicing rights at lower of amortized cost or fair value		179,136		125,430
Mortgage servicing rights at fair value		1,305		1,346
Principal and interest collections receivable		31,391		29,204
Interest receivable		3,136		3,029
Derivative assets		15,186		23,706
Servicing advances		37,695		32,191
Due from affiliates		5,991		4,829
Other assets		14,164		13,922
Total assets	$	2,927,160	$	2,559,663
LIABILITIES
Assets sold under agreements to repurchase:
Mortgage loans acquired for sale at fair value	$	1,035,486	$	894,906
Mortgage loans at fair value		576,018		353,805
Real estate acquired in settlement of loans		3,546		7,391
Derivative liabilities		2,079		967
Recourse liability		6,231		4,441
Accounts payable and accrued liabilities		22,259		42,402
Contingent underwriting fees payable		5,883		5,883
Payable to affiliates		14,748		12,216
Income taxes, net		38,481		36,316
Total liabilities		1,704,731		1,358,327
Commitments and contingencies
SHAREHOLDERS’ EQUITY
Common shares of beneficial interest—authorized, 500,000,000 common shares of $0.01 par value; issued and outstanding, 58,990,225 and 58,904,456 common shares, respectively		590		589
Additional paid-in capital		1,131,231		1,129,858
Retained earnings		90,608		70,889
Total shareholders’ equity		1,222,429		1,201,336
Total liabilities and shareholders’ equity	$	2,927,160	$	2,559,663

The accompanying notes are an integral part of these consolidated financial statements.

1

PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands, except per share data)

	Quarter ended March 31,
	2013			2012
Net Investment Income
Net gain on mortgage loans acquired for sale	$	29,279		$	13,370
Net gain on investments:
Mortgage-backed securities		—			357
Mortgage loans		63,980			11,131
		63,980			11,488
Interest income:
Short-term investments		31			9
Mortgage-backed securities		—			574
Mortgage loans		16,820			15,820
Other		24			22
		16,875			16,425
Loan origination fees		5,473			1,451
Results of real estate acquired in settlement of loans		(3,253	)		3,717
Net loan servicing fees		6,698			197
Other		—			1
Net investment income		119,052			46,649
Expenses
Loan fulfillment fees		28,136			6,124
Interest		11,236			6,674
Loan servicing		8,090			4,938
Management fees		6,492			1,804
Compensation		2,089			1,301
Professional services		2,384			442
Other		4,690			791
Total expenses		63,117			22,074
Income before provision for income taxes		55,935			24,575
Provision for income taxes		2,639			5,517
Net income	$	53,296		$	19,058
Earnings per share
Basic	$	0.90		$	0.65
Diluted	$	0.90		$	0.65
Weighted-average shares outstanding
Basic		58,927			29,076
Diluted		59,319			29,355
Dividends declared per share	$	0.57		$	0.55

The accompanying notes are an integral part of these consolidated financial statements.

2

PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

(In thousands, except share data)

	Number of shares		Par value		Additional paid-in capital			Retained earnings			Total
Balance at December 31, 2011		28,404,554	$	284	$	518,272		$	27,461		$	546,017
Net income		—		—		—			19,058			19,058
Share-based compensation		87,999		—		883			—			883
Cash dividends, $0.55 per share		—		—		—			(15,692	)		(15,692	)
Proceeds from offerings of common shares		2,531,310		26		46,581			—			46,607
Underwriting and offering costs		—		—		(917	)		—			(917	)
Balance at March 31, 2012		31,023,863	$	310	$	564,819		$	30,827		$	595,956
Balance at December 31, 2012		58,904,456		589		1,129,858			70,889			1,201,336
Net income		—		—		—			53,296			53,296
Share-based compensation		85,769		1		1,451			—			1,452
Cash dividends, $0.57 per share		—		—		—			(33,577	)		(33,577	)
Underwriting and offering costs		—		—		(78	)		—			(78	)
Balance at March 31, 2013		58,990,225	$	590	$	1,131,231		$	90,608		$	1,222,429

The accompanying notes are an integral part of these consolidated financial statements.

3

PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)

	Quarter ended March 31,
	2013			2012
Cash flows from operating activities:
Net income	$	53,296		$	19,058
Adjustments to reconcile net income to net cash (used) provided by operating activities:
Net gain on mortgage loans acquired for sale at fair value		(29,279	)		(13,370	)
Net gain on mortgage-backed securities at fair value		—			(357	)
Net gain on mortgage loans at fair value		(63,980	)		(11,131	)
Accrual of unearned discounts on mortgage-backed securities at fair value and capitalization of interest and advances on mortgage loans at fair value		(5,230	)		(8,935	)
Results of real estate acquired in settlement of loans		3,253			(3,717	)
Change in fair value, amortization and impairment of mortgage servicing rights		4,539			455
Amortization of credit facility commitment fees		1,143			559
Accrual of costs related to forward purchase agreements		—			1,954
Share-based compensation expense		1,452			883
Purchases of mortgage loans acquired for sale at fair value		(8,849,152	)		(1,858,147	)
Sales of mortgage loans acquired for sale at fair value		8,683,133			1,931,024
Increase in principal and interest collections receivable		(2,187	)		(6,286	)
Increase in principal and interest collections receivable under forward purchase agreements		—			(2,379	)
(Increase) decrease in interest receivable		(107	)		113
Increase in due from affiliates		(1,161	)		(5,117	)
Increase in other assets		(5,420	)		(6,491	)
(Decrease) increase in accounts payable and accrued liabilities		(20,142	)		579
Increase in payable to affiliates		2,532			5,181
Increase in income taxes, net		2,165			4,042
Net cash (used) provided by operating activities		(225,145	)		47,918
Cash flows from investing activities
Net increase in short-term investments		(6,007	)		(33,125	)
Repayment of United States Treasury security		—			50,000
Repayments of mortgage-backed securities at fair value		—			11,086
Purchases of mortgage loans at fair value		(200,473	)		—
Repayments of mortgage loans at fair value		61,421			34,781
Repayments of mortgage loans under forward purchase agreements at fair value		—			8,701
Sales of real estate acquired in settlement of loans		32,024			26,777
Sales of real estate acquired in settlement of loans under forward purchase agreements		—			6,787
Purchases of mortgage servicing rights		—			(29	)
(Increase) decrease in margin deposits and restricted cash		(1,493	)		4,540
Net cash (used) provided by investing activities		(114,528	)		109,518
Cash flows from financing activities
Sales of securities under agreements to repurchase		—			291,914
Repurchases of securities sold under agreements to repurchase		—			(354,339	)
Sale of mortgage loans acquired for sale at fair value under agreements to repurchase		8,224,637			1,721,043
Repurchases of mortgage loans acquired for sale at fair value sold under agreements to repurchase		(8,084,057	)		(1,789,901	)
Sale of mortgage loans at fair value under agreements to repurchase		286,321			7,137
Repurchases of mortgage loans at fair value sold under agreements to repurchase		(64,108	)		(26,549	)
Repayments of note payable secured by mortgage loans at fair value		—			(2,044	)
Repayments of borrowings under forward purchase agreements		—			(27,129	)
Sales of real estate acquired in settlement of loans financed under agreement to repurchase		—			3,797
Repurchases of real estate acquired in settlement of loans financed under agreement to repurchase		(3,845	)		(9,547	)
Proceeds from issuance of common shares		—			46,607
Payment of common share underwriting and offering costs		(78	)		(917	)
Payment of dividends		(33,577	)		(15,692	)
Net cash provided (used) by financing activities		325,293			(155,620	)
Net (decrease) increase in cash		(14,380	)		1,816
Cash at beginning of period		33,756			14,589
Cash at end of period	$	19,376		$	16,405

The accompanying notes are an integral part of these consolidated financial statements

4

PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1—Organization and Basis of Presentation

PennyMac Mortgage Investment Trust (“PMT” or the “Company”) was organized in Maryland on May 18, 2009, and commenced operations on August 4, 2009, when it completed its initial offerings of common shares of beneficial interest (“shares”). The Company is a specialty finance company, which, through its subsidiaries (all of which are wholly-owned), invests primarily in residential mortgage loans and mortgage-related assets.

The Company operates in two segments: correspondent lending and investment activities:

• The correspondent lending segment represents the Company’s operations aimed at serving as an intermediary between mortgage lenders and the capital markets by purchasing, pooling and reselling newly originated prime credit quality mortgage loans either directly or in the form of mortgage backed securities (“MBS”), using the services of PNMAC Capital Management, LLC (“PCM” or the “Manager”) and PennyMac Loan Services, LLC (“PLS” or the “Servicer”).

Most of the loans the Company has acquired in its correspondent lending activities have been eligible for sale to government-sponsored entities such as the Federal National Mortgage Association (“Fannie Mae”) and Federal Home Loan Mortgage Corporation (“Freddie Mac”) or government agencies such as the U.S. Department of Housing and Urban Development’s Government National Mortgage Association (“Ginnie Mae”). Fannie Mae, Freddie Mac and Ginnie Mae are each referred to as an “Agency” and, collectively, as the “Agencies”.

• The investment activities segment represents the Company’s investments in distressed mortgage loans, real estate acquired in settlement of loans (“REO”), MBS and mortgage servicing rights (“MSRs”). The Company seeks to maximize the value of the distressed mortgage loans that it acquires through proprietary loan modification programs, special servicing or other initiatives focused on keeping borrowers in their homes. Where this is not possible, such as in the case of many nonperforming mortgage loans, the Company seeks to effect property resolution in a timely, orderly and economically efficient manner, including through the use of resolution alternatives to foreclosure.

The Company is externally managed by PCM, an investment adviser registered with the Securities and Exchange Commission (the “SEC”) that specializes in and focuses on residential mortgage loans. Under the terms of a management agreement, PCM is paid a management fee with a base component and a performance incentive component. Determination of the amount of management fees is discussed in Note 3—Transactions with Related Parties.

The Company believes that it qualifies, and has elected to be taxed, as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), beginning with its taxable period ended on December 31, 2009. To maintain its tax status as a REIT, the Company plans to distribute at least 90% of its taxable income in the form of qualifying distributions to shareholders.

The Company conducts substantially all of its operations and makes substantially all of its investments through its subsidiary, PennyMac Operating Partnership, L.P. (the “Operating Partnership”), and the Operating Partnership’s subsidiaries. A subsidiary of the Company is the sole general partner, and the Company is the sole limited partner, of the Operating Partnership.

The accompanying consolidated financial statements have been prepared in compliance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the SEC’s instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, these financial statements and notes do not include all of the information required by U.S. GAAP for complete financial statements. The interim consolidated information should be read together with the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 (the “Annual Report”).

Preparation of financial statements in compliance with U.S. GAAP requires management to make estimates and assumptions 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. Actual results will likely differ from those estimates.

In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the periods ended March 31, 2013 are not necessarily indicative of the results for the year ending December 31, 2013.

5

Note 2—Concentration of Risks

As discussed in Note 1—Organization and Basis of Presentation above, PMT’s operations and investing activities are centered in real estate-related assets, a substantial portion of which are distressed at acquisition. Because of the Company’s investment strategy, many of the mortgage loans in its targeted asset class are purchased at discounts reflecting their distressed state or perceived higher risk of default, as well as a greater likelihood of collateral documentation deficiencies. Before acquiring loans or other assets, PCM validates key information provided by the sellers that is necessary to determine the value of the acquired asset. A substantial portion of the distressed loans purchased by the Company has been acquired from or through one or more subsidiaries of Citigroup, Inc. Because of the Company’s investment focus, PMT is exposed, to a greater extent than traditional mortgage investors, to the risks that borrowers may be in economic distress and/or may have become unemployed, bankrupt or otherwise unable or unwilling to make payments when due, and to the effects of fluctuations in the residential real estate market on the performance of its investments. Factors influencing these risks include, but are not limited to:

• changes in the overall economy and unemployment rates and residential real estate values in the markets where the properties securing the Company’s mortgage loans are located;

• PCM’s ability to identify and the Company’s loan servicers’ ability to execute optimal resolutions of problem mortgage loans;

• the accuracy of valuation information obtained during the Company’s due diligence activities;

• PCM’s ability to effectively model, and to develop appropriate model assumptions that properly anticipate, future outcomes;

• the level of government support for problem loan resolution and the effect of current and future proposed and enacted legislative and regulatory changes on the Company’s ability to effect cures or resolutions to distressed loans; and

• regulatory, judicial and legislative support of the foreclosure process, and the resulting effect on the Company’s ability to acquire and liquidate the real estate securing its portfolio of distressed mortgage loans in a timely manner or at all.

Due to these uncertainties, there can be no assurance that risk management activities identified and executed on PMT’s behalf will prevent significant losses arising from the Company’s investments in real estate-related assets.

On July 12, 2011 and December 20, 2011, the Company entered into forward purchase agreements with Citigroup Global Markets Realty Corp. (“CGM”), a subsidiary of Citigroup Inc., to purchase certain nonperforming residential mortgage loans and residential real property acquired in settlement of loans (collectively, the “CGM Assets”). The CGM Assets were acquired by CGM from unaffiliated money center banks. The commitment under the forward purchase agreement dated July 12, 2011 was settled during the quarter ended June 30, 2012. The commitment under the forward purchase agreement dated December 20, 2011 was settled during the quarter ended September 30, 2012. There were no similar forward purchase agreements entered into or outstanding as of March 31, 2013.

The CGM Assets were included on the Company’s consolidated balance sheet as Mortgage loans under forward purchase agreements at fair value and Real estate acquired in settlement of loans under forward purchase agreements and the related liabilities were included as Borrowings under forward purchase agreements. The CGM Assets were held by CGM within a separate trust entity deemed a variable interest entity. The Company’s interests in the CGM Assets were deemed to be contractually segregated from all other interests in the trust. When assets are contractually segregated, they are often referred to as a “silo.” For these transactions, the silo consisted of the CGM Assets and its related liability. The Company directed all of the activities that drive the economic results of the CGM Assets. All of the changes in the fair value and cash flows of the CGM Assets were attributable solely to the Company, and such cash flows could only be used to settle the related liability.

6

As a result of consolidating the silo, the Company’s consolidated statements of income and cash flows for the three months ended March 31, 2012 include the following amounts related to the silo:

	Quarter ended March 31, 2012
	(in thousands)
Net income:
Net gain on mortgage loans	$	6,700
Interest income on mortgage loans	$	502
Interest expense	$	1,515
Loan servicing fees	$	585
Cash flows:
Repayments of mortgage loans	$	8,701
Repayments of borrowings under forward purchase agreements	$	27,129

The Company has no other variable interests in the trust entity, or other exposure to the creditors of the trust entity which could expose the Company to loss.

The following table presents the fair value of mortgage loans (including forward purchase agreements) and REO purchased for its investment portfolio, including the CGM Assets:

	Quarter ended March 31,
	2013		2012
	(in thousands)
Investment portfolio purchases:
Loans	$	200,473	$	286
REO		—		53
	$	200,473	$	339
Investment portfolio purchases above through one or more subsidiaries of Citigroup, Inc.:
Loans	$	200,297	$	286
REO		—		53
	$	200,297	$	339

Note 3—Transactions with Related Parties

Management Fees

Before February 1, 2013, under a management agreement, PMT paid PCM a base management fee payable quarterly and in arrears. The base management fee was calculated at 1.5% per year of shareholders’ equity. The performance incentive fee was calculated at 20% per year of the amount by which “core earnings,” on a rolling four-quarter basis and before the incentive fee, exceeded an 8% “hurdle rate” as defined in the management agreement.

Effective February 1, 2013, the management agreement was amended to provide that:

• The base management fee is equal to the sum of (i) 1.5% per year of shareholders’ equity up to $2 billion, (ii) 1.375% per year of shareholders’ equity in excess of $2 billion and up to $5 billion, and (iii) 1.25% per year of shareholders’ equity in excess of $5 billion.

• The performance incentive fee is calculated at a defined annualized percentage of the amount by which “net income,” on a rolling four-quarter basis and before deducting the incentive fee, exceeds certain levels of return on “equity.”

The performance incentive fee is calculated quarterly and is equal to: (a) 10% of the amount by which net income for the quarter exceeds (i) an 8% return on equity plus the high watermark, up to (ii) a 12% return on equity; plus (b) 15% of the amount by which net income for the quarter exceeds (i) a 12% return on equity plus the high watermark, up to (ii) a 16% return on equity; plus (c) 20% of the amount by which net income for the quarter exceeds a 16% return on equity plus the high watermark.

For the purpose of determining the amount of the performance incentive fee:

“Net income” is defined as net income or loss computed in accordance with U.S. GAAP and certain other non-cash charges determined after discussions between the Company’s Manager and our independent trustees and approval by a majority of our independent trustees.

“Equity” is the weighted average of the issue price per common share of all of our public offerings, multiplied by the weighted average number of common shares outstanding (including restricted share units) in the four-quarter period.

The “high watermark” starts at zero and is adjusted quarterly. The quarterly adjustment reflects the amount by which the net income (stated as a percentage of return on equity) in that quarter exceeds or falls short of the lesser of 8% and the Fannie Mae MBS yield (the target yield) for such quarter. If the net income is lower than the target yield, the high watermark is increased by the difference. If the net income is higher than the target yield, the high watermark is reduced by the difference. Each time a performance incentive fee is earned, the high watermark returns to zero. As a result, the threshold amounts required for our Manager to earn a performance incentive fee are adjusted cumulatively based on the performance of our net income over (or under) the target yield, until the net income in excess of the target yield exceeds the then-current cumulative high watermark amount, and a performance incentive fee is earned.

The base management fee and the performance incentive fee are both payable quarterly in arrears. The performance incentive fee may be paid in cash or in our common shares (subject to a limit of no more than 50% paid in common shares), at the Company’s option.

7

Following is a summary of the base management and performance incentive fees recorded by the Company for the periods presented:

	Quarter ended March 31,
	2013		2012
	(in thousands)
Base management fee	$	4,364	$	1,804
Performance incentive fee		2,128		—
Total management fee incurred during the period	$	6,492	$	1,804

Mortgage Loan Servicing

The Company, through its Operating Partnership, has a loan servicing agreement with PLS. Before February 1, 2013, the servicing fee rates were based on the risk characteristics of the mortgage loans serviced and total servicing compensation was established at levels that management believed were competitive with those charged by other servicers or specialty servicers, as applicable.

• Servicing fee rates for nonperforming loans ranged between 50 and 100 basis points per year on the unpaid principal balance of the mortgage loans serviced on the Company’s behalf. PLS was also entitled to certain customary market-based fees and charges, including boarding and deboarding fees, liquidation and disposition fees, assumption, modification and origination fees and late charges, as well as interest on funds on deposit in custodial accounts. In the event PLS either effected a refinancing of a loan on the Company’s behalf and not through a third party lender and the resulting loan was readily saleable, or originated a loan to facilitate the disposition of real estate that the Company had acquired in settlement of a loan, PLS was entitled to receive from the Company market-based fees and compensation.

• For mortgage loans serviced by the Company as a result of acquisitions and sales with servicing rights retained in connection with the Company’s correspondent lending business, PLS was entitled to base subservicing fees and other customary market-based fees and charges as described above.

Effective February 1, 2013, the servicing agreement was amended to provide for servicing fees payable to PLS that changed from being based on a percentage of the loan’s unpaid principal balance to fixed per-loan monthly amounts based on the delinquency, bankruptcy and/or foreclosure status of the serviced loan or the REO. PLS also remains entitled to market-based fees and charges relating to boarding, deboarding, liquidation, disposition, assumption, modification and origination fees and late charges relating to loans it services for the Company.

The term of the servicing agreement, as amended, expires on February 1, 2017, subject to automatic renewal for additional 18-month periods, unless terminated earlier in accordance with the terms of the servicing agreement. The base servicing fees for distressed whole loans are calculated based on a monthly per-loan dollar amount, with the actual dollar amount for each loan based on the delinquency, bankruptcy and/or foreclosure status of such loan or the related underlying real estate. Presently, the base servicing fees for distressed whole loans range from $30 per month for current loans up to $125 per month for loans that are severely delinquent and in foreclosure.

The base servicing fees for loans subserviced by PLS on our behalf are also calculated through a monthly per-loan dollar amount, with the actual dollar amount for each loan based on whether the mortgage loan is a fixed-rate or adjustable-rate loan. The base servicing fees for loans subserviced on our behalf are $7.50 per month for fixed-rate loans and $8.50 per month for adjustable rate mortgage loans. To the extent that these loans become delinquent, PLS is entitled to an additional servicing fee per loan falling within a range of $10 to $75 per month and based on the delinquency, bankruptcy and foreclosure status of the loan or the related underlying real estate. PLS is also entitled to customary ancillary income and certain market-based fees and charges, including boarding and deboarding fees, liquidation and disposition fees, and assumption, modification and origination fees.

PLS is required to provide a range of services and activities significantly greater in scope than the services provided in connection with a customary servicing arrangement because the Company does not have any employees or infrastructure. For these services, PLS receives a supplemental fee of $25 per month for each distressed whole loan and $3.25 per month for each other subserviced loan. PLS is entitled to reimbursement for all customary, good faith reasonable and necessary out-of-pocket expenses incurred by the Servicer in connection with the performance of its servicing obligations.

PLS, on behalf of the Company, currently participates in U.S. Department of Housing and Urban Development’s Home Affordable Modification Program (“HAMP”) (and other similar mortgage loan modification programs), which establishes standard loan modification guidelines for “at risk” homeowners and provides incentive payments to certain participants, including loan servicers, for achieving modifications and successfully remaining in the program. The loan servicing agreement entitles PLS to retain any incentive payments made to it and to which it is entitled under HAMP; provided, however, that with respect to any such incentive payments paid to PLS under HAMP in connection with a mortgage loan modification for which the Company previously paid PLS a modification fee, PLS shall reimburse the Company an amount equal to the incentive payments.

8

Following is a summary of mortgage loan servicing fees payable to PLS for the periods presented:

	Quarter ended March 31,
	2013		2012
	(in thousands)
Loan servicing fees to PLS:
Base	$	4,361	$	3,028
Activity-based		3,729		1,910
	$	8,090	$	4,938

Correspondent Lending

Effective February 1, 2013, the mortgage banking and warehouse services agreement provides for a fulfillment fee paid to PLS based on the type of mortgage loan that the Company acquires. The fulfillment fee is equal to a percentage of the unpaid principal balance of mortgage loans purchased, with the addition of potential fee rate discounts applicable to the Company’s monthly purchase volume in excess of designated thresholds. PLS has also agreed to provide such services exclusively for the Company’s benefit, and PLS and its affiliates are prohibited from providing such services for any other third party. Before February 1, 2013, the Company paid PLS a fulfillment fee of 50 basis points of the unpaid principal balance of mortgage loans sold to non-affiliates where the Company is approved or licensed to sell to such non-affiliate.

PLS is entitled to a fulfillment fee based on the type of mortgage loan that the Company acquires and equal to a percentage of the unpaid principal balance of such mortgage loan. Presently, the applicable percentages are (i) 0.50% for conventional mortgage loans, (ii) 0.88% for loans underwritten in accordance with the Ginnie Mae Mortgage-Backed Securities Guide, (iii) 0.80% for Home Affordable Refinance Program (“HARP”) mortgage loans with a loan-to-value ratio of 105% or less, (iv) 1.20% for HARP mortgage loans with a loan-to-value ratio of greater than 105%, and (v) 0.50% for all other mortgage loans not contemplated above. At this time, the Company does not hold the Ginnie Mae approval required to issue securities guaranteed by Ginnie Mae MBS and act as a servicer. Accordingly, under the mortgage banking and warehouse services agreement, PLS currently purchases loans underwritten in accordance with the Ginnie Mae Mortgage-Backed Securities Guide “as is” and without recourse of any kind from us at our cost less an administrative fee plus accrued interest and a sourcing fee of three basis points.

In the event that the Company purchases mortgage loans with an aggregate unpaid principal balance in any month greater than $2.5 billion and less than $5 billion, PLS has agreed to discount the amount of such fulfillment fees by reimbursing PMT an amount equal to the product of (i) 0.025%, (ii) the amount of unpaid principal balance in excess of $2.5 billion and (iii) the percentage of the aggregate unpaid principal balance relating to mortgage loans for which PLS collected fulfillment fees in such month. In the event the Company purchases mortgage loans with an aggregate unpaid principal balance in any month greater than $5 billion, our PLS has agreed to discount the amount of such fulfillment fees by reimbursing us an amount equal to the product of (i) 0.05%, (ii) the amount of unpaid principal balance in excess of $5 billion and (iii) the percentage of the aggregate unpaid principal balance relating to mortgage loans for which PLS collected fulfillment fees in such month.

In consideration for the mortgage banking services provided by PLS with respect to the Company’s acquisition of mortgage loans under the Servicer’s early purchase program, PLS is entitled to fees accruing (i) at a rate equal to $25,000 per year, and (ii) in the amount of $50 for each mortgage loan the Company acquires. In consideration for the warehouse services provided by PLS with respect to mortgage loans that the Company finances for its warehouse lending clients, with respect to each facility, PLS is entitled to fees accruing (i) at a rate equal to $25,000 per year, and (ii) in the amount of $50 for each mortgage loan that the Company finances thereunder. Where we have entered into both an early purchase agreement and a warehouse lending agreement with the same client, our Servicer shall only be entitled to one $25,000 per annum fee and, with respect to any mortgage loan that becomes subject to both such agreements, only one $50 per loan fee.

The term of our mortgage banking and warehouse services agreement expires on February 1, 2017, subject to automatic renewal for additional 18-month periods, unless terminated earlier in accordance with the terms of the agreement.

Following is a summary of correspondent lending activity between the Company and PLS for the periods presented:

	Quarter ended March 31,
	2013		2012
	(in thousands)
Sourcing fees received	$	1,010	$	244
Fulfillment fees	$	28,136	$	6,124
Fair value of loans sold to PLS	$	3,548,397	$	838,120
Fair value of mortgage loans included in mortgage loans acquired for sale pending sale to PLS at period end	$	542,490	$	41,247

Investment Activities

Pursuant to the terms of a MSR recapture agreement, effective February 1, 2013, if PLS refinances through its retail lending business loans for which PMT previously held the MSRs, PLS is generally required to transfer and convey to one of the Company’s wholly-owned subsidiaries, PennyMac Corp. (“PMC”), without cost to PMC, the MSRs with respect to new mortgage loans originated in those refinancings (or, under certain circumstances, other mortgage loans) that have an aggregate unpaid principal balance that is not less than 30% of the aggregate unpaid principal balance of all the loans so originated. MSR recapture amounts are shown in Note 24—Net loan servicing fees. The MSR recapture agreement expires, unless terminated earlier in accordance with the agreement, on February 1, 2017, subject to automatic renewal for additional 18-month periods, unless terminated in accordance with the terms of the agreement.

Pursuant to the spread acquisition and MSR servicing agreement, PMT may acquire from PLS the rights to receive certain excess servicing spread arising from MSRs acquired by PLS, in which case PLS generally would be required to service or subservice the related mortgage loans. The terms of each transaction under the spread acquisition and MSR servicing 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.

9

Other Transactions

In connection with the initial public offering of PMT’s common shares (“IPO”) on August 4, 2009, the Company entered into an agreement with PCM pursuant to which the Company agreed to reimburse PCM for the $2.9 million payment that it made to the IPO underwriters (the “Conditional Reimbursement”) if the Company satisfied certain performance measures over a specified period of time. Effective February 1, 2013, the Company amended the terms of the reimbursement agreement to provide for the reimbursement of PCM of the Conditional Reimbursement if the Company is required to pay PCM performance incentive fees under the management agreement at a rate of $10 in reimbursement for every $100 of performance incentive fees earned. The reimbursement of the Conditional Reimbursement is subject to a maximum reimbursement in any particular 12-month period of $1.0 million and the maximum amount that may be reimbursed under the agreement is $2.9 million. The reimbursement agreement also provides for the payment to the IPO underwriters of the payment that the Company agreed to make to them at the time of the IPO if the Company satisfied certain performance measures over a specified period of time. As PCM earns performance incentive fees under the management agreement, the IPO underwriters will be paid at a rate of $20 of payments for every $100 of performance incentive fees earned by PCM. The payment to the underwriters is subject to a maximum reimbursement in any particular 12-month period of $2.0 million and the maximum amount that may be paid under the agreement is $5.9 million.

In the event the termination fee is payable to PCM under the management agreement and PCM and the underwriters have not received the full amount of the reimbursements and payments under the reimbursement agreement, such amount will be paid in full. The term of the reimbursement agreement expires on February 1, 2019.

The Company reimburses PCM and its affiliates for other expenses, including common overhead expenses incurred on its behalf by PCM and its affiliates, in accordance with the terms of its management agreement.

The foregoing expenses are summarized below:

	Quarter ended March 31,
	2013		2012
	(in thousands)
Reimbursement of expenses incurred on PMT’s behalf	$	1,358	$	2,410
Reimbursement of common overhead incurred by PCM and its affiliates		2,606		386
	$	3,964	$	2,796
Payments and settlements during the period (1)	$	33,362	$	5,485

(1) Payments and settlements include payments for correspondent lending activities itemized in the preceding table and netting settlements made pursuant to master netting agreements between the Company and PCM and its affiliates.

Amounts due to affiliates are summarized below as of the dates presented:

	March 31, 2013		December 31, 2012
	(in thousands)
Management fee	$	6,518	$	4,499
Contingent offering costs		2,941		2,941
Other expenses		5,289		4,776
	$	14,748	$	12,216

Amounts due from affiliates totaling $6.0 million and $4.8 million at March 31, 2013 and December 31, 2012, respectively, represent amounts receivable pursuant to loan sales to PLS and reimbursable expenses paid on the affiliates’ behalf by the Company.

PCM’s parent company, Private National Mortgage Acceptance Company, LLC, held 75,000 of the Company’s common shares of beneficial interest at both March 31, 2013 and December 31, 2012.

Note 4—Earnings Per Share

Basic earnings per share is determined using net income divided by the weighted-average common shares outstanding during the period. Diluted earnings per share is determined by dividing net income attributable to common shareholders by the weighted-average common shares outstanding, assuming all potentially dilutive common shares were issued. In periods in which the Company records a loss, potentially dilutive common shares are excluded from the diluted loss per share calculation, as their effect on loss per share is anti-dilutive.

The Company makes grants of restricted share units which entitle the recipients to receive dividend equivalents during the vesting period on a basis equivalent to the dividends paid to holders of common shares. For purposes of calculating earnings per share, unvested

10

share-based compensation awards containing non-forfeitable rights to receive dividends or dividend equivalents (collectively, “dividends”) are classified as “participating securities” and are included in the basic earnings per share calculation using the two-class method. Under the two-class method, all earnings (distributed and undistributed) are allocated to each class of common shares and participating securities, based on their respective rights to receive dividends.

The following table summarizes the basic and diluted earnings per share calculations:

	Quarter ended March 31,
	2013			2012
	(in thousands, except per share amounts)
Basic earnings per share:
Net income	$	53,296		$	19,058
Effect of participating securities—share-based compensation instruments		(518	)		(213	)
Net income attributable to common shareholders	$	52,778		$	18,845
Weighted-average shares outstanding		58,927			29,076
Basic earnings per share	$	0.90		$	0.65
Diluted earnings per share:
Net income	$	53,296		$	19,058
Weighted-average shares outstanding		58,927			29,076
Dilutive potential common shares—shares issuable under share-based compensation plan		392			279
Diluted weighted-average number of common shares outstanding		59,319			29,355
Diluted earnings per common share	$	0.90		$	0.65

Note 5—Loan Sales

The Company purchases and sells mortgage loans into the secondary mortgage market without recourse for credit losses. However the Company maintains continuing involvement with the loans in the form of servicing arrangements and the potential liability under representations and warranties it makes to purchasers and insurers of the loans.

The following table summarizes cash flows between the Company and transferees upon sale of loans in transactions whereby the Company maintains continuing involvement with the mortgage loan as well as unpaid principal balance information at period end:

	Quarter ended March 31,
	2013		2012
	(in thousands)
Cash flows:
Proceeds from sales	$	8,683,133	$	1,931,024
Service fees received	$	16,965	$	701
Period-end information:
Unpaid principal balance of loans outstanding at period-end	$	16,642,130	$	1,532,615
Delinquencies:
30-89 days	$	38,272	$	1,487
90 or more days or in foreclosure or bankruptcy	$	4,257	$	—

Note 6—Netting of Financial Instruments

The Company uses derivative instruments to manage exposure to interest rate risk created by the commitments it makes to correspondent lenders to purchase loans at specified interest rates, also called interest rate lock commitments (“IRLCs”), mortgage loans acquired for sale at fair value and MSRs. All derivative financial instruments are recorded on the balance sheet at fair value. The

11

Company has elected to net derivative asset and liability positions, and cash collateral obtained (or posted) by (or to) its counterparties when subject to an enforceable master netting arrangement. In the event of default, all counterparties are subject to legally enforceable master netting agreements. The derivatives that are not subject to a master netting arrangement are IRLCs. As of March 31, 2013 and December 31, 2012, the Company did not enter into reverse repurchase agreements or securities lending transactions that are required to be disclosed in the following table.

Offsetting of Derivative Assets

	March 31, 2013								December 31, 2012
	Gross amounts of recognized assets		Gross amounts offset in the balance sheet			Net amounts of assets presented in the balance sheet			Gross amounts of recognized assets		Gross amounts offset in the balance sheet			Net amounts of assets presented in the balance sheet
	(in thousands)
Derivatives:
MBS put options	$	326	$	—		$	326		$	977	$	—		$	977
MBS call options		1,052		—			1,052			—		—			—
Forward purchase contracts		6,460		—			6,460			2,617		—			2,617
Forward sale contracts		1,121		—			1,121			3,458		—			3,458
Netting		—		(4,825	)		(4,825	)		—		(2,825	)		(2,825	)
Total derivatives, subject to a master netting arrangement		8,959		(4,825	)		4,134			7,052		(2,825	)		4,227
Total derivatives, not subject to a master netting arrangement		11,052		—			11,052			19,479		—			19,479
Total	$	20,011	$	(4,825	)	$	15,186		$	26,531	$	(2,825	)	$	23,706

Derivative Assets, and Collateral Held by Counterparty

The following table summarizes by significant counterparty the amount of derivative asset positions after considering master netting arrangements and financial instruments or cash pledged that do not meet the accounting guidance qualifying for netting.

	March 31, 2013								December 31, 2012
			Gross amounts not offset in the balance sheet								Gross amounts not offset in the balance sheet
	Net amount of assets in the balance sheet		Financial instruments		Cash collateral received		Net amount		Net amount of assets in the balance sheet		Financial instruments		Cash collateral received		Net amount
	(in thousands)
Interest rate lock commitments	$	11,052	$	—	$	—	$	11,052	$	19,479	$	—	$	—	$	19,479
Barclays		1,400		—		—		1,400		15		—		—		15
Bank of America, N.A.		596		—		—		596		1,219		—		—		1,219
Cantor Fitzgerald LP		579		—		—		579		581		—		—		581
Citibank		456		—		—		456		1,009		—		—		1,009
Credit Suisse First Boston Mortgage Capital LLC		166		—		—		166		820		—		—		820
Morgan Stanley Bank, N.A.		104		—		—		104		316		—		—		316
Other		833		—		—		833		267		—		—		267
Total	$	15,186	$	—	$	—	$	15,186	$	23,706	$	—	$	—	$	23,706

12

Offsetting of Derivative Liabilities and Financial Liabilities

Following is a summary of net derivative liabilities and assets sold under agreements to repurchase. As discussed above, all derivatives with the exception of IRLCs are subject to master netting arrangements. Assets sold under agreements to repurchase do not qualify for offset.

	March 31, 2013								December 31, 2012
	Gross amounts of recognized liabilities		Gross amounts offset in the balance sheet			Net amounts of liabilities presented in the balance sheet			Gross amounts of recognized liabilities		Gross amounts offset in the balance sheet			Net amounts of liabilities presented in the balance sheet
	(in thousands)
Derivatives:
Forward purchase contracts	$	462	$	—		$	462		$	1,741	$	—		$	1,741
Forward sale contracts		8,560		—			8,560			4,520		—			4,520
Netting		—		(6,943	)		(6,943	)		—		(5,294	)		(5,294	)
Total derivatives, subject to a master netting arrangement		9,022		(6,943	)		2,079			6,261		(5,294	)		967
Total derivatives, not subject to a master netting arrangement		—		—			—			—		—			—
Total derivatives		9,022		(6,943	)		2,079			6,261		(5,294	)		967
Assets sold under agreements to repurchase:
Mortgage loans acquired for sale at fair value		1,035,486		—			1,035,486			894,906		—			894,906
Mortgage loans at fair value		576,018		—			576,018			353,805		—			353,805
Real estate acquired in settlement of loans		3,546		—			3,546			7,391		—			7,391
Total assets sold under agreements to repurchase		1,615,050		—			1,615,050			1,256,102		—			1,256,102
Total	$	1,624,072	$	(6,943	)	$	1,617,129		$	1,262,363	$	(5,294	)	$	1,257,069

13

Derivative Liabilities, Financial Liabilities, and Collateral Held by Counterparty

The following table summarizes by significant counterparty the amount of derivative liabilities and assets sold under agreements to repurchase after considering master netting arrangements and financial instruments or cash pledged that does not meet the accounting guidance qualifying for offset. All assets sold under agreements to repurchase have sufficient collateral or exceed the liability amount recorded on the consolidated balance sheet.

	March 31, 2013									December 31, 2012
	Net liabilities in the balance sheet		Gross amounts not offset in the balance sheet					Net amount		Net liabilities in the balance sheet		Gross amounts not offset in the balance sheet					Net amount
			Financial instruments			Cash collateral pledged						Financial instruments			Cash collateral pledged
	(in thousands)
Citibank	$	778,701	$	(777,825	)	$	—	$	876	$	474,625	$	(474,625	)	$	—	$	—
Bank of America, N.A.		259,858		(259,858	)		—		—		256,711		(256,711	)		—		—
Credit Suisse First Boston Mortgage Capital LLC		372,985		(372,663	)		—		322		243,525		(243,525	)		—		—
Morgan Stanley Bank, N.A.		133,413		(133,413	)		—		—		155,321		(155,321	)		—		—
Barclays		71,291		(71,291	)		—		—		79,253		(78,780	)		—		473
Wells Fargo Bank, N.A.		88		—			—		88		47,140		(47,140	)		—		—
Other		793		—			—		793		494		—			—		494
Total	$	1,617,129	$	(1,615,050	)	$	—	$	2,079	$	1,257,069	$	(1,256,102	)	$	—	$	967

Note 7—Fair Value

The Company’s consolidated financial statements include assets and liabilities that are measured based on their estimated fair values. The application of fair value estimates may be on a recurring or nonrecurring basis depending on the accounting principles applicable to the specific asset or liability and whether management has elected to carry the item at its estimated fair value as discussed in the following paragraphs.

Fair Value Accounting Elections

Management identified all of its non cash financial assets, including short-term investments and mortgage loans, as well as its MSRs relating to loans with initial interest rates of more than 4.5% that were acquired as a result of its correspondent lending operations, to be accounted for at estimated fair value so such changes in fair value will be reflected in income as they occur and more timely reflect the results of the Company’s performance.

For MSRs relating to mortgage loans with initial interest rates of less than or equal to 4.5% that were acquired as a result of the Company’s correspondent lending operations, management has concluded that such assets present different risks to the Company than MSRs relating to mortgage loans with initial interest rates of more than 4.5% and therefore require a different risk management approach. Management’s risk management efforts relating to these assets are aimed at moderating the effects of non-interest rate risks on fair value, such as the effect of changes in home prices on the assets’ values. Management has identified these assets for accounting at the lower of amortized cost or fair value.

The Company’s risk management efforts in connection with MSRs relating to mortgage loans with initial interest rates of more than 4.5% are generally aimed at moderating the effects of changes in interest rates on the assets’ values. During the period, a portion of the IRLCs, the fair value of which typically increases when prepayment speeds increase, were used to mitigate the effect of changes in fair value of the servicing assets, which typically decreases as prepayment speeds increase.

For loans sold under agreements to repurchase, REO financed through agreements to repurchase and borrowings under forward purchase agreements, management has determined that historical cost accounting is more appropriate because under this method debt issuance costs are amortized over the term of the debt, thereby matching the debt issuance cost to the periods benefiting from the usage of the debt.

14

Financial Statement Items Measured at Fair Value on a Recurring Basis

Following is a summary of financial statement items that are measured at estimated fair value on a recurring basis:

	March 31, 2013
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Short-term investments	$	45,024	$	—	$	—	$	45,024
Mortgage loans acquired for sale at fair value		—		1,123,348		—		1,123,348
Mortgage loans at fair value		—		—		1,366,922		1,366,922
Mortgage servicing rights at fair value		—		—		1,305		1,305
Derivative assets:
Interest rate lock commitments		—		—		11,052		11,052
MBS put options		—		326		—		326
MBS call options		—		1,052		—		1,052
Forward purchase contracts		—		6,460		—		6,460
Forward sales contracts		—		1,121		—		1,121
Total derivative assets before netting		—		8,959		11,052		20,011
Netting (1)		—		—		—		(4,825	)
Total derivative assets		—		8,959		11,052		15,186
	$	45,024	$	1,132,307	$	1,379,279	$	2,551,785
Liabilities:
Derivative liabilities:
Forward purchase contracts	$	—	$	462	$	—	$	462
Forward sales contracts		—		8,560		—		8,560
Total derivative liabilities before netting		—		9,022		—		9,022
Netting (1)		—		—		—		(6,943	)
Total derivative liabilities	$	—	$	9,022	$	—	$	2,079

(1) Derivatives are reported net of cash collateral received and paid and, to the extent that the criteria of the accounting guidance covering the offsetting of amounts related to certain contracts are met, positions with the same counterparty are netted as part of a legally enforceable master netting agreement.

15

	December 31, 2012
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Short-term investments	$	39,017	$	—	$	—	$	39,017
Mortgage loans acquired for sale at fair value		—		975,184		—		975,184
Mortgage loans at fair value		—		—		1,189,971		1,189,971
Mortgage servicing rights at fair value		—		—		1,346		1,346
Derivative assets:
Interest rate lock commitments		—		—		19,479		19,479
MBS put options		—		977		—		977
Forward purchase contracts		—		2,617		—		2,617
Forward sales contracts		—		3,458		—		3,458
Total derivative assets before netting (1)		—		7,052		19,479		26,531
Netting (1)		—		—		—		(2,825	)
Total derivative assets		—		7,052		19,479		23,706
	$	39,017	$	982,236	$	1,210,796	$	2,229,224
Liabilities:
Derivative liabilities:
Forward purchase contracts	$	—	$	1,741	$	—	$	1,741
Forward sales contracts		—		4,520		—		4,520
Total derivative liabilities before netting		—		6,261		—		6,261
Netting (1)		—		—		—		(5,294	)
Total derivative liabilities	$	—	$	6,261	$	—	$	967

(1) Derivatives are reported net of cash collateral received and paid and, to the extent that the criteria of the accounting guidance covering the offsetting of amounts related to certain contracts are met, positions with the same counterparty are netted as part of a legally enforceable master netting agreement.

16

The Company’s MBS, mortgage loans at fair value, mortgage loans under forward purchase agreements, MSRs, IRLCs and securities sold under agreements to repurchase were measured using Level 3 inputs on a recurring basis. The following is a summary of changes in those items:

	Quarter ended March 31, 2013
	Mortgage loans			Mortgage servicing rights			Interest rate lock commitments			Total
	(in thousands)
Assets:
Balance, December 31, 2012	$	1,189,971		$	1,346		$	19,479		$	1,210,796
Purchases		200,473			—			—			200,473
Repayments		(61,421	)		—			—			(61,421	)
Interest rate lock commitments issued, net		—			—			35,414			35,414
Capitalization of interest		5,230			—			—			5,230
Servicing received as proceeds from sales of mortgage loans		—			26			—			26
Changes in fair value included in income arising from:
Changes in instrument-specific credit risk		8,445			—			—			8,445
Other factors		55,535			(67	)		—			55,468
		63,980			(67	)		—			63,913
Transfers of mortgage loans to REO		(31,311	)		—			—			(31,311	)
Transfers of interest rate lock commitments to mortgage loans acquired for sale		—			—			(43,841	)		(43,841	)
Balance, March 31, 2013	$	1,366,922		$	1,305		$	11,052		$	1,379,279
Changes in fair value recognized during the period relating to assets still held at March 31, 2013	$	50,608		$	(67	)	$	11,052		$	61,593
Accumulated changes in fair value relating to assets still held at March 31, 2013	$	147,627					$	11,052

17

	Quarter ended March 31, 2012
	Mortgage- backed securities			Mortgage loans			Mortgage loans under forward purchase agreements			Mortgage servicing rights			Total
	(in thousands)
Assets:
Balance, December 31, 2011	$	72,813		$	696,266		$	129,310		$	749		$	899,138
Purchases		—			—			286			20			306
Repayments		(11,086	)		(26,187	)		(8,701	)		—			(45,974	)
Accrual of unearned discounts		335			—			—			—			335
Servicing received as proceeds from sales of mortgage loans		—			—			—			520			520
Changes in fair value included in income arising from:
Changes in instrument-specific credit risk		—			7,704			1,743			—			9,447
Other factors		363			(3,367	)		4,957			(101	)		1,852
		363			4,337			6,700			(101	)		11,299
Transfers of mortgage loans to REO		—			(24,201	)		—			—			(24,201	)
Transfer from mortgage loans acquired for sale		—			18			—			—			18
Transfers of mortgage loans under forward purchase agreements to REO under forward purchase agreements		—			—			(5,256	)		—			(5,256	)
Transfers of mortgage loans under forward purchase agreements to mortgage loans		—			17,309			(17,309	)		—			—
Balance, March 31, 2012	$	62,425		$	667,542		$	105,030		$	1,188		$	836,185
Changes in fair value recognized during the period relating to assets still held at March 31, 2012	$	363		$	26		$	4,494		$	(101	)	$	4,782
Accumulated changes in fair value relating to assets still held at March 31, 2012	$	(2,288	)	$	58,748		$	9,091
	Securities sold under agreements to repurchase
	(in thousands)
Liabilities:
Balance, December 31, 2011	$	115,493
Changes in fair value included in income		—
Sales		291,914
Repurchases		(354,339	)
Balance, March 31, 2012	$	53,068
Changes in fair value recognized during the period relating to liabilities still outstanding at March 31, 2012	$	—

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Following are the fair values and related principal amounts due upon maturity of mortgage loans accounted for under the fair value option (including mortgage loans acquired for sale, mortgage loans at fair value and mortgage loans under forward purchase agreements at fair value):

	March 31, 2013
	Fair value		Principal amount due upon maturity		Difference
	(in thousands)
Mortgage loans acquired for sale:
Current through 89 days delinquent	$	1,123,348	$	1,078,360	$	44,988
90 or more days delinquent (1)		—		—		—
		1,123,348		1,078,360		44,988
Other mortgage loans at fair value:
Current through 89 days delinquent		448,054		673,684		(225,630	)
90 or more days delinquent (1)		918,868		1,679,842		(760,974	)
		1,366,922		2,353,526		(986,604	)
	$	2,490,270	$	3,431,886	$	(941,616	)

	December 31, 2012
	Fair value		Principal amount due upon maturity		Difference
	(in thousands)
Mortgage loans acquired for sale:
Current through 89 days delinquent	$	975,184	$	931,787	$	43,397
90 or more days delinquent (1)		—		—		—
		975,184		931,787		43,397
Other mortgage loans at fair value:
Current through 89 days delinquent		404,016		640,722		(236,706	)
90 or more days delinquent (1)		785,955		1,483,311		(697,356	)
		1,189,971		2,124,033		(934,062	)
	$	2,165,155	$	3,055,820	$	(890,665	)

(1) Loans delinquent 90 or more days are placed on nonaccrual status and previously accrued interest is reversed.

19

Following are the changes in fair value included in current period income by consolidated statement of income line item for financial statement items accounted for under the fair value option:

	Quarter ended March 31, 2013
	Net gain  on mortgage loans acquired for sale		Net gain on investments		Interest income		Net loan servicing fees			Total
	(in thousands)
Assets:
Short-term investments	$	—	$	—	$	—	$	—		$	—
Mortgage loans acquired for sale at fair value		24,757		—		—		—			24,757
Mortgage loans at fair value		—		63,980		—		—			63,980
Mortgage servicing rights at fair value		—		—		—		(67	)		(67	)
	$	24,757	$	63,980	$	—	$	(67	)	$	88,670

	Quarter ended March 31, 2012
	Net gain  on mortgage loans acquired for sale		Net gain on investments		Interest income		Net loan servicing fees			Total
	(in thousands)
Assets:
Short-term investments	$	—	$	—	$	—	$	—		$	—
Mortgage-backed securities at fair value		—		357		335		—			692
Mortgage loans acquired for sale at fair value		13,370		—		—		—			13,370
Mortgage loans at fair value		—		4,431		—		—			4,431
Mortgage loans under forward purchase agreements at fair value		—		6,700		—		—			6,700
Mortgage servicing rights at fair value		—		—		—		(101	)		(101	)
	$	13,370	$	11,488	$	335	$	(101	)	$	25,092

20

Financial Statement Items Measured at Fair Value on a Nonrecurring Basis

Following is a summary of financial statement items that are measured at estimated fair value on a nonrecurring basis:

	March 31, 2013
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Real estate asset acquired in settlement of loans	$	—	$	—	$	42,254	$	42,254
Mortgage servicing assets at lower of amortized cost or fair value		—		—		111,935		111,935
	$	—	$	—	$	154,189	$	154,189

	December 31, 2012
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Real estate asset acquired in settlement of loans	$	—	$	—	$	56,156	$	56,156
Mortgage servicing rights at lower of amortized cost or fair value		—		—		86,215		86,215
	$	—	$	—	$	142,371	$	142,371

The following table summarizes the total gains (losses) on assets measured at estimated fair values on a nonrecurring basis:

	Quarter ended March 31,
	2013			2012
	(in thousands)
Real estate asset acquired in settlement of loans	$	(4,954	)	$	(2,782	)
Real estate asset acquired in settlement of loans under forward purchase agreements		—			(348	)
Mortgage servicing assets at lower of amortized cost or fair value		2,486			(106	)
	$	(2,468	)	$	(3,236	)

Real Estate Acquired in Settlement of Loans

The Company measures its investment in REO at the respective properties’ estimated fair values less cost to sell on a nonrecurring basis. The initial carrying value of the REO is established as the lesser of (a) either the fair value of the loan at the date of transfer, (b) the fair value of the real estate less estimated costs to sell as of the date of transfer or (c) the purchase price of the property. REO may be subsequently revalued due to the Company receiving greater access to the property, the property being held for an extended period or management receiving indications that the property’s value may not be supported by developing market conditions. Any subsequent change in fair value to a level that is less than or equal to the value at which the property was initially recorded is recognized in Results of real estate acquired in settlement of loans in the consolidated statements of income.

Mortgage Servicing Rights at Lower of Amortized Cost or Fair Value

The Company evaluates its MSRs at lower of amortized cost or fair value for impairment with reference to the assets’ fair value. For purposes of performing its MSR impairment evaluation, the Company stratifies its MSRs at lower of amortized cost or fair value based on the interest rates borne by the mortgage loans underlying the MSRs. Mortgage loans are grouped into note rate pools of 50 basis point ranges for fixed-rate mortgage loans with note rates between 3% and 4.5% and a single pool for note rates below 3%. MSRs relating to adjustable rate mortgage loans with initial interest rates of 4.5% or less are evaluated in a single pool. If the fair value of MSRs in any of the note rate pools is below the carrying value of the MSRs for that pool reduced by the existing valuation allowance, those MSRs are impaired.

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When MSRs are impaired, the impairment is recognized in current-period income and the carrying value of the MSRs is adjusted using a valuation allowance. If the value of the MSRs subsequently increases, the increase of value is recognized in current period earnings only to the extent of the valuation allowance for the respective stratum.

Management periodically reviews the various impairment strata to determine whether the value of the impaired MSRs in a given stratum is likely to recover. When management deems recovery of the value to be unlikely in the foreseeable future, a write-down of the cost of the MSRs for that stratum to its estimated fair value is charged to the valuation allowance.

Fair Value of Financial Instruments Carried at Amortized Cost

The Company’s cash balances as well as its borrowings secured by its inventory of mortgage loans acquired for sale and its investments in nonperforming loans and REO in the form of repurchase agreements are carried at amortized cost.

Management has concluded that the estimated fair values of Cash, Mortgage loans acquired for sale at fair value sold under agreements to repurchase, Mortgage loans at fair value sold under agreements to repurchase and Real estate acquired in settlement of loans financed under agreements to repurchase approximate the agreements’ carrying values due to the immediate realizability of cash at its carrying amount and to the borrowing agreements’ short terms and variable interest rates.

Cash is measured using Level 1 inputs. The Company’s borrowings carried at amortized cost do not have active markets or observable inputs and the fair value is measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation. The Company has classified these financial instruments as “Level 3” financial statement items as of March 31, 2013 due to the lack of current market activity and the Company’s reliance on unobservable inputs to estimate these instruments’ fair value.

Valuation Techniques and Assumptions

Most of the Company’s assets are carried at fair value with changes in fair value recognized in current period income. A substantial portion of those assets are “Level 3” financial statement items which require the use of significant unobservable inputs in the estimation of the assets’ values. Unobservable inputs reflect the Company’s own assumptions about the factors that market participants use in pricing an asset or liability, and are based on the best information available under the circumstances.

The Manager has assigned the responsibility for estimating the fair values of “Level 3” financial statement items to its Financial Analysis and Valuation group (the “FAV group”), which is responsible for valuing and monitoring the Company’s investment portfolios and maintenance of its valuation policies and procedures.

The FAV group reports to the Manager’s senior management valuation committee, which oversees and approves the valuations. The valuation committee includes the chief executive, financial, investment and credit officers of the Manager. The FAV group monitors the models used for valuation of the Company’s “Level 3” financial statement items, including the models’ performance versus actual results and reports those results to the valuation committee. The results developed in the FAV group’s monitoring activities are used to calibrate subsequent projections used for valuation.

The FAV group is responsible for reporting to the valuation committee on a monthly basis on the changes in the valuation of the portfolio, including major factors affecting the valuation and any changes in model methods and assumptions. To assess the reasonableness of its valuations, the FAV group presents an analysis of the effect on the valuation of each of the changes to the significant inputs to the models.

The following describes the valuation techniques and assumptions used in estimating the fair values of Level 2 and Level 3 financial statement items:

Mortgage Loans

Fair value of mortgage loans is estimated based on whether the mortgage loans are saleable into active markets:

• Mortgage loans that are saleable into active markets, comprised of the Company’s mortgage loans acquired for sale at fair value, are categorized as “Level 2” financial statement items and their fair values are estimated using their quoted market or contracted price or market price equivalent.

• Loans that are not saleable into active markets, comprised of the Company’s mortgage loans at fair value and mortgage loans under forward purchase agreements at fair value, are categorized as “Level 3” financial statement items, and their fair

22

values are estimated using a discounted cash flow approach. Inputs to the discounted cash flow model include current interest rates, loan amount, payment status and property type, and forecasts of future interest rates, home prices, prepayment speeds, default speeds and loss severities. The valuation process includes the computation by stratum of loan population and a review for reasonableness of various measures such as weighted average life, projected prepayment and default speeds, and projected default and loss percentages. The FAV group computes the effect on the valuation of changes in input variables such as interest rates, home prices, and delinquency status to assess the reasonableness of changes in the loan valuation. The results of the estimates of fair value of “Level 3” mortgage loans are reported to PCM’s valuation committee as part of its review and approval of monthly valuation results.

Changes in fair value attributable to changes in instrument-specific credit risk are measured by the change in the respective loan’s delinquency status at period-end from the later of the beginning of the period or acquisition date.

The significant unobservable inputs used in the fair value measurement of the Company’s mortgage loans at fair value and mortgage loans under forward purchase agreements at fair value are discount rate, home price projections, voluntary prepayment speeds and default speeds. Significant changes in any of those inputs in isolation could result in a significant change to the loans’ fair value measurement. Increases in home price projections are generally accompanied by an increase in voluntary prepayment speeds.

Following is a quantitative summary of key inputs used in the valuation of mortgage loans at fair value:

	Range (Weighted Average)
Key Inputs	March 31, 2013	December 31, 2012
Discount rate	8.3% – 20.5%	8.8% – 20.7%
	(12.5%)	(13.1%)
Twelve-month projected housing price index change	2.1% – 5.6%	0.4% – 1.5%
	(3.6%)	(1.1%)
Prepayment speed (1)	0.0% – 4.6%	0.4% – 4.4%
	(2.5%)	(2.2%)
Total prepayment speed (2)	0.6% – 41.2%	5.9% – 31.2%
	(21.0%)	(20.6%)

(1) Prepayment speed is measured using life voluntary Conditional Prepayment Rate (“CPR”).

(2) Total prepayment speed is measured using life total CPR.

Derivative Financial Instruments

The Company estimates the fair value of an IRLC based on quoted Agency MBS prices, its estimate of the fair value of the MSRs it expects to receive in the sale of the loans and the percentage of loans that the Company expects to ultimately fund as a percentage of the commitments it has made (the “pull-through rate”).

The significant unobservable inputs used in the fair value measurement of the Company’s IRLCs are the pull-through rate and the MSR component of the Company’s estimate of the value of the mortgage loans it has committed to purchase. Significant changes in the pull-through rate and the MSR component of the IRLCs, in isolation, could result in a significant change in fair value measurement. The financial impact of these assumptions are generally inversely correlated as increasing interest rates have a positive effect on the fair value of the MSR component of IRLC value, but increase the pull-through rate for loans that have decreased in market value in comparison to the agreed-upon purchase price.

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Following is a quantitative summary of key unobservable inputs used in the valuation of IRLCs:

	Range (Weighted average)
	March 31, 2013	December 31, 2012
Key Inputs	Range (Weighted average)
Pull-through rate	65.0% – 98.0%	44.2% – 98.0%
	(83.5%)	(80.6%)
MSR value expressed as:
Servicing fee multiple	0.9 – 5.2	1.8 – 4.8
	(4.5)	(4.5)
Percentage of unpaid principal balance	0.2% – 1.3%	0.4% – 1.2%
	(1.1%)	(1.1%)

The Company estimates the fair value of commitments to sell loans based on quoted MBS prices. The Company estimates the fair value of the interest rate options and futures it purchases and sells based on observed interest rate volatilities in the MBS market. The Company estimates the fair value of its MBS interest rate swaptions based on quoted market prices.

Real Estate Acquired in Settlement of Loans

REO is measured based on its fair value on a nonrecurring basis and is categorized as a “Level 3” financial statement item. Fair value of REO is determined by using a current estimate of value from a broker’s price opinion or a full appraisal, or the price given in a current contract of sale.

REO values are reviewed by PCM’s staff appraisers when the Company obtains multiple indications of value and there is a significant discrepancy between the values received. PCM’s staff appraisers will attempt to resolve the discrepancy between the indications of value. In circumstances where the appraisers are not able to generate adequate data to support a value conclusion, the staff appraisers will order an additional appraisal to resolve the property’s value.

Mortgage Servicing Rights

MSRs are categorized as “Level 3” financial statement items. The Company uses a discounted cash flow approach to estimate the fair value of MSRs. The key assumptions used in the estimation of the fair value of MSRs include prepayment and default rates of the underlying loans, the applicable discount rate, and cost to service loans. The key assumptions used in the Company’s discounted cash flow model are based on market factors which management believes are consistent with assumptions and data used by market participants valuing similar MSRs. The results of the estimates of fair value of MSRs are reported to PCM’s valuation committee as part of their review and approval of monthly valuation results.

The significant unobservable inputs used in the fair value measurement of the Company’s MSRs are pricing spreads, prepayment speeds (or life) and annual per-loan cost of servicing. Significant changes to any of those inputs in isolation could result in a significant change in the MSR fair value measurement. Changes in these key assumptions are not necessarily directly related.

MSRs are generally subject to loss in value when mortgage rates decrease. Decreasing mortgage rates normally encourage increased mortgage refinancing activity. Increased refinancing activity reduces the life of the loans underlying the MSRs, thereby reducing MSR value. Reductions in the value of MSRs affect income primarily through change in fair value and impairment charges. For MSRs backed by mortgage loans with historically low interest rates, factors other than interest rates (such as housing price changes) take on increasing influence on prepayment behavior of the underlying mortgage loans.

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Following are the key inputs used in determining the fair value of MSRs at the time of initial recognition:

	Quarter ended March 31,
	2013		2012
	Range (Weighted average)
Key Inputs	Amortized cost	Fair value	Amortized cost	Fair value
Pricing spread (1)	5.4% – 14.4%	7.5% – 14.4%	7.5% – 14.5%	7.5% – 14.5%
	(7.0%)	(8.5%)	(7.5%)	(8.3%)
Life (in years)	2.7 – 6.9	2.8 – 6.8	2.8 – 7.0	2.8 – 7.0
	(6.4)	(6.1)	(6.5)	(5.8)
Annual total prepayment speed (2)	8.5% – 22.7%	10.4% – 27.0%	6.7% – 27.4%	7.9% – 27.4%
	(9.1%)	(14.4%)	(7.9%)	(13.1%)
Annual per-loan cost of servicing	$68 – $140	$68 – $68	$68 – $140	$68 – $140
	($68)	($68)	($69)	($89)

(1) Pricing spread represents a margin that is applied to a reference interest rate’s forward rate curve to develop periodic discount rates. The Company applies a pricing spread to the United States Dollar LIBOR curve for purposes of discounting cash flows relating to MSRs acquired as proceeds from the sale of mortgage loans.

(2) Prepayment speed is measured using CPR.

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Following is a quantitative summary of key inputs used in the valuation of MSRs, and the effect on the estimated fair value from adverse changes in those assumptions (weighted averages are based upon unpaid principal balance or fair value where applicable):

	March 31, 2013						December 31, 2012
	Range (Weighted average)
Key Inputs	Amortized cost			Fair value			Amortized cost			Fair value
	(unpaid principal balance and effect on value amounts in thousands)
Unpaid principal balance of underlying loans	$	16,479,081		$	163,049		$	11,986,957		$	181,783
Pricing spread (1)		5.4% – 19.0	%		8.6% – 14.5	%		7.5% – 16.5	%		7.5% – 16.5%
		(6.8%)			(9.0%)			(7.7%)			(7.7%)
Effect on value of 5% adverse change	$	(3,056	)	$	(19	)	$	(2,052	)	$	(21	)
Effect on value of 10% adverse change	$	(6,020	)	$	(38	)	$	(4,041	)	$	(40	)
Effect on value of 20% adverse change	$	(11,686	)	$	(73	)	$	(7,845	)	$	(78	)
Average life (in years)		1.8 – 6.9			1.5 – 6.8			1.7 – 6.3			1.4 – 6.3
		(6.4)			(6.2)			(6.3)			(6.0)
Prepayment speed (2)		8.6% – 45.9	%		10.4% – 50.9	%		10.3% – 47.8	%		10.3% – 65.9	%
		(9.5%)			(15.1%)			(10.3%)			(13.2%)
Effect on value of 5% adverse change	$	(4,214	)	$	(43	)	$	(3,026	)	$	(52	)
Effect on value of 10% adverse change	$	(8,275	)	$	(83	)	$	(5,937	)	$	(100	)
Effect on value of 20% adverse change	$	(15,966	)	$	(159	)	$	(11,436	)	$	(190	)
Annual per-loan cost of servicing		$68 – $140			$68 – $140			$68 – $140			$68 – $140
		$(68)			$(73)			$(68)			$(74)
Effect on value of 5% adverse change	$	(1,138	)	$	(12	)	$	(778	)	$	(12	)
Effect on value of 10% adverse change	$	(2,275	)	$	(24	)	$	(1,556	)	$	(24	)
Effect on value of 20% adverse change	$	(4,551	)	$	(47	)	$	(3,112	)	$	(48	)

(1) Pricing spread represents a margin that is applied to a reference interest rate’s forward rate curve to develop periodic discount rates. The Company applies a pricing spread to the United States Dollar LIBOR curve for purposes of discounting cash flows relating to MSRs acquired as proceeds from the sale of mortgage loans and purchased MSRs not backed by pools of distressed mortgage loans.

(2) Prepayment speed is measured using CPR.

The preceding sensitivity analyses are limited in that they were performed at a particular point in time; only contemplate the movements in the indicated variables; do not incorporate changes in the variables in relation to other variables; are subject to the accuracy of various models and assumptions used; and do not incorporate other factors that would affect the Company’s overall financial performance in such scenarios, including operational adjustments made by management to account for changing circumstances. For these reasons, the preceding estimates should not be viewed as an earnings forecast.

Securities Sold Under Agreements to Repurchase

Fair value of securities sold under agreements to repurchase is based on the accrued cost of the agreements, which approximates the agreements’ fair values, due to the agreements’ short maturities.

Note 8—Short-Term Investments

The Company’s short-term investments are comprised of money market accounts deposited with U.S. commercial banks.

26

Note 9—Mortgage Loans Acquired for Sale at Fair Value

Mortgage loans acquired for sale at fair value is comprised of recently originated mortgage loans purchased by the Company for resale. Following is a summary of the distribution of the Company’s mortgage loans acquired for sale at fair value:

	March 31, 2013				December 31, 2012
	Fair value		Unpaid principal balance		Fair value		Unpaid principal balance
Loan Type	(in thousands)
Government insured or guaranteed	$	542,490	$	516,633	$	153,326	$	144,619
Conventional:
Agency-eligible		574,006		555,061		820,492		785,830
Jumbo loans		6,852		6,666		1,366		1,338
	$	1,123,348	$	1,078,360	$	975,184	$	931,787
Loans pledged to secure loans sold under agreements to repurchase	$	1,122,940			$	972,079

The Company is not approved by Ginnie Mae as an issuer of Ginnie Mae-guaranteed securities which are backed by government-insured or guaranteed mortgage loans. As discussed in Note 3—Transactions with Related Parties, the Company transfers government insured or guaranteed mortgage loans that it purchases from correspondent lenders to PLS, which is a Ginnie Mae-approved issuer, and earns a sourcing fee of three basis points on the unpaid principal balance of each such loan.

Note 10—Derivative Financial Instruments

The Company is exposed to price risk relative to its mortgage loans acquired for sale as well as to the IRLCs it issues to correspondent lenders. The Company bears price risk from the time a IRLC is issued to a correspondent lender to the time the purchased mortgage loan is sold. During this period, the Company is exposed to losses if mortgage interest rates increase, because the value of the purchase commitment or mortgage loan acquired for sale decreases.

The Company engages in interest rate risk management activities in an effort to reduce the variability of earnings caused by changes in interest rates. To manage this price risk resulting from interest rate risk, the Company uses derivative financial instruments acquired with the intention of moderating the risk that changes in market interest rates will result in unfavorable changes in the value of the Company’s IRLCs and inventory of mortgage loans acquired for sale.

The Company is also exposed to risk relative to the fair value of its MSRs. The Company is exposed to loss in value of its MSRs when interest rates decrease. Beginning in the fourth quarter of 2012, the Company includes MSRs in its hedging activities.

The Company does not use derivative financial instruments for purposes other than in support of its risk management activities. The Company records all derivative financial instruments at fair value and records changes in fair value in current period income.

27

The Company had the following derivative assets and liabilities and related margin deposits recorded within the Derivative assets and Derivative liabilities on the consolidated balance sheets:

	March 31, 2013								December 31, 2012
			Fair value								Fair value
Instrument	Notional amount		Derivative assets			Derivative liabilities			Notional amount		Derivative assets			Derivative liabilities
	(in thousands)
Derivatives not designated as hedging instruments:
Free-standing derivatives (economic hedges):
Interest rate lock commitments	$	933,768	$	11,052		$	—		$	1,694,739	$	19,479		$	—
Forward purchase contracts		1,890,960		6,460			462			2,206,539		2,617			1,741
Forward sales contracts		3,224,190		1,121			8,560			4,266,983		3,458			4,520
MBS put options		225,000		326			—			495,000		977			—
MBS call options		350,000		1,052			—			—		—			—
Total derivative instruments before netting		6,623,918		20,011			9,022			8,663,261		26,531			6,261
Netting		—		(4,825	)		(6,943	)		—		(2,825	)		(5,294	)
Total	$	6,623,918	$	15,186		$	2,079		$	8,663,261	$	23,706		$	967
Margin deposits with derivatives counterparties			$	2,118							$	2,469

The following table summarizes the notional amount activity for derivative contracts used to hedge the Company’s IRLCs, inventory of mortgage loans acquired for sale and Agency MBS:

Period/Instrument	Balance, beginning of period		Additions		Dispositions/ expirations			Balance, end of period
	(in thousands)
Quarter ended March 31, 2013
MBS put options		495,000		1,480,000		(1,750,000	)		225,000
MBS call options		—		900,000		(550,000	)		350,000
Forward purchase contracts		2,206,539		12,442,344		(12,757,923	)		1,890,960
Forward sales contracts		4,266,983		17,850,273		(18,893,066	)		3,224,190

Period/Instrument	Balance, beginning of period		Additions		Dispositions/ expirations			Balance, end of period
	(in thousands)
Quarter ended March 31, 2012
MBS put options		28,000		97,500		(55,500	)		70,000
MBS call options		5,000		25,000		(10,000	)		20,000
Forward purchase contracts		398,400		1,381,283		(1,017,359	)		762,324
Forward sales contracts		756,691		2,835,824		(2,377,235	)		1,215,280

The Company recorded net gains on derivative financial instruments used to hedge the Company’s IRLCs and inventory of mortgage loans totaling $10.9 million and $602 thousand for the quarters ending March 31, 2013 and 2012, respectively. Derivative gains and losses are included in Net gains on mortgage loans acquired for sale in the Company’s consolidated statements of income.

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The Company recorded net losses on derivative financial instruments used as economic hedges of MSRs totaling $2.0 million for the quarter ending March 31, 2013. The derivative losses are included in Net loan servicing fees in the Company’s consolidated statements of income. The Company had no similar economic hedges in place for the quarter ending March 31, 2012.

Note 11—Mortgage Loans at Fair Value

Mortgage loans at fair value are comprised of mortgage loans not acquired for resale. Such loans may be sold at a later date pursuant to a management determination that such a sale represents the most advantageous liquidation strategy for the identified loan.

Following is a summary of the distribution of the Company’s mortgage loans at fair value:

	March 31, 2013				December 31, 2012
Loan type	Fair value		Unpaid principal balance		Fair value		Unpaid principal balance
	(in thousands)				(in thousands)
Nonperforming loans	$	918,868	$	1,679,842	$	785,955	$	1,483,311
Performing loans:
Fixed		226,329		344,652		201,212		322,005
Adjustable rate/hybrid		143,239		194,475		134,196		195,381
Interest rate step-up		78,343		134,339		68,475		123,117
Balloon		143		218		133		219
		448,054		673,684		404,016		640,722
	$	1,366,922	$	2,353,526	$	1,189,971	$	2,124,033
Mortgage loans at fair value pledged to secure borrowings at period end:
Sales of loans under agreements to repurchase	$	1,203,387			$	947,522
Mortgage loans held in a consolidated subsidiary whose stock is pledged to secure financings of such loans	$	8,233			$	9,061

Following is a summary of certain concentrations of credit risk in the portfolio of mortgage loans at fair value:

Concentration	March 31, 2013	December 31, 2012
Portion of mortgage loans originated between 2005 and 2007	74%	74%
Percentage of fair value of mortgage loans with unpaid-principal-balance-to current-property-value in excess of 100%	69%	68%
Percentage of mortgage loans secured by California real estate	19%	18%
Additional states contributing 5% or more of mortgage loans	New York Florida New Jersey	New York Florida New Jersey

29

Note 12—Real Estate Acquired in Settlement of Loans

Following is a summary of the activity in REO:

	Quarter ended March 31,
	2013			2012
	(in thousands)
Balance at beginning of period	$	88,078		$	80,570
Transfers from mortgage loans at fair value and advances		31,510			25,419
Results of REO:
Valuation adjustments, net		(6,089	)		(2,554	)
Gain on sale, net		2,836			4,551
		(3,253	)		1,997
Sale proceeds		(31,849	)		(26,777	)
Balance at period end	$	84,486		$	81,209
At period end:
REO pledged to secure agreements to repurchase	$	8,233		$	9,061
REO held in a consolidated subsidiary whose stock is pledged to secure financings of such properties	$	7,122		$	14,773

Note 13—Real Estate Acquired in Settlement of Loans Under Forward Purchase Agreements

There was no REO under forward purchase agreements for the quarter ended March 31, 2013. Following is a summary of the activity in REO under forward purchase agreements for the quarter ended March 31, 2012:

	Quarter ended March  31, 2012
Balance at beginning of period	$	22,979
Purchases		53
Transfers from mortgage loans under forward purchase agreements at fair value and advances		5,696
Results of REO under forward purchase agreements:
Valuation adjustments, net		(381	)
Gain on sale, net		2,101
		1,720
Sale proceeds		(6,787	)
Balance at period end	$	23,661

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Note 14—Mortgage Servicing Rights

Carried at Fair Value:

The activity in MSRs carried at fair value is as follows:

	Quarter ended March 31,
	2013			2012
	(in thousands)
Balance at beginning of period	$	1,346		$	749
Additions:
Purchases		—			20
MSRs resulting from loan sales		26			520
Total additions		26			540
Change in fair value:
Due to changes in valuation inputs or assumptions used in valuation model (1)		—			(64	)
Other changes in fair value (2)		(67	)		(37	)
		(67	)		(101	)
Balance at period end	$	1,305		$	1,188

(1) Principally reflects changes in discount rates and prepayment speed assumptions, primarily due to changes in interest rates.

(2) Represents changes due to realization of expected cash flows.

Carried at Lower of Amortized Cost or Fair Value:

The activity in MSRs carried at amortized cost is summarized below:

	Quarter ended March 31,
	2013			2012
	(in thousands)
Mortgage Servicing Rights:
Balance at beginning of period	$	132,977		$	5,282
MSRs received as proceeds from loan sales		56,190			12,409
Purchases		—			9
Sales		—			—
Amortization		(4,970	)		(248	)
Application of valuation allowance to write down MSRs with other-than temporary impairment		—			—
Balance at period end		184,197			17,452
Valuation Allowance for Impairment of Mortgage Servicing Rights:
Balance at beginning of period		(7,547	)		—
Reversals (additions)		2,486			(106	)
Application of valuation allowance to write down MSRs with other-than temporary impairment		—			—
Balance at period end		(5,061	)		(106	)
Mortgage Servicing Rights, net at period end	$	179,136		$	17,346
Estimated Fair Value of MSRs at period end	$	186,209		$	17,396

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The following table summarizes the Company’s estimate of amortization of its existing MSRs carried at amortized cost. This projection was developed using the assumptions made by management in its March 31, 2013 valuation of MSRs. The assumptions underlying the following estimate will change as market conditions and portfolio composition and behavior change, causing both actual and projected amortization levels to change over time. Therefore, the following estimates will change in a manner and amount not presently determinable by management.

Twelve month period ending March 31,	Estimated MSR amortization
	(in thousands)
2014	$	20,897
2015		19,373
2016		17,487
2017		15,936
2018		14,669
Thereafter		95,835
Total	$	184,197

Servicing fees relating to MSRs are recorded in Net loan servicing fees on the consolidated statements of income and are summarized below:

	Quarter ended March 31,
	2013		2012
	(in thousands)
Contractual servicing fees	$	8,937	$	646
Late charges		—		—
Ancillary fees		—		—
	$	8,937	$	646

Note 15—Securities Sold Under Agreements to Repurchase at Fair Value

As of and during the quarter ended March 31, 2013, the Company had no securities sold under agreements to repurchase outstanding. Following is a summary of financial information relating to securities sold under agreements to repurchase at fair value as of and for the quarter ended:

	Quarter ended March 31,  2012
	(dollar amounts in thousands)
Period end:
Balance	$	53,068
Weighted-average interest rate		0.99	%
Fair value of securities securing agreements to repurchase	$	62,425
During the period:
Weighted-average interest rate		0.90	%
Average balance of securities sold under agreements to repurchase	$	69,030
Total interest expense	$	157
Maximum daily amount outstanding	$	115,493

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Note 16—Mortgage Loans Acquired for Sale Sold Under Agreements to Repurchase

Following is a summary of financial information relating to mortgage loans acquired for sale sold under agreements to repurchase:

	Quarter ended March 31,
	2013			2012
	(dollar amounts in thousands)
Period end:
Balance	$	1,035,486		$	143,819
Unused amount (1)	$	664,514		$	246,181
Weighted-average interest rate		2.39	%		2.27	%
Fair value of mortgage loans acquired for sale securing agreements to repurchase	$	1,122,940		$	155,295
During the period:
Weighted-average interest rate during the period (2)		2.30	%		2.11	%
Average balance of loans sold under agreements to repurchase	$	774,417		$	177,864
Total interest expense	$	6,175		$	1,364
Maximum daily amount outstanding	$	1,035,613		$	263,890

(1) The amount the Company is able to borrow under loan repurchase agreements is tied to the fair value of unencumbered mortgage loans eligible to secure those agreements and the Company’s ability to fund the agreements’ margin requirements relating to the collateral sold.

(2) Weighted-average interest rate during the periods excludes the effect of amortization of debt issuance costs of $1.7 million and $417,000 during the quarters ended March 31, 2013 and 2012, respectively.

Following is a summary of maturities of outstanding advances under repurchase agreements by maturity date:

Remaining maturity at March 31, 2013	Balance
	(in thousands)
Within 30 days	$	246,210
Over 30 to 90 days		789,276
Over 90 days to 180 days		—
Over 180 days to 1 year		—
	$	1,035,486
Weighted average maturity (in months)		1.97

The Company is subject to margin calls during the period the agreements are outstanding and therefore may be required to repay a portion of the borrowings before the respective agreements mature if the value (as determined by the applicable lender) of the mortgage loans securing those agreements decreases. The Company had $3.0 million and $4.1 million on deposit with its loan repurchase agreement counterparties at March 31, 2013 and December 31, 2012, respectively. Margin deposits are included in Other assets in the consolidated balance sheets.

The amount at risk (the fair value of the assets pledged plus the related margin deposit, less the amount advanced by the counterparty and interest payable) relating to the Company’s mortgage loans acquired for sale sold under agreements to repurchase is summarized by counterparty below as of March 31, 2013:

Counterparty	Amount at risk		Weighted-average repurchase agreement maturity
	(in thousands)
Citibank	$	25,794	May 23, 2013
Credit Suisse First Boston Mortgage Capital LLC	$	27,062	October 29, 2013
Bank of America, N.A.	$	22,678	January 4, 2014
Morgan Stanley Bank, N.A.	$	7,233	November 19, 2013
Barclays Bank PLC	$	6,647	July 1, 2013

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Note 17—Mortgage Loans at Fair Value Sold Under Agreements to Repurchase

Following is a summary of financial information relating to mortgage loans sold under agreements to repurchase:

	Quarter ended March 31,
	2013			2012
	(dollar amounts in thousands)
Period end:
Balance	$	576,018		$	282,810
Unused amount (1)	$	173,982		$	167,190
Weighted-average interest rate		3.45	%		3.85	%
Fair value of mortgage loans at fair value and REO securing agreements to repurchase	$	1,211,620		$	631,945
During the period:
Weighted-average interest rate (2)		3.43	%		4.07	%
Average balance of loans sold under agreements to repurchase	$	442,151		$	285,817
Total interest expense	$	4,357		$	3,138
Maximum daily amount outstanding	$	576,018		$	299,091

(1) The amount the Company is able to borrow under loan repurchase agreements is tied to the fair value of unencumbered mortgage loans eligible to secure those agreements and the Company’s ability to fund the agreements’ margin requirements relating to the collateral sold.

(2) Weighted-average interest rate during the period excludes the effect of amortization of debt issuance costs of $563,000 and $199,000 during the quarters ended March 31, 2013 and 2012, respectively.

Following is a summary of maturities of repurchase agreements by maturity date:

Remaining Maturity at March 31, 2013	Balance
	(in thousands)
Within 30 days	$	484,185
Over 30 to 90 days		91,833
Over 90 days to 180 days		—
Over 180 days to 1 year		—
	$	576,018
Weighted average maturity (in months)		0.9

The Company is subject to margin calls during the period the agreements are outstanding and therefore may be required to repay a portion of the borrowings before the respective agreements mature if the value (as determined by the applicable lender) of the loans securing those agreements decreases. The Company had no margin deposits as of March 31, 2013 and as of December 31, 2012, the Company had $379,000 on deposit with its loan repurchase agreement counterparties. Margin deposits are included in Other assets in the consolidated balance sheets.

The amount at risk (the fair value of the assets pledged plus the related margin deposit, less the amount advanced by the counterparty and interest payable) relating to the Company’s mortgage loans at fair value sold under agreements to repurchase is summarized by counterparty below as of March 31, 2013:

Counterparty	Amount at risk		Weighted-average repurchase agreement maturity
	(in thousands)
Citibank, N.A.	$	485,352	April 19, 2013
Credit Suisse First Boston Mortgage Capital LLC	$	149,897	June 5, 2013

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Note 18—Real Estate Acquired in Settlement of Loans Financed Under Agreements to Repurchase

Following is a summary of financial information relating to REO financed under agreements to repurchase:

	Quarter ended March 31,
	2013			2012
	(dollar amounts in thousands)
Period end:
Balance	$	3,546		$	21,744
Unused amount (1)	$	96,454		$	78,256
Weighted-average interest rate		3.95	%		3.99	%
Fair value of loans and REO held in a consolidated subsidiary whose stock is pledged to secure agreements to repurchase	$	7,523		$	43,269
During the period:
Weighted-average interest rate (2)		4.21	%		4.21	%
Average balance of REO sold under agreements to repurchase	$	5,198		$	24,589
Total interest expense	$	180		$	387
Maximum daily amount outstanding	$	7,391		$	27,494

(1) The amount the Company is able to borrow under repurchase agreements is subject to a sublimit of the commitment amount available pursuant to the repurchase facility for mortgage loans at fair value. The facility is tied to the fair value of unencumbered REO eligible for contribution to the subsidiary, whose stock is pledged to secure those agreements, and the Company’s ability to fund the agreements’ margin requirements relating to the collateral so contributed.

(2) Weighted-average interest rate during the period excludes the effect of amortization of debt issuance costs of $125,000 for the quarters ended March 31, 2013 and 2012, respectively.

The repurchase agreement collateralized by REO has a remaining term of approximately 2.2 months at March 31, 2013.

The Company is subject to margin calls during the period the agreements are outstanding and therefore may be required to repay a portion of the borrowings before the respective agreements mature if the value (as determined by the applicable lender) of the REOs decreases. The Company had no margin deposits as of March 31, 2013 and as of December 31, 2012.

The amount at risk (the fair value of the assets pledged plus the related margin deposit, less the amount advanced by the counterparty and interest payable) relating to the Company’s REO held in a consolidated subsidiary, whose stock is pledged to secure agreements to repurchase is summarized by counterparty below as of March 31, 2013:

Counterparty	Amount at risk		Weighted-average repurchase agreement maturity
	(in thousands)
Credit Suisse First Boston Mortgage Capital LLC	$	3,972	June 5, 2013

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Note 19—Borrowings under Forward Purchase Agreements

Following is a summary of financial information relating to borrowings under forward purchase agreements:

	Quarter ended March 31, 2012
	(dollar amounts in thousands)
Period end:
Balance	$	127,591
Weighted-average interest rate		4.24	%
Fair value of underlying loans and REO	$	127,411
During the period:
Weighted-average interest rate		4.09	%
Average balance	$	146,512
Interest expense	$	1,515
Maximum daily amount outstanding	$	152,428

Note 20—Recourse liability

The Company’s agreements with Fannie Mae and Freddie Mac include representations and warranties related to the loans the Company sells to those Agencies. The representations and warranties require adherence to Agency 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 law.

In the event of a breach of its representations and warranties, the Company may be required to either repurchase the mortgage loans with the identified defects or indemnify the investor or insurer. In such cases, the Company bears any subsequent credit loss on the mortgage loans. The Company’s credit loss may be reduced by any recourse it has to correspondent lenders that, in turn, had sold such mortgage loans to the Company and breached similar or other representations and warranties. In such event, the Company has the right to seek a recovery of related repurchase losses from that originator.

The Company records a provision for losses relating to the representations and warranties it makes as part of its loan sale transactions. The method used to estimate the liability for representations and warranties is a function of the representations and warranties given and considers a combination of factors, including, but not limited to, estimated future defaults and loan repurchase rates and the potential severity of loss in the event of defaults and the probability of reimbursement by the correspondent loan seller. The Company establishes a liability at the time loans are sold and continually updates its liability estimate.

Following is a summary of the Company’s Recourse liability in the consolidated balance sheets:

	Quarter ended March 31,
	2013		2012
	(in thousands)
Balance, beginning of period	$	4,441	$	205
Provisions for losses		1,790		426
Incurred losses		—		—
Balance, end of period	$	6,231	$	631

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Following is a summary of the Company’s repurchase activity:

	Quarter ended March 31,
	2013		2012
	(in thousands)
During the period:
Unpaid balance of mortgage loans repurchased	$	648	$	—
Incurred losses on repurchased loans	$	—	$	—
At period end:
Unpaid balance of mortgage loans subject to pending claims for repurchase	$	—	$	—

The Company’s representations and warranties are generally not subject to stated limits of exposure. However, management believes that the current unpaid principal balance of loans sold by the Company to date represents the maximum exposure to repurchases related to representations and warranties. The level of the liability for representations and warranties is difficult to estimate and requires considerable management judgment. The level of mortgage loan repurchase losses is dependent on economic factors, investor demand strategies, and other external conditions that will change over the lives of the underlying loans, However, management believes the amount and range of reasonably possible losses in relation to the recorded liability is not material to the Company’s financial condition or results of operations.

Note 21—Commitments and Contingencies

From time to time, the Company may be involved in various proceedings, claims and legal actions arising in the ordinary course of business. As of March 31, 2013, the Company was not involved in any such proceedings, claims or legal actions that would have a material adverse effect on the Company.

Mortgage Loan Commitments

The following table summarizes the Company’s outstanding contractual loan commitments:

	March 31, 2013
	(in thousands)
Commitments to purchase mortgage loans:
Correspondent lending	$	933,768
Other mortgage loans	$	—

Note 22—Shareholders’ Equity

During the three months ended March 31, 2012, the Company sold common shares under a Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co. Pursuant to the Controlled Equity Offering Sales Agreement, the Company sold a total of 2,531,310 of its common shares at a weighted average price of $18.41 per share, providing net proceeds to the Company of approximately $45.7 million, net of sales commissions. The sales agent received a total of approximately $917,000, which represents an average commission of approximately 2.0% of the gross sales price.

As more fully described in the Company’s Annual Report, certain of the underwriting costs incurred in the Company’s IPO were paid on PMT’s behalf by PCM and a portion of the underwriting discount was deferred by agreement with the underwriters of the offering. On February 1, 2013, the Company entered into an Amended and Restated Underwriting Fee Reimbursement Agreement (“Reimbursement Agreement”), by and among the Company, the Operating Partnership and PCM. The Reimbursement Agreement provides that, to the extent the Company is required to pay PCM performance incentive fees under the management agreement, the Company will reimburse PCM for underwriting costs it paid on the offering date at a rate of $10 in reimbursement for every $100 of performance incentive fees earned. The reimbursement is subject to a maximum reimbursement in any particular 12-month period of $980,422, and the maximum amount that may be reimbursed under the agreement is $2.9 million.

The Reimbursement Agreement also provides for the payment to the IPO underwriters of the payment that the Company agreed to make to them at the time of the IPO if the Company satisfied certain performance measures over a specified period of time. As PCM earns performance incentive fees under the management agreement, the IPO underwriters will be paid at a rate of $20 of payments for every $100 of performance incentive fees earned by PCM. The payment to the underwriters is subject to a maximum reimbursement in any particular 12-month period of $1,960,844 and the maximum

37

amount that may be paid under the agreement is $5.9 million. The reimbursement agreement expires on February 1, 2019. Management has concluded that these amounts are likely to be paid and has recognized a liability for reimbursement to PCM and payment of the contingent underwriting discount as a reduction of additional paid-in capital.

Note 23—Net Gain on Mortgage Loans Acquired For Sale

Net gain on mortgage loans acquired for sale is summarized below:

	Quarter ended March 31,
	2013			2012
	(in thousands)
Cash gain (loss):
Sales proceeds	$	(27,247	)	$	548
Hedging activities		13,614			(803	)
		(13,633	)		(255	)
Non cash gain (loss):
Change in fair value of IRLCs		(8,426	)		(1,464	)
Receipt of MSRs in loan sale transactions		56,216			12,929
Provision for losses relating to representations and warranties provided in loan sales		(1,790	)		(426	)
Change in fair value relating to loans and hedging derivatives held at year-end:
Mortgage loans		(2,422	)		1,181
Hedging derivatives		(666	)		1,405
		(3,088	)		2,586
	$	29,279		$	13,370

Note 24—Net Loan Servicing Fees

Net loan servicing fees is summarized below:

	Quarter ended March 31,
	2013			2012
	(in thousands)
Servicing fees (1)	$	11,104		$	652
MSR recapture fee from affiliate		133			—
Effect of MSRs:
Amortization		(4,970	)		(248	)
Impairment reversal (provision) for MSRs carried at lower of amortized cost or fair value		2,486			(106	)
Change in fair value of MSRs carried at fair value		(67	)		(101	)
Losses on hedging derivatives		(1,988	)		—
		(4,539	)		(455	)
	$	6,698		$	197

(1) Includes contractually specified servicing and ancillary fees.

Note 25—Share-Based Compensation Plans

The Company has adopted an equity incentive plan which provides for the issuance of equity based awards, including share options, restricted shares, restricted share units, unrestricted common share awards, LTIP units (a special class of partnership interests in the Operating Partnership) and other awards based on PMT’s shares that may be made by the Company directly to its officers and trustees, and the members, officers, trustees, directors and employees of PCM, PLS, or their affiliates and to PCM, PLS and other entities that provide services to PMT and the employees of such other entities. The equity incentive plan is administered by the Company’s compensation committee, pursuant to authority delegated by the board of trustees, which has the authority to make awards to the eligible participants referenced above, and to determine what form the awards will take, and the terms and conditions of the awards.

38

The Company’s equity incentive plan allows for grants of equity-based awards up to an aggregate of 8% of PMT’s issued and outstanding shares on a diluted basis at the time of the award.

The shares underlying award grants will again be available for award under the equity incentive plan if:

• any shares subject to an award granted under the equity incentive plan are forfeited, cancelled, exchanged or surrendered;

• an award terminates or expires without a distribution of shares to the participant; or

• shares are surrendered or withheld by PMT as payment of either the exercise price of an award and/or withholding taxes for an award.

Restricted share units have been awarded to trustees and officers of the Company and to employees of PCM and PLS at no cost to the grantees. Such awards generally vest over a one- to four-year period. Each share option awarded under the equity incentive plan will have a term of no longer than ten years, and will have an exercise price that is no less than 100% of the fair value of the Company’s shares on the date of grant of the award.

The Company’s estimate of value included assumed grantee forfeiture rates of 15% per year for employees of PCM and its affiliates and no turnover for certain of PMT’s officers and its board of trustees.

The table below summarizes restricted share unit activity and compensation expense:

	Quarter ended March 31,
	2013			2012
Number of units:
Outstanding at beginning of period		665,617			491,809
Granted		—			—
Vested		85,769			(88,249	)
Canceled		(2,784	)		(171	)
Outstanding at end of period		577,064			403,389
Weighted Average Grant Date Fair Value:
Outstanding at beginning of period	$	15.92		$	12.57
Granted	$	—		$	—
Vested	$	16.28		$	17.28
Expired or canceled	$	14.81		$	3.15
Outstanding at end of period	$	15.89		$	11.54
Compensation expense recorded during the period	$	1,781,000		$	883,000
Period end:
Units available for future awards (1)		4,185,000			2,105,000
Unamortized compensation cost	$	4,611,000		$	2,758,000

(1) Based on shares outstanding as of March 31, 2013. Total units available for future awards may be adjusted in accordance with the equity incentive plan based on future issuances of PMT’s shares as described above.

As of March 31, 2012, 541,630 restricted share units with a weighted average grant date fair value of $16.53 per share unit are expected to vest over their average remaining vesting period of 2.2 years. The grant date fair values of share unit awards are based on the market value of the Company’s stock at the date of grant.

Note 26—Income Taxes

The Company has elected to be taxed as a REIT for U.S. federal income tax purposes under Sections 856 through 860 of the Internal Revenue Code. Therefore, PMT generally will not be subject to corporate federal or state income tax to the extent that qualifying distributions are made to shareholders and the Company meets REIT requirements including certain asset, income, distribution and share ownership tests. The Company believes that it has met the distribution requirements, as it has declared dividends sufficient to distribute substantially all of its taxable income. Taxable income will generally differ from net income. The primary

39

difference between net income and the REIT taxable income (before deduction for qualifying distributions) is the income of the taxable REIT subsidiary (“TRS”) and the method of determining the income or loss related to valuation of the mortgage loans owned by the qualified REIT subsidiary (“QRS”). Other differences between REIT book income and REIT taxable income are not material.

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 Company had elected to treat two of its subsidiaries as TRSs. In the quarter ended September 30, 2012, the Company revoked the election to treat its wholly owned subsidiary that is the sole general partner of the Operating Partnership as a TRS. As a result, beginning September 1, 2012, one subsidiary, PMC, is treated as a 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 the REIT. No such dividend distributions have been made to date. A TRS is subject to corporate federal and state income tax. Accordingly, a provision for income taxes for PMC and, for the periods for which TRS treatment had been elected, the sole general partner of the Company’s Operating Partnership is included in the consolidated statements of income.

The Company files U.S. federal and state income tax returns for both the REIT and TRSs. These returns for 2009 and forward are subject to examination. No returns are currently under examination.

The following table details the Company’s income tax expense (benefit) which relates primarily to the TRSs:

	Quarter ended March 31,
	2013			2012
	(in thousands)
Current (benefit) expense:
Federal	$	(10,725	)	$	706
State		(2,489	)		245
Total current (benefit) expense		(13,214	)		951
Deferred expense:
Federal		12,678			3,389
State		3,175			1,177
Total deferred expense		15,853			4,566
Total provision for income taxes	$	2,639		$	5,517

The provision for deferred income taxes for the quarter ended March 31, 2013 and March 31, 2012 primarily relates to a net unrealized valuation loss on REO and to mortgage servicing rights the Company received pursuant to sales of mortgage loans with servicing rights retained as detailed below.

40

The following table is a reconciliation of the Company’s provision for income taxes at statutory rates to the provision for income taxes at the Company’s effective rate:

	Quarter ended March 31,
	2013						2012
	Amount			Rate			Amount			Rate
	(dollars in thousands)
Federal income tax expense at statutory tax rate	$	19,577			35.0	%	$	8,601			35.0	%
Effect of non-taxable REIT income		(17,491	)		(31.3	)%		(3,990	)		(16.2	)%
State income taxes, net of federal benefit		446			0.8	%		925			3.8	%
Other		107			0.2	%		(19	)		(0.1	)%
Valuation allowance		—			0.0	%		—			0.0	%
Provision for income taxes	$	2,639			4.7	%	$	5,517			22.5	%

The Company’s components of the provision for deferred income taxes are as follows:

	Quarter ended March 31,
	2013			2012
	(in thousands)
Real estate valuation gain (loss)	$	221		$	(388	)
Mortgage servicing rights		22,500			5,133
Net operating loss carryforward		(6,115	)		—
Other		(753	)		(179	)
Valuation allowance		—			—
Total provision for deferred income taxes	$	15,853		$	4,566

41

The components of the income taxes, net are as follows:

	March 31, 2013			December 31, 2012
	(in thousands)
Taxes currently receivable	$	19,062		$	5,374
Deferred income taxes payable		(57,543	)		(41,690	)
Income taxes, net	$	(38,481	)	$	(36,316	)

The tax effects of temporary differences that gave rise to deferred income tax assets and liabilities are presented below:

	March 31, 2013			December 31, 2012
	(in thousands)
Deferred income tax assets:
REO valuation loss	$	8,178		$	8,399
Net operating loss carryforward		6,115			—
Other		2,620			1,867
Gross deferred tax assets		16,913			10,266
Deferred income tax liabilities:
Mortgage servicing rights		(74,456	)		(51,956	)
Gross deferred tax liabilities		(74,456	)		(51,956	)
Net deferred income tax liability	$	(57,543	)	$	(41,690	)

The net deferred income tax liability is recorded in Income taxes payable in the consolidated balance sheets as of March 31, 2013 and December 31, 2012.

At March 31, 2013 and December 31, 2012, the Company had no unrecognized tax benefits and does not anticipate any increase in unrecognized tax benefits. Should the accrual of any interest or penalties relative to unrecognized tax benefits be necessary, it is the Company’s policy to record such accruals in the Company’s income tax accounts. No such accruals existed at March 31, 2013 and December 31, 2012.

Note 27—Segments and Related Information

The Company has two business segments: correspondent lending and investment activities.

• The correspondent lending segment represents the Company’s operations aimed at serving as an intermediary between mortgage originators, particularly mortgage lenders, and the capital markets by purchasing, pooling and reselling the loans either directly or in the form of MBS, using the operations of the Manager and the Servicer.

• The investment activities segment represents the Company’s investments in distressed mortgage loans, REO, MBS and MSRs. Management seeks to maximize the value of the mortgage loans acquired by the Company through proprietary loan modification programs, special servicing and other initiatives focused on keeping borrowers in their homes. Where this is not possible, such as in the case of many nonperforming mortgage loans, the Company seeks to effect property resolution in a timely, orderly and economically efficient manner. The Company also invests in mortgage-related securities and other mortgage-related real estate and financial assets.

42

Financial highlights by operating segment are summarized below:

Quarter ended March 31, 2013	Correspondent lending		Investment activities		Intersegment elimination & other			Total
	(in thousands)
Revenues:
External
Net gain on mortgage loans acquired for sale	$	29,279	$	—	$	—		$	29,279
Net gain on investments		—		63,980		—			63,980
Interest		6,324		10,592		(41	)		16,875
Other		5,473		3,445		—			8,918
		41,076		78,017		(41	)		119,052
Expenses:
Loan fulfillment fees		24,852		—		3,284	(1)		28,136
Interest		5,647		5,630		(41	)		11,236
Loan servicing		150		7,940		—			8,090
Other		1,547		14,108		—			15,655
		32,196		27,678		3,243			63,117
Pre-tax net income	$	8,880	$	50,339	$	(3,284	)	$	55,935
Total assets at period end	$	1,142,774	$	1,829,246	$	(44,860	)	$	2,927,160

(1) Corporate absorption of fulfillment fees for transition adjustment related to the amended and restated management agreement effective February 1, 2013.

Quarter ended March 31, 2012	Correspondent lending			Investment activities		Intersegment eliminations  & other		Total
	(in thousands)
Revenues:
External
Net gain on mortgage loans acquired for sale	$	13,370		$	—	$	—	$	13,370
Net gain on investments		—			11,488		—		11,488
Interest income		2,792			13,638		—		16,430
Other income		1,461			3,900		—		5,361
Intersegment		(16	)		16		—		—
		17,607			29,042		—		46,649
Expenses:
Loan fulfillment fees payable to affiliate		6,124			—		—		6,124
Interest		927			5,747		—		6,674
Other		255			9,021		—		9,276
		7,306			14,768		—		22,074
Pre-tax net income	$	10,301		$	14,274	$	—	$	24,575

The accounting policies of the reportable segments are the same as those described in Note 3—Significant Accounting Policies to the Company’s Annual Report.

43

Note 28—Supplemental Cash Flow Information

	Quarter ended March 31,
	2013		2012
	(in thousands)
Cash paid for interest	$	11,192	$	6,954
Cash paid for income taxes	$	473	$	1,474
Non-cash investing activities:
Unsettled purchases of MBS and swaptions	$	—	$	115,636
Transfer of mortgage loans to REO	$	31,510	$	25,419
Purchase of mortgage loans financed through forward purchase agreements	$	—	$	286
Transfer of mortgage loans under forward purchase agreements to mortgage loans, at fair value	$	—	$	17,309
Transfer of mortgage loans under forward purchase agreements to REO under forward purchase agreements	$	—	$	5,696
Receipt of MSRs as proceeds from sales of loans	$	56,216	$	12,929
Transfer of REO under forward purchase agreements to REO	$	—	$	53
Non-cash financing activities:
Purchase of mortgage loans financed through forward purchase agreements	$	—	$	286
Purchase of REO financed through forward purchase agreements	$	—	$	53

Note 29—Regulatory Net Worth Requirement

PMC is a seller-servicer for Fannie Mae and Freddie Mac. To retain its status as an approved seller-servicer, PMC is required to meet Fannie Mae’s and Freddie Mac’s capital standards, which require PMC to maintain a minimum net worth of $2.5 million for both Agencies. Management believes PMC complies with Fannie Mae’s and Freddie Mac’s net worth requirement as of March 31, 2013.

44

Note 30—Condensed Consolidating Financial Statements

After March 31, 2013, PMC issued approximately $250.0 million in exchangeable notes guaranteed by the Company. The notes are fully and unconditionally guaranteed by the Company as to all payments due on the notes whether at their stated maturity date, by acceleration, repurchase or otherwise. In the case of PMC’s failure to pay punctually any principal, premium or interest on the notes, PMT will cause any such payment to be made (without duplication) as it becomes due and payable, whether at maturity, upon acceleration, repayment or otherwise.

The guarantee is PMT’s senior unsecured obligation and will rank senior in right of payment to any of PMT’s indebtedness that is expressly subordinated in right of payment to the guarantee, equal to any of PMT’s other unsecured indebtedness that is not so subordinated, effectively junior to any of PMT’s secured indebtedness to the extent of the value of the assets securing such indebtedness and structurally junior to all indebtedness and other liabilities (including trade payables) and preferred equity of PMT’s subsidiaries.

The following supplemental financial information sets forth, on a consolidating basis, the condensed consolidating balance sheets and statements of income and cash flows for the Company as guarantor, for PMC as the issuer of the exchangeable notes, and for the Company’s non-guarantor subsidiaries as of and for the periods presented:

PennyMac Mortgage Investment Trust

Condensed Consolidating Balance Sheet

March 31, 2013

	PennyMac Mortgage Investment Trust		PennyMac Corp.		Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(“Guarantor”)		(“Issuer”)
	(in thousands)
Assets:
Cash and short-term investments	$	2,931	$	25,846	$	35,623	$	—		$	64,400
Mortgage-backed securities		—		—		36,359		(36,359	)		—
Mortgage loans held for sale		—		1,123,348		—		—			1,123,348
Mortgage loans at fair value		—		503,194		863,728		—			1,366,922
Real estate acquired in settlement of loans		—		84,335		188		(37	)		84,486
Mortgage servicing rights		—		180,441		—		—			180,441
Investment in subsidiaries		1,229,392		—		751,355		(1,980,747	)		—
Other assets		1,964		82,892		547,287		(524,580	)		107,563
	$	1,234,287	$	2,000,056	$	2,234,540	$	(2,541,723	)	$	2,927,160
Liabilities:
Accounts payable and accrued liabilities	$	2,089	$	18,042	$	2,128	$	—		$	22,259
Assets sold under agreements to repurchase		—		1,192,157		422,893		—			1,615,050
Notes payable		—		—		—		—			—
Borrowings under forward purchase agreement		—		—		—		—			—
Intercompany borrowings		—		403,299		151,098		(554,397	)		—
Other liabilities		9,456		54,884		9,625		(6,543	)		67,422
		11,545		1,668,382		585,744		(560,940	)		1,704,731
Shareholders’ equity		1,222,742		331,674		1,648,796		(1,980,783	)		1,222,429
	$	1,234,287	$	2,000,056	$	2,234,540	$	(2,541,723	)	$	2,927,160

45

PennyMac Mortgage Investment Trust

Condensed Consolidating Balance Sheet

December 31, 2012

	PennyMac Mortgage Investment Trust		PennyMac Corp.		Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(“Guarantor”)		(“Issuer”)
	(in thousands)
Assets:
Cash and short-term investments	$	3,399	$	45,187	$	24,187	$	—		$	72,773
Mortgage-backed securities		—		—		39,967		(39,967	)		—
Mortgage loans held for sale		—		975,184		—		—			975,184
Mortgage loans at fair value		—		505,072		684,899		—			1,189,971
Real estate acquired in settlement of loans		—		87,536		582		(40	)		88,078
Mortgage servicing rights		—		126,776		—		—			126,776
Investment in subsidiaries		1,207,471		—		705,321		(1,912,792	)		—
Other assets		205		108,524		548,087		(549,935	)		106,881
	$	1,211,075	$	1,848,279	$	2,003,043	$	(2,502,734	)	$	2,559,663
Liabilities:
Accounts payable and accrued liabilities	$	524	$	39,309	$	2,569	$	—		$	42,402
Assets sold under agreements to repurchase		—		1,042,946		213,156		—			1,256,102
Notes payable		—		—		—		—			—
Borrowings under forward purchase agreement		—		—		—		—			—
Intercompany borrowings		—		117,904		—		(117,904	)		—
Other liabilities		8,903		322,178		203,333		(474,591	)		59,823
		9,427		1,522,337		419,058		(592,495	)		1,358,327
Shareholders’ equity		1,201,648		325,942		1,583,985		(1,910,239	)		1,201,336
	$	1,211,075	$	1,848,279	$	2,003,043	$	(2,502,734	)	$	2,559,663

46

PennyMac Mortgage Investment Trust

Condensed Consolidating Income Statement

Quarter ended March 31, 2013

	PennyMac Mortgage Investment Trust		PennyMac Corp.		Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(“Guarantor”)		(“Issuer”)
	(in thousands)
Gain on sale of correspondent lending loans	$	—	$	29,279	$	—	$	—		$	29,279
Gains on investments		—		22,704		41,276		—			63,980
Interest income		197		11,306		19,678		(14,306	)		16,875
Equity in earnings of subsidiaries		54,041		—		46,034		(100,075	)		—
Other income		—		8,334		581		3			8,918
Net investment income		54,238		71,623		107,569		(114,378	)		119,052
Expenses
Compensation		87		1,830		172		—			2,089
Management Fees		—		5,935		557		—			6,492
Fulfillment fees		—		28,136		—		—			28,136
Interest		198		14,724		6,145		(9,831	)		11,236
Other		652		11,184		3,328		—			15,164
		937		61,809		10,202		(9,831	)		63,117
Pre-tax income		53,301		9,814		97,367		(104,547	)		55,935
Provision for income taxes		—		4,436		84		(1,881	)		2,639
Net income	$	53,301	$	5,378	$	97,283	$	(102,666	)	$	53,296

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PennyMac Mortgage Investment Trust

Condensed Consolidating Income Statement

Quarter ended March 31, 2012

	PennyMac Mortgage Investment Trust		PennyMac Corp.		Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(“Guarantor”)		(“Issuer”)
	(in thousands)
Gain on sale of correspondent lending loans	$	—	$	13,370	$	—	$	—		$	13,370
Gains on investments		—		4,594		6,894		—			11,488
Interest income		12		10,872		5,541					16,425
Equity in earnings of subsidiaries		17,658		439		177		(18,274	)		—
Other income		—		4,261		216		889			5,366
Net investment income		17,670		33,536		12,828		(17,385	)		46,649
Expenses
Compensation		63		1,008		230		—			1,301
Management Fees		—		1,469		335		—			1,804
Fulfillment fees		—		6,124		—		—			6,124
Interest		106		4,119		2,449		—			6,674
Other		9		4,300		1,862		—			6,171
		178		17,020		4,876		—			22,074
Pre-tax income		17,492		16,516		7,952		(17,385	)		24,575
Provision for income taxes		—		5,442		75		—			5,517
Net income	$	17,492	$	11,074	$	7,877	$	(17,385	)	$	19,058

48

PennyMac Mortgage Investment Trust

Condensed Consolidating Cash Flows

Quarter Ended March 31, 2013

	PennyMac Mortgage Investment Trust			PennyMac Corp.			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(“Guarantor”)			(“Issuer”)
	(in thousands)
Cash flows from operating activities	$	33,187		$	(201,367	)	$	(11,372	)	$	(45,593	)	$	(225,145	)
Cash flows from investing activities:
Purchases of mortgage loans at fair value		—			(36,914	)		(163,559	)		—			(200,473	)
Sales of real estate and repayments of mortgage loans at fair value		—			60,630			36,950			(4,135	)		93,445
Intercompany purchases of assets under agreements to resell		—			—			(179,721	)		179,721			—
Intercompany sales of assets purchased under agreements to resell		—			—			197,719			(197,719	)		—
Purchases of short-term investments		468			5,665			(12,139	)		(1	)		(6,007	)
Other investment activities		—			(1,303	)		190			(380	)		(1,493	)
Cash flows from investing activities		468			28,078			(120,560	)		(22,514	)		(114,528	)
Cash flows from financing activities:
Proceeds from sale of assets under agreements to repurchase		—			8,301,595			209,363			—			8,510,958
Repayments of assets under agreements to repurchase		—			(8,105,279	)		(46,731	)		—			(8,152,010	)
Proceeds from borrowings with affiliated entities		—			177,624			2,097			(179,721	)		—
Repayment of borrowings with affiliated entities		—			(214,328	)		—			214,328			—
Dividends paid		(33,577	)		—			(33,500	)		33,500			(33,577	)
Other financing activities		(78	)		—			—			—			(78	)
Cash flows from financing activities		(33,655	)		159,612			131,229			68,107			325,293
Net change in cash and cash equivalents		—			(13,677	)		(703	)		—			(14,380	)
Cash at beginning of period		—			32,040			1,716			—			33,756
Cash at end of period	$	—		$	18,363		$	1,013		$	—		$	19,376

49

PennyMac Mortgage Investment Trust

Condensed Consolidating Cash Flows

Quarter Ended March 31, 2012

	PennyMac Mortgage Investment Trust			PennyMac Corp.			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(“Guarantor”)			(“Issuer”)
	(in thousands)
Cash flows from operating activities	$	35,848		$	(563	)	$	28,324		$	(15,691	)	$	47,918
Cash flows from investing activities:
Sales of real estate and repayments of mortgage loans at fair value		(43,694	)		63,054			22,584			35,102			77,046
Intercompany purchases of assets under agreements to resell		—			—			(53,341	)		53,341			—
Intercompany sales of assets purchased under agreements to resell		—			—			47,108			(47,108	)		—
Purchases of short-term investments		(22,152	)		—			(10,973	)		—			(33,125	)
Repayments of mortgage-backed and U.S. Treasury Securities		—			—			61,086			—			61,086
Purchases and sales of MSRs		—			(23	)		(6	)		—			(29	)
Other investment activities		—			400			4,140			—			4,540
Cash flows from investing activities		(65,846	)		63,431			70,598			41,335			109,518
Cash flows from financing activities:
Sales of securities under agreements to repurchase		—			—			291,914			—			291,914
Repurchases of securities sold under agreements to repurchase		—			—			(354,339	)		—			(354,339	)
Proceeds from sale of assets under agreements to repurchase		—			1,724,841			7,136			—			1,731,977
Repayments of assets under agreements to repurchase		—			(1,826,462	)		(28,708	)		—			(1,855,170	)
Proceeds from borrowings with affiliated entities		—			103,794			(50,453	)		(53,341	)		—
Repayment of borrowings with affiliated entities		—			(106,153	)		50,453			55,700			—
Issuance of stock		45,690			—			—			—			45,690
Dividends paid		(15,692	)		—			(15,693	)		15,693			(15,692	)
Change in intercompany advances		—			—			—			—			—
Cash investment from parent		—			43,696			—			(43,696	)		—
Cash flows from financing activities		29,998			(60,284	)		(99,690	)		(25,644	)		(155,620	)
Net change in cash and cash equivalents		—			2,584			(768	)		—			1,816
Cash at beginning of period		—			12,833			1,756			—			14,589
Cash at end of period	$	—		$	15,417		$	988		$	—		$	16,405

Note 31—Subsequent Events

Management has evaluated all events and transactions through the date the Company issued these consolidated financial statements. During this period:

• On April 19, 2013, PCM committed to acquire on the Company’s behalf mortgage loans with purchase prices totaling approximately $294.1 million. The transaction will be recorded as mortgage loans under forward purchase agreements. The pending transaction is subject to continuing due diligence and customary closing conditions. There can be no assurance that the committed amounts will ultimately be acquired or that the transactions will be completed at all.

50

• On April 23, 2013, the Company’s board of trustees declared a cash dividend of $0.57 per share payable on May 31, 2013 to holders of record of the Company’s common shares as of May 16, 2013.

• On April 30, 2013, PMC issued in a private offering $250 million aggregate principal amount of its Exchangeable Senior Notes due 2020 (the “Notes”). The Notes bear interest at a rate of 5.375% per year, payable semiannually, and the Notes have an approximate 25% conversion premium to the Company’s common share price on the date of the pricing. The Notes will mature May 1, 2020, unless repurchased or exchanged in accordance with their terms prior to such date.

The Notes were offered only to qualified institutional buyers (as defined in the Securities Act of 1933, as amended (the “Securities Act”)) pursuant to Rule 144A under the Securities Act.

The Notes are fully and unconditionally guaranteed by the Company and exchangeable for the Company’s common shares at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.

The net proceeds from the offering are intended to be used to fund the business and investment activities of the Company, which may include the acquisition of distressed mortgage loans or other investments; the funding of the continued growth of its correspondent lending business, including the purchase of jumbo loans; the repayment of other indebtedness; and for general corporate purposes.

• On May 8, 2013, the Company, through two of its wholly-owned subsidiaries, PMC and PMITH, entered into an amendment to its amended and restated master repurchase agreement, dated as of August 25, 2011, by and among Credit Suisse First Boston Mortgage Capital LLC (“CSFB”) and PMC, PMITH and the Company (the “NPL Facility”).

Under the terms of the amendment to the NPL Facility, the Company modified certain of its financial covenants, which now include maintaining the following: (i) a minimum tangible net worth of $860 million at the Company, $250 million at PMITH and $150 million at PMC, (ii) unrestricted cash and cash equivalents, on a consolidated basis, in minimum amounts of $40 million at the Company, $10 million at each of PMITH and PMC, and $25 million at PMITH and PMC in the aggregate, (iii) a maximum ratio of total liabilities to tangible net worth of less than 5:1 at each of the Company and PMITH and 10:1 at PMC; and (iv) profitability at each of PMITH and PMC for at least one (1) of the previous two (2) consecutive fiscal quarters, as of the end of each fiscal quarter.

• On May 8, 2013, the Company, through its wholly-owned subsidiary, the Operating Partnership, entered into an amendment to its master repurchase agreement, dated September 28, 2012, by and among CSFB and the Operating Partnership and the Company (the “Re-warehouse Facility”).

Under the terms of the amendment to the Re-warehouse Facility, the Company modified certain of its financial covenants, which now include maintaining the following: (i) a minimum tangible net worth of $860 million at the Company and $700 million at the Operating Partnership, (ii) unrestricted cash and cash equivalents, on a consolidated basis, in minimum amounts of $40 million at each of the Company and the Operating Partnership, (iii) a maximum ratio of total liabilities to tangible net worth of less than 5:1 at each of the Company and the Operating Partnership; and (iv) profitability at the Operating Partnership for at least one (1) of the previous two (2) consecutive fiscal quarters, as of the end of each fiscal quarter.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

We are a specialty finance company that invests primarily in residential mortgage loans and mortgage-related assets. Our objective is to provide attractive risk-adjusted returns to our investors over the long-term, principally through dividends and secondarily through capital appreciation. We intend to achieve this objective largely by investing in distressed mortgage assets and acquiring, pooling and selling newly originated prime credit quality residential mortgage loans (“correspondent lending”).

Changes in the mortgage market have significantly reduced the outlets for sales of newly originated mortgage loans by mortgage lenders who have traditionally sold their loans to larger mortgage companies and banks who, in turn, sold those loans to Agencies and other investors or into securitizations. We believe that these changes are due in part to banks’ anticipation of regulatory changes to loan and securitization-related capital requirements, along with a focus on retail lending; and that the changes provide us with the opportunity to act as a link between loan originators and the Agency and securitization markets.

During the quarter ended March 31, 2013, we purchased loans with fair values totaling $8.8 billion, in furtherance of our correspondent lending business. To the extent that we purchase loans that are insured by the U.S. Department of Housing and Urban Development’s Federal Housing Administration (“FHA”) or insured or guaranteed by the Veterans Administration, we and PLS have agreed that PLS will fulfill and purchase such loans, as PLS is a Ginnie Mae approved issuer and servicer. This arrangement has enabled us to compete with other correspondent lenders that purchase both government and conventional loans. We receive a sourcing fee from PLS of three basis points on the unpaid principal balance of each loan that we sell to PLS under such arrangement, and earn interest income on the loan for the time period we hold the loan prior to the sale to PLS. We received sourcing fees totaling $1.0 million and $244 thousand relating to $3.5 billion and $838.1 million of fair value loans we sold to PLS for the quarters ended March 31, 2013 and 2012, respectively.

We invest in distressed mortgage loans through direct acquisitions of mortgage loan portfolios from institutions such as banks and mortgage companies. A substantial portion of the nonperforming loans we have purchased has been acquired from or through one or more subsidiaries of Citigroup, Inc.

We seek to maximize the value of the distressed mortgage loans that we acquire using means that are appropriate for the particular loan, including both proprietary and nonproprietary loan modification programs (such as the U.S. Departments of the Treasury and Housing and Urban Development’s Home Affordable Modification Program (“HAMP”)), special servicing and other initiatives focused on avoiding foreclosure, when possible. When we are unable to effect a cure for a mortgage delinquency, our objective is to effect timely acquisition and/or liquidation of the property securing the loan through the use, in part, of short sales and deed-in-lieu of foreclosure programs. During the quarter ended March 31, 2013, we acquired distressed mortgage loans with fair values totaling $200.3 million and we received proceeds from liquidation, payoffs and sales from our portfolio of distressed mortgage loans and REO totaling $93.4 million.

We supplement these activities through participation in other mortgage-related activities, which are in various states of analysis, planning or implementation, including:

• Acquisition of MSRs or excess servicing spread from MSRs from financial institutions. We believe that MSR investments may allow us to earn attractive current returns and to leverage the loan servicing and origination capabilities of PLS to improve the assets’ value. We also intend to continue to retain the MSRs that we receive as a portion of the proceeds from our sale or securitization of mortgage loans through our correspondent lending operation.

• Pursuant to the terms of the MSR recapture agreement entered into with PLS effective February 1, 2013, if PLS refinances loans for which we previously created and held the MSRs through our correspondent lending activities, PLS is generally required to transfer and convey to us, without cost to us, the MSRs with respect to new mortgage loans originated in those refinancings (or, under certain circumstances, other mortgage loans) that have an aggregate unpaid principal balance that is not less than 30% of the aggregate unpaid principal balance of all the loans so originated.

• Providing inventory financing of mortgage loans for mortgage lenders. We believe this activity may result in attractive investment assets and will supplement and make our correspondent lending business more attractive to lenders from which we acquire newly originated loans.

• To the extent that we transfer correspondent lending loans into private label securitizations in the future, we may retain a portion of the securities created in the securitization transaction.

• Acquisition of REIT-eligible mortgage-backed securities.

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We are externally managed by PCM, an investment adviser that specializes in and focuses on, residential mortgage loans. Most of our mortgage loan portfolio is serviced by PLS, an affiliate of PCM.

We conduct substantially all of our operations, and make substantially all of our investments, through our Operating Partnership and its subsidiaries. We are the sole limited partner and one of our subsidiaries is the sole general partner of our Operating Partnership.

We believe that we qualify to be taxed as a REIT. We believe that we will not be subject to federal income tax on that portion of our income that is distributed to shareholders as long as we meet certain 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 correspondent lending business, is conducted in a taxable REIT subsidiary (“TRS”), which is subject to corporate federal and state income taxes. Accordingly, we have made 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.

Observations on Current Market Opportunities

The U.S. economy continues its pattern of modest growth as reflected in recent economic data. During the first quarter of 2013, real U.S. gross domestic product expanded at an annual rate of 2.5% compared to a revised 2.0% and 0.4% annual rates for the first and fourth quarters of 2012, respectively. Modest economic growth and pressure on state and federal government spending continued to affect unemployment rates during the first quarter of 2013. The national unemployment rate was 7.6% at March 31, 2013 and compares to a revised seasonally adjusted rate of 8.2% at March 31, 2012 and 7.8% at December 31, 2012. Declining unemployment is partially reflective of a declining workforce labor participation rate. Delinquency rates on single family residential mortgage loans linger at historically high rates. As reported by the Federal Reserve, during the fourth quarter of 2012, charge-off and delinquency rates on loans and leases at commercial banks were 10.07%, an improvement from 10.30% during the first quarter of 2012.

Residential real estate activity appears to be modestly improving. The seasonally adjusted annual rate of existing home sales for March 2013 was 10.3% higher than for March 2012 and the national median existing home price for all housing types was $184,300, an 11.8% increase from March 2012. On a national level, foreclosure filings during the first quarter of 2013 decreased 12% as compared to the fourth quarter of 2012 and 23% as compared to the first quarter of 2012, representing the ninth consecutive quarter with an annual decrease in foreclosure activity. A previously expected increase in foreclosure activity at the national level as lenders resolve their operational issues relating to the foreclosure of delinquent loans has not yet materialized; however it is anticipated that foreclosure activity within select markets may increase during the remainder of 2013 and beyond.

Thirty-year fixed rate mortgage interest rates ranged from a high of 3.57% to a low of 3.41% during the first quarter of 2013 (Source: the Federal Home Loan Mortgage Corporation’s Weekly Primary Mortgage Market Survey). During the first quarter of 2012, interest rates for the thirty-year fixed rate mortgage ranged from a high of 3.95% to a low of 3.89%.

Total mortgage originations in the first quarter of 2013 were approximately $500 billion, an increase of 19.0% compared to originations of $420 billion during the first quarter of 2012, and a decrease of 4.8% compared to originations of $525 billion during the fourth quarter of 2012 (Source: Inside Mortgage Finance).

The potential market opportunity in non-agency jumbo is significant. First quarter prime jumbo MBS issuance surpassed the total for all of 2012. Investor appetite is growing for non-agency MBS and borrower demand is growing as low rates and improving home values drove increased origination activity. We believe that the Federal Housing Finance Agency (“FHFA”) will execute upon its stated goal to reduce the role of Fannie Mae and Freddie Mac in mortgage finance, and part of that goal will be to reduce agency conforming limits to pre-crisis levels. This would open a significant portion of the jumbo market to non agency securitization and move the market one step closer to normalization. During the quarter ended March 31, 2013, we acquired approximately $8.1 million in unpaid principal balance jumbo loans compared to $10.8 million in unpaid principal balance during all of 2012.

The Manager continues to see substantial volumes of distressed residential mortgage loan sales (sales of loan pools that consist of either nonperforming loans, troubled but performing loans or a combination thereof) offered for sale by a limited number of sellers. During the first quarter of 2013, our Manager reviewed 27 mortgage loan pools with unpaid principal balances totaling approximately $5.7 billion. This compares to our Manager’s review of 25 mortgage loan pools with unpaid principal balances totaling approximately $4.9 billion during the first quarter of 2012. We acquired distressed mortgage loans with fair values totaling $200.3 million during the quarter ended March 31, 2013; there were no distressed mortgage loan acquisitions during the quarter ended March 31, 2012.

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Results of Operations

The following is a summary of our key performance measures for the periods presented:

	Quarter ended March 31,
	2013		2012
	(in thousands, except per share amounts)
Net investment income	$	119,052	$	46,649
Pre-tax income by segment:
Correspondent lending	$	8,880	$	10,301
Investment		50,339		14,274
	$	59,219	$	24,575
Net income	$	53,296	$	19,058
Earnings per share:
Basic	$	0.90	$	0.65
Diluted	$	0.90	$	0.65
Dividends per share:
Declared	$	0.57	$	0.55
Paid	$	0.57	$	0.55
Investment activities:
Correspondent lending:
Purchases of mortgage loans for sale	$	8,849,152	$	1,858,147
Proceeds from sales of mortgage loans acquired for sale:
Cash:
Sales to nonaffiliated investors	$	5,134,736	$	1,353,172
Sales of government-insured and guaranteed loans to PLS		3,548,397		577,852
	$	8,683,133	$	1,931,024
MSRs	$	56,216	$	12,929
Distressed mortgage loans and REO:
Purchases	$	200,473	$	339
Cash proceeds from sales and repayments	$	93,445	$	68,446
MBS:
Purchases	$	—	$	112,383
Cash proceeds from repayment and sales	$	—	$	11,086
Share prices during the period:
High	$	28.73	$	18.92
Low	$	24.17	$	16.75
At period end	$	25.89	$	18.67
At period end:
Total assets	$	2,927,160	$	1,378,020
Book value per share	$	20.72	$	19.21

During the quarter ended March 31, 2013, we recorded net income of $53.3 million, or $0.90 per diluted share. Our net income for the quarter reflects net gains on our investments in financial instruments totaling $93.3 million (comprised of net gain on investments and net gain on mortgage loans acquired for sale), including $55.6 million of valuation gains on mortgage loans excluding mortgage loans acquired for sale, supplemented by $16.9 million of interest income. During the quarter ended March 31, 2013, we purchased $8.8 billion in fair value of newly originated mortgage loans. We recognized gains on such loans totaling approximately $29.3 million. At March 31, 2013, we held mortgage loans acquired for sale with fair values totaling $1.1 billion.

During the quarter ended March 31, 2012, we recorded net income of $19.1 million, or $0.65 per diluted share. Our net income for the quarter reflected net gains on our investments in financial instruments totaling $24.9 million (comprised of net gain on investments and net gain on mortgage loans acquired for sale), including $6.7 million of valuation gains on MBS and mortgage loans excluding mortgage loans acquired for sale, supplemented by $16.4 million of interest income. During the first quarter of 2012, we purchased $1.9 billion in fair value of newly originated mortgage loans. We recognized gains on such loans totaling approximately $13.4 million. At March 31, 2012, we held mortgage loans acquired for sale with fair values totaling $155.3 million.

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Our net income increased during the quarter ended March 31, 2013 as compared to the quarter ended March 31, 2012 due to growth in our investment activities segment. During the quarter ended March 31, 2013, we sold $8.6 billion in fair value of mortgage loans and issued $4.2 billion of IRLCs, an increase of $6.8 billion or 350% and $1.8 billion or 75%, respectively, from the quarter ended March 31, 2012. As a result of these increases, our gain on mortgage loans acquired for sale increased $15.9 million or 119%. In our investment activities, our average investment portfolio was approximately $1.2 billion during the quarter ended March 31, 2013, an increase of $340.4 million or 40% from the quarter ended March 31, 2012. We recognized interest income and net gains (losses) from investments totaling approximately $15.0 and $64.0 million during the quarter ended March 2013, increases of $1.8 million or 13% and $52.5 million or 457%, respectively, from the quarter ended March 31, 2012.

Net Investment Income

During the quarter ended March 31, 2013, we recorded net investment income of $119.1 million, comprised primarily of net gains on investments in financial instruments of $93.3 million supplemented by $16.9 million of interest income, $5.5 million of loan origination fees and $6.7 million of net loan servicing fees, partially offset by $3.3 million from results of REO. This compares to net investment income of $46.6 million in the quarter ended March 31, 2012, comprised primarily of net gains on investments in financial instruments of $24.9 million supplemented by $16.4 million of interest income and $3.7 million from results of REO.

The growth in net investment income reflects the growth in the distressed loan portfolio and correspondent lending activities.

Net investment income on financial instruments is summarized below for the periods presented:

	Quarter ended March 31, 2013
	Net gain		Interest income/expense						Total revenue/ expense				Annualized interest yield/cost %
			Coupon		Discount/ fees (1)		Total interest				Average balance
	(dollars in thousands)
Assets:
Correspondent lending:
Mortgage loans acquired for sale at fair value	$	29,279	$	1,849	$	—	$	1,849	$	31,128	$	831,511		0.89	%
Investment activities:
Short-term investments		—		31		—		31		31		63,896		0.20	%
Mortgage loans at fair value		63,980		14,971		—		14,971		78,951		1,135,248		5.27	%
Total investment activities		63,980		15,002		—		15,002		78,982		1,199,144		5.00	%
Other interest		—		24		—		24		24		—
	$	93,259	$	16,875	$	—	$	16,875	$	110,134	$	2,030,655		3.32	%
Liabilities:
Assets sold under agreements to repurchase:
Mortgage loans at fair value	$	—	$	3,794	$	563	$	4,357	$	4,357	$	442,151		3.94	%
Mortgage loans acquired for sale at fair value		—		4,452		1,598		6,050		6,050		774,417		3.12	%
Real estate acquired in settlement of loans		—		55		125		180		180		5,198		13.83	%
Note payable secured by warehouse notes receivable		—		—		125		125		125		—		—
Interest bearing liabilities		—		8,301		2,411		10,712		10,712		1,221,766		3.51	%
Other interest—servicing related		—		524		—		524		524		—
	$	—	$	8,825	$	2,411	$	11,236	$	11,236	$	1,221,766		3.68	%

(1) Amounts in this column represent accrual of unearned discounts and amortization of facility commitment fees for liabilities.

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	Quarter ended March 31, 2012
	Net gain (loss) on investments			Interest income/expense							Total revenue/ expense			Average balance		Annualized interest yield/cost %
				Coupon		Discount/ fees (1)			Total
	(dollars in thousands)
Assets:
Correspondent lending:
Mortgage loans acquired for sale at fair value	$	13,370		$	2,791	$	—		$	2,791	$	16,161		$	191,522		5.77	%
Investment activities:
Short -term investments		—			9		—			9		9			37,541		0.10	%
United States Treasury security		—			—		—			—		—			9,890		0.00	%
Mortgage-backed securities:
Fannie Mae 30-year fixed		(6	)		—		—			—		(6	)		2,470		0.00	%
Non-Agency subprime		246			95		283			378		624			57,947		2.58	%
Non-Agency Alt-A		27			111		43			154		181			7,667		7.97	%
Non-Agency prime jumbo		90			33		9			42		132			5,134		3.27	%
Total mortgage-backed securities		357			239		335			574		931			73,218		3.10	%
Mortgage loans at fair value		4,431			12,527		—			12,527		16,958			621,441		7.97	%
Under forward purchase agreements at fair value		6,700			502		—			502		7,202			116,613		1.70	%
Total investment activities		11,488			13,277		335			13,612		25,100			858,703		6.27	%
Other interest		—			22		—			22		22			—
	$	24,858		$	16,090	$	335		$	16,425	$	41,283		$	1,050,225		6.19	%
Liabilities:
Assets sold under agreements to repurchase:
Securities	$	—		$	157	$	—		$	157	$	157		$	69,030		0.90	%
Mortgage loans at fair value		—			2,939		199			3,138		3,138			285,817		4.34	%
Mortgage loans acquired for sale at fair value		—			947		417			1,364		1,364			177,864		3.03	%
Real estate acquired in settlement of loans		—			262		125			387		387			24,589		6.22	%
Note payable secured by mortgage loans at fair value		—			121		(8	)		113		113			6,869		6.47	%
Borrowings under forward purchase agreements		—			1,515		—			1,515		1,515			146,512		4.09	%
Interest bearing liabilities	$	—		$	5,941	$	733		$	6,674	$	6,674		$	710,681		3.71	%

(1) Amounts in this column represent accrual of unearned discounts and amortization of facility commitment fees for liabilities.

Correspondent Lending

Net Gain on Mortgage Loans Acquired for Sale

During the quarter ended March 31, 2013, we recorded a net gain of $29.3 million on mortgage loans acquired for sale which included approximately $56.2 million in fair value of MSRs received as part of the proceeds from our correspondent lending loan sales. During the quarter ended March 31, 2012, we recorded a net gain of $13.4 million on mortgage loans acquired for sale, which included $12.9 million of MSRs received as part of the proceeds from our correspondent lending sales.

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Our gains on mortgage loans acquired for sale are summarized below:

	Quarter ended March 31,
	2013			2012
	(in thousands)
Cash gain (loss):
Sales proceeds	$	(27,247	)	$	548
Hedging activities		13,614			(803	)
		(13,633	)		(255	)
Non cash gain:
Change in fair value of IRLCs		(8,426	)		(1,464	)
Receipt of MSRs in loan sale transactions		56,216			12,929
Provision for losses relating to representations and warranties provided in loan sales		(1,790	)		(426	)
Change in fair value relating to loans and hedging derivatives held at year-end:
Mortgage loans		(2,422	)		1,181
Hedging derivatives		(666	)		1,405
		(3,088	)		2,586
	$	29,279		$	13,370
Increase (decrease) in gain on mortgage loans acquired for sale due to:
Change in pipeline fair value	$	(6,962	)	$	(1,464	)
Volume of loans sold		32,379			14,800
Gain margin		(9,508	)		(49	)
Total change	$	15,909		$	13,287

Our gain on mortgage loans acquired for sale includes both cash and non-cash elements. We receive proceeds on sale that include both cash and our estimate of the value of MSRs and we recognize a liability for losses potential relating to representations and warranties created in the loan sales transactions.

The change in our cash gain on sale from the quarter ended March 31, 2012 to the quarter ended March 31, 2013 reflects the differing market environments prevailing during the respective periods. During the quarter ended March 31, 2012, mortgage interest rates were generally decreasing, resulting in larger cash gains; during the quarter ended March 31, 2013, mortgage interest rates were generally increasing, resulting in reduced cash gains. As well, during the quarter ended March 31, 2013, pricing margins were compressed as compared to the quarter ended March 31, 2012, due to increasing competition in the market for mortgage loans.

MSRs represent the value of a contract that obligates us to service mortgage loans on behalf of the purchaser of the loan in exchange for servicing fees and the right to collect certain ancillary income from the borrower. We recognize MSRs at our estimate of the fair value of the contract to service the loans. As discussed in Net loan servicing fees, below, how much of the MSR we realize in cash relies on how our initial estimates of the future cash flows accruing to the MSRs are realized. As economic fundamentals influencing the loans we sell with servicing rights retained change, our estimate of the fair value of MSRs will also change. As a result, we will record changes in fair value as a component of Net loan servicing fees for the MSRs we carry at fair value and we may recognize changes in fair value relating to our MSRs carried at the lower of amortized cost or fair value depending on the relationship of the asset’s fair value to its carrying value at the measurement date.

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Following are the key inputs used in determining the fair value of MSRs at the time of initial recognition:

	Quarter ended March 31,
	2013		2012
	Range (Weighted average)
Key Inputs	Amortized cost	Fair value	Amortized cost	Fair value
Pricing spread (1)	5.4% – 14.4%	7.5% – 14.4%	7.5% – 14.5%	7.5% – 14.5%
	(7.0%)	(8.5%)	(7.5%)	(8.3%)
Life (in years)	2.7 – 6.9	2.8 – 6.8	2.8 – 7.0	2.8 – 7.0
	(6.4)	(6.1)	(6.5)	(5.8)
Annual total prepayment speed (2)	8.5% – 22.7%	10.4% – 27.0%	6.7% – 27.4%	7.9% – 27.4%
	(9.1%)	(14.4%)	(7.9%)	(13.1%)
Annual per-loan cost of servicing	$68 – $140	$68 – $68	$68 – $140	$68 – $140
	($68)	($68)	($69)	($89)

(1) Pricing spread represents a margin that is applied to a reference interest rate’s forward rate curve to develop periodic discount rates. The Company applies a pricing spread to the United States Dollar LIBOR curve for purposes of discounting cash flows relating to MSRs acquired as proceeds from the sale of mortgage loans.

(2) Annual total prepayment speed is measured using life total CPR.

We also provide for our estimate of the future losses that we may be required to incur as a result of our breach of representations and warranties provided to the purchasers of the loans we sold. Our agreements with the Agencies include representations and warranties related to the loans we sell to the Agencies. The representations and warranties require adherence to Agency 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 law.

In the event of a breach of our representations and warranties, we may be required to either repurchase the mortgage loans with the identified defects or indemnify the investor or insurer. In such cases, we bear any subsequent credit loss on the mortgage loans. Our credit loss may be reduced by any recourse to correspondent lenders that, in turn, had sold such mortgage loans to us and breached similar or other representations and warranties. In such event, we have the right to seek a recovery of related repurchase losses from that originator.

We evaluate the adequacy of our estimate based on our loss experience and our assessment of future losses to be incurred relating to loans we have previously sold and which remain outstanding at the balance sheet date. The method used to estimate the liability for representations and warranties is a function of the representations and warranties given and considers a combination of factors, including, but not limited to, estimated future defaults and loan repurchase rates and the potential severity of loss in the event of defaults and the probability of reimbursement by the correspondent loan seller. We establish a liability at the time loans are sold and continually update our liability estimate.

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Following is a summary of our Recourse liability in the consolidated balance sheets:

	Quarter ended March 31,
	2013		2012
	(in thousands)
Balance, beginning of period	$	4,441	$	205
Provisions for losses		1,790		426
Incurred losses		—		—
Balance, end of period	$	6,231	$	631

Following is a summary of the repurchase activity and unpaid balance of mortgage loans subject to representations and warranties:

	Quarter ended March 31,
	2013		2012
	(in thousands)
During the period:
Unpaid balance of mortgage loans repurchased	$	648	$	—
Incurred losses on repurchased loans	$	—	$	—
At period end:
Unpaid balance of mortgage loans subject to pending claims for repurchase	$	—	$	—
Unpaid principal balance of mortgage loans subject to representations and warranties	$	—	$	—

During the quarter ended March 31, 2013, we repurchased mortgage loans with unpaid balances totaling $648,000 and incurred no losses relating to such repurchases. However, as the outstanding balance of loans we purchase and sell subject to representations and warranties increases and the loans sold season, we expect the level of repurchase activity to increase. In addition, as economic fundamentals change and as investor and Agency evaluation of their loss mitigation strategies, including claims under representations and warranties change, the level of repurchase activity and ensuing losses will change and such changes may be material to us.

The level of the recourse liability is difficult to estimate and requires considerable management judgment. The level of mortgage loan repurchase losses is dependent on economic factors, investor demand strategies, and other external conditions that may change over the lives of the underlying loans. Our representations and warranties are generally not subject to stated limits of exposure. However, we believe that the current unpaid principal balance of loans sold by us to date represents the maximum exposure to repurchases related to representations and warranties. We believe the amount and range of reasonably possible losses in relation to the recorded liability is not material to our financial condition or results of operations.

Our hedging activities relating to correspondent lending primarily involve forward sales of our inventory and commitments to purchase mortgage loans as well as purchases of options to sell and options to purchase MBS. We hedged the interest rate fluctuations on indebtedness incurred to acquire our investment in Agency MBS using interest rate swaption agreements.

Following is a summary of the notional activity in our hedging derivatives for the periods presented:

Period/Instrument	Balance, beginning of period		Additions		Dispositions/ expirations			Balance, end of period
	(in thousands)
Quarter ended March 31, 2013
MBS put options		495,000		1,480,000		(1,750,000	)		225,000
MBS call options		—		900,000		(550,000	)		350,000
Forward purchase contracts		2,206,539		12,442,344		(12,757,923	)		1,890,960
Forward sales contracts		4,266,983		17,850,273		(18,893,066	)		3,224,190

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Investment Activities

Net Gain (Loss) on Investments

During the quarter ended March 31, 2013, we recognized net gains on mortgage loans at fair value totaling $64.0 million. This compares to gains on mortgage loans at fair value and MBS of $11.5 million for the quarter ended March 31, 2012. The increase for the quarter ended March 31, 2013 as compared to the quarter ended March 31, 2012 is primarily due to valuation gains in our portfolio of mortgage loans, reflecting continuing improvements in actual and expected performance in the residential real estate market. This appreciation was compounded by growth in our average investment in mortgage loans at fair value. The average portfolio balance of mortgage loans at fair value (including mortgage loans under forward purchase agreements) increased $397.2 million or 54% during the quarter ended March 31, 2013 as compared to the quarter ended March 31, 2012.

Net gains on mortgage loans at fair value and mortgage loans under forward purchase agreements at fair value are summarized below for the periods presented:

	Quarter ended March 31,
	2013		2012
	(in thousands)
Valuation changes:
Performing loans	$	22,984	$	1,712
Nonperforming loans		32,632		4,572
		55,616		6,284
Payoffs		8,364		4,847
	$	63,980	$	11,131

The net gains on mortgage loans arising from valuation changes were due to improvements in observed market demand for performing and re-performing distressed loans, changes in the value of loans as the loans moved through the resolution process and continuing improvement in actual and expected performance in the residential real estate market.

During the quarters ended March 31, 2013 and 2012, we recognized gains on mortgage loan payoffs as summarized below:

	Quarter ended March 31,
	2013		2012
	(dollar amounts in thousands)
Number of loans		293		185
Unpaid principal balance	$	80,642	$	62,061
Gain recognized at payoff	$	8,364	$	4,847

The increase in gains recognized at payoff for the quarter ended March 31, 2013 compared to the quarter ended March 31, 2012 was due to the higher level of payoff activity due to a larger portfolio for the quarter ended March 31, 2013 compared to the quarter ended March 31, 2012.

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The following tables present a summary of loan modifications completed for the periods presented:

	Quarter ended March 31
	2013				2012
Modification type (1)	Number of loans		Balance of loans (2)		Number of loans		Balance of loans (2)
	(dollar amounts in thousands)
Rate reduction		123	$	26,905		185	$	48,913
Term extension		111		22,580		93		24,432
Capitalization of interest and fees		218		46,185		267		66,055
Principal forbearance		49		8,931		36		10,839
Principal reduction		74		20,341		138		34,049
Total		218		46,185		267		66,055

(1) Modification type categories are not mutually exclusive, and a modification of a single loan may be counted in multiple categories if applicable. The total number of modifications noted in the table is therefore lower than the sum of all of the categories.

(2) Before modification.

The following table summarizes the average impact of the modifications noted above to the terms of the loans modified for the periods presented:

	Quarter ended March 31,
	2013						2012
Category	Before Modification			After Modification			Before Modification			After Modification
	(Dollar amounts in thousands)
Loan balance	$	212		$	197		$	247		$	226
Remaining term (months)		313			442			310			365
Interest rate		5.99	%		5.08	%		6.67	%		3.90	%
Forbeared principal	$	—		$	6		$	—		$	8

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During the quarter ended March 31, 2012, we recognized a net valuation gain on MBS totaling $357,000. We sold our portfolio of MBS during the quarter ended September 30, 2012 and have not reinvested in such assets through March 31, 2013.

Interest Income

The effects of changes in the composition of our investments on our interest income during the periods presented are summarized below:

	Quarter ended March 31, 2013 vs. Quarter ended March 31, 2012
	Increase (decrease) due to changes in
	Rate			Volume			Total change
				(in thousands)
Short-term investments	$	13		$	9		$	22
Mortgage-backed securities:
Non-Agency subprime		—			(378	)		(378	)
Non-Agency Alt-A		—			(154	)		(154	)
Non-Agency prime jumbo		—			(42	)		(42	)
Total mortgage-backed securities		—			(574	)		(574	)
Mortgage loans at fair value		(5,308	)		7,752			2,444
Mortgage loans under forward purchase agreements at fair value		—			(502	)		(502	)
Total investment activities	$	(5,295	)	$	6,685		$	1,390

In the quarter ended March 31, 2013, we earned interest income of $15.0 million compared to $13.6 million for the quarter ended March 31, 2012.

We earned interest income of $574,000 on our portfolio of MBS during the quarter ended March 31, 2012. As noted above, we sold this portfolio during the quarter ended September 30, 2012 and therefore had no income relating to such securities during the quarter ended March 31, 2013.

In the quarter ended March 31, 2013, we recognized interest income on mortgage loans at fair value of $15.0 million, which compares to $13.0 million (including interest earned on mortgage loans under forward purchase agreements) in the quarter ended March 31, 2012. The increases in interest income are due primarily to growth in the average balance of our mortgage loan portfolio of $340.4 million or 40% for the quarter ended March 31, 2013 when compared to the same period in 2012. During the quarter ended March 31, 2013, we recognized annualized interest of 5.00 % on our portfolio of mortgage loans at fair value as measured by the portfolio’s average fair value. This compares to 6.27% for the quarter ended March 31, 2012. The decrease in yield during the quarter ended March 31, 2013 as compared to the same period in 2012 is due primarily to the large number of modifications we made in which we recovered delinquent interest during 2012 as compared to the quarter ended March 31, 2013, and the decrease in the weighted average coupon of performing mortgage loans. At March 31, 2013, our investment in performing mortgage loans had a weighted average coupon of 4.10% compared to 4.27% at March 31, 2012.

At March 31, 2013, approximately 67% of the fair value of our portfolio of mortgage loans was nonperforming, which compares to 68% at March 31, 2012. We do not accrue interest on nonperforming loans and generally do not recognize revenues during the period we hold REO. We calculate the yield on our mortgage loan portfolio based on the portfolio’s average fair value, which most closely reflects our investment in the mortgage loans. Accordingly, the yield we realize is substantially higher than would be recorded based on the loans’ unpaid balances as we purchase our mortgage loans at substantial discounts to their unpaid principal balances.

The revenue benefits of nonperforming loans and REO generally take longer to realize than those of performing loans due to the time required to work with borrowers to resolve payment issues through our modification programs and to acquire and liquidate the property securing the mortgage loans. The value and returns we realize from these assets are determined by our ability to cure the borrowers’ defaults, or when curing of borrower defaults is not a viable solution, by our ability to effectively manage the liquidation process. As a participant in HAMP, we are required to comply with the process specified by the HAMP program before liquidating a loan, and this may extend the liquidation process. At March 31, 2013, we held $918.9 million in fair value of nonperforming loans and $84.5 million in carrying value of REO.

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Results of Real Estate Acquired in Settlement of Loans

Results of REO includes the gains or losses we record upon sale of the properties as well as valuation adjustments we record during the period we hold those properties. During the quarter ended March 31, 2013, we recorded net losses of $3.3 million in Results of real estate acquired in settlement of loans as compared to net gains totaling $3.7 million, respectively, for the quarter ended March 31, 2012.

Results of REO are summarized below:

	Quarter ended March 31,
	2013			2012
	(in thousands)
Valuation adjustments, net	$	(6,089	)	$	(2,935	)
Gain on sale, net		2,836			6,652
		(3,253	)		3,717

The shift in results of REO from a gain during the quarter ended March 31, 2012 to a loss during the quarter ended March 31, 2013 was primarily due to recognition of large valuation losses on several properties in the Company’s portfolio during the quarter ended March 31, 2013, along with the effect on gain on sale of REO related to enhancements in the measurement of fair value of mortgage loans immediately before transfer to REO, which has resulted in larger valuation gains on mortgage loans at fair value immediately before the transfer to REO. These gains were partially offset by more exposure to valuation adjustments during the period we hold the respective properties and to reduced gains on sale when we ultimately sell the properties.

Net Loan Servicing Fees

When we sell mortgage loans, we generally enter into a contract to service the mortgage loans and recognize the value of such contracts as MSRs. Under these contracts, we perform loan servicing functions in exchange for fees and the right to other compensation. The servicing functions typically performed include, among other responsibilities, collecting and remitting loan payments; responding to borrower inquiries; accounting for principal and interest, holding custodial (impound) funds for payment of property taxes and insurance premiums; counseling delinquent mortgagors; and supervising foreclosures and property dispositions.

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Net loan servicing fees are summarized below:

	Quarter ended March 31,
	2013			2012
	(in thousands)
Servicing fees (1)	$	11,104		$	652
MSR recapture fee from affiliate		133			—
Effect of MSRs:
Amortization		(4,970	)		(248	)
Impairment reversal (provision) of MSRs carried at lower of amortized cost or fair value		2,486			(106	)
Change in fair value of MSRs carried at fair value		(67	)		(101	)
Losses on hedging derivatives		(1,988	)		—
		(4,539	)		(455	)
Net loan servicing fees	$	6,698		$	197

(1) Includes contractually specified servicing and ancillary fees.

Our servicing fees increased $10.5 million during the quarter ended March 31, 2013 compared to the quarter ended March 31, 2012 due to the growth in our mortgage loan servicing portfolio. Correspondent lending activity—presently the primary source of our mortgage loan servicing portfolio—began to increase in the fourth quarter of 2011. As a result, our mortgage loan servicing portfolio during the quarter ended March 31, 2012 was much smaller than during the quarter ended March 31, 2013.

Effective February 1, 2013, we entered into an MSR recapture agreement that requires PLS to transfer to us the MSRs with respect to new mortgage loans originated in refinancing transactions where PLS refinances a mortgage loan for which we previously held the MSRs. PLS is generally required to transfer MSRs relating to such mortgage loans (or, under certain circumstances, other mortgage loans) that have an aggregate unpaid principal balance that is not less than 30% of the aggregate unpaid principal balance of all the loans so originated. We recognized approximately $133,000 of such income during the quarter ended March 31, 2013.

Amortization, impairment and changes in fair value of MSRs have a significant effect on net loan servicing fees, driven primarily by our monthly re-estimation of the fair value of MSRs. As our investment in MSRs grows, we expect that the effect of amortization, impairment and changes in fair value will have an increasing influence on our net income. The fair value of MSRs is difficult to determine because MSRs are not actively traded in standalone markets. Considerable judgment is required to estimate the fair values of these assets and the exercise of such judgment can significantly affect our income.

Our MSR valuation process combines the use of a discounted cash flow model and analysis of current market data to arrive at an estimate of fair value at each balance sheet date. The cash flow and prepayment assumptions used in the Manager’s discounted cash flow model are based on market factors and include the historical performance of its MSRs, which the Manager believes are consistent with assumptions and data used by market participants valuing similar MSRs. The key assumptions used in the valuation of MSRs include mortgage prepayment speeds and discount rates. These variables can, and generally do, change from period to period as market conditions change. Therefore our estimate of the fair value of MSRs changes from period to period. PCM’s valuation committee reviews and approves the fair value estimates of our MSRs.

We account for MSRs at either our estimate of the asset’s fair value with changes in fair value recorded in current period earnings or using the amortization method carried at the lower of estimated amortized cost or fair value based on whether we view the underlying mortgages as being sensitive to prepayments resulting from changing market interest rates. We have identified an initial mortgage interest rate of 4.5% as the threshold for whether such mortgage loans are sensitive to changes in interest rates:

• Our risk management efforts in connection with MSRs relating to mortgage loans with initial interest rates of more than 4.5% are aimed at moderating the effects of changes in interest rates on the assets’ values.

• For MSRs relating to mortgage loans with initial interest rates of less than or equal to 4.5% that were acquired as a result of the our correspondent lending operations, we have concluded that such assets present different risks than MSRs relating to mortgage loans with initial interest rates of more than 4.5% and therefore require a different risk management approach. Our risk management efforts relating to these assets are aimed at moderating the effects of non-interest rate risks on fair value, such as the effect of changes in home prices on the assets’ values. We have identified these assets for accounting using the amortization method.

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Our MSRs are summarized by the basis on which we account for the assets below as of the dates presented:

Basis of Accounting	March 31, 2013			December 31, 2012
	(in thousands)
Fair value	$	1,305		$	1,346
Lower of amortized cost or fair value:
Amortized cost	$	184,197		$	132,977
Valuation allowance		(5,061	)		(7,547	)
Carrying value	$	179,136		$	125,430
Fair value	$	186,209		$	129,995
Total MSR:
Carrying value	$	180,441		$	126,776
Fair value	$	187,514		$	131,341
Unpaid balance of mortgage loans underlying MSRs	$	16,642,130		$	12,168,740

Key assumptions used in determining the fair value of MSRs and estimates of the sensitivity of MSR values to changes in these assumptions as of the dates presented are as follows:

	March 31, 2013						December 31, 2012
	Range (Weighted average)
Key Inputs	Amortized cost			Fair value			Amortized cost			Fair value
	(unpaid principal balance and effect on value amounts in thousands)
Unpaid principal balance of underlying loans	$	16,479,081		$	163,049		$	11,986,957		$	181,783
Pricing spread (1)		5.4% – 19.0%			8.6% – 14.5%			7.5% – 16.5%			7.5% – 16.5%
		(6.8%)			(9.0%)			(7.5%)			(7.8%)
Effect on value of 5% adverse change	$	(3,056	)	$	(19	)	$	(2,052	)	$	(21	)
Effect on value of 10% adverse change	$	(6,020	)	$	(38	)	$	(4,041	)	$	(40	)
Effect on value of 20% adverse change	$	(11,686	)	$	(73	)	$	(7,845	)	$	(78	)
Average life (in years)		1.8 – 6.9			1.5 – 6.8			1.7 – 6.8			1.4 – 6.7
		(6.4)			(6.2)			(6.3)			(5.8)
Prepayment speed (2)		8.6% – 45.9%			10.4% – 50.9%			8.6% – 47.8%			11.4% – 65.9%
		(9.5%)			(15.1%)			(10.2%)			(18.0%)
Effect on value of 5% adverse change	$	(4,214	)	$	(43	)	$	(3,026	)	$	(52	)
Effect on value of 10% adverse change	$	(8,275	)	$	(83	)	$	(5,937	)	$	(100	)
Effect on value of 20% adverse change	$	(15,966	)	$	(159	)	$	(11,436	)	$	(190	)
Annual per-loan cost of servicing		$68 – $140			$68 – $140			$68 – $140			$68 – $140
		$68			$73			$68			$74
Effect on value of 5% adverse change	$	(885	)	$	(9	)	$	(778	)	$	(12	)
Effect on value of 10% adverse change	$	(1,769	)	$	(19	)	$	(1,556	)	$	(24	)
Effect on value of 20% adverse change	$	(3,538	)	$	(37	)	$	(3,112	)	$	(48	)

(1) Pricing spread represents a margin that is applied to a reference interest rate’s forward rate curve to develop periodic discount rates. The Company applies a pricing spread to the United States Dollar LIBOR curve for purposes of discounting cash flows relating to MSRs acquired as proceeds from the sale of mortgage loans and purchased MSRs not backed by pools of distressed mortgage loans.

(2) Prepayment speed is measured using life total CPR.

Significant changes to any of the key assumptions shown above in isolation could result in a significant change in the MSR fair value measurement. Changes in these key assumptions are not necessarily directly related. The preceding sensitivity analyses are

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limited in that they were performed as of a particular point in time; only contemplate the movements in the indicated variables; do not incorporate changes in the variables in relation to other variables; are subject to the accuracy of various models and inputs used; and do not take into account other factors that would affect our overall financial performance in such scenarios, including operational adjustments made by the Manager to account for changing circumstances. For these reasons, the preceding estimates should not be viewed as earnings forecasts.

Expenses

Our expenses are summarized below for the periods presented:

	Quarter ended March, 31
	2013		2012
	(in thousands)
Loan fulfillment fees	$	28,136	$	6,124
Interest		11,236		6,674
Loan servicing		8,090		4,938
Management fees		6,492		1,804
Compensation		2,089		1,301
Professional services		2,384		442
Other		4,690		791
	$	63,117	$	22,074

Increased expenses during the quarter ended March 31, 2013 compared to the same period in 2012 were primarily a result of the growth in the Company’s investment portfolio, the use of borrowings to finance that growth and the substantial growth in our correspondent lending activities.

Loan fulfillment fees payable to an affiliate represent fees we pay to PLS for the services it performs on our behalf in connection with our acquisition, packaging and sale of mortgage loans. The fee is calculated as a percentage of the unpaid principal balance of the mortgage loans purchased. The increase of $22.0 million in the fees during the quarter ended March 31, 2013 compared to the same periods in 2012 is due to the substantial growth in the volume of Agency-eligible and jumbo mortgage loans we purchase in our correspondent lending activities.

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The effects of changes in the composition of our borrowings on our interest expense during the periods presented are summarized below:

	Quarter ended March 31, 2013 vs. Quarter ended March 31, 2012
	Increase (decrease)
	due to changes in
							Total
	Rate			Volume			change
	(in thousands)
Assets sold under agreements to repurchase:
Securities	$	—		$	(157	)	$	(157	)
Mortgage loans acquired for sale at fair value		(320	)		1,539			1,219
Mortgage loans at fair value		42			4,644			4,686
Real estate acquired in settlement of loans		245			(452	)		(207	)
Note payable secured by mortgage loans at fair value		—			125			125
Note payable secured by warehouse notes receivable		—			(113	)		(113	)
Borrowings under forward purchase agreements		—			(1,515	)		(1,515	)
Interest bearing liabilities		(33	)		4,071			4,038
Other interest—servicing related		—			524			524
	$	(33	)		(4,595	)	$	4,562

During the quarter ended March 31, 2013, we incurred interest expense totaling $11.2 million as compared to $6.7 million during the quarter ended March 31, 2012. Our interest cost was 3.51% for the quarter ended March 31, 2013 as compared to 3.71% for the quarter ended March 31, 2012. The increase in interest expense reflects our increased use of borrowings in support of growth of our balance sheet throughout 2012 and 2013, partially offset by declining interest rates from 2012 to 2013 and a shift in borrowings toward financing more liquid assets which are financeable with lower borrowing rates.

Loan servicing expenses grew from $4.9 million in the quarter ended March 31, 2012 to $8.1 million in the quarter ended March 31, 2013 as our average investment in mortgage loans increased by 112% from the quarter ended March 31, 2012. Included in loan servicing fees were activity-based fees of which the amount increased by $2.1 million, generally relating to the liquidation of loans.

Loan servicing expenses are summarized below for the periods presented:

	Quarter ended March 31,
	2013		2012
	(in thousands)
Servicing fees
Base	$	4,361	$	3,028
Activity-based		3,381		1,299
		7,742		4,327
Collection expenses		348		611
	$	8,090	$	4,938

Management fees increased by $4.7 million compared to the same period in 2012, primarily due to the increase in the base management fee, which increased due to the increase in shareholders’ equity, and the incentive fee. This was the first quarter the incentive fee was earned by our Manager and is linked to the Company’s profitability.

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Compensation expense increased due to the effect on 2012 stock-based compensation expense of restricted share units granted during the second quarter of 2012 to our officers and trustees as well as certain employees of PCM and its affiliates.

Professional services expense increased during the quarter ended March 31, 2013 as compared to the quarter ended March 31, 2012 due to the heightened level of mortgage investment acquisition activity which requires support in the form of due diligence and legal consultations.

Other expense items increased commensurately with increased business activity and asset growth.

Income Taxes

We had elected to treat two of our subsidiaries as TRSs. In the quarter ended September 30, 2012, we revoked the election to treat our wholly owned subsidiary that is the sole general partner of our Operating Partnership as a TRS. As a result, beginning September 1, 2012, only PMC is treated as a 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 the REIT.

No such dividend distributions have been made to date. A TRS is subject to corporate federal and state income tax. Accordingly, a provision for income taxes for PMC and, for the period for which TRS treatment had been elected, the sole general partner of our Operating Partnership is included in the accompanying Consolidated Statements of Income.

In general, cash dividends declared by us will be considered ordinary income to shareholders for income tax purposes. Some portion of the dividends may be characterized as capital gain distributions or a return of capital. Of the 2012 distributions, approximately 83% were characterized as ordinary income and 17% were characterized as a return of capital.

Below is a reconciliation of U.S. GAAP net income to estimated taxable income for the quarter ended March 31, 2013 and the allocation between the TRS and the REIT:

							Taxable income
Three months ending March 31, 2013	U.S. GAAP net income			GAAP/tax differences			Total			Taxable subsidiaries			REIT
	(in thousands)
Net gain on mortgage loans acquired for sale	$	29,279		$	(53,512	)	$	(24,233	)	$	(24,233	)	$	—
Net gain on investments		63,980			(24,339	)		39,641			22,954			16,687
Interest income		16,875			619			17,494			6,804			10,690
Loan origination fees		5,473			—			5,473			5,473			—
Results of real estate acquired in settlement of loans		(3,253	)		(503	)		(3,756	)		(1,135	)		(2,621	)
Net loan servicing fees		6,698			1,791			8,489			7,919			570
Other		—			200			200			(3,476	)		3,676
Net investment income		119,052			(75,744	)		43,308			14,306			29,002
Operating expense		63,117			21,196			84,313			55,489			28,824
Income before provision for income taxes		55,935			(96,940	)		(41,005	)		(41,183	)		178
Provision for income taxes		2,639			(15,853	)		(13,214	)		(13,298	)		84
Net income	$	53,296		$	(81,087	)	$	(27,791	)	$	(27,885	)	$	94

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Balance Sheet Analysis

Following is a summary of key balance sheet items as of the dates presented:

	March 31, 2013		December 31, 2012
	(in thousands)
Assets
Cash	$	19,376	$	33,756
Investments:
Short-term investments		45,024		39,017
Mortgage loans acquired for sale at fair value		1,123,348		975,184
Mortgage loans at fair value		1,366,922		1,189,971
Real estate acquired in settlement of loans		84,486		88,078
Mortgage servicing rights		180,441		126,776
		2,800,221		2,419,026
Other assets		107,563		106,881
Total assets	$	2,927,160	$	2,559,663
Liabilities
Assets sold under agreements to repurchase:
Mortgage loans acquired for sale at fair value	$	1,035,486	$	894,906
Mortgage loans at fair value		576,018		353,805
Real estate acquired in settlement of loans		3,546		7,391
		1,615,050		1,256,102
Other liabilities		89,681		102,225
Total liabilities		1,704,731		1,358,327
Shareholders’ equity		1,222,429		1,201,336
Total liabilities and shareholders’ equity	$	2,927,160	$	2,559,663

Total assets increased by approximately $367.5 million or 14% during the period from December 31, 2012 through March 31, 2013. Growth in total assets reflects growth of investments totaling $381.2 million or 16% from December 31, 2012. We financed our asset growth through additional borrowings of $358.9 million or 29% compared to December 31, 2012. We made net mortgage loan investments (excluding the purchase of correspondent lending loans) of $177.0 million or an increase of 15% compared to December 31, 2012. The increase is related to purchases of $200.5 million and fair valuation changes of $64.0 million partially offset by repayments of $61.4 million during the period the valuation changes resulted from a continuing stabilization in home prices and fair value appreciation of the loans as they progress toward their ultimate resolution. Through our correspondent lending activities, we also purchased newly-originated mortgage loans totaling $8.8 billion. Our acquisitions are summarized below.

Asset Acquisitions

Correspondent Lending

Following is a summary of our correspondent lending acquisitions:

	Quarter ended March 31,
	2013		2012
	(in thousands)
Fair value of correspondent lending loans purchased:
Agency eligible	$	4,904,554	$	1,019,739
Government insured or guaranteed		3,936,443		833,104
Jumbo		8,155		5,304
	$	8,849,152	$	1,858,147
Fair value of correspondent lending loans in inventory at period-end	$	1,123,348	$	975,184

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During the quarter ended March 31, 2013, we purchased for sale $8.8 billion in fair value of correspondent lending loans compared to $1.9 billion in fair value of correspondent lending loans during the quarter ended March 31, 2012. The increase is a result of our growing correspondent seller network relationships as well as the refinance activity due to the low interest rate environment. Our ability to continue the expansion of our correspondent lending business is subject to our ability to obtain additional inventory financing and our ability to fund the portion of the loans not financed, either through cash flows from business activities or the raising of additional equity capital. There can be no assurance that we will be successful in increasing our borrowing capacity or in obtaining the additional equity capital necessary or that we will be able to identify additional sources of mortgage loans.

Investment Portfolio

Following is a summary of our acquisitions of mortgage investments other than correspondent lending acquisitions as shown in the preceding table:

	Quarter ended March 31,
	2013		2012
	(in thousands)
MBS	$	—	$	112,383
Distressed mortgage loans (1) (2)
Performing		13,161		—
Nonperforming		187,137		—
		200,298		—
REO		—		53
MSRs		—		29
	$	200,298	$	112,465

(1) Performance status as of the date of acquisition.

(2) All of our distressed asset purchases during the quarter ended March 31, 2013 were acquired from or through one or more subsidiaries of Citigroup Inc.

Our acquisition during the quarters ended March 31, 2013 and 2012 were financed primarily through the use of borrowings. We continue to identify additional means of increasing our investment portfolio through cash flow from existing investments, borrowings, and transactions that minimize current cash outlays. However, we expect that, over time, our ability to continue our investment activities portfolio growth will depend on our ability to raise additional equity capital.

Investment Portfolio Composition

Mortgage Loans

The relationship of the fair value of our mortgage loans at fair value (excluding mortgage loans acquired for sale at fair value) to the fair value of the real estate collateral underlying the loans is summarized below:

	March 31, 2013				December 31, 2012
	Fair values
	Loan		Collateral		Loan		Collateral
	(in thousands)
Performing loans	$	448,054	$	650,458	$	404,016	$	608,833
Nonperforming loans		918,868		1,342,496		785,955		1,179,737
	$	1,366,922	$	1,992,954	$	1,189,971	$	1,788,570

The collateral values presented above do not represent our assessment of the amount of future cash flows to be realized from the mortgage loans and/or underlying collateral. Future cash flows will be influenced by, among other considerations, our asset disposition strategies with respect to individual loans, the costs and expenses we incur in the disposition process, changes in borrower performance and the underlying collateral values.

Collateral values summarized above are estimated and may change over time due to various factors including our level of access to the properties securing the loans, changes in the real estate market or the condition of individual properties. Collateral values noted do not include any costs that would typically be incurred in obtaining the property in settlement of the loan, readying the property for sale or in the sale of a property.

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Following is a summary of the distribution of our mortgage loans at fair value (excluding mortgage loans acquired for sale at fair value):

	March 31, 2013																December 31, 2012
	Performing loans								Nonperforming loans								Performing loans								Nonperforming loans
Loan type	Fair value		% total			Average note rate			Fair value		% total			Average note rate			Fair value		% total			Average note rate			Fair value		% total			Average note rate
	(dollars in thousands)																(dollars in thousands)
Fixed	$	226,329		51	%		5.00	%	$	561,911		61	%		6.10	%	$	201,212		50	%		5.01	%	$	463,657		59	%		6.23	%
Adjustable Rate/Hybrid		143,239		32	%		3.84	%		348,790		38	%		5.80	%		134,196		33	%		3.91	%		315,905		40	%		5.97	%
Interest rate step-up		78,343		17	%		2.16	%		7,064		1	%		2.44	%		68,475		17	%		2.18	%		5,969		1	%		2.26	%
Balloon		143		0	%		2.00	%		1,103		0	%		6.65	%		133		0	%		2.00	%		424		0	%		8.12	%
	$	448,054		100	%		4.10	%	$	918,868		100	%		5.96	%	$	404,016		100	%		4.13	%	$	785,955		100	%		6.10	%

	March 31, 2013																December 31, 2012
	Performing loans								Nonperforming loans								Performing loans								Nonperforming loans
Lien position	Fair value		% total			Average note rate			Fair value		% total			Average note rate			Fair value		% total			Average note rate			Fair value		% total			Average note rate
	(dollars in thousands)																(dollars in thousands)
1st lien	$	447,788		100	%		4.09	%	$	918,851		100	%		5.95	%	$	403,870		100	%		4.12	%	$	785,846		100	%		6.09	%
2nd lien		266		0	%		6.15	%		17		0	%		10.88	%		146		0	%		6.80	%		109		0	%		10.90	%
Unsecured		—		0	%		0.41	%		—		0	%		0.01	%		—		0	%		0.00	%		—		0	%		0.00	%
	$	448,054		100	%		4.10	%	$	918,868		100	%		5.96	%	$	404,016		100	%		4.13	%	$	785,955		100	%		6.10	%

	March 31, 2013																December 31, 2012
	Performing loans								Nonperforming loans								Performing loans								Nonperforming loans
Occupancy	Fair value		% total			Average note rate			Fair value		% total			Average note rate			Fair value		% total			Average note rate			Fair value		% total			Average note rate
	(dollars in thousands)																(dollars in thousands)
Owner occupied	$	383,976		86	%		4.06	%	$	665,210		72	%		5.85	%	$	346,301		86	%		4.07	%	$	563,058		72	%		6.00	%
Investment property	$	57,563		13	%		4.40	%	$	252,603		28	%		6.23	%		50,801		12	%		4.58	%		222,138		28	%		6.35	%
Other		6,515		1	%		3.98	%		1,055		0	%		3.99	%		6,914		2	%		3.94	%		759		0	%		4.94	%
	$	448,054		100	%		4.10	%	$	918,868		100	%		5.96	%	$	404,016		100	%		4.13	%	$	785,955		100	%		6.10	%

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	March 31, 2013																December 31, 2012
	Performing loans								Nonperforming loans								Performing loans								Nonperforming loans
Loan age	Fair value		% total			Average note rate			Fair value		% total			Average note rate			Fair value		% total			Average note rate			Fair value		% total			Average note rate
	(dollars in thousands)																(dollars in thousands)
Less than 12 months	$	199		0	%		4.81	%	$	—		0	%		0.00	%	$	99		0	%		5.56	%	$	—		0	%		5.20	%
12 - 35 months		375		0	%		2.98	%		1,994		0	%		4.20	%		1,000		0	%		2.85	%		808		0	%		4.97	%
36 - 59 months		17,105		4	%		4.38	%		67,180		7	%		6.33	%		24,250		6	%		4.41	%		101,699		13	%		6.22	%
60 months or more		430,375		96	%		4.09	%		849,694		93	%		5.93	%		378,667		94	%		4.11	%		683,448		87	%		6.09	%
	$	448,054		100	%		4.10	%	$	918,868		100	%		5.96	%	$	404,016		100	%		4.13	%	$	785,955		100	%		6.10	%

	March 31, 2013																December 31, 2012
	Performing loans								Nonperforming loans								Performing loans								Nonperforming loans
Origination FICO score	Fair value		% total			Average note rate			Fair value		% total			Average note rate			Fair value		% total			Average note rate			Fair value		% total			Average note rate
	(dollars in thousands)																(dollars in thousands)
Less than 600	$	105,023		23	%		4.82	%	$	205,935		22	%		6.35	%	$	94,928		24	%		4.78	%	$	174,955		22	%		6.50	%
600-649		90,530		20	%		4.42	%		186,722		20	%		6.16	%		78,641		19	%		4.47	%		154,809		20	%		6.27	%
650-699		113,530		25	%		3.81	%		242,623		27	%		5.93	%		101,173		25	%		3.91	%		212,916		27	%		6.07	%
700-749		91,713		21	%		3.51	%		189,120		21	%		5.53	%		84,145		21	%		3.57	%		164,304		21	%		5.72	%
750 or greater		47,258		11	%		3.64	%		94,468		10	%		5.58	%		45,129		11	%		3.66	%		78,971		10	%		5.73	%
	$	448,054		100	%		4.10	%	$	918,868		100	%		5.96	%	$	404,016		100	%		4.13	%	$	785,955		100	%		6.10	%

	March 31, 2013																December 31, 2012
	Performing loans								Nonperforming loans								Performing loans								Nonperforming loans
Current loan- value (1)	Fair value		% total			Average note rate			Fair value		% total			Average note rate			Fair value		% total			Average note rate			Fair value		% total			Average note rate
			(dollars in thousands)																(dollars in thousands)
Less than 80%	$	76,792		17	%		5.08	%	$	94,370		10	%		6.24	%	$	69,139		17	%		5.14	%	$	85,294		11	%		6.28	%
80% - 99.99%		91,450		20	%		4.64	%		165,788		18	%		6.11	%		83,571		21	%		4.74	%		139,272		18	%		6.21	%
100% - 119.99%		110,546		25	%		4.02	%		196,831		22	%		5.95	%		95,313		23	%		4.03	%		171,569		22	%		6.20	%
120% or greater		169,266		38	%		3.64	%		461,879		50	%		5.90	%		155,993		39	%		3.65	%		389,820		49	%		6.03	%
	$	448,054		100	%		4.10	%	$	918,868		100	%		5.96	%	$	404,016		100	%		4.13	%	$	785,955		100	%		6.10	%

	March 31, 2013																December 31, 2012
	Performing loans								Nonperforming loans								Performing loans								Nonperforming loans
Geographic distribution	Fair value		% total			Average note rate			Fair value		% total			Average note rate			Fair value		% total			Average note rate			Fair value		% total			Average note rate
			(dollars in thousands)																(dollars in thousands)
California	$	124,510		28	%		3.34	%	$	134,098		15	%		4.84	%	$	112,544		28	%		3.45	%	$	106,667		13	%		5.11	%
Florida		25,079		6	%		3.95	%		133,844		14	%		6.22	%		21,834		5	%		3.91	%		124,557		16	%		6.26	%
New York		35,664		8	%		3.87	%		127,027		14	%		6.38	%		29,289		7	%		3.74	%		112,179		14	%		6.49	%
New Jersey		*			*			*		65,636		7	%		6.01	%		*			*			*		61,177		8	%		6.07	%
Other		262,801		58	%		4.56	%		458,263		50	%		6.15	%		240,349		60	%		4.55	%		381,375		49	%		6.20	%
	$	448,054		100	%		4.10	%	$	918,868		100	%		5.96	%	$	404,016		100	%		4.13	%	$	785,955		100	%		6.10	%

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	March 31, 2013												December 31, 2012
	Performing loans						Nonperforming loans						Performing loans						Nonperforming loans
Payment status	Fair value		% total		Average note rate		Fair value		% total		Average note rate		Fair value		% total		Average note rate		Fair value		% total		Average note rate
	(dollars in thousands)												(dollars in thousands)
Current	$	353,920		79%		3.89%	$	—		0%		0.00%	$	313,852		78%		3.91%	$	—		0%		0.00%
30 days delinquent		61,423		14%		4.67%		—		0%		0.00%		52,651		13%		4.75%		—		0%		0.00%
60 days delinquent		32,711		7%		5.02%		—		0%		0.00%		37,513		9%		4.96%		—		0%		0.00%
90 days or more delinquent		—		0%		0.00%		465,130		51%		5.61%		—		0%		0.00%		326,073		41%		5.82%
In foreclosure		—		0%		0.00%		453,738		49%		6.33%		—		0%		0.00%		459,882		59%		6.31%
	$	448,054		100%		4.10%	$	918,868		100%		5.96%	$	404,016		100%		4.13%	$	785,955		100%		6.10%

(1) Current loan-to-value is calculated based on the unpaid principal balance of the mortgage loan and our estimate of the value of the mortgaged property.

Following is a comparison of the valuation techniques and key inputs we use in the valuation of our financial assets measured using “Level 3” inputs:

Financial statement item	Valuation technique	Key inputs (1)	Range (Weighted average)
			March 31, 2013		December 31, 2012
Mortgage loans at fair value	Discounted cash flow	Discount rate		8.3% –20.5%		8.8% – 20.7%
				(12.5%)		(13.1%)
		Twelve-month projected		2.1% – 5.6%		0.4% – 1.5%
		housing price index change		(3.6%)		(1.1%)
		Prepayment speed (1)		0.0% – 4.6%		0.4% – 4.4%
				(2.5%)		(2.2%)
		Total prepayment speed		0.6% –41.2%		5.9% – 31.2%
		(Life total CPR) (2)		(21.0%)		(20.6%)

(1) Prepayment speed is measured using life voluntary CPR.

(2) Total prepayment is measured using life total CPR.

We monitor and value our investments in pools of distressed mortgage loans either by acquisition date or by payment status of the loans. Most of the measures we use to value and monitor the loan portfolio, such as projected prepayment and default speeds and discount rates, are applied or output at the pool level. The characteristics of the individual loans, such as loan size, loan-to-value ratio and current delinquency status, can vary widely within a pool.

The weighted average discount rate used in the valuation of mortgage loans at fair value decreased from 13.1% at December 31, 2012 to 12.5% at March 31, 2013 as market participant expected returns for similar assets have decreased during the quarter.

The weighted average twelve-month projected housing price index (“HPI”) change increased from 1.1% at December 31, 2012 to 3.6% at March 31, 2013 due to recent improvements observed in the residential housing sector increasing the expectation of positive home price appreciation.

The total prepayment speed of our mortgage loans at fair value portfolio increased from 20.6% at December 31, 2012 to 21.0% at March 31, 2013, primarily due to increase in mortgage loans moving from nonperforming to performing and an increase in mortgage loans moving towards resolution.

We believe that our current fair value estimates are representative of fair value at the reporting date. However, the market for distressed mortgage assets is illiquid with very few market participants. Furthermore, our business strategy is to enhance value during the period in which the loans are held. Therefore, any resulting appreciation or depreciation in the fair value of the loans is recorded during such holding period and ultimately realized at the end of the holding period.

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Real Estate Acquired in Settlement of Loans

Following is a summary of our REO by attribute as of the dates presented:

	March 31, 2013					December 31, 2012
Property type	Fair value		% total			Fair value		% total
	(dollars in thousands)
1 - 4 dwelling units	$	61,913		73	%	$	66,882		76	%
Planned unit development		11,802		14	%		9,971		11	%
Condominium/Co-op		7,414		9	%		7,375		9	%
5+ dwelling units		3,357		4	%		3,851		4	%
	$	84,486		100	%	$	88,079		100	%
	March 31, 2013					December 31, 2012
Geographic distribution	Fair value		% total			Fair value		% total
	(dollars in thousands)
California	$	22,445		27	%	$	26,650		30	%
Florida		6,934		8	%		8,549		10	%
Illinois		6,532		8	%		5,045		6	%
Connecticut		4,085		5	%		4,168		5	%
Pennsylvania		3,582		4	%		*			*
South Carolina		3,386		4	%		*			*
Washington		*			*		2,861		3	%
Other		37,522		44	%		40,806		46	%
	$	84,486		100	%	$	88,079		100	%

* Not included in the states representing the largest balances as of the date presented.

Following is a summary of the status of our portfolio of acquisitions by quarter acquired (excluding acquisitions for the quarter ended March 31, 2013 due to close proximity of current status to quarter-end)

	Acquisitions for the quarter ended
	December 31, 2012						September 30, 2012						June 30, 2012						March 31, 2012
	At Purchase			March 31, 2013			At Purchase			March 31, 2013			At Purchase			March 31, 2013			At Purchase			March 31, 2013
													(dollars in millions)
Unpaid principal balance	$	290.3		$	283.8		$	357.2		$	325.6		$	402.5		$	356.1		$	—		$	—
Pool factor*		1.00			0.98			1.00			0.91			1.00			0.88			—			—
Collection status:
Delinquency
Current		3.1	%		5.8	%		0.0	%		4.3	%		45.0	%		49.3	%		0.0	%		0.0	%
30 days		1.3	%		2.0	%		0.0	%		0.2	%		4.0	%		5.8	%		0.0	%		0.0	%
60 days		5.4	%		2.8	%		0.1	%		0.4	%		4.3	%		2.5	%		0.0	%		0.0	%
over 90 days		57.8	%		52.7	%		49.1	%		44.8	%		31.3	%		21.1	%		0.0	%		0.0	%
In foreclosure		32.4	%		34.9	%		50.8	%		45.7	%		15.3	%		18.0	%		0.0	%		0.0	%
REO		0.0	%		1.8	%		0.0	%		4.7	%		0.1	%		3.3	%		0.0	%		0.0	%

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	Acquisitions for the quarter ended
	December 31, 2011						September 30, 2011						June 30, 2011						March 31, 2011
	At Purchase			March 31, 2013			At Purchase			March 31, 2013			At Purchase			March 31, 2013			At Purchase			March 31, 2013
													(dollars in millions)
Unpaid principal balance	$	49.0		$	42.5		$	542.6		$	296.8		$	259.8		$	167.7		$	515.1		$	296.7
Pool factor *		1.00			0.87			1.00			0.55			1.00			0.65			1.00			0.58
Collection status:
Delinquency
Current		0.2	%		24.1	%		0.6	%		13.0	%		11.5	%		34.4	%		2.0	%		27.1	%
30 days		0.1	%		3.5	%		1.3	%		3.1	%		6.5	%		4.8	%		1.9	%		5.6	%
60 days		0.2	%		2.1	%		2.0	%		1.7	%		5.2	%		2.8	%		3.9	%		1.7	%
over 90 days		70.4	%		28.8	%		22.6	%		20.2	%		31.2	%		18.8	%		25.9	%		15.9	%
In foreclosure		29.0	%		38.3	%		73.0	%		49.6	%		43.9	%		32.5	%		66.3	%		42.4	%
REO		0.0	%		3.2	%		0.4	%		12.3	%		1.7	%		6.8	%		0.0	%		7.4	%

* Ratio of unpaid principal balance remaining to unpaid principal balance at acquisition.

Cash Flows

Our cash flows resulted in a net decrease in cash of $14.4 million during the three months ended March 31, 2013. The decrease was primarily due to cash used in our operating and investing activities exceeding cash provided through our financing activities. Cash used by operating activities totaled $225.1 million during the three months ended March 31, 2013, primarily due to our purchase of mortgage loans acquired for sale exceeding cash proceeds from our sales by $166.0 million. Cash provided by operating activities totaling $47.9 million during the three months ended March 31, 2012 was primarily the reduction of our inventory of mortgage loans acquired for sale. While our mortgage loan acquisition activity continued to increase during the quarter ended March 31, 2012, we realized the benefit of increased operational efficiency in the packaging and sale of the mortgage loans, thereby reducing the time we held the loans pending sale.

Net cash used by investing activities was $114.5 million for the three months ended March 31, 2013. This use of cash reflects the growth of our investment portfolio. We used cash to purchase mortgage loans with fair values of $200.5 million during the quarter ended March 31, 2013. Offsetting this use in cash were cash inflows from repayments of mortgage loans and sales of REO totaling $61.4 million and $32.0 million, respectively. During the three months ended March 31, 2012, cash provided by investing activities totaled $109.5 million due to the maturity of a $50.0 million United States Treasury security and proceeds of $68.4 million from certain investments.

Approximately 40% of our investments, comprised of non-correspondent lending mortgage loans, REO and MSRs, were nonperforming assets as of March 31, 2013. Nonperforming assets include mortgage loans delinquent 90 or more days and REO. Accordingly, we expect that these assets will require a longer period to begin producing cash flow and the timing and amount of cash flows from these assets is less certain than for performing assets. During the three months ended March 31, 2013, we transferred $31.7 million of mortgage loans to REO and realized cash proceeds from the sales and repayments of mortgage loans at fair values and REO totaling $61.4 million and $32.0 million, respectively.

Our investing activities include the purchase of long-term assets which are not presently cash flowing or are at risk of interruption of cash flows in the near future. Furthermore, much of the investment income we recognize is in the form of valuation adjustments we record recognizing our estimates of the net appreciation in value of the assets as we work with borrowers to either modify their loans or acquire the property securing their loans in settlement thereof. Accordingly, the cash associated with a substantial portion of our revenues is often realized as part of the proceeds of the liquidation of the assets, either through payoff or sale of the mortgage loan or through acquisition and sale of the property securing the loans, many months after we record the revenues.

75

The following table illustrates the net gain (loss) in value that we accumulated over the period during which we owned the liquidated assets, as compared to the proceeds actually received and the additional net gain (loss) realized upon liquidation of such assets:

	Quarter ended March 31,
	2013							2012
	Proceeds		Accumulated gains (losses) (1)			Gain on liquidation (2)		Proceeds		Accumulated gains (losses) (1)			Gain on liquidation (2)
	(in thousands)
Mortgage loans	$	57,348	$	7,016		$	8,364	$	34,794	$	4,056		$	4,847
REO		32,024		(6,089	)		2,836		33,564		(2,093	)		5,810
	$	89,372	$	927		$	11,200	$	68,358	$	1,963		$	10,657

(1) Represents valuation gains and losses recognized during the period we held the respective asset but excludes the gain or loss recorded upon sale or repayment of the respective asset.

(2) Represents the gain or loss recognized as of the date of sale or repayment of the respective asset.

The amounts included in accumulated gains and gain on liquidation do not include the cost of managing the liquidated assets. Rather, they include the amount of accumulated valuation gains and losses recognized throughout the holding period—which may be substantial depending on the collection status of the loan at acquisition and on our success in working with the borrower to resolve the source of distress in the loan—and in the case of REO, includes direct transaction costs incurred in the sale of the property. Accordingly, the preceding amounts do not represent periodic earnings on a cash basis and the amount of gain will have accumulated over varying periods depending on the liquidation period for individual assets.

Net cash provided by financing activities was $325.3 million for the three months ended March 31, 2013, during which we increased borrowings through repurchase agreements in order to finance growth in our inventory of mortgage loans acquired for sale, mortgage loans at fair value and recording of MSRs through our sale activity. As discussed below in Liquidity and Capital Resources, our Manager continues to evaluate and pursue additional sources of financing to provide us with future investing capacity.

Liquidity and Capital Resources

Our liquidity reflects our ability to meet our current obligations (including the purchase of loans from correspondent lenders, 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 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 proceeds from or through earnings on our investments, cash flows from business activities, and proceeds from borrowings and/or additional equity offerings. We believe our current liquidity is sufficient to meet our short-term liquidity needs.

Our current leverage strategy is to finance our assets where we believe such borrowing is prudent and appropriate. We have made borrowings in the form of borrowings under forward purchase agreements, sales of assets under agreements to repurchase, and a note payable secured by mortgage loans at fair value. To the extent available to us, we expect in the future to obtain long-term financing for assets with estimated future lives of more than one year; this may include term financing and securitization of performing (including newly purchased jumbo mortgage loans), nonperforming and/or re-performing mortgage loans.

Until attractive long-term financing is procured, we will continue to finance our assets on a short-term basis through agreements to repurchase and other secured lending and structured finance facilities, pending the ultimate disposition of the assets, whether through sale, securitization or liquidation. Because our current debt facilities consist solely of short-term borrowings, we expect to 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.

We use debt financing, primarily through the use of repurchase agreements and forward purchase agreements, as a means of extending our balance sheet capacity. Our repurchase agreements represent the sales of assets together with agreements for us to buy back the assets at a later date. During the three months ended March 31, 2013, the average balance outstanding under agreements to repurchase mortgage loans and REO totaled $1.2 billion, and the maximum daily amount

76

outstanding under such agreements totaled $1.6 billion. The difference between the maximum and average daily amounts outstanding was due to the continuing growth of our investments in these assets. The total facility size of our borrowings was $2.7 billion at March 31, 2013.

As of March 31, 2013 and December 31, 2012, we financed our investments in mortgage loans at fair value and REO, and our inventory of mortgage loans acquired for sale at fair value, under agreements to repurchase and forward purchase agreements as follows:

	March 31, 2013			December 31, 2012
	(in thousands)
Assets financed	$	2,342,083		$	1,944,973
Total assets in classes of assets financed	$	2,574,756		$	2,253,233
Borrowings	$	1,615,050		$	1,256,102
Percentage of invested assets pledged		91	%		86	%
Advance rate against pledged assets		69	%		65	%

The increase in the percentage of assets pledged and advance rate against pledged assets at March 31, 2013 was primarily due to financing of purchases of mortgage loans for investment and for our correspondent lending segment.

As discussed above, all of our borrowings have short-term maturities:

• The transactions relating to mortgage loans under agreements to repurchase mature between May 23, 2013 and January 2, 2014 and provide for sale to major financial institution counterparties based on the estimated fair value of the mortgage loans sold. The agreements provide for terms of approximately one year.

• The transactions relating to REO are secured financings that mature on June 5, 2013 and provide for sale to a major financial institution counterparty at advance rates based on the estimated fair value of the REO.

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 currently include the following:

• profitability at each of the Company and two of our subsidiaries, the Operating Partnership and PennyMac Mortgage Investment Trust Holdings I, LLC (“PMITH”), for at least one (1) of the previous two consecutive fiscal quarters, as of the end of each fiscal quarter, and at our subsidiary, PMC, for the prior three (3) calendar quarters;

• a minimum of $40 million in unrestricted cash and cash equivalents, among the Company and/or our subsidiaries; a minimum of $40 million in unrestricted cash and cash equivalents among the Operating Partnership and its consolidated subsidiaries; a minimum of $25 million in unrestricted cash and cash equivalents between PMC and PMITH; and a minimum of $10 million in unrestricted cash and cash equivalents at each of PMC and PMITH;

• a minimum tangible net worth for the Company of $860 million; a minimum tangible net worth for the Operating Partnership of $700 million; a minimum tangible net worth for PMITH of $250 million; and a minimum tangible net worth for PMC of $150 million;

• a maximum ratio of total liabilities to tangible net worth of less than 3:1 for the Company, 10:1 for PMC and 5:1 for the Operating Partnership and PMITH;

• a maximum ratio of indebtedness related to other than newly originated mortgage loans to tangible net worth, of less than 3:1 for PMC; 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.

When we have transactions relating to securities sold under agreements to repurchase, such transactions contain margin call provisions that, upon notice from the applicable lender at its option, require us to transfer cash or additional securities 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 an agreement to repurchase, 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.

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The transactions relating to mortgage loans and/or equity interests in special purpose entities holding real property under agreements to repurchase contain margin call provisions that, upon notice from the applicable lender at its option, require us to transfer cash or additional mortgage loans or real property, as applicable, 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 an agreement to repurchase. 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.

Our Manager continues to explore a variety of additional means of financing our continued growth, including debt financing through bank warehouse lines of credit, additional repurchase agreements, term financing, securitization transactions and additional 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. Further, counterparty credit sensitivity and collateral documentation requirements have made it difficult to obtain financing for REO, the result of which could place stress on our capital and liquidity positions at certain times during the foreclosure cycles of the related nonperforming loans.

Off-Balance Sheet Arrangements and Aggregate Contractual Obligations

Off-Balance Sheet Arrangements and Guarantees

As of March 31, 2013, we have not entered into any off-balance sheet arrangements or guarantees.

Contractual Obligations

As of March 31, 2013, all of our known on-balance sheet contractual obligations that relate to financing agreements mature within one year. As of March 31, 2013, we had on-balance sheet contractual obligations of $1.6 billion to finance assets under agreements to repurchase with maturities between May 23, 2013 and January 2, 2014. All agreements to repurchase that matured between March 31, 2013 and the date of this Report have been renewed, extended or repaid and are described in Note 15—Securities Sold Under Agreements to Repurchase at Fair Value, Note 16—Mortgage Loans Acquired for Sale Sold Under Agreements to Repurchase and Note 17—Mortgage Loans at Fair Value Sold Under Agreements to Repurchase in the accompanying consolidated financial statements.

The amount at risk (the fair value of the assets pledged plus the related margin deposit, less the amount advanced by the counterparty and interest payable) relating to the Company’s assets sold under agreements to repurchase and forward purchase agreements is summarized by counterparty below as of March 31, 2013:

Counterparty	Amount at risk (in thousands)
Citibank, N.A.	$	511,146
Credit Suisse First Boston Mortgage Capital LLC.		180,931
Bank of America, N.A.		22,678
Morgan Stanley Bank, N.A.		7,233
Barclays Bank PLC		6,647
	$	728,635

Management Agreement. We are externally managed and advised by our Manager pursuant to a management agreement, which was amended and restated effective February 1, 2013. Our management agreement requires our Manager to oversee our business affairs in conformity with the investment policies that are approved and monitored by our Board. Our Manager is responsible for our day-to-day management and will perform such services and activities related to our assets and operations as may be appropriate.

Pursuant to our management agreement, our Manager collects a base management fee and may collect a performance incentive fee, both payable quarterly and in arrears. The term of our management agreement expires on February 1, 2017, subject to automatic renewal for additional 18-month periods, unless terminated earlier in accordance with the terms of the agreement.

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The base management fee is calculated at a defined annualized percentage of “shareholders’ equity.” Our “shareholders’ equity” is defined as the sum of the net proceeds from any issuances of our equity securities since our inception (weighted for the time outstanding during the measurement period); plus our retained earnings at the end of the quarter; less any amount that we pay for repurchases of our common shares (weighted for the time held during the measurement period); and excluding one-time events pursuant to changes in GAAP and certain other non-cash charges after discussions between our Manager and our independent trustees and approval by a majority of our independent trustees.

Pursuant to our management agreement, the base management fee is equal to the sum of (i) 1.5% per annum of shareholders’ equity up to $2 billion, (ii) 1.375% per annum of shareholders’ equity in excess of $2 billion and up to $5 billion, and (iii) 1.25% per annum of shareholders’ equity in excess of $5 billion. The base management fee is paid in cash.

The performance incentive fee is calculated at a defined annualized percentage of the amount by which “net income,” on a rolling four-quarter basis and before deducting the incentive fee, exceeds certain levels of return on “equity.” For the purpose of determining the amount of the performance incentive fee, “net income” is defined as net income or loss computed in accordance with GAAP and certain other non-cash charges determined after discussions between our Manager and our independent trustees and approval by a majority of our independent trustees. For this purpose, “equity” is the weighted average of the issue price per common share of all of our public offerings, multiplied by the weighted average number of common shares outstanding (including restricted share units) in the four-quarter period.

The performance incentive fee is calculated quarterly and escalates as net income (stated as a percentage of return on equity) increases over certain thresholds. On each calculation date, the threshold amounts represent a stated return on equity, plus or minus a “high watermark” adjustment. The performance fee payable for any quarter is equal to: (a) 10% of the amount by which net income for the quarter exceeds (i) an 8% return on equity plus the high watermark, up to (ii) a 12% return on equity; plus (b) 15% of the amount by which net income for the quarter exceeds (i) a 12% return on equity plus the high watermark, up to (ii) a 16% return on equity; plus (c) 20% of the amount by which net income for the quarter exceeds a 16% return on equity plus the high watermark.

The high watermark starts at zero and is adjusted quarterly. The quarterly adjustment reflects the amount by which the net income (stated as a percentage of return on equity) in that quarter exceeds or falls short of the lesser of 8% and the Fannie Mae MBS Yield (the target yield) for such quarter. If the net income is lower than the target yield, the high watermark is increased by the difference. If the net income is higher than the target yield, the high watermark is reduced by the difference. Each time a performance incentive fee is earned, the high watermark returns to zero. As a result, the threshold amounts required for our Manager to earn a performance incentive fee are adjusted cumulatively based on the performance of our net income over (or under) the target yield, until the net income in excess of the target yield exceeds the then-current cumulative high watermark amount, and a performance incentive fee is earned. The performance incentive fee may be paid in cash or in our common shares (subject to a limit of no more than 50% paid in common shares), at our option.

Under our management agreement, our Manager is entitled to reimbursement of its organizational and operating expenses, including third-party expenses, incurred on our behalf. Our Manager may also be entitled to a termination fee under certain circumstances. Specifically, the termination fee is payable for (1) our termination of our management agreement without cause, (2) our Manager’s termination of our management agreement upon a default by us in the performance of any material term of the agreement that has continued uncured for a period of 30 days after receipt of written notice thereof or (3) our Manager’s termination of the agreement after the termination by us without cause (excluding a non-renewal) of our MBWS agreement, our MSR recapture agreement, or our servicing agreement (each as described and/or defined below). The termination fee is equal to three times the sum of (a) the average annual base management fee and (b) the average annual (or, if the period is less than 24 months, annualized) performance incentive fee, in each case earned by our Manager during the 24-month period before termination.

Our management agreement also provides that, prior to the undertaking by our Manager or its affiliates of any new investment opportunity or any other business opportunity requiring a source of capital with respect to which our Manager or its affiliates will earn a management, advisory, consulting or similar fee, our Manager shall present to us such new opportunity and the material terms on which our Manager proposes to provide services to us before pursuing such opportunity with third parties.

Servicing Agreement. We have entered into a servicing agreement with our Servicer pursuant to which our Servicer provides servicing for our portfolio of residential mortgage loans. The loan servicing provided by our Servicer includes collecting principal, interest and escrow account payments, if any, with respect to mortgage loans, as well as managing loss mitigation, which may include, among other things, collection activities, loan workouts, modifications, foreclosures and short sales. Our Servicer also engages in certain loan origination activities that include refinancing mortgage loans and financings

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that facilitate sales of real estate owned properties, or REOs. The term of our servicing agreement, as amended, expires on February 1, 2017, subject to automatic renewal for additional 18-month periods, unless terminated earlier in accordance with the terms of the agreement.

The base servicing fees for distressed whole loans are calculated based on a monthly per-loan dollar amount, with the actual dollar amount for each loan based on the delinquency, bankruptcy and/or foreclosure status of such loan or the related underlying real estate. Presently, the base servicing fees for distressed whole loans range from $30 per month for current loans up to $125 per month for loans that are severely delinquent and in foreclosure.

The base servicing fees for loans subserviced by our Servicer on our behalf are also calculated through a monthly per-loan dollar amount, with the actual dollar amount for each loan based on whether the mortgage loan is a fixed-rate or adjustable-rate loan. The base servicing fees for loans subserviced on our behalf are $7.50 per month for fixed-rate loans and $8.50 per month for adjustable-rate mortgage loans. To the extent that these loans become delinquent, our Servicer is entitled to an additional servicing fee per loan falling within a range of $10 to $75 per month and based on the delinquency, bankruptcy and foreclosure status of the loan or the related underlying real estate. Our Servicer is also entitled to customary ancillary income and certain market-based fees and charges, including boarding and deboarding fees, liquidation and disposition fees, and assumption, modification and origination fees.

Except as otherwise provided in our MSR recapture agreement, when our Servicer effects a refinancing of a loan on our behalf and not through a third-party lender and the resulting loan is readily saleable, or our Servicer originates a loan to facilitate the disposition of the real estate acquired by us in settlement of a loan, our Servicer is entitled to receive from us market-based fees and compensation consistent with pricing and terms our Servicer offers unaffiliated third parties on a retail basis.

To the extent that our Servicer participates in HAMP (or other similar mortgage loan modification programs), our Servicer is entitled to retain any incentive payments made to it and to which it is entitled under HAMP, provided that, with respect to any incentive payments paid to our Servicer in connection with a mortgage loan modification for which we previously paid our Servicer a modification fee, our Servicer is required to reimburse us an amount equal to the incentive payments.

In addition, because we do not have any employees or infrastructure, our Servicer is required to provide a range of services and activities significantly greater in scope than the services provided in connection with a customary servicing arrangement. For these services, our Servicer receives a supplemental fee of $25 per month for each distressed whole loan and $3.25 per month for each other subserviced loan. Our Servicer is entitled to reimbursement for all customary, bona fide reasonable and necessary out-of-pocket expenses incurred by our Servicer in connection with the performance of its servicing obligations.

Mortgage Banking and Warehouse Services Agreement. We have also entered into a mortgage banking and warehouse services agreement (the “MBWS agreement”), pursuant to which our Servicer provides us with certain mortgage banking services, including fulfillment and disposition-related services, with respect to loans acquired by us from correspondent lenders, and certain warehouse lending services, including fulfillment and administrative services, with respect to loans financed by us for our warehouse lending clients. The term of our MBWS agreement expires on February 1, 2017, subject to automatic renewal for additional 18-month periods, unless terminated earlier in accordance with the terms of the agreement.

Under our MBWS agreement, our Servicer has agreed to provide the mortgage banking services exclusively for our benefit, and our Servicer and its affiliates are prohibited from providing such services for any other third party. However, such exclusivity and prohibition shall not apply, and certain other duties instead will be imposed upon our Servicer, if we are unable to purchase or finance mortgage loans as contemplated under our MBWS agreement for any reason.

In consideration for the mortgage banking services provided by our Servicer with respect to our acquisition of mortgage loans, our Servicer is entitled to a fulfillment fee based on the type of mortgage loan that we acquire and equal to a percentage of the unpaid principal balance of such mortgage loan. Presently, the applicable percentages are (i) 0.50% for conventional mortgage loans, (ii) 0.88% for loans underwritten in accordance with the Ginnie Mae Mortgage-Backed Securities Guide, (iii) 0.80% for HARP mortgage loans with a loan-to-value ratio of 105% or less, (iv) 1.20% for HARP mortgage loans with a loan-to-value ratio of greater than 105%, and (v) 0.50% for all other mortgage loans not contemplated above. At this time, we do not hold the Ginnie Mae approval required to issue Ginnie Mae MBS and act as a servicer. Accordingly, under our MBWS agreement, our Servicer currently purchases loans underwritten in accordance with the Ginnie Mae Mortgage-Backed Securities Guide “as is” and without recourse of any kind from us at our cost less an administrative fee plus accrued interest and a sourcing fee of three basis points.

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In the event that we purchase mortgage loans with an aggregate unpaid principal balance in any month greater than $2.5 billion and less than $5 billion, our Servicer has agreed to discount the amount of such fulfillment fees by reimbursing us an amount equal to the product of (i) 0.025%, (ii) the amount of unpaid principal balance in excess of $2.5 billion and (iii) the percentage of the aggregate unpaid principal balance relating to mortgage loans for which our Servicer collected fulfillment fees in such month. In the event that we purchase mortgage loans with an aggregate unpaid principal balance in any month greater than $5 billion, our Servicer has agreed to discount the amount of such fulfillment fees by reimbursing us an amount equal to the product of (i) 0.05%, (ii) the amount of unpaid principal balance in excess of $5 billion and (iii) the percentage of the aggregate unpaid principal balance relating to mortgage loans for which our Servicer collected fulfillment fees in such month.

In consideration for the mortgage banking services provided by our Servicer with respect to our acquisition of mortgage loans under our Servicer’s early purchase program, our Servicer is entitled to fees accruing (i) at a rate equal to $25,000 per annum, and (ii) in the amount of $50 for each mortgage loan that we acquire. In consideration for the warehouse services provided by our Servicer with respect to mortgage loans that we finance for our warehouse lending clients, with respect to each facility, our Servicer is entitled to fees accruing (i) at a rate equal to $25,000 per annum, and (ii) in the amount of $50 for each mortgage loan that we finance thereunder. Where we have entered into both an early purchase agreement and a warehouse lending agreement with the same client, our Servicer shall only be entitled to one $25,000 per annum fee and, with respect to any mortgage loan that becomes subject to both such agreements, only one $50 per loan fee.

Notwithstanding any provision of our MBWS agreement to the contrary, if it becomes reasonably necessary or advisable for our Servicer to engage in additional services in connection with post-breach or post-default resolution activities for the purposes of a correspondent lending agreement, a warehouse agreement or a re-warehouse agreement, then we have generally agreed with our Servicer to negotiate in good faith for additional compensation and reimbursement of expenses to be paid to our Servicer for the performance of such additional services.

MSR Recapture Agreement. Effective February 1, 2013, we entered into an MSR recapture agreement with our Servicer. Pursuant to the terms of our MSR recapture agreement, if our Servicer refinances via its retail lending business loans for which we previously held the mortgage servicing rights, or MSRs, our Servicer is generally required to transfer and convey to us, without cost to us, the MSRs with respect to new mortgage loans originated in those refinancings (or, under certain circumstances, other mortgage loans) that have an aggregate unpaid principal balance that is not less than 30% of the aggregate unpaid principal balance of all the loans so originated. The initial term of our MSR recapture agreement expires, unless terminated earlier in accordance with the terms of the agreement, on February 1, 2017, subject to automatic renewal for additional 18-month periods, unless terminated in accordance with the terms of the agreement.

Reimbursement Agreement. In connection with the initial public offering of our common shares (“IPO”), on August 4, 2009, we entered into an agreement with our Manager pursuant to which we agreed to reimburse our Manager for the $2.9 million payment that it made to the underwriters for the IPO (the “Conditional Reimbursement”) if we satisfied certain performance measures over a specified period of time. Effective February 1, 2013, we amended the terms of the reimbursement agreement to provide for the reimbursement of our Manager of the Conditional Reimbursement if we are required to pay our Manager performance incentive fees under our management agreement at a rate of $10 in reimbursement for every $100 of performance incentive fees earned. The reimbursement of the Conditional Reimbursement is subject to a maximum reimbursement in any particular 12-month period of $1.0 million and the maximum amount that may be reimbursed under the agreement is $2.9 million. The reimbursement agreement also provides for the payment to the IPO underwriters of the payment that we agreed to make to them at the time of the IPO if we satisfied certain performance measures over a specified period of time. As our Manager earns performance incentive fees under our management agreement, the IPO underwriters will be paid at a rate of $20 of payments for every $100 of performance incentive fees earned by our Manager. The payment to the underwriters is subject to a maximum reimbursement in any particular 12-month period of $2.0 million and the maximum amount that may be paid under the agreement is $5.9 million.

In the event the termination fee is payable to our Manager under our management agreement and our Manager and the underwriters have not received the full amount of the reimbursements and payments under the reimbursement agreement, such amount will be paid in full. The term of the reimbursement agreement expires on February 1, 2019.

Quantitative and Qualitative Disclosures About Market Risk

Market risk is the exposure to loss resulting from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices, real estate values and other market-based risks. The primary market risks that we are exposed to are real estate risk, credit risk, interest rate risk, prepayment risk, inflation risk and market value risk. A substantial portion of our investments are comprised of nonperforming loans. We believe that such assets’ fair values respond primarily to changes in the fair value of the real estate securing such loans.

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The following table summarizes the estimated change in fair value of our portfolio of mortgage loans at fair value as of March 31, 2013, given several hypothetical (instantaneous) changes in home values from those used in the determination of fair value:

Property value shift	-15%			-10%			-5%			+5%			+10%			+15%
	(dollar amounts in thousands)
Fair value	$	1,224,453		$	1,275,076		$	1,322,620		$	1,408,015		$	1,445,892		$	1,480,641
Change in fair value:
$	$	(142,469	)	$	(91,846	)	$	(44,302	)	$	41,093		$	78,970		$	113,719
%		(10.42	)%		(6.72%	)		(3.24%	)		3.01	%		5.78	%		8.32	%

Mortgage Servicing Rights

The following tables summarize the estimated change in fair value of MSRs accounted for using the amortization method as of March 31, 2013, given several shifts in pricing spreads, prepayment speed and annual per-loan cost of servicing:

Pricing spread shift in %	-20%			-10%			-5%			+5%			+10%			+20%
	(dollar amounts in thousands)
Fair value	$	199,447		$	192,617		$	189,363		$	183,153		$	180,189		$	174,524
Change in fair value:
$	$	13,238		$	6,407		$	3,153		$	(3,056	)	$	(6,020	)	$	(11,686	)
%		7.11	%		3.44	%		1.69	%		-1.64	%		-3.23	%		-6.28	%
Prepayment speed shift in %	-20%			-10%			-5%			+5%			+10%			+20%
	(dollar amounts in thousands)
Fair value	$	204,763		$	195,129		$	190,584		$	181,996		$	177,935		$	170,243
Change in fair value:
$	$	18,554		$	8,919		$	4,374		$	(4,214	)	$	(8,275	)	$	(15,966	)
%		9.96	%		4.79	%		2.35	%		-2.26	%		-4.44	%		-8.57	%
Per-loan servicing cost shift in %	-20%			-10%			-5%			+5%			+10%			+20%
	(dollar amounts in thousands)
Fair value	$	190,760		$	188,485		$	187,347		$	185,072		$	183,934		$	181,658
Change in fair value:
$	$	4,551		$	2,275		$	1,138		$	(1,138	)	$	(2,275	)	$	(4,551	)
%		2.44	%		1.22	%		0.61	%		-0.61	%		-1.22	%		-2.44	%

The following tables summarize the estimated change in fair value of MSRs accounted for using the fair value option method as of March 31, 2013, given several shifts in pricing spreads, prepayment speed and annual per-loan cost of servicing:

Pricing spread shift in %	-20%			-10%			-5%			+5%			+10%			+20%
	(dollar amounts in thousands)
Fair value	$	1,388		$	1,345		$	1,325		$	1,286		$	1,268		$	1,232
Change in fair value:
$	$	82		$	40		$	20		$	(19	)	$	(38	)	$	(73	)
%		6.31	%		3.06	%		1.51	%		-1.46	%		-2.88	%		-5.61	%

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Prepayment speed shift in %	-20%			-10%			-5%			+5%			+10%			+20%
	(dollar amounts in thousands)
Fair value	$	1,499		$	1,397		$	1,350		$	1,263		$	1,222		$	1,147
Change in fair value:
$	$	193		$	92		$	45		$	(43	)	$	(83	)	$	(159	)
%		14.81	%		7.03	%		3.43	%		-3.26	%		-6.37	%		-12.15	%

Per-loan servicing cost shift in %	-20%			-10%			-5%			+5%			+10%			+20%
	(dollar amounts in thousands)
Fair value	$	1,353		$	1,329		$	1,317		$	1,293		$	1,281		$	1,258
Change in fair value:
$	$	48		$	24		$	12		$	(12	)	$	(24	)	$	(48	)
%		3.67	%		1.83	%		0.92	%		-0.92	%		-1.83	%		-3.67	%

Factors That May Affect Our Future Results

This Report contains certain forward-looking statements that are subject to various risks and uncertainties. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “seek,” “anticipate,” “estimate,” “approximately,” “believe,” “could,” “project,” “predict,” “continue,” “plan” or other similar words or expressions.

Forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, contain financial and operating projections or state other forward-looking information. Examples of forward-looking statements include the following:

• projections of our revenues, income, earnings per share, capital structure or other financial items;

• descriptions of our plans or objectives for future operations, products or services;

• forecasts of our future economic performance, interest rates, profit margins and our share of future markets; and

• descriptions of assumptions underlying or relating to any of the foregoing expectations regarding the timing of generating any revenues.

Our ability to predict results or the actual effect of future events, actions, plans or strategies is inherently uncertain. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements. There are a number of factors, many of which are beyond our control, that could cause actual results to differ significantly from management’s expectations. Some of these factors are discussed below.

You should not place undue reliance on any forward-looking statement and should consider the following uncertainties and risks, as well as the risks and uncertainties discussed elsewhere in this Report and as set forth in Item 1A. “Risk Factors” in our Annual Report.

Factors that could cause actual results to differ materially from historical results or those anticipated include, but are not limited to:

• changes in our investment objectives or investment or operational strategies, including any new lines of business or new products and services that may subject us to additional risks;

• volatility in our industry, the debt or equity markets, the general economy or the residential finance and real estate markets specifically, whether the result of market events or otherwise;

• events or circumstances which undermine confidence in the financial markets or otherwise have a broad impact on financial markets, such as a credit downgrade of U.S. Government obligations, the sudden instability or collapse of large depository institutions or other significant corporations, terrorist attacks, natural or man-made disasters, or threatened or actual armed conflicts;

• changes in general business, economic, market, employment and political conditions, or in consumer confidence and spending habits from those expected;

• continued declines in residential real estate and significant changes in U.S. housing prices or activity in the U.S. housing market;

• the availability of, and level of competition for, attractive risk-adjusted investment opportunities in residential mortgage loans and mortgage-related assets that satisfy our investment objectives;

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• the inherent difficulty in winning bids to acquire distressed loans or correspondent loans, and our success in doing so;

• the concentration of credit risks to which we are exposed;

• the degree and nature of our competition;

• changes in personnel and lack of availability of qualified personnel;

• our dependence on PCM and PLS, potential conflicts of interest with such entities, and the performance of such entities;

• the availability, terms and deployment of short-term and long-term capital;

• the adequacy of our cash reserves and working capital;

• our ability to match the interest rates and maturities of our assets with our financing;

• the timing and amount of cash flows, if any, from our investments;

• unanticipated increases in financing and other costs, including a rise in interest rates;

• the performance, financial condition and liquidity of borrowers;

• incomplete or inaccurate information or documentation provided by customers or counterparties, or adverse changes in the financial condition of our customers and counterparties;

• the quality and enforceability of the collateral documentation evidencing our ownership and rights in the assets in which we invest;

• increased rates of delinquency, default and/or decreased recovery rates on our investments;

• our ability to foreclose on our investments in a timely manner or at all;

• increased prepayments of the mortgages and other loans underlying our MBS, MSRs and other investments;

• the degree to which our hedging strategies may or may not protect us from interest rate volatility;

• the effect of the accuracy of or changes in the estimates we make about uncertainties and contingencies when measuring and reporting upon our financial condition and results of operations;

• our failure to maintain appropriate internal controls over financial reporting;

• our ability to obtain and/or maintain licenses and other approvals in those jurisdictions where required to conduct our business;

• our ability to comply with various federal, state and local laws that govern our business;

• developments in the secondary markets for our mortgage loan products;

• legislative and regulatory changes that impact the mortgage loan industry or housing market;

• changes in regulations or the occurrence of other events that impact the business, operation or prospects of GSEs or government agencies such as the FHA or Veterans Administration;

• the Dodd-Frank Wall Street Reform and Consumer Protection Act and its implementing regulations and regulatory agencies, and any other legislative and regulatory changes that impact the business, operations or governance of mortgage lenders and/or publicly-traded companies;

• the creation of the Consumer Financial Protection Bureau (“CFPB”), its recently issued and future rules and the enforcement thereof by the CFPB;

• changes in government support of homeownership;

• changes in government or government-sponsored home affordability programs;

• changes in governmental regulations, accounting treatment, tax rates and similar matters (including changes to laws governing the taxation of REITs or the exclusions from registration as an investment company);

• limitations imposed on our business and our ability to satisfy complex rules for us to qualify as a REIT for U.S. federal income tax purposes and qualify for an exclusion from the Investment Company Act of 1940 and the ability of certain of our subsidiaries to qualify as REITs or as subsidiaries to qualify as TRSs for U.S. federal income tax purposes, and our ability and the ability of our subsidiaries to operate effectively within the limitations imposed by these rules;

• estimates relating to our ability to make distributions to our shareholders in the future;

• the effect of public opinion on our reputation; and

• the occurrence of natural disasters or other events or circumstances that could impact our operations.

84

Other factors that could also cause results to differ from our expectations may not be described in this Report or any other document. Each of these factors could by itself, or together with one or more other factors, adversely affect our business, income and/or financial condition.

Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update any forward-looking statement to reflect the impact of circumstances or events that arise after the date the forward-looking statement was made.

85

Item 3. Quantitative and Qualitative Disclosures About Market Risk

In response to this Item 3, the information set forth on pages 81 through 83 is incorporated herein by reference.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. However, no matter how well a control system is designed and operated, it can provide only reasonable, not absolute, assurance that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth in our periodic reports.

Our management has conducted an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Report as required by paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act. Based on our evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective, as of the end of the period covered by this Report, to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting during the quarter ended March 31, 2013 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may be involved in various legal proceedings, claims and actions arising in the ordinary course of business. As of March 31, 2013, we were not involved in any such legal proceedings, claims or actions that management believes would be reasonably likely to have a material adverse effect on us.

Item 1A. Risk Factors

There are no material changes from the risk factors set forth under Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2012, filed with the SEC on February 28, 2013.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

On May 8, 2013, the Company, through two of our wholly-owned subsidiaries, PMC and PMITH, entered into an amendment to our amended and restated master repurchase agreement, dated as of August 25, 2011, by and among Credit Suisse First Boston Mortgage Capital LLC (“CSFB”) and PMC, PMITH and the Company (the “NPL Facility”).

Under the terms of the NPL Facility, (i) PMITH may sell to CSFB eligible nonperforming mortgage loans, and (ii) PMC may sell to CSFB eligible nonperforming mortgage loans and equity interests (the “SPE Entity Interest”) in a special purpose entity that owns real property acquired upon settlement of mortgage loans (“REO Property”). The principal amount paid by CSFB is based on a percentage of the market value of the mortgage loans or the REO Property underlying the SPE Entity Interest (each, a “Facility Asset”), as applicable. The obligations of PMC and PMITH, as applicable, are fully guaranteed by the Company, and the mortgage loans and real property are serviced by PLS pursuant to the terms of the NPL Facility.

Upon our repurchase, or the sale, securitization or liquidation, of a Facility Asset pursuant to the terms of the NPL Facility, we are required to repay CSFB the principal amount related to such Facility Asset plus accrued interest (at a rate reflective of the current market and based on CSFB’s cost of funds plus a margin) to the date of such repurchase, sale, securitization or liquidation. We are also required to pay CSFB a commitment fee for the NPL Facility, as well as certain other administrative costs and expenses in connection with CSFB’s structuring, management and ongoing administration of the NPL Facility.

Under the terms of the amendment to the NPL Facility, we modified certain of our financial covenants, which now include maintaining the following: (i) a minimum tangible net worth of $860 million at the Company, $250 million at PMITH and $150 million at PMC, (ii) unrestricted cash and cash equivalents, on a consolidated basis, in minimum amounts of $40 million at the Company, $10 million at each of PMITH and PMC, and $25 million at PMITH and PMC in the aggregate, (iii) a maximum ratio of total liabilities to tangible net worth of less than 5:1 at each of the Company and PMITH and 10:1 at PMC; and (iv) profitability at each of PMITH and PMC for at least one (1) of the previous two (2) consecutive fiscal quarters, as of the end of each fiscal quarter. All other terms and conditions of the NPL Facility and the related guaranty remain the same in all material respects.

The foregoing description of the amendment to the NPL Facility does not purport to be complete and is qualified in its entirety by reference to the full text of the amendment, which has been filed with this Report as Exhibit 10.51, the full text of the NPL Facility, which was filed as Exhibit 10.28 to our Quarterly Report on Form 10-Q filed on November 8, 2011, the full text of the related guaranty, which was filed as Exhibit 1.2 to our Current Report on Form 8-K filed on June 14, 2011, and the full text of any amendments to the NPL Facility filed thereafter.

On May 8, 2013, the Company, through our wholly-owned subsidiary, the Operating Partnership, entered into an amendment to our master repurchase agreement, dated September 28, 2012, by and among CSFB and the Operating Partnership and the Company (the “Re-warehouse Facility”).

Under the terms of the Re-warehouse Facility, the Operating Partnership may sell to CSFB, and later repurchase, newly originated mortgage loans for which the Operating Partnership provides financing to third party mortgage loan originators. The principal amount paid by CSFB for each eligible mortgage loan is based upon a percentage of the lesser of the market value or the unpaid principal balance of such mortgage loan. The obligations of the Operating Partnership are fully guaranteed by the Company, and the mortgage loans and real property are serviced by PLS pursuant to the terms of the Re-warehouse Facility.

Upon our repurchase of a mortgage loan pursuant to the terms of the Re-warehouse Facility, we are required to repay CSFB the principal amount related to such mortgage loan plus accrued interest (at a rate reflective of the current market and based on CSFB’s cost of funds plus a margin) to the date of such repurchase. We are also required to pay CSFB certain administrative costs and expenses in connection with CSFB’s structuring, management and ongoing administration of the Re-warehouse Facility.

Under the terms of the amendment to the Re-warehouse Facility, we modified certain of our financial covenants, which now include maintaining the following: (i) a minimum tangible net worth of $860 million at the Company and $700 million at the Operating Partnership, (ii) unrestricted cash and cash equivalents, on a consolidated basis, in minimum amounts of $40 million at each of the Company and the Operating Partnership, (iii) a maximum ratio of total liabilities to tangible net worth of less than 5:1 at each of the Company and the Operating Partnership; and (iv) profitability at the Operating Partnership for at least one (1) of the previous two (2) consecutive fiscal quarters, as of the end of each fiscal quarter. All other terms and conditions of the Re-warehouse Facility and the related guaranty remain the same in all material respects.

The foregoing description of the amendment to the Re-warehouse Facility does not purport to be complete and is qualified in its entirety by reference to the full text of the amendment, which has been filed with this Report as Exhibit 10.80, and the full text of the Re-warehouse Facility and the related guaranty, which were filed as Exhibits 1.1 and 1.2, respectively, to our Current Report on Form 8-K filed on October 3, 2012.

87

Item 6. Exhibits

Exhibit Number	Exhibit Description
3.1	Declaration of Trust of PennyMac Mortgage Investment Trust, as amended and restated (incorporated by reference to Exhibit 3.1 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009).
3.2	Bylaws of PennyMac Mortgage Investment Trust (incorporated by reference to Exhibit 3.2 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009).
4.1	Specimen Common Share Certificate of PennyMac Mortgage Investment Trust (incorporated by reference to Exhibit 4.1 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009).
10.1	Amended and Restated Limited Partnership Agreement of PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 10.2 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009).
10.2	Registration Rights Agreement, dated as of August 4, 2009, among PennyMac Mortgage Investment Trust, Stanford L. Kurland, David A. Spector, BlackRock Holdco II, Inc., Highfields Capital Investments LLC and Private National Mortgage Acceptance Company, LLC (incorporated by reference to Exhibit 10.1 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009).
10.3	Underwriting Fee Reimbursement Agreement, dated as of August 4, 2009, among PennyMac Mortgage Investment Trust, PennyMac Operating Partnership, L.P. and PNMAC Capital Management, LLC (incorporated by reference to Exhibit 10.7 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009).
10.4	Amended and Restated Underwriting Fee Reimbursement Agreement, dated as of February 1, 2013, by and among PennyMac Mortgage Investment Trust, PennyMac Operating Partnership, L.P. and PNMAC Capital Management, LLC (incorporated by reference to Exhibit 1.6 of our Current Report on Form 8-K filed on February 7, 2013).
10.5	Management Agreement, dated as of August 4, 2009, among PennyMac Mortgage Investment Trust, PennyMac Operating Partnership, L.P. and PNMAC Capital Management, LLC (incorporated by reference to Exhibit 10.3 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009).
10.6	Amendment No. 1 to Management Agreement, dated March 3, 2010, among PennyMac Mortgage Investment Trust, PennyMac Operating Partnership, L.P. and PNMAC Capital Management, LLC (incorporated by reference to Exhibit 10.4 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2010).
10.7	Amendment No. 2 to Management Agreement, dated May 16, 2012, among PennyMac Mortgage Investment Trust, PennyMac Operating Partnership, L.P. and PNMAC Capital Management, LLC (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on May 22, 2012).
10.8	Amended and Restated Management Agreement, dated as of February 1, 2013, among PennyMac Mortgage Investment Trust, PennyMac Operating Partnership, L.P. and PNMAC Capital Management, LLC (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on February 7, 2013).
10.9	Flow Servicing Agreement, dated as of August 4, 2009, between PennyMac Operating Partnership, L.P. and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.4 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009).
10.10	Amendment No. 1 to Flow Servicing Agreement, dated as of March 3, 2010, between PennyMac Operating Partnership, L.P. and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.6 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2010).
10.11	Amendment No. 2 to Flow Servicing Agreement, dated as of March 8, 2011, between PennyMac Operating Partnership, L.P. and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.8 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2011).
10.12	Amendment No. 3 to Flow Servicing Agreement, dated as of May 17, 2011, by and between PennyMac Operating Partnership, L.P. and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.9 of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2011).
10.13	Amended and Restated Flow Servicing Agreement, dated as of February 1, 2013, between PennyMac Operating Partnership, L.P. and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 1.2 of our Current Report on Form 8-K filed on February 7, 2013).
10.14	Second Amended and Restated Flow Servicing Agreement, dated as of March 1, 2013, between PennyMac Operating Partnership, L.P. and PennyMac Loan Services, LLC.

88

Exhibit Number	Exhibit Description
10.15	PennyMac Mortgage Investment Trust 2009 Equity Incentive Plan (incorporated by reference to Exhibit 10.5 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009).
10.16	Form of Restricted Share Unit Award Agreement under the PennyMac Mortgage Investment Trust 2009 Equity Incentive Plan (incorporated by reference to Exhibit 10.8 to Amendment No. 3 to the Company’s Registration Statement on Form S-11, filed with the SEC on July 24, 2009).
10.17	Master Repurchase Agreement, dated as of November 2, 2010, among PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC, and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.11 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2010).
10.18	Amendment Number One to Master Repurchase Agreement, dated as of August 18, 2011, among PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC, and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.13 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011).
10.19	Amendment Number Two to Master Repurchase Agreement, dated as of September 28, 2011, among PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC, and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.14 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011).
10.20	Amendment Number Three to Master Repurchase Agreement, dated as of December 30, 2011, among PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC, and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.15 of our Annual Report on Form 10-K for the year ended December 31, 2011).
10.21	Amendment Number Four to Master Repurchase Agreement, dated as of December 28, 2012, among PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC, and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.17 of our Annual Report on Form 10-K for the year ended December 31, 2012).
10.22	Guaranty Agreement, dated as of November 2, 2010, by PennyMac Mortgage Investment Trust in favor of Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.12 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2010).
10.23	Amendment Number One to Guaranty Agreement, dated as of August 18, 2011, by PennyMac Mortgage Investment Trust in favor of Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.16 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011).
10.24	Amendment Number Two to Guaranty Agreement, dated as of September 28, 2011, by PennyMac Mortgage Investment Trust in favor of Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.17 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011).
10.25	Master Repurchase Agreement, dated as of November 2, 2010, among Credit Suisse First Boston Mortgage Capital, LLC, PennyMac Corp., PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 10.13 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2010).
10.26	Amendment Number One to Master Repurchase Agreement, dated as of May 20, 2011, among Credit Suisse First Boston Mortgage Capital LLC, PennyMac Corp., PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 10.15 of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2011).
10.27	Amendment Number Two to Master Repurchase Agreement, dated as of July 14, 2011, among Credit Suisse First Boston Mortgage Capital LLC, PennyMac Corp., PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P (incorporated by reference to Exhibit 10.20 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011).
10.28	Amendment Number Three to Master Repurchase Agreement, dated as of October 7, 2011, among Credit Suisse First Boston Mortgage Capital LLC, PennyMac Corp., PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P (incorporated by reference to Exhibit 10.21 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011).
10.29	Amendment Number Four to Master Repurchase Agreement, dated as of November 1, 2011, among Credit Suisse First Boston Mortgage Capital LLC, PennyMac Corp., PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P (incorporated by reference to Exhibit 10.22 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011).

89

Exhibit Number	Exhibit Description
10.30	Amendment Number Five to Master Repurchase Agreement, dated as of November 30, 2011, among Credit Suisse First Boston Mortgage Capital LLC, PennyMac Corp., PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on November 30, 2011).
10.31	Amendment Number Six to Master Repurchase Agreement, dated as of March 29, 2012, among Credit Suisse First Boston Mortgage Capital LLC, PennyMac Corp., PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 10.25 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012).
10.32	Amendment Number Seven to Master Repurchase Agreement, dated as of July 25, 2012, among Credit Suisse First Boston Mortgage Capital LLC, PennyMac Corp., PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on July 31, 2012).
10.33	Amendment Number Eight to Master Repurchase Agreement, dated as of September 26, 2012, among Credit Suisse First Boston Mortgage Capital LLC, PennyMac Corp., PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on October 1, 2012).
10.34	Amendment Number Nine to Master Repurchase Agreement, dated as of October 29, 2012, among Credit Suisse First Boston Mortgage Capital LLC, PennyMac Corp., PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on October 29, 2012).
10.35	Guaranty, dated as of November 2, 2010, by PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. and Credit Suisse First Boston Mortgage Capital, LLC (incorporated by reference to Exhibit 10.14 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2010).
10.36	Master Repurchase Agreement, dated as of December 9, 2010, among PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC, and PennyMac Loan Services, LLC, and Citibank, N.A. (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on December 15, 2010).
10.37	Amendment Number One to Master Repurchase Agreement, dated as of February 25, 2011, by and among Citibank, N.A. and PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on March 3, 2011).
10.38	Amendment Number Two to Master Repurchase Agreement, dated as of December 8, 2011, by and among Citibank, N.A. and PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.28 of our Annual Report on Form 10-K for the year ended December 31, 2011).
10.39	Amendment Number Three to Master Repurchase Agreement, dated as of February 24, 2012, by and among Citibank, N.A. and PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.30 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012).
10.40	Amendment Number Four to Master Repurchase Agreement, dated as of April 13, 2012, by and among Citibank, N.A. and PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.32 of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2012).
10.41	Amendment Number Five to Master Repurchase Agreement, dated as of April 20, 2012, by and among Citibank, N.A. and PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.33 of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2012).
10.42	Amendment Number Six to Master Repurchase Agreement, dated as of May 31, 2012, by and among Citibank, N.A. and PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on June 5, 2012).
10.43	Amendment Number Seven to Master Repurchase Agreement, dated as of November 13, 2012, by and among Citibank, N.A. and PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.39 of our Annual Report on Form 10-K for the year ended December 31, 2012).
10.44	Amendment Number Eight to Master Repurchase Agreement, dated as of December 31, 2012, by and among Citibank, N.A. and PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.40 of our Annual Report on Form 10-K for the year ended December 31, 2012).

90

Exhibit Number	Exhibit Description
10.45	Amendment Number Nine to Master Repurchase Agreement, dated as of March 12, 2013, by and among Citibank, N.A. and PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on March 13, 2013).
10.46	Guaranty Agreement, dated as of December 9, 2010, by PennyMac Mortgage Investment Trust in favor of Citibank, N.A. (incorporated by reference to Exhibit 1.2 of our Current Report on Form 8-K filed on December 15, 2010).
10.47	Master Repurchase Agreement, dated as of June 8, 2011, among Credit Suisse First Boston Mortgage Capital LLC, PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and PennyMac Mortgage Investment Trust (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on June 14, 2011).
10.48	Amended and Restated Master Repurchase Agreement, dated as of August 25, 2011, among Credit Suisse First Boston Mortgage Capital LLC, PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and PennyMac Mortgage Investment Trust (incorporated by reference to Exhibit 10.28 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011).
10.49	Amendment No. 1 to Amended and Restated Master Repurchase Agreement, dated as of June 6, 2012, among Credit Suisse First Boston Mortgage Capital, LLC, PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and PennyMac Mortgage Investment Trust (incorporated by reference to Exhibit 10.38 of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2012).
10.50	Amendment No. 2 to Amended and Restated Master Repurchase Agreement, dated as of March 28, 2013, among Credit Suisse First Boston Mortgage Capital, LLC, PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and PennyMac Mortgage Investment Trust.
10.51	Amendment No. 3 to Amended and Restated Master Repurchase Agreement, dated as of May 8, 2013, among Credit Suisse First Boston Mortgage Capital, LLC, PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and PennyMac Mortgage Investment Trust.
10.52	Guaranty, dated as of June 8, 2011, of PennyMac Mortgage Investment Trust in favor of Credit Suisse First Boston Mortgage Capital LLC (incorporated by reference to Exhibit 1.2 of our Current Report on Form 8-K filed on June 14, 2011).
10.53	Master Loan and Security Agreement, dated as of September 28, 2011, by and between PCNPL Trust and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on October 4, 2011).
10.54	Limited Guaranty Agreement, dated as of September 28, 2011, of PennyMac Mortgage Investment Trust in favor of Wells Fargo Bank, National Association (incorporated by reference to Exhibit 1.2 of our Current Report on Form 8-K filed on October 4, 2011).
10.55	Master Repurchase Agreement, dated as of November 7, 2011, among Bank of America, N.A., PennyMac Corp., PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on November 14, 2011).
10.56	Amendment No. 1 to Master Repurchase Agreement, dated as of August 17, 2012, among Bank of America, N.A., PennyMac Corp., PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 10.45 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2012).
10.57	Amendment No. 2 to Master Repurchase Agreement, dated as of January 3, 2013, among Bank of America, N.A., PennyMac Corp., PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on January 7, 2013).
10.58	Amendment No. 3 to Master Repurchase Agreement, dated as of March 28, 2013, among Bank of America, N.A., PennyMac Corp., PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on April 3, 2013).
10.59	Guaranty, dated as of November 7, 2011, by PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P., in favor of Bank of America, N.A. (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on November 14, 2011).

91

Exhibit Number	Exhibit Description
10.60	Letter Agreement, dated as of July 21, 2011, by and between PennyMac Corp. and Citigroup Global Markets Realty Corp. (incorporated by reference to Exhibit 10.32 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011).*
10.61	Amendment Number One, dated as of January 6, 2012, to Letter Agreement, dated as of July 12, 2011, by and between PennyMac Corp. and Citigroup Global Markets Realty Corp. (incorporated by reference to Exhibit 10.40 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012).*
10.62	Amendment Number Two, dated as of February 1, 2012, to Letter Agreement, dated as of July 12, 2011, by and between PennyMac Corp. and Citigroup Global Markets Realty Corp. (incorporated by reference to Exhibit 10.41 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012).*
10.63	Letter Agreement, dated as of December 20, 2011, by and between PennyMac Corp. and Citigroup Global Markets Realty Corp. (incorporated by reference to Exhibit 10.38 of our Annual Report on Form 10-K for the year ended December 31, 2011).*
10.64	Master Repurchase Agreement, dated as of March 29, 2012, among Credit Suisse First Boston Mortgage Capital, LLC, PennyMac Mortgage Investment Trust Holdings I, LLC, PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on March 29, 2012).
10.65	Amendment Number One to Master Repurchase Agreement, dated as of July 25, 2012, among Credit Suisse First Boston Mortgage Capital, LLC, PennyMac Mortgage Investment Trust Holdings I, LLC, PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 1.2 of our Current Report on Form 8-K filed on July 31, 2012).
10.66	Amendment Number Two to Master Repurchase Agreement, dated as of September 26, 2012, among Credit Suisse First Boston Mortgage Capital, LLC, PennyMac Mortgage Investment Trust Holdings I, LLC, PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 1.2 of our Current Report on Form 8-K filed on October 1, 2012).
10.67	Amendment Number Three to Master Repurchase Agreement, dated as of October 29, 2012, among Credit Suisse First Boston Mortgage Capital, LLC, PennyMac Mortgage Investment Trust Holdings I, LLC, PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 1.2 of our Current Report on Form 8-K filed on October 29, 2012).
10.68	Guaranty, dated as of March 29, 2012, by PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. in favor of Credit Suisse First Boston Mortgage Capital, LLC (incorporated by reference to Exhibit 1.2 of our Current Report on Form 8-K filed on March 29, 2012).
10.69	Master Repurchase Agreement, dated as of May 24, 2012, among Citibank, N.A., PennyMac Corp. and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on May 30, 2012).
10.70	Amendment Number One to Master Repurchase Agreement, dated as of October 15, 2012, among Citibank, N.A., PennyMac Corp. and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on October 16, 2012).
10.71	Amendment Number Two to Master Repurchase Agreement, dated as of November 13, 2012, among Citibank, N.A., PennyMac Corp. and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.62 of our Annual Report on Form 10-K for the year ended December 31, 2012).
10.72	Amendment Number Three to Master Repurchase Agreement, dated as of December 31, 2012, among Citibank, N.A., PennyMac Corp. and PennyMac Loan Services, LLC.
10.73	Guaranty, dated as of May 24, 2012, by PennyMac Mortgage Investment Trust in favor of Citibank, N.A. (incorporated by reference to Exhibit 1.2 of our Current Report on Form 8-K filed on May 30, 2012).
10.74	Master Repurchase Agreement, dated as of July 2, 2012, among Barclays Bank PLC, PennyMac Corp., PennyMac Loan Services, LLC and PennyMac Mortgage Investment Trust (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on July 10, 2012).
10.75	Amended and Restated Mortgage Banking Services Agreement, dated as of November 1, 2010, between PennyMac Corp. and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.53 of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2012).

92

Exhibit Number	Exhibit Description
10.76	Amendment No. 1 to Amended and Restated Mortgage Banking Services Agreement, dated as of July 1, 2011, between PennyMac Corp. and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.54 of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2012).
10.77	Amendment No. 2 to Amended and Restated Mortgage Banking Services Agreement, dated as of February 29, 2012, between PennyMac Corp. and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.55 of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2012).
10.78	Amendment No. 3 to Amended and Restated Mortgage Banking Services Agreement, dated as of May 16, 2012, between PennyMac Corp. and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.56 of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2012).
10.79	Master Repurchase Agreement, dated as of September 28, 2012, among Credit Suisse First Boston Mortgage Capital, LLC, PennyMac Operating Partnership, L.P. and PennyMac Mortgage Investment Trust (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on October 3, 2012).
10.80	Amendment No. 1 to Master Repurchase Agreement, dated as of May 8, 2013, among Credit Suisse First Boston Mortgage Capital, LLC, PennyMac Operating Partnership, L.P. and PennyMac Mortgage Investment Trust.
10.81	Guaranty, dated as of September 28, 2012, by PennyMac Mortgage Investment Trust in favor of Credit Suisse First Boston Mortgage Capital, LLC (incorporated by reference to Exhibit 1.2 of our Current Report on Form 8-K filed on October 3, 2012).
10.82	Master Repurchase Agreement, dated as of November 20, 2012, among PennyMac Corp., Morgan Stanley Bank, N.A. and Morgan Stanley Mortgage Capital Holdings LLC (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on November 26, 2012).
10.83	Guaranty, dated as of November 20, 2012, by PennyMac Mortgage Investment Trust in favor of Morgan Stanley Bank, N.A. and Morgan Stanley Mortgage Capital Holdings LLC (incorporated by reference to Exhibit 1.2 of our Current Report on Form 8-K filed on November 26, 2012).
10.84	Mortgage Banking and Warehouse Services Agreement, dated as of February 1, 2013, by and between PennyMac Loan Services, LLC and PennyMac Corp. (incorporated by reference to Exhibit 1.3 of our Current Report on Form 8-K filed on February 7, 2013).
10.85	Amendment No. 1 to Mortgage Banking and Warehouse Services Agreement, dated as of March 1, 2013, by and between PennyMac Loan Services, LLC and PennyMac Corp.
10.86	MSR Recapture Agreement, dated as of February 1, 2013, by and between PennyMac Loan Services, LLC and PennyMac Corp. (incorporated by reference to Exhibit 1.4 of our Current Report on Form 8-K filed on February 7, 2013).
10.87	Master Spread Acquisition and MSR Servicing Agreement, dated as of February 1, 2013, by and between PennyMac Loan Services, LLC and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 1.5 of our Current Report on Form 8-K filed on February 7, 2013).
10.88	Confidentiality Agreement, dated as of February 6, 2013, between Private National Mortgage Acceptance Company, LLC and PennyMac Mortgage Investment Trust (incorporated by reference to Exhibit 1.7 of our Current Report on Form 8-K filed on February 7, 2013).
10.89	Amended and Restated Confidentiality Agreement, dated as of March 1, 2013, between Private National Mortgage Acceptance Company, LLC and PennyMac Mortgage Investment Trust.
31.1	Certification of Stanford L. Kurland pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Anne D. McCallion pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

93

Exhibit Number	Exhibit Description
32.1	Certification of Stanford L. Kurland pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Anne D. McCallion pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets as of March 31, 2013 and December 31, 2012, (ii) the Consolidated Statements of Income for the quarters ended March 31, 2013 and 2012, (iii) the Consolidated Statements of Changes in Shareholders’ Equity for the quarters ended March 31, 2013 and 2012, (iv) the Consolidated Statements of Cash Flows for the quarters ended March 31, 2013 and 2012 and (v) the Notes to the Consolidated Financial Statements.**

* Certain terms have been redacted pursuant to requests for confidential treatment that were granted by the Securities and Exchange Commission.

** Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is otherwise not subject to liability under those sections.

94

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	PENNYMAC MORTGAGE INVESTMENT TRUST (Registrant)
Dated: May 10, 2013	By:	/s/ STANFORD L. KURLAND
		Stanford L. Kurland
		Chairman of the Board and Chief Executive Officer

Dated: May 10, 2013	By:	/s/ ANNE D. MCCALLION
		Anne D. McCallion
		Chief Financial Officer

95

PENNYMAC MORTGAGE INVESTMENT TRUST

FORM 10-Q

March 31, 2013

INDEX OF EXHIBITS

Exhibit Number	Exhibit Description
3.1	Declaration of Trust of PennyMac Mortgage Investment Trust, as amended and restated (incorporated by reference to Exhibit 3.1 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009).
3.2	Bylaws of PennyMac Mortgage Investment Trust (incorporated by reference to Exhibit 3.2 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009).
4.1	Specimen Common Share Certificate of PennyMac Mortgage Investment Trust (incorporated by reference to Exhibit 4.1 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009).
10.1	Amended and Restated Limited Partnership Agreement of PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 10.2 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009).
10.2	Registration Rights Agreement, dated as of August 4, 2009, among PennyMac Mortgage Investment Trust, Stanford L. Kurland, David A. Spector, BlackRock Holdco II, Inc., Highfields Capital Investments LLC and Private National Mortgage Acceptance Company, LLC (incorporated by reference to Exhibit 10.1 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009).
10.3	Underwriting Fee Reimbursement Agreement, dated as of August 4, 2009, among PennyMac Mortgage Investment Trust, PennyMac Operating Partnership, L.P. and PNMAC Capital Management, LLC (incorporated by reference to Exhibit 10.7 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009).
10.4	Amended and Restated Underwriting Fee Reimbursement Agreement, dated as of February 1, 2013, by and among PennyMac Mortgage Investment Trust, PennyMac Operating Partnership, L.P. and PNMAC Capital Management, LLC (incorporated by reference to Exhibit 1.6 of our Current Report on Form 8-K filed on February 7, 2013).
10.5	Management Agreement, dated as of August 4, 2009, among PennyMac Mortgage Investment Trust, PennyMac Operating Partnership, L.P. and PNMAC Capital Management, LLC (incorporated by reference to Exhibit 10.3 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009).
10.6	Amendment No. 1 to Management Agreement, dated March 3, 2010, among PennyMac Mortgage Investment Trust, PennyMac Operating Partnership, L.P. and PNMAC Capital Management, LLC (incorporated by reference to Exhibit 10.4 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2010).
10.7	Amendment No. 2 to Management Agreement, dated May 16, 2012, among PennyMac Mortgage Investment Trust, PennyMac Operating Partnership, L.P. and PNMAC Capital Management, LLC (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on May 22, 2012).
10.8	Amended and Restated Management Agreement, dated as of February 1, 2013, among PennyMac Mortgage Investment Trust, PennyMac Operating Partnership, L.P. and PNMAC Capital Management, LLC (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on February 7, 2013).
10.9	Flow Servicing Agreement, dated as of August 4, 2009, between PennyMac Operating Partnership, L.P. and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.4 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009).
10.10	Amendment No. 1 to Flow Servicing Agreement, dated as of March 3, 2010, between PennyMac Operating Partnership, L.P. and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.6 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2010).
10.11	Amendment No. 2 to Flow Servicing Agreement, dated as of March 8, 2011, between PennyMac Operating Partnership, L.P. and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.8 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2011).
10.12	Amendment No. 3 to Flow Servicing Agreement, dated as of May 17, 2011, by and between PennyMac Operating Partnership, L.P. and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.9 of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2011).
10.13	Amended and Restated Flow Servicing Agreement, dated as of February 1, 2013, between PennyMac Operating Partnership, L.P. and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 1.2 of our Current Report on Form 8-K filed on February 7, 2013).
10.14	Second Amended and Restated Flow Servicing Agreement, dated as of March 1, 2013, between PennyMac Operating Partnership, L.P. and PennyMac Loan Services, LLC.

Exhibit Number	Exhibit Description
10.15	PennyMac Mortgage Investment Trust 2009 Equity Incentive Plan (incorporated by reference to Exhibit 10.5 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009).
10.16	Form of Restricted Share Unit Award Agreement under the PennyMac Mortgage Investment Trust 2009 Equity Incentive Plan (incorporated by reference to Exhibit 10.8 to Amendment No. 3 to the Company’s Registration Statement on Form S-11, filed with the SEC on July 24, 2009).
10.17	Master Repurchase Agreement, dated as of November 2, 2010, among PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC, and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.11 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2010).
10.18	Amendment Number One to Master Repurchase Agreement, dated as of August 18, 2011, among PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC, and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.13 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011).
10.19	Amendment Number Two to Master Repurchase Agreement, dated as of September 28, 2011, among PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC, and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.14 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011).
10.20	Amendment Number Three to Master Repurchase Agreement, dated as of December 30, 2011, among PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC, and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.15 of our Annual Report on Form 10-K for the year ended December 31, 2011).
10.21	Amendment Number Four to Master Repurchase Agreement, dated as of December 28, 2012, among PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC, and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.17 of our Annual Report on Form 10-K for the year ended December 31, 2012).
10.22	Guaranty Agreement, dated as of November 2, 2010, by PennyMac Mortgage Investment Trust in favor of Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.12 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2010).
10.23	Amendment Number One to Guaranty Agreement, dated as of August 18, 2011, by PennyMac Mortgage Investment Trust in favor of Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.16 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011).
10.24	Amendment Number Two to Guaranty Agreement, dated as of September 28, 2011, by PennyMac Mortgage Investment Trust in favor of Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.17 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011).
10.25	Master Repurchase Agreement, dated as of November 2, 2010, among Credit Suisse First Boston Mortgage Capital, LLC, PennyMac Corp., PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 10.13 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2010).
10.26	Amendment Number One to Master Repurchase Agreement, dated as of May 20, 2011, among Credit Suisse First Boston Mortgage Capital LLC, PennyMac Corp., PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 10.15 of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2011).
10.27	Amendment Number Two to Master Repurchase Agreement, dated as of July 14, 2011, among Credit Suisse First Boston Mortgage Capital LLC, PennyMac Corp., PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P (incorporated by reference to Exhibit 10.20 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011).
10.28	Amendment Number Three to Master Repurchase Agreement, dated as of October 7, 2011, among Credit Suisse First Boston Mortgage Capital LLC, PennyMac Corp., PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P (incorporated by reference to Exhibit 10.21 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011).
10.29	Amendment Number Four to Master Repurchase Agreement, dated as of November 1, 2011, among Credit Suisse First Boston Mortgage Capital LLC, PennyMac Corp., PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P (incorporated by reference to Exhibit 10.22 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011).

Exhibit Number	Exhibit Description
10.30	Amendment Number Five to Master Repurchase Agreement, dated as of November 30, 2011, among Credit Suisse First Boston Mortgage Capital LLC, PennyMac Corp., PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on November 30, 2011).
10.31	Amendment Number Six to Master Repurchase Agreement, dated as of March 29, 2012, among Credit Suisse First Boston Mortgage Capital LLC, PennyMac Corp., PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 10.25 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012).
10.32	Amendment Number Seven to Master Repurchase Agreement, dated as of July 25, 2012, among Credit Suisse First Boston Mortgage Capital LLC, PennyMac Corp., PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on July 31, 2012).
10.33	Amendment Number Eight to Master Repurchase Agreement, dated as of September 26, 2012, among Credit Suisse First Boston Mortgage Capital LLC, PennyMac Corp., PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on October 1, 2012).
10.34	Amendment Number Nine to Master Repurchase Agreement, dated as of October 29, 2012, among Credit Suisse First Boston Mortgage Capital LLC, PennyMac Corp., PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on October 29, 2012).
10.35	Guaranty, dated as of November 2, 2010, by PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. and Credit Suisse First Boston Mortgage Capital, LLC (incorporated by reference to Exhibit 10.14 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2010).
10.36	Master Repurchase Agreement, dated as of December 9, 2010, among PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC, and PennyMac Loan Services, LLC, and Citibank, N.A. (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on December 15, 2010).
10.37	Amendment Number One to Master Repurchase Agreement, dated as of February 25, 2011, by and among Citibank, N.A. and PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on March 3, 2011).
10.38	Amendment Number Two to Master Repurchase Agreement, dated as of December 8, 2011, by and among Citibank, N.A. and PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.28 of our Annual Report on Form 10-K for the year ended December 31, 2011).
10.39	Amendment Number Three to Master Repurchase Agreement, dated as of February 24, 2012, by and among Citibank, N.A. and PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.30 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012).
10.40	Amendment Number Four to Master Repurchase Agreement, dated as of April 13, 2012, by and among Citibank, N.A. and PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.32 of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2012).
10.41	Amendment Number Five to Master Repurchase Agreement, dated as of April 20, 2012, by and among Citibank, N.A. and PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.33 of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2012).
10.42	Amendment Number Six to Master Repurchase Agreement, dated as of May 31, 2012, by and among Citibank, N.A. and PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on June 5, 2012).
10.43	Amendment Number Seven to Master Repurchase Agreement, dated as of November 13, 2012, by and among Citibank, N.A. and PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.39 of our Annual Report on Form 10-K for the year ended December 31, 2012).

Exhibit Number	Exhibit Description
10.44	Amendment Number Eight to Master Repurchase Agreement, dated as of December 31, 2012, by and among Citibank, N.A. and PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.40 of our Annual Report on Form 10-K for the year ended December 31, 2012).
10.45	Amendment Number Nine to Master Repurchase Agreement, dated as of March 12, 2013, by and among Citibank, N.A. and PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on March 13, 2013).
10.46	Guaranty Agreement, dated as of December 9, 2010, by PennyMac Mortgage Investment Trust in favor of Citibank, N.A. (incorporated by reference to Exhibit 1.2 of our Current Report on Form 8-K filed on December 15, 2010).
10.47	Master Repurchase Agreement, dated as of June 8, 2011, among Credit Suisse First Boston Mortgage Capital LLC, PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and PennyMac Mortgage Investment Trust (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on June 14, 2011).
10.48	Amended and Restated Master Repurchase Agreement, dated as of August 25, 2011, among Credit Suisse First Boston Mortgage Capital LLC, PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and PennyMac Mortgage Investment Trust (incorporated by reference to Exhibit 10.28 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011).
10.49	Amendment No. 1 to Amended and Restated Master Repurchase Agreement, dated as of June 6, 2012, among Credit Suisse First Boston Mortgage Capital, LLC, PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and PennyMac Mortgage Investment Trust (incorporated by reference to Exhibit 10.38 of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2012).
10.50	Amendment No. 2 to Amended and Restated Master Repurchase Agreement, dated as of March 28, 2013, among Credit Suisse First Boston Mortgage Capital, LLC, PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and PennyMac Mortgage Investment Trust.
10.51	Amendment No. 3 to Amended and Restated Master Repurchase Agreement, dated as of May 8, 2013, among Credit Suisse First Boston Mortgage Capital, LLC, PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and PennyMac Mortgage Investment Trust.
10.52	Guaranty, dated as of June 8, 2011, of PennyMac Mortgage Investment Trust in favor of Credit Suisse First Boston Mortgage Capital LLC (incorporated by reference to Exhibit 1.2 of our Current Report on Form 8-K filed on June 14, 2011).
10.53	Master Loan and Security Agreement, dated as of September 28, 2011, by and between PCNPL Trust and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on October 4, 2011).
10.54	Limited Guaranty Agreement, dated as of September 28, 2011, of PennyMac Mortgage Investment Trust in favor of Wells Fargo Bank, National Association (incorporated by reference to Exhibit 1.2 of our Current Report on Form 8-K filed on October 4, 2011).
10.55	Master Repurchase Agreement, dated as of November 7, 2011, among Bank of America, N.A., PennyMac Corp., PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on November 14, 2011).
10.56	Amendment No. 1 to Master Repurchase Agreement, dated as of August 17, 2012, among Bank of America, N.A., PennyMac Corp., PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 10.45 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2012).
10.57	Amendment No. 2 to Master Repurchase Agreement, dated as of January 3, 2013, among Bank of America, N.A., PennyMac Corp., PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on January 7, 2013).
10.58	Amendment No. 3 to Master Repurchase Agreement, dated as of March 28, 2013, among Bank of America, N.A., PennyMac Corp., PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on April 3, 2013).
10.59	Guaranty, dated as of November 7, 2011, by PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P., in favor of Bank of America, N.A. (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on November 14, 2011).

Exhibit Number	Exhibit Description
10.60	Letter Agreement, dated as of July 21, 2011, by and between PennyMac Corp. and Citigroup Global Markets Realty Corp. (incorporated by reference to Exhibit 10.32 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011).*
10.61	Amendment Number One, dated as of January 6, 2012, to Letter Agreement, dated as of July 12, 2011, by and between PennyMac Corp. and Citigroup Global Markets Realty Corp. (incorporated by reference to Exhibit 10.40 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012).*
10.62	Amendment Number Two, dated as of February 1, 2012, to Letter Agreement, dated as of July 12, 2011, by and between PennyMac Corp. and Citigroup Global Markets Realty Corp. (incorporated by reference to Exhibit 10.41 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012).*
10.63	Letter Agreement, dated as of December 20, 2011, by and between PennyMac Corp. and Citigroup Global Markets Realty Corp. (incorporated by reference to Exhibit 10.38 of our Annual Report on Form 10-K for the year ended December 31, 2011).*
10.64	Master Repurchase Agreement, dated as of March 29, 2012, among Credit Suisse First Boston Mortgage Capital, LLC, PennyMac Mortgage Investment Trust Holdings I, LLC, PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on March 29, 2012).
10.65	Amendment Number One to Master Repurchase Agreement, dated as of July 25, 2012, among Credit Suisse First Boston Mortgage Capital, LLC, PennyMac Mortgage Investment Trust Holdings I, LLC, PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 1.2 of our Current Report on Form 8-K filed on July 31, 2012).
10.66	Amendment Number Two to Master Repurchase Agreement, dated as of September 26, 2012, among Credit Suisse First Boston Mortgage Capital, LLC, PennyMac Mortgage Investment Trust Holdings I, LLC, PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 1.2 of our Current Report on Form 8-K filed on October 1, 2012).
10.67	Amendment Number Three to Master Repurchase Agreement, dated as of October 29, 2012, among Credit Suisse First Boston Mortgage Capital, LLC, PennyMac Mortgage Investment Trust Holdings I, LLC, PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 1.2 of our Current Report on Form 8-K filed on October 29, 2012).
10.68	Guaranty, dated as of March 29, 2012, by PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. in favor of Credit Suisse First Boston Mortgage Capital, LLC (incorporated by reference to Exhibit 1.2 of our Current Report on Form 8-K filed on March 29, 2012).
10.69	Master Repurchase Agreement, dated as of May 24, 2012, among Citibank, N.A., PennyMac Corp. and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on May 30, 2012).
10.70	Amendment Number One to Master Repurchase Agreement, dated as of October 15, 2012, among Citibank, N.A., PennyMac Corp. and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on October 16, 2012).
10.71	Amendment Number Two to Master Repurchase Agreement, dated as of November 13, 2012, among Citibank, N.A., PennyMac Corp. and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.62 of our Annual Report on Form 10-K for the year ended December 31, 2012).
10.72	Amendment Number Three to Master Repurchase Agreement, dated as of December 31, 2012, among Citibank, N.A., PennyMac Corp. and PennyMac Loan Services, LLC.
10.73	Guaranty, dated as of May 24, 2012, by PennyMac Mortgage Investment Trust in favor of Citibank, N.A. (incorporated by reference to Exhibit 1.2 of our Current Report on Form 8-K filed on May 30, 2012).
10.74	Master Repurchase Agreement, dated as of July 2, 2012, among Barclays Bank PLC, PennyMac Corp., PennyMac Loan Services, LLC and PennyMac Mortgage Investment Trust (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on July 10, 2012).
10.75	Amended and Restated Mortgage Banking Services Agreement, dated as of November 1, 2010, between PennyMac Corp. and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.53 of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2012).

10.76	Amendment No. 1 to Amended and Restated Mortgage Banking Services Agreement, dated as of July 1, 2011, between PennyMac Corp. and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.54 of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2012).
10.77	Amendment No. 2 to Amended and Restated Mortgage Banking Services Agreement, dated as of February 29, 2012, between PennyMac Corp. and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.55 of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2012).
10.78	Amendment No. 3 to Amended and Restated Mortgage Banking Services Agreement, dated as of May 16, 2012, between PennyMac Corp. and PennyMac Loan Services, LLC (incorporated by reference to Exhibit 10.56 of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2012).
10.79	Master Repurchase Agreement, dated as of September 28, 2012, among Credit Suisse First Boston Mortgage Capital, LLC, PennyMac Operating Partnership, L.P. and PennyMac Mortgage Investment Trust (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on October 3, 2012).
10.80	Amendment No. 1 to Master Repurchase Agreement, dated as of May 8, 2013, among Credit Suisse First Boston Mortgage Capital, LLC, PennyMac Operating Partnership, L.P. and PennyMac Mortgage Investment Trust.
10.81	Guaranty, dated as of September 28, 2012, by PennyMac Mortgage Investment Trust in favor of Credit Suisse First Boston Mortgage Capital, LLC (incorporated by reference to Exhibit 1.2 of our Current Report on Form 8-K filed on October 3, 2012).
10.82	Master Repurchase Agreement, dated as of November 20, 2012, among PennyMac Corp., Morgan Stanley Bank, N.A. and Morgan Stanley Mortgage Capital Holdings LLC (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on November 26, 2012).
10.83	Guaranty, dated as of November 20, 2012, by PennyMac Mortgage Investment Trust in favor of Morgan Stanley Bank, N.A. and Morgan Stanley Mortgage Capital Holdings LLC (incorporated by reference to Exhibit 1.2 of our Current Report on Form 8-K filed on November 26, 2012).
10.84	Mortgage Banking and Warehouse Services Agreement, dated as of February 1, 2013, by and between PennyMac Loan Services, LLC and PennyMac Corp. (incorporated by reference to Exhibit 1.3 of our Current Report on Form 8-K filed on February 7, 2013).
10.85	Amendment No. 1 to Mortgage Banking and Warehouse Services Agreement, dated as of March 1, 2013, by and between PennyMac Loan Services, LLC and PennyMac Corp.
10.86	MSR Recapture Agreement, dated as of February 1, 2013, by and between PennyMac Loan Services, LLC and PennyMac Corp. (incorporated by reference to Exhibit 1.4 of our Current Report on Form 8-K filed on February 7, 2013).
10.87	Master Spread Acquisition and MSR Servicing Agreement, dated as of February 1, 2013, by and between PennyMac Loan Services, LLC and PennyMac Operating Partnership, L.P. (incorporated by reference to Exhibit 1.5 of our Current Report on Form 8-K filed on February 7, 2013).
10.88	Confidentiality Agreement, dated as of February 6, 2013, between Private National Mortgage Acceptance Company, LLC and PennyMac Mortgage Investment Trust (incorporated by reference to Exhibit 1.7 of our Current Report on Form 8-K filed on February 7, 2013).
10.89	Amended and Restated Confidentiality Agreement, dated as of March 1, 2013, between Private National Mortgage Acceptance Company, LLC and PennyMac Mortgage Investment Trust.
31.1	Certification of Stanford L. Kurland pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Anne D. McCallion pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	Certification of Stanford L. Kurland pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Anne D. McCallion pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets as of March 31, 2013 and December 31, 2012, (ii) the Consolidated Statements of Income for the quarters ended March 31, 2013 and 2012, (iii) the Consolidated Statements of Changes in Shareholders’ Equity for the quarters ended March 31, 2013 and 2012, (iv) the Consolidated Statements of Cash Flows for the quarters ended March 31, 2013 and 2012 and (v) the Notes to the Consolidated Financial Statements.**

* Certain terms have been redacted pursuant to requests for confidential treatment that were granted by the Securities and Exchange Commission.

** Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is otherwise not subject to liability under those sections.

EX-10.14

Exhibit 10.14

Execution Version

SECOND AMENDED AND RESTATED FLOW SERVICING AGREEMENT

between

PENNYMAC OPERATING PARTNERSHIP, L.P.,

as Owner

and

PENNYMAC LOAN SERVICES, LLC,

as Servicer

Dated as of March 1, 2013

FIXED- AND ADJUSTABLE-RATE RESIDENTIAL MORTGAGE LOANS

TABLE OF CONTENTS

		Page
ARTICLE I DEFINITIONS			2
Section 1.01	Definitions		2
ARTICLE II CONTINUATION OF EXISTING SERVICING; SERVICING OF ADDITIONAL MORTGAGE LOANS			19
Section 2.01	Servicing to Continue		19
Section 2.02	Addition of Mortgage Loans		19
Section 2.03	Closing Documents		20
ARTICLE III SERVICING OF AGENCY MORTGAGE LOANS			22
Section 3.01	Servicer to Act as Servicer of Agency Mortgage Loans		22
Section 3.02	Guides Control		22
ARTICLE IV SERVICING OF NON-AGENCY MORTGAGE LOANS			23
Section 4.01	Servicer to Act as Servicer of Non-Agency Mortgage Loans		23
Section 4.02	Liquidation of Mortgage Loans		25
Section 4.03	Collection of Mortgage Loan Payments; Payment Clearing Account		26
Section 4.04	Establishment of and Deposits to Custodial Account		26
Section 4.05	Permitted Withdrawals From Custodial Account		27
Section 4.06	Establishment of and Deposits to Escrow Account		28
Section 4.07	Permitted Withdrawals From Escrow Account		29
Section 4.08	Payment of Taxes, Insurance and Other Charges		30
Section 4.09	Protection of Accounts		30
Section 4.10	Maintenance of Hazard Insurance		31
Section 4.11	Maintenance of Mortgage Impairment Insurance Policy		33
Section 4.12	Maintenance of Fidelity Bond and Errors and Omissions Insurance		33
Section 4.13	Inspections		33
Section 4.14	Restoration of Mortgaged Property		34
Section 4.15	Title, Management and Disposition of REO Property		34
Section 4.16	Costs and Expenses		36
Section 4.17	Liquidity and Litigation Reserves		36
Section 4.18	Transfers of Mortgaged Properties		37
Section 4.19	Satisfaction of Mortgages and Release of Mortgage Files		38
Section 4.20	Notification of Adjustments		39
Section 4.21	Recordation of Assignments of Mortgage		40
Section 4.22	[Reserved]		40
Section 4.23	Credit Reporting		40
Section 4.24	Superior Liens		40
Section 4.25	Prepayments in Full		41
Section 4.26	Tax and Flood Service Contracts		41

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Section 4.27	Maintenance of PMI Policies and LPMI Policies; Collections Thereunder	41
Section 4.28	Reliability of Information/Exceptional Expenses	42
Section 4.29	Escrow Obligations	42
Section 4.30	No Obligation to Advance Delinquent Payments	43
Section 4.31	MERS Transfers	43
ARTICLE V PAYMENTS; REPORTS		44
Section 5.01	Remittances	44
Section 5.02	Reports to the Owner	44
Section 5.03	Tax Reporting	45
Section 5.04	Cost of Funds	45
ARTICLE VI RECORDS, INFORMATION AND COMPLIANCE DOCUMENTS		46
Section 6.01	Possession of Servicing Files	46
Section 6.02	Annual Statement as to Compliance	46
Section 6.03	Annual Independent Public Accountants’ Servicing Report	47
Section 6.04	Provision of Information	47
Section 6.05	Right to Examine Servicer Records	47
Section 6.06	Compliance with Gramm-Leach-Bliley Act of 1999	48
Section 6.07	Reserved	48
Section 6.08	Financial Statements; Servicing Facilities	48
Section 6.09	Use of Subservicers	48
Section 6.10	Mortgage Loans Held by Wholly Owned Subsidiaries of Owner	48
ARTICLE VII SERVICING COMPENSATION		50
Section 7.01	Servicing Compensation	50
ARTICLE VIII TERMINATION		53
Section 8.01	Termination	53
Section 8.02	Outbound Transfer of Servicing	55
ARTICLE IX INDEMNIFICATION AND ASSIGNMENT AND OTHER MATTERS RELATED TO SERVICER		58
Section 9.01	Indemnification	58
Section 9.02	Limitation on Liability of Servicer and Others	59
Section 9.03	Limitation on Resignation and Assignment by Servicer	59
Section 9.04	Assignment by Owner	60
Section 9.05	Merger or Consolidation of the Servicer	60
Section 9.06	Additional Activities of the Servicer	60
ARTICLE X REPRESENTATIONS AND WARRANTIES		61
Section 10.01	Representations and Warranties of the Owner	61
Section 10.02	Representations and Warranties of the Servicer	62

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ARTICLE XI DEFAULT		65
Section 11.01	Events of Default	65
Section 11.02	Waiver of Defaults	67
ARTICLE XII RECONSTITUTIONS		68
Section 12.01	Cooperation of Servicer with a Reconstitution	68
ARTICLE XIII MISCELLANEOUS PROVISIONS		71
Section 13.01	Notices	71
Section 13.02	Amendment	72
Section 13.03	Entire Agreement	72
Section 13.04	Binding Effect; Beneficiaries	72
Section 13.05	Headings	72
Section 13.06	Further Assurances	72
Section 13.07	Governing Law	72
Section 13.08	Relationship of Parties	72
Section 13.09	Severability of Provisions	73
Section 13.10	No Waiver; Cumulative Remedies	73
Section 13.11	Recordation of Assignments of Mortgage	73
Section 13.12	Exhibits	73
Section 13.13	Counterparts	73
Section 13.14	Trademarks	73
Section 13.15	Confidentiality of Information	74
Section 13.16	WAIVER OF TRIAL BY JURY	74
Section 13.17	LIMITATION OF DAMAGES	74
Section 13.18	SUBMISSION TO JURISDICTION; WAIVERS	74

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EXHIBITS
EXHIBIT 1	LIST OF MONTHLY AND DAILY REPORTS
EXHIBIT 2	FORM OF CUSTODIAL ACCOUNT CERTIFICATION
EXHIBIT 3	RESERVED
EXHIBIT 4	FORM OF ESCROW ACCOUNT CERTIFICATION
EXHIBIT 5	RESERVED
EXHIBIT 6	FORM OF OFFICER’S CERTIFICATE
EXHIBIT 7	MORTGAGE LOAN DOCUMENTS
EXHIBIT 8	FORM OF LIMITED POWER OF ATTORNEY
EXHIBIT 9	TERM SHEET
EXHIBIT 10	DELEGATION OF AUTHORITY MATRIX

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SECOND AMENDED AND RESTATED FLOW SERVICING AGREEMENT

This Second Amended and Restated Flow Servicing Agreement (this “Agreement”) is entered into as of March 1, 2013, by and between PennyMac Loan Services, LLC, a Delaware limited liability company (the “Servicer”), and PennyMac Operating Partnership, L.P., a Delaware limited partnership (the “Owner”).

RECITALS

WHEREAS, the Servicer is in the business of servicing residential mortgage loans similar to the Mortgage Loans;

WHEREAS, the Owner desires that the Servicer service some or all of the Mortgage Loans, and the Servicer is willing to perform such servicing;

WHEREAS, the Owner and the Servicer previously entered into that certain Flow Servicing Agreement, dated as of August 4, 2009, as amended by Amendment No. 1 thereto dated as of March 3, 2010, Amendment No. 2 thereto dated as of March 8, 2011 and Amendment No. 3 thereto dated as of May 17, 2011, and as amended and restated in that certain Amended and Restated Flow Servicing Agreement dated as of February 1, 2013 (collectively, the “Original Agreement”);

WHEREAS, the Owner and the Servicer desire to amend and restate the Original Agreement;

NOW, THEREFORE, in consideration of the mutual premises and agreements set forth herein and for other good and valuable consideration, the receipt and the sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Definitions.

The following terms are defined as follows:

AAA: As defined in Section 7.01.

Accepted Servicing Practices: With respect to any Mortgage Loan (including any related REO Property), each of those mortgage servicing practices (including collection procedures) of prudent mortgage lending institutions which service mortgage loans of the same type as such Mortgage Loan in the jurisdiction where the related Mortgaged Property is located, which servicing practices (i) are in compliance with all federal, state and local laws and regulations, (ii) shall be in accordance with the Servicer’s policies and procedures as amended from time to time for mortgage loans of the same type, (iii) are in accordance with the terms of the related Mortgage and Mortgage Note and (iv) are at a minimum based on the requirements set forth from time to time by Fannie Mae.

Actual/Actual Basis: Remittance to the Owner or its designee which requires the Servicer to remit to the Owner or such designee the actual interest and actual principal collected from each Mortgagor.

Additional Servicing Fee: With respect to each Third Party Loan, the Additional Servicing Fee set forth in or established pursuant to Exhibit 9 hereto.

Adjustable-Rate Mortgage Loan: A Mortgage Loan which provides for the adjustment of the Mortgage Interest Rate payable in respect thereto.

Affiliate: With respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

Agency: With respect to an Agency Mortgage Loan, Fannie Mae, Freddie Mac or Ginnie Mae, as applicable.

Agency Mortgage Loan: A Mortgage Loan that is a Fannie Mae Mortgage Loan, a Freddie Mac Mortgage Loan or a Ginnie Mae Mortgage Loan.

Ancillary Income: All income derived from the Mortgage Loans (other than payments or other collections in respect of principal, interest, Escrow Payments and Prepayment Penalties attributable to the Mortgage Loans) including, but not limited to, the Servicer’s share of all late charges, all interest received on funds deposited in the Custodial Account or any Escrow Account (subject to applicable law), assumption fees, reconveyance fees, subordination fees,

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speedpay fees, mortgage pay on the web fees, automatic clearing house fees, demand statement fees, modification fees, if any, fees received with respect to checks on bank drafts returned by the related bank for insufficient funds, assumption fees and other similar types of fees arising from or in connection with any Mortgage Loan to the extent not otherwise payable to the Mortgagor under applicable law or pursuant to the terms of the related Mortgage Note. In no event shall the Servicer be entitled to any Prepayment Penalties.

Appraised Value: With respect to any Mortgaged Property, the lesser of (i) the value thereof as determined by an appraisal made for the originator of the Mortgage Loan at the time of origination of the Mortgage Loan and (ii) the purchase price for the related Mortgaged Property paid by the Mortgagor with the proceeds of the Mortgage Loan; provided, however, in the case of a Refinanced Mortgage Loan, such value of the Mortgaged Property is based solely upon the value determined by an appraisal made for the originator of such Refinanced Mortgage Loan at the time of origination of such Refinanced Mortgage Loan.

Arbitrator: As defined in Section 7.01.

Asset Balance: On any day for any Mortgage Loan, other than a liquidated Mortgage Loan, the total unpaid outstanding principal balance of such Mortgage Loan on such date.

Assignment of Mortgage: An assignment of the Mortgage, notice of transfer or equivalent instrument in recordable form, sufficient under the laws of the jurisdiction wherein the related Mortgaged Property is located to reflect the sale of the Mortgage to the Owner.

Base Servicing Fee: The Base Servicing Fee set forth in or established pursuant to Exhibit 9 hereto.

BPO: A broker price opinion.

Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a day on which banking and savings and loan institutions in the States of New York or California are authorized or obligated by law or executive authority to be closed.

Combined Loan-to-Value Ratio or CLTV: With respect to any Second Lien Mortgage Loan, the ratio (expressed as a percentage) of the sum of the outstanding principal amount of such Second Lien Mortgage Loan plus the outstanding principal amount of the related First Lien Mortgage Loan to the lesser of (a) the Appraised Value of the Mortgaged Property at origination or (b) if such Second Lien Mortgage Loan was made to finance part of the acquisition of the related Mortgaged Property, the purchase price of the Mortgaged Property.

Code: The Internal Revenue Code of 1986, as amended.

Condemnation Proceeds: All awards or settlements in respect of a Mortgaged Property, whether permanent or temporary, partial or entire, by exercise of the power of eminent domain or condemnation, to the extent not required to be released to a Mortgagor in accordance with the terms of the related Mortgage Loan Documents.

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Correspondent Loan: A newly originated Mortgage Loan acquired by Owner or one of its wholly owned subsidiaries from a third party originator under the correspondent lending program established by Owner or such subsidiary.

Cost of Funds: The amount payable by the Owner to the Servicer pursuant to Section 5.04, which amount shall be equal to one-twelfth of the product of (x) the average daily balance of Servicing Advances and (y) the sum of (i) the Cost of Funds Index plus 0 basis points.

Cost of Funds Index: A per annum rate equal to the London interbank offered rate for one-month United States dollar deposits as such rate appears, in The Wall Street Journal (West Coast edition), as of the first Business Day of such calendar month. If the rate above is unavailable, the Servicer shall select a comparable source mutually agreeable to the Servicer and the Owner from which to determine such rate.

Custodial Account: The separate trust account or accounts created and maintained pursuant to Section 4.04 at a Qualified Depository.

Custodial Agreement: The agreement governing the retention of the originals of each Mortgage Note, Mortgage, Assignment of Mortgage and other Mortgage Loan Documents.

Custodian: The custodian of the Mortgage Loan Documents as specified under the related Custodial Agreement.

Cut-off Date: The date set forth in the related Purchase Agreement, if applicable.

Deed in Lieu Fee: With respect to each Mortgaged Property, the title to which is acquired by deed in lieu of foreclosure, the Deed in Lieu Fee as set forth in Exhibit 9.

Delinquent Mortgage Loan: As defined in Section 8.01(c).

Dispute: As defined in Section 7.01.

Distressed Whole Loan: Any Mortgage Loan classified by the PennyMac REIT Manager as troubled or distressed and acquired by Owner as part of a pool of mortgage loans that are or are expected to be re-performing and/or under-performing mortgage loans.

Due Date: The day of the month on which the Monthly Payment is due on a Mortgage Loan, exclusive of any days of grace.

Due Period: With respect to amounts collected by the Servicer and required to be remitted to the Owner (or as otherwise directed in writing by the Owner) on each Remittance Date, the period commencing on the first day of the month and ending on the last day of the month preceding the month of the Remittance Date.

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Eligible Investments: Any one or more of the obligations or securities listed below, acquired at a purchase price of not greater than par which investment provides for a date of maturity not later than one day prior to the Remittance Date in each month (or such other date as permitted under this Agreement):

(i) direct obligations of, and obligations fully guaranteed as to timely payment of principal and interest by, the United States of America or any agency or instrumentality thereof, provided such the obligations are backed by the full faith and credit of the United States of America (“Direct Obligations”);

(ii) (A) federal funds, demand and time deposits in, certificates of deposits of, or bankers’ acceptances issued by, any depository institution or trust company (including U.S. subsidiaries of foreign depositories) incorporated or organized under the laws of the United States of America or any state thereof and subject to supervision and examination by federal and/or state authorities, so long as at the time of such investment or the contractual commitment providing for such investment, such depository institution or trust company has a short-term uninsured debt rating in the highest available rating category of Moody’s and S&P and provided that each such investment has an original maturity of no more than 365 days; and (B) any other demand or time deposit or deposit which is fully insured by the FDIC;

(iii) repurchase obligations with a term not to exceed 30 days with respect to any security described in clause (i) above and entered into with a depository institution or trust company (acting as principal) that has obligations with an investment-grade rating from a Rating Agency, provided, however, that collateral transferred pursuant to such repurchase obligation must be of the type described in clause (i) above and must (A) be valued daily at current market prices plus accrued interest, (B) pursuant to such valuation, be equal, at all times, to 105% of the cash transferred by a party in exchange for such collateral and (C) be delivered to such party or, if such party is supplying the collateral, an agent for such party, in such a manner as to accomplish perfection of a security interest in the collateral by possession of certificated securities;

(iv) securities bearing interest or sold at a discount issued by any corporation incorporated under the laws of the United States of America or any state thereof which have a credit rating from a Rating Agency that rates such securities in its highest long-term unsecured rating categories at the time of investment or the contractual commitment providing for such investment;

(v) commercial paper (including both non interest bearing discount obligations and interest bearing obligations payable on demand or on a specified date not more than thirty (30) days after the date of issuance thereof) that is rated by a Rating Agency that rates such securities in its highest short term rating category available at the time of such investment;

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(vi) certificates or receipts representing direct ownership interests in future interest or principal payments on obligations of the United States of America or its agencies or instrumentalities (which obligations are backed by the full faith and credit of the United States of America) held by a custodian in safekeeping on behalf of the holders of such receipts; and

(vii) any other demand, money market, common trust fund or time deposit or obligation, or interest bearing or other security or investment rated investment grade level by a Rating Agency;

provided, however, that no such instrument shall be an Eligible Investment if such instrument evidences either (i) a right to receive only interest payments with respect to the obligations underlying such instrument, or (ii) both principal and interest payments derived from obligations underlying such instrument and the principal and interest payments with respect to such instrument provide a yield to maturity of greater than 120% of the yield to maturity at par of such underlying obligations.

Eligible Mortgage Loan: A mortgage loan that is a fixed-rate or Adjustable-Rate Mortgage Loan that is secured by either a 1st lien or 2nd lien Mortgage on a single family (i.e., one- to four-unit) residential Mortgaged Property located in any of the 50 states of the United States or in the District of Columbia; provided, however, that such mortgage loan shall not be a High Cost Loan or a HOEPA Loan. Notwithstanding the foregoing, an Eligible Mortgage Loan shall be one of the types of mortgage loans that the Servicer currently services on its servicing platform.

Errors and Omissions Insurance Policy: An errors and omissions insurance policy to be maintained by the Servicer pursuant to Section 4.12.

Escrow Account: The separate trust account or accounts created and maintained pursuant to Section 4.06 at a Qualified Depository.

Escrow Payment: With respect to any Mortgage Loan, the amounts constituting ground rents, taxes, assessments, water rates, sewer rents, municipal charges, mortgage insurance premiums, flood insurance premiums, fire and hazard insurance premiums, condominium charges, and any other payments required to be escrowed by the Mortgagor with the mortgagee pursuant to the related Mortgage or any other document.

Event of Default: Any one of the conditions or circumstances enumerated in Section 11.01.

Fannie Mae: The Federal National Mortgage Association, or any successor thereto.

Fannie Mae Guide: Collectively, the Fannie Mae Selling Guide and Servicing Guide, as such Guides may be amended from time to time hereafter.

Fannie Mae Mortgage Loan: A Mortgage Loan underwritten in accordance with the guidelines of Fannie Mae described in the Fannie Mae Guide.

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FDIC: The Federal Deposit Insurance Corporation, or any successor thereto.

Fee Amendment: As defined in Section 7.01.

Fee Negotiation Request: As defined in Section 7.01.

Fidelity Bond: A fidelity bond to be maintained by the Servicer pursuant to Section 4.12.

First Lien Mortgage Loan: A Mortgage Loan secured by a Mortgage in first lien position on the related Mortgaged Property.

Fitch: Fitch, Inc., or any successor thereto.

Fixed-Rate Mortgage Loan: A fixed-rate mortgage loan serviced pursuant to this Agreement.

Flood Zone Service Contract: A transferable contract maintained for a Mortgaged Property with a nationally recognized flood zone service provider for the purpose of obtaining the current flood zone status relating to such Mortgaged Property.

Foreclosure Commencement: With respect to any Mortgage Loan, the delivery of the applicable file to the Servicer’s foreclosure counsel for initiation of foreclosure proceedings.

Freddie Mac: The Federal Home Loan Mortgage Corporation, or any successor thereto.

Freddie Mac Guide: The Freddie Mac Single-Family Seller/Servicer Guide, as such Guide may be amended from time to time hereafter.

Freddie Mac Mortgage Loan: A Mortgage Loan underwritten in accordance with the guidelines of Freddie Mac described in the Freddie Mac Guide.

Ginnie Mae: The Government National Mortgage Association, or any successor thereto.

Ginnie Mae Mortgage Loan: A Mortgage Loan underwritten in accordance with the guidelines of Ginnie Mae described in the Ginnie Mae Guide.

Ginnie Mae Guide: The Ginnie Mae Mortgage-Backed Securities Guide, as such Guide may hereafter from time to time be amended.

Guide: With respect to any Fannie Mae Mortgage Loan, the Fannie Mae Guide; with respect to any Freddie Mac Mortgage Loan, the Freddie Mac Guide; and with respect to any Ginnie Mae Mortgage Loan, the Ginnie Mae Guide.

Gross Margin: With respect to each Adjustable-Rate Mortgage Loan, the fixed percentage amount set forth in the related Mortgage Note which amount is added to the Index in accordance with the terms of such Mortgage Note to determine on each Interest Rate Adjustment Date the Mortgage Interest Rate for such Mortgage Loan.

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High Cost Loan: A Mortgage Loan (a) covered by HOEPA or (b) classified as a “high cost,” “threshold,” “covered,” “predatory” or similar loan under any other applicable state, federal or local law (or a similarly classified loan using different terminology under a law imposing heightened regulatory scrutiny or additional legal liability for residential mortgage loans having high interest rates, points and/or fees).

HOEPA: The Federal Home Ownership and Equity Protection Act of 1994, as amended.

HOEPA Loan: A Mortgage Loan which (a) is subject to HOEPA or (b) which the Servicer discovers is subject to HOEPA.

Inbound Transfer Date: The date on which the Servicer begins servicing the related Mortgage Loan pursuant to this Agreement.

Index: With respect to each Adjustable-Rate Mortgage Loan, the index set forth in the related Mortgage Note.

Insurance Proceeds: With respect to each Mortgage Loan, proceeds of insurance policies insuring such Mortgage Loan or the related Mortgaged Property.

Interest Rate Adjustment Date: With respect to each Adjustable-Rate Mortgage Loan, the date specified in the related Mortgage Note on which the Mortgage Interest Rate is adjusted.

Interest Shortfall: The amount of interest due a third party owner of a Mortgage Loan following a payoff or Principal Prepayment where the interest accrued and due from the underlying Mortgagor is insufficient to pay the interest due to such third party owner pursuant to the terms of the applicable Guide or the terms of any Whole Loan Transfer, Private Securitization Transaction or Public Securitization Transaction. Such Interest Shortfall shall be the sole responsibility of the Owner.

Interim Servicing Period: With respect to any Mortgage Loan, the period commencing on the related Inbound Transfer Date and ending on the Reconstitution Date.

Lender Paid Mortgage Insurance Policy or LPMI Policy: A policy of mortgage guaranty insurance issued by an insurer which meets the requirements of Fannie Mae and Freddie Mac in which the owner or servicer of the Mortgage Loan is responsible for the premiums associated with such mortgage insurance policy.

Lifetime Rate Cap: With respect to each Adjustable-Rate Mortgage Loan, the provision of the related Mortgage Note that provides for an absolute maximum Mortgage Interest Rate thereunder. The Mortgage Interest Rate during the terms of each Adjustable-Rate Mortgage Loan shall not at any time exceed the Mortgage Interest Rate at the time of origination of such Adjustable-Rate Mortgage Loan by more than the amount per annum set forth on the Mortgage Loan Schedule.

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Liquidation Fee: With respect to each sale of an REO Property or each full or discounted payoff accepted by the Servicer in satisfaction of a defaulted Mortgage Loan, the Liquidation Fee as set forth in Exhibit 9.

Liquidation Proceeds: Amounts, other than Condemnation Proceeds and Insurance Proceeds, received in connection with the liquidation of a defaulted Mortgage Loan, whether through the sale or assignment of such Mortgage Loan, trustee’s sale, foreclosure sale or otherwise, or the sale of the related Mortgaged Property if the Mortgaged Property is acquired in satisfaction of the Mortgage Loan, other than amounts received following the acquisition of an REO Property pursuant to Section 4.15 and prior to such liquidation.

Liquidity Reserve: As defined in Section 4.17.

Liquidity Reserve Account: The separate trust account or accounts to be created and maintained under the circumstances described in Section 4.17.

Litigation Reserve: As defined in Section 4.17.

Litigation Reserve Account: The separate trust account or accounts to be created and maintained under the circumstances described in Section 4.17.

Loan-to-Value Ratio or LTV: With respect to any First Lien Mortgage Loan, the ratio (expressed as a percentage) of the outstanding principal amount of such First Lien Mortgage Loan to the lesser of (a) the Appraised Value of the related Mortgaged Property at origination or (b) if such First Lien Mortgage Loan was made to finance the acquisition of the related Mortgaged Property, the purchase price of such Mortgaged Property.

Management Agreement: The Management Agreement dated as of August 4, 2009 by and among PennyMac Mortgage Investment Trust, PennyMac Operating Partnership, L.P. and PNMAC Capital Management, LLC, as such agreement may be amended from time to time.

MERS: Mortgage Electronic Registration Systems, Inc., a corporation organized and existing under the laws of the State of Delaware, or any successor thereto.

MERS Mortgage Loan: Any Mortgage Loan as to which the related Mortgage or Assignment of Mortgage has been recorded in the name of MERS, as agent for the holder from time to time of the Mortgage Note and which is identified as a MERS Mortgage Loan on the related Mortgage Loan Schedule.

MERS^® System: The system of recording transfers of mortgages electronically maintained by MERS.

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MOM Loan: Any Mortgage Loan as to which MERS acts as the mortgagee of record of such Mortgage Loan, solely as nominee for the originator of such Mortgage Loan and its successors and assigns, at the origination thereof.

Monthly Payment: The scheduled monthly payment of principal and interest on a Mortgage Loan.

Moody’s: Moody’s Investors Service, Inc., and any successor thereto.

Mortgage: The mortgage, deed of trust or other instrument securing a Mortgage Note, which creates a first or second lien, as applicable, on an unsubordinated estate in fee simple in real property securing such Mortgage Note; except that with respect to real property located in jurisdictions in which the use of leasehold estates for residential properties is a widely accepted practice, the mortgage, deed of trust or other instrument securing the Mortgage Note may secure and create a first or second lien, as applicable, upon a leasehold estate of the Mortgagor.

Mortgage File: The items pertaining to a particular Mortgage Loan referred to as the Mortgage File in Exhibit 7 annexed hereto, and any additional documents required to be added to the Mortgage File pursuant to this Agreement.

Mortgage Impairment Insurance Policy: A mortgage impairment or blanket hazard insurance policy as described in Section 4.11.

Mortgage Interest Rate: With respect to each Mortgage Loan, the annual rate of interest borne on the related Mortgage Note.

Mortgage Loan: An individual mortgage loan to be serviced pursuant to this Agreement, as identified on the Mortgage Loan Schedule, which mortgage loan shall be an Eligible Mortgage Loan and includes without limitation the Mortgage File, the Monthly Payments, Principal Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds, Servicing Rights and all other rights, benefits, proceeds and obligations arising from or in connection with such mortgage loan, excluding replaced or repurchased mortgage loans.

Mortgage Loan Documents: The documents listed on Exhibit 7 attached hereto pertaining to any Mortgage Loan.

Mortgage Loan Remittance Rate: With respect to each Mortgage Loan, the annual rate of interest remitted to the Owner (or as otherwise directed in writing by the Owner), which shall be equal to the related Mortgage Interest Rate.

Mortgage Loan Schedule: The schedule of Mortgage Loans in the form attached as a schedule to the Notice of Inbound Transfer, to be delivered from time to time by the Owner to the Servicer, which schedule shall include, but not be limited to, the following information with respect to each Mortgage Loan (or such lesser information as the Service Provider may determine in its reasonable discretion):

(1) the name of the Seller and the Seller’s Mortgage Loan identifying number;

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(2) the Mortgagor’s name;

(3) the street address of the Mortgaged Property including the city, state and ZIP code;

(4) a code indicating whether the Mortgaged Property is owner-occupied, a second home or investment property;

(5) the number and type of residential units constituting the Mortgaged Property (i.e., a one-family residence, a two- to four-family residence, a unit in a condominium project or a unit in a planned unit development);

(6) the original months to maturity or the remaining months to maturity from the related Cut-off Date, in any case based on the original amortization schedule and, if different, the maturity expressed in the same manner but based on the actual amortization schedule;

(7) the LTV at origination in the case of a First Lien Mortgage Loan;

(8) the CLTV at origination in the case of a Second Lien Mortgage Loan;

(9) the Mortgage Interest Rate as of the related Cut-off Date;

(10) the date on which the Monthly Payment was due on the Mortgage Loan and, if such date is not consistent with the Due Date currently in effect, such Due Date;

(11) the stated maturity date;

(12) the amount of the Monthly Payment as of the related Cut-off Date;

(13) the last payment date on which a Monthly Payment was actually applied to pay interest and the outstanding principal balance;

(14) the original principal amount of the Mortgage Loan;

(15) the principal balance of the Mortgage Loan as of the close of business on the related Cut-off Date, after deduction of payments of principal due and collected on or before the related Cut-off Date;

(16) in the case of an Adjustable-Rate Mortgage Loan, the next Interest Rate Adjustment Date;

(17) in the case of an Adjustable-Rate Mortgage Loan, the Gross Margin;

(18) in the case of an Adjustable-Rate Mortgage Loan, the Lifetime Rate Cap under the terms of the Mortgage Note;

(19) in the case of an Adjustable-Rate Mortgage Loan, a code indicating the type of Index;

(20) in the case of an Adjustable-Rate Mortgage Loan, the Periodic Rate Cap under the terms of the Mortgage Note;

(21) in the case of an Adjustable-Rate Mortgage Loan, the Periodic Rate Floor under the terms of the Mortgage Note;

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(22) the type of Mortgage Loan (i.e., Fixed-Rate, Adjustable-Rate, First Lien, Second Lien);

(23) a code indicating the purpose of the loan (i.e., purchase, rate and term refinance, equity take-out refinance);

(24) a code indicating the related documentation program (i.e. full, alternative or reduced);

(25) the loan credit classification (as described in the related Underwriting Guidelines);

(26) whether the Mortgage Loan provides for a Prepayment Penalty;

(27) the Prepayment Penalty period of the Mortgage Loan, if applicable;

(28) a description of the Prepayment Penalty, if applicable;

(29) the Mortgage Interest Rate as of origination;

(30) the credit risk score (FICO score) of the related Mortgagor at origination;

(31) the date of origination;

(32) in the case of an Adjustable-Rate Mortgage Loan, the Mortgage Interest Rate adjustment period;

(33) in the case of an Adjustable-Rate Mortgage Loan, the Mortgage Interest Rate adjustment percentage;

(34) in the case of an Adjustable-Rate Mortgage Loan, the Mortgage Interest Rate floor;

(35) the Mortgage Interest Rate calculation method (i.e., 30/360, simple interest, other);

(36) a code indicating whether the Mortgage Loan is assumable;

(37) a code indicating whether the Mortgage Loan has been modified;

(38) the one year payment history;

(39) the Due Date for the first Monthly Payment;

(40) the original Monthly Payment due;

(41) with respect to the related Mortgagor, the debt-to-income ratio;

(42) the Appraised Value of the Mortgaged Property;

(43) the sales price of the Mortgaged Property if the Mortgage Loan was originated in connection with the purchase of the Mortgaged Property;

(44) the MERS identification number;

(45) a code indicating whether the Mortgage Loan has borrower paid, lender paid or deep primary mortgage insurance coverage and, if so, (i) the insurer’s name, (ii) the policy or certification number, (iii) the premium rate and (iv) the coverage percentage;

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(46) in the case of a Second Lien Mortgage Loan, the outstanding principal balance of the superior lien;

(47) a code indicating whether the Mortgage Loan is a HOEPA Loan;

(48) a code indicating whether the Mortgage Loan is a High Cost Loan;

(49) a code indicating whether the Mortgage Loan is a subject to a buydown;

(50) flood zone and flood insurance coverage information with respect to the Mortgage Loan (to the extent known by the Owner);

(51) whether the Mortgage Loan is subject to a repurchase agreement;

(52) if the Mortgage Loan is subject to a repurchase agreement, the name of the counterparty; and

(53) in the case of a negative amortization Mortgage Loan, the next payment adjustment date and the maximum negative amortization.

With respect to the Mortgage Loans in the aggregate, the Mortgage Loan Schedule shall set forth the following information, as of the related Cut-off Date:

(a) the number of Mortgage Loans;

(b) the current aggregate outstanding principal balance of the Mortgage Loans;

(c) the weighted average Mortgage Interest Rate of the Mortgage Loans; and

(d) the weighted average maturity of the Mortgage Loans.

Mortgage Note: The note or other evidence of the indebtedness of a Mortgagor under a Mortgage Loan secured by a Mortgage.

Mortgaged Property: The real property (or leasehold estate, if applicable) securing repayment of the debt evidenced by a Mortgage Note.

Mortgagor: The obligor on a Mortgage Note.

MSR Recapture Agreement: The MSR Recapture Agreement, dated as of February 1, 2013, by and between the Servicer and PennyMac Corp.

Non-Agency Mortgage Loan: A Mortgage Loan that is not an Agency Mortgage Loan.

Nonrecoverable Advance: Any Servicing Advance previously made or proposed to be made in respect of a Mortgage Loan or REO Property which, in the good faith judgment of the Servicer, will not or, in the case of a proposed advance, would not, be ultimately recoverable from related Insurance Proceeds, Liquidation Proceeds or otherwise from such Mortgage Loan or REO Property.

Notice of Inbound Transfer: A notice in the form mutually agreed upon by the Owner and the Servicer prior to a pending transfer whereby the Owner notifies the Servicer of the addition of the Mortgage Loans specified therein to the coverage of this Agreement.

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Officer’s Certificate: A certificate signed by the Chairman of the Board or the Vice Chairman of the Board or a President or Vice President or the Treasurer or the Secretary or one of the Assistant Treasurers or Assistant Secretaries of the Servicer, and delivered to the Owner.

Opinion of Counsel: A written opinion of counsel, who may be counsel for the Servicer, reasonably acceptable to the Owner; provided, however, that any Opinion of Counsel relating to the qualification of any account required to be maintained pursuant to this Agreement at a Qualified Depository must be (unless otherwise stated in such Opinion of Counsel) an opinion of counsel who (i) is in fact independent of the Servicer, (ii) does not have any material direct or indirect financial interest in the related Servicer or is an Affiliate of either of them and (iii) is not connected with the Servicer as an officer, employee, director or person performing similar functions.

Originator: With respect to a Mortgage Loan, the originator of such Mortgage Loan.

Other Fees: With respect to each Mortgage Loan, those fees set forth in Exhibit 9 for the specific services described therein.

Outbound Transfer Date: With respect to a Mortgage Loan, the date on which the physical servicing of such Mortgage Loan is transferred from the Servicer pursuant to this Agreement to a successor servicer.

Outstanding Owner Servicing Advances: As defined in Section 4.28(f).

P&I Advance: Payments of principal and interest advanced by Servicer to a third party owner of a Mortgage Loan, including those Mortgage Loans in any pool created pursuant to the terms of the applicable Guide or the terms of any Whole Loan Transfer, Private Securitization Transaction or Public Securitization Transaction, and any amounts required to be advanced due to negative amortization or Interest Shortfall due such owner upon the payoff or Principal Prepayment of a Mortgage Loan. Such P&I Advance shall be the sole responsibility of the Owner.

Parent: As defined in Section 13.14.

Payment Clearing Account: The account established and maintained pursuant to the second paragraph of Section 4.03.

PennyMac Property Preservation Program: The proprietary property preservation programs designed by PNMAC Capital Management, LLC to modify and enhance the value of Mortgage Loans or mitigate losses to Mortgage Loans, as amended from time to time, and presented to the Servicer by the program technology and other documentation administered and provided by the PennyMac REIT Manager.

PennyMac REIT: PennyMac Mortgage Investment Trust, a Maryland real estate investment trust, or any successor thereto.

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PennyMac REIT Manager: PNMAC Capital Management, LLC, a Delaware limited liability company, or any successor thereto.

Periodic Rate Cap: With respect to each Adjustable-Rate Mortgage Loan, the provision of the Mortgage Note which provides for an absolute maximum amount by which the Mortgage Interest Rate specified therein may increase on an Interest Rate Adjustment Date above the Mortgage Interest Rate previously in effect.

Periodic Rate Floor: With respect to each Adjustable-Rate Mortgage Loan, the provision of the related Mortgage Note which provides for an absolute maximum amount by which the related Mortgage Interest Rate may decrease on an Interest Rate Adjustment Date below the Mortgage Interest Rate previously in effect.

Person: Any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof.

PMI Policy: A policy of primary mortgage guaranty insurance issued by a Qualified Insurer.

Prepayment Penalty: Any prepayment premium, penalty or charge collected by the Servicer with respect to a Mortgage Loan from a Mortgagor in connection with any Principal Prepayment pursuant to the terms of such Mortgage Loan.

Prime Rate: The prime rate in effect from time to time as published as the average rate in The Wall Street Journal (West Coast edition).

Principal Prepayment: Any payment or other recovery of principal on a Mortgage Loan which is received in advance of its scheduled Due Date, including any Prepayment Penalty thereon, and which is not accompanied by an amount of interest representing scheduled interest due on any date or dates in any month or months subsequent to the month of prepayment.

Private Securitization Transaction: Any transaction involving either (1) a sale of some or all of the Mortgage Loans directly or indirectly to an entity that issues privately offered, rated mortgage-backed securities or (2) an entity that issues privately offered, rated securities, the payments of which are determined primarily by reference to one or more portfolios of mortgage loans consisting, in whole or in part, of some or all of the Mortgage Loans.

Public Securitization Transaction: Any transaction subject to Regulation AB involving either (1) a sale or other transfer of some or all of the Mortgage Loans directly or indirectly to an issuing entity in connection with an issuance of publicly offered, rated mortgage-backed securities or (2) an issuance of publicly offered, rated securities, the payments on which are determined primarily by reference to one or more portfolios of residential mortgage loans consisting, in whole or in part, of some or all of the Mortgage Loans.

Purchase Agreement: The agreement pursuant to which the Owner purchased Mortgage Loans from the related Seller, if applicable.

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Qualified Depository: Either (i) an account or accounts maintained with a federal or state chartered depository institution or trust company the short-term unsecured debt obligations of which (or, in the case of a depository institution or trust company that is the principal subsidiary of a holding company, the short-term unsecured debt obligations of such holding company of which) are rated A-2 by S&P or Prime-2 by Moody’s (or a comparable rating if another Rating Agency is specified by the Owner by written notice to the Servicer) at the time any amounts are held on deposit therein, (ii) an account or accounts the deposits in which are fully insured by the FDIC or (iii) a trust account or accounts maintained with a federal or state chartered depository institution or trust company acting in its fiduciary capacity.

Qualified Insurer: Any insurer which meets the requirements of Fannie Mae and Freddie Mac.

Rating Agency: Any credit rating agency that is a “nationally recognized statistical rating organization” within the meaning of Section 3(a)(62) of the Securities Exchange Act of 1934, as amended, in the residential mortgage asset class and is designated by the Owner, or any successor to such organization.

Reconstitution: As defined in Section 12.01.

Reconstitution Date: As defined in Section 12.01.

Refinanced Mortgage Loan: A Mortgage Loan the proceeds of which were not used to purchase the related Mortgaged Property.

Remittance Date: With respect to each Mortgage Loan, not later than the last Business Day of the month following the month in which payments in respect of such Mortgage Loan are received and credited.

REO Property: A Mortgaged Property acquired by the Servicer on behalf of the Owner through foreclosure or by deed in lieu of foreclosure, as described in Section 4.15.

RESPA: Real Estate Settlement Procedures Act, as amended from time to time.

S&P: Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and any successor thereto.

Second Lien Mortgage Loan: A Mortgage Loan secured by a Mortgage in second lien position on the related Mortgaged Property.

Seller: With respect to each Mortgage Loan, the Seller set forth in the related Mortgage Loan Schedule, if applicable.

Service Release Fee: With respect to each Mortgage Loan, the fee set forth in Exhibit 9 hereto payable by the Owner to the Servicer upon the release of such Mortgage Loan from the Servicer’s loan administration system; provided, however, that no such fee shall be payable by the Owner if the Mortgage Loan or the servicing thereof is transferred (i) to the Servicer or an Affiliate of the Servicer or (ii) pursuant to an Event of Default.

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Servicer: PennyMac Loan Services, LLC or its successor in interest or any permitted assignee or designee of under this Agreement as herein provided and as provided in Section 8.02. Unless the context requires otherwise, all references to “Servicer” in this Agreement shall be deemed to include such Servicer’s successors in interest or permitted assignees or designees.

Servicer Employees: As defined in Section 4.12.

Servicer Information: As defined in Section 12.01(b)(ii)(A).

Servicing Advances: All customary, reasonable and necessary “out-of-pocket” costs and expenses (including reasonable attorneys’ fees and disbursements) incurred (regardless if any such advance is not, in the reasonable determination of the Servicer, a Nonrecoverable Advance when made but, thereafter, becomes a Nonrecoverable Advance) in the performance by the Servicer of its servicing obligations, including, but not limited to, the cost of (a) the preservation, restoration and protection of the Mortgaged Property or REO Property, (b) any fees relating to any enforcement or judicial proceedings, excluding foreclosures, (c) amounts advanced to correct defaults on any mortgage loan which is senior to the Mortgage Loan and amounts advanced to keep current or pay off a mortgage loan that is senior to the Mortgage Loan, (d) any appraisals, valuations, broker price opinions, inspections, or environmental assessments, (e) the management and liquidation of the Mortgaged Property if the Mortgaged Property is acquired in satisfaction of the Mortgage, (f) taxes, assessments, water rates, sewer rents, mortgage insurance premiums, fire and hazard insurance premiums, flood insurance premiums and other charges which are or may become a lien upon the Mortgaged Property, and (g) executing and recording instruments of satisfaction, deeds of reconveyance.

Servicing Fee: With respect to each Mortgage Loan, the monthly sum of (a) the applicable Base Servicing Fee, (b) if such Mortgage Loan is a Third Party Loan, the applicable Additional Servicing Fee and (c) if such Mortgage Loan is a Third Party Loan or a Distressed Whole Loan, the applicable Supplemental Servicing Fee. With respect to each newly boarded Mortgage Loan, boarded on or before the 15th day of month, the Servicer shall be entitled to receive the full monthly Servicing Fee for each newly boarded Mortgage Loan. With respect to each newly boarded Mortgage Loan boarded after the 15th day of the month, the Servicer shall be entitled to one-half of the monthly Servicing Fee for each newly boarded Mortgage Loan. With respect to each Mortgage Loan released from servicing, Servicer shall be entitled to receive the full monthly Servicing Fee irrespective of the applicable release date.

Servicing File: With respect to each Mortgage Loan, the file retained by the Servicer consisting of originals, if provided, or copies of all documents in the related Mortgage File which are not delivered to the Owner, its designee or the Custodian and copies of the related Mortgage Loan Documents.

Servicing Officer: Any officer of the Servicer involved in or responsible for, the administration and servicing of the Mortgage Loans whose name appears on a list of servicing officers that is required to be furnished by the Servicer to the Owner, as such list may from time to time be amended.

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Servicing Rights: With respect to a Mortgage Loan, the right to do any and all of the following: (a) service and administer such Mortgage Loan; (b) collect any payments or monies payable or received for servicing such Mortgage Loan; (c) collect any late fees, assumption fees, penalties or similar payments with respect to such Mortgage Loan; (d) enforce the provisions of all agreements or documents creating, defining or evidencing any such servicing rights and all rights of the servicer thereunder, including, but not limited to, any clean-up calls and termination options; (e) collect and apply any escrow payments or other similar payments with respect to such Mortgage Loan; (f) control and maintain all accounts and other rights to payments related to any of the property described in the other clauses of this definition; (g) possess and use any and all documents, files, records, servicing files, servicing documents, servicing records, data tapes, computer records, or other information pertaining to such Mortgage Loan or pertaining to the past, present or prospective servicing of such Mortgage Loan; and (h) enforce any and all rights, powers and privileges incident to any of the foregoing.

Special Deposit Account: An account which the Owner and the Servicer agree shall be a special deposit account for the benefit of the Owner under applicable law.

Subservicer: Any Person that services Mortgage Loans on behalf of the Servicer or any Subservicer and is responsible for the performance (whether directly or through Subservicers) of a substantial portion of the material servicing functions required to be performed by the Servicer under this Agreement.

Supplemental Servicing Fee: With respect to each Third Party Loan and each Distressed Whole Loan, the Supplemental Servicing Fee set forth in or established pursuant to Exhibit 9 hereto.

Tax Service Contract: A life of loan tax service contract maintained for a Mortgaged Property with a tax service provider for the purpose of obtaining current information from local taxing authorities relating to such Mortgaged Property.

Third Party Loan: A Correspondent Loan or other Mortgage Loan owned by a third party investor and with respect to which Owner has acquired the Servicing Rights relating thereto.

Underwriting Guidelines: The underwriting guidelines of the applicable Originator, as identified or specified in the related Purchase Agreement, if applicable.

Whole Loan Transfer: The sale or transfer by Owner of some or all of the Mortgage Loans in a whole loan or participation format other than a Private Securitization Transaction or a Public Securitization Transaction.

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ARTICLE II

CONTINUATION OF EXISTING SERVICING;

SERVICING OF ADDITIONAL MORTGAGE LOANS

Section 2.01 Servicing to Continue.

All mortgage loans that were being serviced by the Servicer under the Original Agreement immediately prior to the execution and delivery of this Agreement shall constitute Mortgage Loans serviced under this Agreement upon its execution and delivery.

Section 2.02 Addition of Mortgage Loans.

The Owner and the Servicer shall take the following actions with respect to each Mortgage Loan that the Owner desires to have serviced by the Servicer hereunder in order to effect the transfer of servicing to the Servicer on the related Inbound Transfer Date:

(a) Delivery of Mortgage Loan Data. With respect to each pool of Mortgage Loans to be serviced under this Agreement, no later than thirty (30) calendar days prior to the Inbound Transfer Date (or as otherwise mutually agreed between the Owner and the Servicer), the Owner shall furnish or cause to be furnished to the Servicer complete and accurate Mortgage Loan data reflecting the status of payments, balances and other pertinent information necessary to service such Mortgage Loans including but not limited to: (i) master file; (ii) Adjustable-Rate Mortgage Loan master file; (iii) escrow file; (iv) tax and insurance payee file; (v) Adjustable-Rate Mortgage Loan history file; (vi) servicing activities; and (vii) any other pertinent information reasonably required by the Servicer. Such information shall be provided to the Servicer in such electronic format as is mutually agreed upon by both parties.

(b) Delivery of Notification Letter. With respect to each pool of Mortgage Loans to be serviced under this Agreement, the Owner shall use its best efforts to deliver or cause to be delivered to the Servicer a Notice of Inbound Transfer for such Mortgage Loans not less than thirty (30) days prior to the related Inbound Transfer Date (or as otherwise mutually agreed between the Owner and the Servicer). The Notice of Inbound Transfer shall include a statement of the related delinquency methodology to be used for the related Mortgage Loans as determined by the Owner.

(c) Delivery of Servicing and Other Files. The Owner shall use its reasonable best efforts to provide Servicer with hard copies (or imaged copies if available) of the Servicing File with respect to each Mortgage Loan transferred to Servicer within fifteen (15) Business Days prior to the applicable Inbound Transfer Date (or as otherwise mutually agreed between the Owner and the Servicer). The Owner shall use its reasonable best efforts to provide Servicer with hard copies (or imaged copies if available) of any default file with respect to each Mortgage Loan transferred to Servicer within five (5) Business Days of the applicable Inbound Transfer Date (or as otherwise mutually agreed between the Owner and the Servicer). Any costs and expenses to deliver the aforementioned files shall be borne by the Owner.

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(d) Notice to Mortgagors. The Owner shall cause to be provided to each Mortgagor a “Notice of assignment, sale or transfer of servicing” to the Servicer. Upon boarding of each Mortgage Loan originated by a third-party originator, the Servicer shall deliver to each related Mortgagor a “Welcome Letter” in accordance with RESPA and Accepted Servicing Practices.

(e) Transfer of Escrow Funds and Other Proceeds. The Servicer shall use its best efforts to transfer or cause to be transferred to a designated account, within one (1) Business Day and not later than three (3) Business Days following the Inbound Transfer Date by wire transfer, an amount equal to the sum of (i) Escrow Payments collected from each Mortgagor; and if applicable (ii) all undistributed insurance loss draft funds; (iii) all unapplied funds received by the Owner or any prior servicer; (iv) all unapplied interest on escrow balances accrued through the related Inbound Transfer Date; (v) all buydown funds held by the Owner or any prior servicer as of the related Inbound Transfer Date; and (vi) all other related amounts held by the respective owner of the Mortgage Loan or any prior servicer of such Mortgage Loan as of the related Inbound Transfer Date that the Owner or any prior servicer is not entitled to retain. The Owner shall be responsible for any interest on escrow amounts held by the Owner prior to the related Inbound Transfer Date. The Servicer shall be entitled to deduct from Servicer’s monthly remittance to the Owner any shortfalls in Escrow Payments that result from Owner’s failure to deliver any Escrow Payment in full to the Servicer. To the extent the Custodial Account has insufficient funds to fully fund such shortfalls in the Escrow Payments plus all other amounts due to the Servicer as set forth in Section 5.01 herein, the Owner shall wire such shortfall amount to the Servicer promptly upon receipt of notice of such shortfalls from the Servicer.

(f) Outstanding Servicing Advances. The Servicer agrees to reimburse the prior servicer or the Owner, as applicable, within thirty (30) days following the related Inbound Transfer Date for all unreimbursed Servicing Advances made by the prior servicer or the Owner with respect to the Mortgage Loans as of such Inbound Transfer Date (the “Outstanding Owner Servicing Advances”) and for which the prior servicer or the Owner has provided to the Servicer reasonably detailed documentation evidencing such advances. The Servicer shall have no obligation to board Outstanding Owner Servicing Advances or reimburse the prior servicer unless the Servicer has received reasonably detailed documentation allowing the Servicer to collect such advances from the Mortgagor.

Section 2.03 Closing Documents.

Simultaneously with the execution and delivery of this Agreement, the Servicer shall deliver to the Owner an Officer’s Certificate, in the form of Exhibit 6, with respect to the Servicer, including all attachments thereto. If requested by the Owner in connection with any Notice of Inbound Transfer, the Servicer shall deliver the following documents to or at the direction of the Owner:

1. a copy of this Agreement;

2. a Custodial Account Certification in the form of Exhibit 2, as required under Article IV, or a copy of any similar certification previously delivered under the Original Agreement or this Agreement; and

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3. an Escrow Account Certification in the form of Exhibit 4, as required under Article IV, or a copy of any similar certification previously delivered under the Original Agreement or this Agreement.

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ARTICLE III

SERVICING OF AGENCY MORTGAGE LOANS

Section 3.01 Servicer to Act as Servicer of Agency Mortgage Loans.

The Servicer shall service and administer each Agency Mortgage Loan in accordance and shall otherwise comply in all respects with the related Guide, including the requirements of such Guide relating to the maintenance of custodial and escrow accounts.

Section 3.02 Guides Control.

In the event of any conflict between the other provisions of this Agreement, insofar as they may relate to any Agency Mortgage Loan, and the terms of the related Guide, the terms of such Guide shall control.

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ARTICLE IV

SERVICING OF NON-AGENCY MORTGAGE LOANS

Section 4.01 Servicer to Act as Servicer of Non-Agency Mortgage Loans.

The Servicer shall service the Non-Agency Mortgage Loans in accordance with the provisions of this Agreement and its obligations in respect of the Mortgage Loans shall be limited to those set forth in this Agreement. To the extent set forth in and subject to the terms of the Delegation of Authority Matrix attached as Exhibit 10 hereto, the Owner hereby delegates authority to the Servicer to carry out the Servicer’s servicing and administration duties with respect to the Non-Agency Mortgage Loans without obtaining the Owner’s prior written approval.

Consistent with the terms of this Agreement, the PennyMac Property Preservation Program, and Accepted Servicing Practices, the Servicer may, with respect to a Non-Agency Mortgage Loan, (i) waive any late payment charge or, if applicable, any penalty interest, or (ii) extend the due dates for the Monthly Payments due on a Mortgage Note, or waive, in whole or in part, a Prepayment Penalty. Unless in compliance with the PennyMac Property Preservation Program, the terms of any Non-Agency Mortgage Loan may only be modified, varied or forgiven with the prior written consent of the Owner while the Non-Agency Mortgage Loan remains outstanding. The Servicer’s analysis supporting any forbearance and the conclusion that any forbearance meets the standards of this section shall be reflected in writing or electronically in the Servicing File. The Servicer is hereby authorized and empowered to execute and deliver on behalf of itself and the Owner, all instruments of satisfaction or cancellation, or of partial or full release, discharge and all other comparable instruments, with respect to the Non-Agency Mortgage Loans and with respect to the Mortgaged Properties. If reasonably required by the Servicer, the Owner shall furnish the Servicer with a fully executed Power of Attorney and other documents necessary or appropriate to enable the Servicer to carry out its servicing and administrative duties under this Agreement with respect to the Non-Agency Mortgage Loans. With respect to the Non-Agency Mortgage Loans, the Servicer may request the consent of the Owner in writing by certified mail, overnight courier or such other means as may be agreed to by the parties to a course of action that the Servicer proposes to take under this Agreement. Unless the Owner shall give written notice to the Servicer that it objects to any such recommended course of action within ten (10) Business Days immediately following the day on which the Owner received the Servicer’s written consent request (together with its recommended course of action and relevant supporting documentation), the Owner shall be deemed to have consented to such recommended course of action, and Servicer may take the action recommended to the Owner, unless the Servicer determines, in its reasonable discretion, that such action is no longer prudent or applicable and the Servicer notifies the Owner of such decision not to act. In the event that the Owner shall object to the Servicer’s recommended course of action, Servicer shall take such action as is required by the Owner, and the Servicer shall have no liability therefor if it is not negligent in performing such action. Further, to the extent the Servicer has provided the Owner with reasonably timely notice, the Owner shall indemnify and hold harmless the Servicer from and against any penalty, fine or damages that may result from the Owner’s decision to wait for any period of time up to ten (10) Business Days before providing Servicer with direction as to the course of action to be taken as permitted in the second immediately preceding sentence. In

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addition, except in accordance with the PennyMac Property Preservation Program, notwithstanding the foregoing, the Servicer may not waive any Prepayment Penalty or portion thereof required by the terms of the related Mortgage Note unless (i) the Servicer determines that such waiver would maximize recovery of Liquidation Proceeds for such Non-Agency Mortgage Loan, taking into account the value of such Prepayment Penalty and such Non-Agency Mortgage Loan, and the waiver of such Prepayment Penalty is standard and customary in servicing similar Non-Agency Mortgage Loans (including the waiver of a Prepayment Penalty in connection with a refinancing of the Mortgage Loan related to a default or a reasonably foreseeable default) or (ii) the enforceability thereof is limited (1) by bankruptcy, insolvency, moratorium, receivership or other similar laws relating to creditor’s rights or (2) due to acceleration in connection with a foreclosure or other involuntary payment, or (iii) in the Servicer’s reasonable judgment, (1) the waiver of such prepayment penalty relates to a default or a reasonably foreseeable default, (2) such waiver would maximize recovery of total proceeds taking into account the value of such Prepayment Penalty and such Mortgage Loan and (3) such waiver is standard and customary in servicing similar mortgage loans similar to such Non-Agency Mortgage Loan (including any waiver of a prepayment penalty in connection with a refinancing of a Non-Agency Mortgage Loan that is related to a default or a reasonably foreseeable default). In no event will the Servicer waive a Prepayment Penalty in connection with a refinancing of a Non-Agency Mortgage Loan that is not related to a default or a reasonably foreseeable default. In servicing and administering the Non-Agency Mortgage Loans, the Servicer shall employ procedures (including collection procedures) and exercise the same care that it customarily employs and exercises in servicing and administering mortgage loans for its own account, where such procedures do not conflict with the requirements of this Agreement, and the Owner’s reliance on the Servicer. In addition, the Servicer shall retain adequate personnel to effect such servicing and administration of the Non-Agency Mortgage Loans. Servicer shall have no obligation to collect a Prepayment Penalty with respect to a Non-Agency Mortgage Loan unless the Servicer is provided with such information electronically; provided, however, that the Servicer shall compare the Notice of Inbound Transfer provided by the Owner and any electronic data regarding the Non-Agency Mortgage Loans provided by the previous servicer of such Non-Agency Mortgage Loans and provide the Owner with prompt written notice of any discrepancies with respect to information regarding Prepayment Penalties.

The Owner may sell and transfer, in whole or in part, some or all of the Non-Agency Mortgage Loans at any time and from time to time (including, without limitation, in connection with a Private Securitization Transaction or a Public Securitization Transaction). Upon such execution, the Servicer shall mark its books and records to reflect the ownership of the Non-Agency Mortgage Loans by such transferee.

The Servicer shall notify MERS of the ownership interest of Owner in each MOM Loan. At any time during the term of this Agreement, Owner may direct the Servicer to cause any MOM Loan to be deactivated from the MERS System.

The Servicing File maintained by the Servicer pursuant to this Agreement shall be appropriately marked and identified in the Servicer’s computer system to clearly reflect the ownership of the related Non-Agency Mortgage Loan by the Owner. The Servicer shall release from its custody the contents of any Servicing File maintained by it only in accordance with this Agreement.

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The Servicer shall be responsible for the actions of any vendors which the Servicer utilizes to carry out its obligations hereunder. The Owner shall promptly reimburse the Servicer for any fees paid to such vendors by the Servicer.

The Servicer shall maintain adequate capacity to service the Non-Agency Mortgage Loans, as well as other mortgage loans that it may service (including mortgage loans held by other entities managed by the PennyMac REIT Manager or any of its Affiliates).

Section 4.02 Liquidation of Mortgage Loans.

In the event that any payment due under any Non-Agency Mortgage Loan and not postponed pursuant to Section 4.01 is not paid when the same becomes due and payable, or in the event the Mortgagor fails to perform any other covenant or obligation under the Non-Agency Mortgage Loan and such failure continues beyond any applicable grace period, the Servicer shall take such action as the Servicer shall determine reasonably to be in the best interest of the Owner in accordance with Accepted Servicing Practices. In the event that any payment due under any Non-Agency Mortgage Loan is not postponed pursuant to Section 4.01 and remains delinquent for a period of ninety (90) days or any other default continues for a period of ninety (90) days beyond the expiration of any grace or cure period (or such other period as is required by law in the jurisdiction where the related Mortgaged Property is located) or earlier as determined by the Servicer, the Servicer is granted authority to effect Foreclosure Commencement in accordance with and subject to Exhibit 10 hereto and Accepted Servicing Practices. In such connection, the Servicer shall, acting in accordance with Accepted Servicing Practices, advance on behalf of the Owner such funds as are necessary and proper in connection with any foreclosure or towards the restoration or preservation of any Mortgaged Property securing a Non-Agency Mortgage Loan. Notwithstanding anything herein to the contrary, no Servicing Advance shall be required to be made hereunder with respect to a Non-Agency Mortgage Loan if such Servicing Advance would, if made, constitute a Nonrecoverable Advance. The determination by the Servicer that it has made a Nonrecoverable Advance with respect to a Non-Agency Mortgage Loan or that any proposed Servicing Advance with respect to a Non-Agency Mortgage Loan would constitute a Nonrecoverable Advance shall be evidenced by an Officers’ Certificate of the Servicer, delivered to the Owner, which details the reasons for such determination.

The Servicer acknowledges and agrees that it shall take and initiate any legal actions with respect to any with respect to a Non-Agency Mortgage Loans and related REO Properties, including, without limitation, any foreclosure actions, acceptance of deeds in lieu of foreclosure, and any collection actions with respect to such Non-Agency Mortgage Loans or related REO Properties on behalf of the Owner, but only in the name of the Servicer or its nominee and without reference to the Owner. Except as otherwise required by law or with the consent of the Owner, under no circumstances shall any such action be taken in the name of, or with any reference to, the Owner. The Servicer shall provide prior written notice to the Owner, if the Servicer is required by applicable law to take any legal actions with respect to the Non-Agency Mortgage Loans or related REO Properties in the name of, or with reference to, the Owner.

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Section 4.03 Collection of Mortgage Loan Payments; Payment Clearing Account.

Continuously from the related Inbound Transfer Date until the principal and interest on all Mortgage Loans are paid in full (unless otherwise provided herein), the Servicer shall proceed diligently to collect all payments due under each of the Non-Agency Mortgage Loans when the same shall become due and payable and shall take special care in ascertaining and estimating Escrow Payments, to the extent applicable, and all other charges that will become due and payable with respect to the Non-Agency Mortgage Loans and each related Mortgaged Property, to the end that the installments payable by the Mortgagors will be sufficient to pay such charges as and when they become due and payable. Notwithstanding anything herein to the contrary, with respect to the Non-Agency Mortgage Loans, the Servicer shall not be required to institute or join in litigation with respect to collection of any payment (whether under a Mortgage, Mortgage Note, PMI Policy or otherwise or against any public or governmental authority with respect to a taking or condemnation) if in its reasonable judgment it believes that it will be unable to enforce the provision of the Mortgage or other instrument pursuant to which payment is required. Further, the Servicer shall take special care in ascertaining and estimating annual ground rents, taxes, assessments, water rates, flood insurance premiums, fire and hazard insurance premiums, mortgage insurance premiums, and all other charges that, as provided in the Mortgage, will become due and payable to the end that the installments payable by the Mortgagors will be sufficient to pay such charges as and when they become due and payable.

The Servicer shall establish and maintain a Payment Clearing Account into which it shall deposit on a daily basis all payments received in respect of mortgage loans serviced by the Servicer (whether or not serviced pursuant to this Agreement). Not later than the second Business Day following the receipt of a payment in respect of a Non-Agency Mortgage Loan subject to this Agreement, the Servicer shall withdraw the amount of such payment from the Payment Clearing Account and shall immediately deposit (1) in the Custodial Account, the portion of such payment required to be deposited therein pursuant to Section 4.04, and (2) in the Escrow Account, the portion of such payment required to be deposited therein pursuant to Section 4.06.

Section 4.04 Establishment of and Deposits to Custodial Account.

The Servicer shall establish one or more Custodial Accounts, in the form of time deposit or demand accounts titled in the name of “PNMAC Loan Svc LLC ITF [description of applicable owners or investors]” or titled in another reasonable manner indicating that such account is held in a custodial capacity. Each Custodial Account shall be established with a Qualified Depository acceptable to the Owner as a Special Deposit Account. Any funds deposited in the Custodial Account shall at all times be fully insured to the full extent permitted by the FDIC and any amounts therein may be invested in Eligible Investments. The creation of any Custodial Account shall be evidenced by a certification in the form of Exhibit 2 hereto, in the case of an account established with the Servicer (provided the Servicer qualifies as a Qualified Depository). A copy of such certification or letter agreement shall be furnished to the Owner upon request. The Servicer shall segregate and hold all funds in the Custodial Account separate and apart from the Servicer’s own funds and general assets.

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With respect to the Non-Agency Mortgage Loans, the Servicer shall deposit in the Custodial Account and retain therein the following collections received by the Servicer, together with any payments made by the Servicer subsequent to the Inbound Transfer Date pursuant to this Agreement:

(i) all payments on account of principal on such Mortgage Loans, including all Principal Prepayments;

(ii) all payments on account of interest on the related Mortgage adjusted to the Mortgage Loan Remittance Rate;

(iii) all related Liquidation Proceeds and any amount received with respect to the related REO Property;

(iv) all related Insurance Proceeds including amounts required to be deposited pursuant to Section 4.10 (other than proceeds to be held in the Escrow Account and applied to the restoration or repair of the related Mortgaged Property or released to the related Mortgagor in accordance with Section 4.14), and Section 4.11;

(v) all Condemnation Proceeds affecting any related Mortgaged Property that are not applied to the restoration or repair of the related Mortgaged Property or released to the related Mortgagor in accordance with Section 4.14;

(vi) any amount required to be deposited in the Custodial Account pursuant to Section 4.15 or 4.19;

(vii) any Prepayment Penalties received with respect to any Non-Agency Mortgage Loan; and

(viii) any amounts required to be deposited by the Servicer pursuant to Section 4.11 in connection with the deductible clause in any blanket hazard insurance policy. Such deposit shall be made from Servicer’s own funds, without reimbursement therefor.

The foregoing requirements for deposit into the Custodial Account shall be exclusive, it being understood and agreed that, without limiting the generality of the foregoing, Ancillary Income and Prepayment Penalties need not be deposited by the Servicer into the Custodial Account. Any interest paid by the depository institution on funds deposited in the Custodial Account shall accrue to the benefit of the Servicer and the Servicer may retain any such interest.

Section 4.05 Permitted Withdrawals From Custodial Account.

Subject to Section 5.01, the Servicer shall be entitled to withdraw funds from the Custodial Account for the following purposes:

(i) to make payments to the Owner (or as otherwise directed by the Owner in writing) in the amounts and in the manner provided in Section 5.01;

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(ii) to fund any Liquidity Reserve Account or any Litigation Reserve Account as and to the extent required by Section 4.17;

(iii) following the liquidation of a Non-Agency Mortgage Loan, to reimburse itself for (a) any unpaid Servicing Advances to the extent recoverable from Liquidation Proceeds, Insurance Proceeds or other amounts received with respect to the related Non-Agency Mortgage Loan plus (b) related unreimbursed Nonrecoverable Advances made by the Servicer in accordance with this Agreement;

(iv) to invest funds in Eligible Investments in accordance with Section 4.09;

(v) to withdraw funds deposited in the Custodial Account in error;

(vi) to pay to itself any interest earned on funds deposited in the Custodial Account (all such interest to be withdrawn monthly not later than each Remittance Date); and

(vii) to clear and terminate the Custodial Account upon the termination of the Servicing Agreement.

The Servicer shall keep and maintain separate accounting, on a Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from the Custodial Account pursuant to subclause (iii) above.

Section 4.06 Establishment of and Deposits to Escrow Account.

The Servicer shall establish and maintain one or more Escrow Accounts, in the form of time deposit or demand accounts titled in the name of “PNMAC Loan Svc LLC ttee and/or bailee for [description of applicable owners or investors]” or titled in another reasonable manner indicating that such account is held in a custodial capacity. Each Escrow Account shall be established with a Qualified Depository as a Special Deposit Account. Funds deposited in the Escrow Accounts may be drawn on by the Servicer in accordance with Section 4.07. The creation of any Escrow Account shall be evidenced by a certification in the form of Exhibit 4 hereto, in the case of an account established with the Servicer (provided the Servicer qualifies as a Qualified Depository). A copy of such certification shall be furnished to the Owner on or prior to the execution of this Agreement. The Servicer shall segregate and hold all funds in any Escrow Account separate and apart from the Servicer’s own funds and general assets.

With respect to the Non-Agency Mortgage Loans, the Servicer shall deposit in the Escrow Account or Accounts and retain therein the following collections received by the Servicer:

(i) all related Escrow Payments collected on account of the Non-Agency Mortgage Loans, for the purpose of effecting timely payment of any such items as required under the terms of this Agreement; and

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(ii) all amounts representing related Insurance Proceeds or Condemnation Proceeds which are to be applied to the restoration or repair of any related Mortgaged Property.

The Servicer shall make withdrawals from the Escrow Account only to effect such payments as are required under this Agreement, as set forth in Section 4.07. Any interest paid on funds deposited in the Escrow Account by the depository institution shall accrue to the benefit of the Servicer, other than interest on escrowed funds required by law to be paid to the Mortgagor. To the extent required by law, the Servicer shall be responsible to pay from its own funds interest on escrowed funds to the Mortgagor notwithstanding that the Escrow Account may be non interest bearing or that interest paid thereon is insufficient for such purposes.

Section 4.07 Permitted Withdrawals From Escrow Account.

With respect to the Non-Agency Mortgage Loans, withdrawals from the Escrow Account or Accounts may be made by the Servicer only:

(i) to effect timely payments of ground rents, taxes, assessments, water rates, mortgage insurance premiums, condominium charges, flood insurance, fire and hazard insurance, premiums or other items constituting related Escrow Payments for the related Mortgage;

(ii) to reimburse the Servicer for any Servicing Advance made by the Servicer pursuant to Section 4.08 with respect to a Non-Agency Mortgage Loan, but only from amounts received on the related Mortgage Loan which represent late payments or collections of Escrow Payments thereunder;

(iii) to refund to any related Mortgagor any funds found to be in excess of the amounts required under the terms of the related Mortgage Loan or applicable federal or state law or judicial or administrative ruling;

(iv) for transfer to the Custodial Account in accordance with the terms of the related Mortgage and Mortgage Note or this Agreement;

(v) for application to restoration or repair of the related Mortgaged Property in accordance with the procedures outlined in Section 4.14;

(vi) to pay the Servicer, or any Mortgagors to the extent required by law, any interest paid on the funds deposited in the Escrow Account;

(vii) to reimburse itself for any amounts deposited in the Escrow Account in error; and

(viii) to clear and terminate the Escrow Account on the termination of this Agreement.

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Section 4.08 Payment of Taxes, Insurance and Other Charges.

With respect to each Non-Agency Mortgage Loan that is a First Lien Mortgage Loan requiring Escrow Payments to be made by the related Mortgagor, the Servicer shall maintain accurate records reflecting the status of ground rents, taxes, assessments, water rates and other charges which are or may become a lien upon the Mortgaged Property and the status of PMI Policy premiums, flood insurance, and fire and hazard insurance coverage and shall obtain, from time to time, all bills for the payment of such charges (including renewal premiums) and shall effect payment thereof prior to the applicable penalty or termination date and at a time appropriate for securing maximum discounts allowable, employing for such purpose deposits of the related Mortgagor in the Escrow Account which shall have been estimated and accumulated by the Servicer in amounts sufficient for such purposes, as allowed under the terms of the related Mortgage.

To the extent that any Non-Agency Mortgage Loan is a First Lien Mortgage Loan that does not provide for Escrow Payments, the Servicer shall determine that any such payments are made by the related Mortgagor when due. With respect to each Non-Agency Mortgage Loan that is a First Lien Mortgage Loan requiring Escrow Payments to be made by the related Mortgagor, subject to Accepted Servicing Practices, the Servicer assumes full responsibility for the payment of all such bills and shall effect payments of all such bills irrespective of the Mortgagor’s faithful performance in the payment of same or the making of the Escrow Payments and shall make Servicing Advances from its own funds to effect such payments within the time period required to avoid penalties and interest and avoid the loss of the related Mortgaged Property by foreclosure from a tax or other lien. Notwithstanding the foregoing, if Servicer reasonably determines that such Servicing Advance would be a Nonrecoverable Advance, Servicer shall have no obligation to make such Servicing Advance. Solely with respect to Non-Agency Mortgage Loans that require Escrow Payments, if Servicer fails to make a Servicing Advance with respect to any payment prior to the date on which late payment penalties or costs related to protecting the lien accrue, the Servicer shall pay any such penalties or costs which accrued.

Section 4.09 Protection of Accounts.

The Servicer may transfer the Custodial Account, the Escrow Account, any Liquidity Reserve Account or any Litigation Reserve Account to a different Qualified Depository from time to time. Such transfer shall be made only upon obtaining consent of the Owner, which shall not be unreasonably withheld. The Servicer shall notify the Owner in writing of any such transfer fifteen (15) Business Days prior to such transfer.

Amounts on deposit in the Custodial Account, the Escrow Account, any Liquidity Reserve Account or any Litigation Reserve Account may at the option of the Servicer be invested in Eligible Investments. Any such Eligible Investment shall mature no later than one day prior to the Remittance Date in each month; provided, however, that if such Eligible Investment is an obligation of a Qualified Depository (other than the Servicer) that maintains the Custodial Account, the Escrow Account, any Liquidity Reserve Account or any Litigation Reserve Account, then such Eligible Investment may mature on the related Remittance Date. Any such Eligible Investment shall be made in the name of the Servicer in trust for the benefit of

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the Owner. All income on or gain realized from any such Eligible Investment shall be for the benefit of the Servicer and may be withdrawn at any time by the Servicer. Any losses incurred in respect of any such investment shall be deposited in the Custodial Account, the Escrow Account, any Liquidity Reserve Account or any Litigation Reserve Account, by the Servicer out of its own funds immediately as realized with no right to reimbursement.

Section 4.10 Maintenance of Hazard Insurance.

The Servicer shall cause to be maintained for each Non-Agency Mortgage Loan that is a First Lien Mortgage Loan, hazard insurance (with extended coverage as is customary in the area where the Mortgaged Property is located) such that all buildings upon the related Mortgaged Property are insured by a generally acceptable insurer acceptable under the Fannie Mae Guides against loss by fire, hazards of extended coverage and such other hazards as are required to be insured pursuant to the Fannie Mae Guides, in an amount which is at least equal to the lesser of (i) the maximum insurable value of the improvements securing such Mortgage Loan and (ii) the greater of (a) the outstanding principal balance of such Mortgage Loan or (b) an amount such that the proceeds thereof shall be sufficient to prevent the related Mortgagor or the loss payee from becoming a co-insurer (or, in the case of any related REO Property, the fair market value of such REO Property).

With respect to the Non-Agency Mortgage Loans, if required by the National Flood Insurance Act of 1968 or Flood Disaster Prevention Act of 1973, as amended, each such Mortgage Loan is, and shall continue to be, covered by a flood insurance policy meeting the requirements of the current guidelines of the Federal Insurance Administration with a generally acceptable insurance carrier acceptable under the Fannie Mae Guides in an amount representing coverage not less than the least of (i) the aggregate unpaid principal balance of such Mortgage Loan (or, in the case of a related REO Property, the fair market value of such REO Property), (ii) maximum amount of insurance which is available under the National Flood Insurance Act of 1968 or Flood Disaster Prevention Act of 1973, as amended (regardless of whether the area in which such Mortgaged Property is located is participating in such program), or (iii) the full replacement value of the improvements which are part of such Mortgaged Property. If a related Mortgaged Property is located in a special flood hazard area and is not covered by flood insurance or is covered in an amount less than the amount required by the National Flood Insurance Act of 1968 or Flood Disaster Prevention Act of 1973, as amended, the Servicer shall notify the related Mortgagor that the Mortgagor must obtain such flood insurance coverage, and if such Mortgagor fails to obtain the required flood insurance coverage within forty-five (45) days after such notification, the Servicer shall immediately force place the required flood insurance on such Mortgagor’s behalf. Notwithstanding the foregoing, Servicer shall have no liability to Owner or any third party for any penalties or fines imposed based on Servicer’s failure to timely notify the Director of FEMA and the flood insurance provider related to a servicing transfer if Servicer is not provided with flood insurance information; provided that, the Servicer shall have promptly provided Owner with notice of such missing flood insurance information. Notwithstanding the foregoing, the Servicer shall maintain a blanket insurance policy in sufficient amounts to cover any uninsured loss due to any gap in Mortgagor-provided coverage.

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If a Non-Agency Mortgage Loan that is a First Lien Mortgage Loan is secured by a unit in a condominium project, the Servicer shall verify that the coverage required of the homeowners’ association, including hazard, flood, liability, and fidelity coverage, is being maintained in accordance with then current Fannie Mae requirements, and secure from the homeowners’ association its agreement to notify the Servicer promptly of any change in the insurance coverage or of any condemnation or casualty loss that may have a material effect on the value of the related Mortgaged Property as security.

The Servicer shall cause to be maintained on each Mortgaged Property securing a Non-Agency Mortgage Loan such other or additional insurance as may be required pursuant to such applicable laws and regulations as shall at any time be in force and as shall require such additional insurance, or pursuant to the requirements of any private mortgage guaranty insurer, or as may be required to conform with Accepted Servicing Practices.

In the event that the Owner or the Servicer shall determine that the Mortgaged Property securing a Non-Agency Mortgage Loan should be insured against loss or damage by hazards and risks not covered by the insurance required to be maintained by the Mortgagor pursuant to the terms of the Mortgage, the Servicer shall in accordance with the Fannie Mae Guides make commercially reasonable efforts to communicate and consult with the Mortgagor with respect to the need for such insurance and bring to the Mortgagor’s attention the desirability of protection of the Mortgaged Property.

All policies required hereunder shall name the Servicer and its successors and assigns as a mortgagee and loss payee and shall be endorsed with non contributory standard or New York mortgagee clauses which shall provide for at least thirty (30) days prior written notice of any cancellation, reduction in amount or material change in coverage.

In all such cases, the Servicer shall not interfere with the Mortgagor’s freedom of choice in selecting either his insurance carrier or agent, provided, however, that the Servicer shall not accept any such insurance policies from insurance companies unless such companies currently reflect a General Policy Rating of A:VI or better under Best’s Key Rating Guides, are acceptable under the Fannie Mae Guides and are licensed to do business in the jurisdiction in which the Mortgaged Property is located. The Servicer shall determine that such policies provide sufficient risk coverage and amounts as required pursuant to the Fannie Mae Guides, that they insure the property owner, and that they properly describe the property address. The Servicer shall furnish to the Mortgagor a formal notice of expiration of any such insurance in sufficient time for the Mortgagor to arrange for renewal coverage by the expiration date; provided, however, that in the event that no such notice is furnished by the Servicer, the Servicer shall ensure that replacement insurance policies are in place in the required coverages and the Servicer shall be solely liable for any losses in the event coverage is not provided.

Pursuant to Section 4.04, any amounts collected by the Servicer under any such policies (other than amounts to be deposited in the Escrow Account and applied to the restoration or repair of the related Mortgaged Property, or property acquired in liquidation of the Mortgage Loan, or to be released to the Mortgagor, in accordance with the Servicer’s normal servicing procedures as specified in Section 4.14) shall be deposited in the Custodial Account subject to withdrawal pursuant to Section 4.05.

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Section 4.11 Maintenance of Mortgage Impairment Insurance Policy.

In the event that the Servicer shall obtain and maintain a blanket policy insuring against losses arising from flood, fire and hazards covered under extended coverage on all of the Non-Agency Mortgage Loans, then, to the extent such policy provides coverage in an amount equal to the amount required pursuant to Section 4.10 and otherwise complies with all other requirements of Section 4.10, it shall conclusively be deemed to have satisfied its obligations as set forth in Section 4.10. Any amounts collected by the Servicer under any such policy relating to a Non-Agency Mortgage Loan shall be deposited in the Custodial Account subject to withdrawal pursuant to Section 4.05. Such policy may contain a deductible clause, in which case, in the event that there shall not have been maintained on the related Mortgaged Property a policy complying with Section 4.10, and there shall have been a loss which would have been covered by such policy, the Servicer shall deposit in the Custodial Account at the time of such loss the amount not otherwise payable under the blanket policy because of such deductible clause, such amount to be deposited from the Servicer’s funds, without reimbursement therefor. The Servicer may seek reimbursement from the Owner for the costs and premiums associated with obtaining and maintaining any such blanket policy.

Section 4.12 Maintenance of Fidelity Bond and Errors and Omissions Insurance.

The Servicer shall maintain with responsible companies that would meet the requirements of Fannie Mae, at its own expense, a blanket Fidelity Bond and an Errors and Omissions Insurance Policy, with broad coverage on all officers, employees or other persons acting in any capacity requiring such persons to handle funds, money, documents or papers relating to the Mortgage Loans (“Servicer Employees”). Any such Fidelity Bond and Errors and Omissions Insurance Policy shall be in the form of the Mortgage Banker’s Blanket Bond and shall protect and insure the Servicer against losses, including forgery, theft, embezzlement, fraud, errors and omissions and negligent acts of such Servicer Employees. Such Fidelity Bond and Errors and Omissions Insurance Policy also shall protect and insure the Servicer against losses in connection with the failure to maintain any insurance policies required pursuant to this agreement and the release or satisfaction of a Mortgage Loan without having obtained payment in full of the indebtedness secured thereby. No provision of this Section 4.12 requiring such Fidelity Bond and Errors and Omissions Insurance Policy shall diminish or relieve the Servicer from its duties and obligations as set forth in this Agreement. Any such Fidelity Bond and Errors and Omissions Insurance Policy shall comply with the applicable requirements from time to time of Fannie Mae. Upon request, the Servicer shall cause to be delivered to the Owner a certified true copy of such Fidelity Bond and Errors and Omissions Insurance Policy and shall obtain a statement from the surety and insurer that such Fidelity Bond and Errors and Omissions Insurance Policy shall in no event be terminated or materially modified without thirty (30) days’ prior written notice to the Owner.

Section 4.13 Inspections.

The Servicer shall order an inspection of the Mortgaged Property securing a Non-Agency Mortgage Loan when such Mortgage Loan becomes 45 days delinquent and every 30 days thereafter so long as such Mortgage Loan remains delinquent to assure itself that the value

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of the Mortgaged Property is being preserved, provided that the Servicer shall be required to take such action only if it determines that the proceeds to the Owner (after giving effect to the recovery of the Servicer’s out-of-pocket expenses) from payment on, or disposition of, the related Mortgage Loan or REO Property would be increased as a result of the taking of such action. The Servicer shall document on its servicing system each such inspection. The costs of such inspections shall be treated as Servicing Advances for which the Servicer shall be entitled to full reimbursement for in accordance with Section 4.05(iv).

Section 4.14 Restoration of Mortgaged Property.

With respect to the Non-Agency Mortgage Loans, the Servicer need not obtain the approval of the Owner prior to releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be applied to the restoration or repair of the Mortgaged Property if such release is in accordance with Accepted Servicing Practices and the terms of this Agreement. At a minimum, the Servicer shall comply with the following conditions in connection with any such release of such Insurance Proceeds or Condemnation Proceeds:

(i) the Servicer shall receive satisfactory independent verification of completion in all material respects of repairs and issuance of any required approvals with respect thereto;

(ii) the Servicer shall take all steps necessary to preserve the priority of the lien of the Mortgage, including, but not limited to requiring waivers with respect to mechanics’ and materialmen’s liens;

(iii) the Servicer shall verify that the Mortgage Loan is not in default; and

(iv) pending repairs or restoration, the Servicer shall place the Insurance Proceeds or Condemnation Proceeds in the Escrow Account.

If the Owner is named as an additional loss payee, the Servicer is hereby empowered to endorse any loss draft issued in respect of such a claim in the name of the Owner.

Section 4.15 Title, Management and Disposition of REO Property.

In the event that title to any Mortgaged Property securing a Non-Agency Mortgage Loan is acquired in foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale shall be taken in the name of the Owner or its designee, which may include Servicer on behalf of the Owner, or in the event the Servicer is not authorized or permitted to hold title to real property in the state where the REO Property is located, or would be adversely affected under the “doing business” or tax laws of such state by so holding title, the deed or certificate of sale shall be taken in the name of such Person(s) as shall be consistent with an Opinion of Counsel obtained by Servicer from an attorney duly licensed to practice law in the state where the REO Property is located. The Person or Persons holding such title other than the Owner shall acknowledge in writing that such title is being held as nominee for the Owner. Where title is acquired by the acceptance of a deed in lieu of foreclosure, the Owner shall pay to the Servicer a Deed in Lieu Fee.

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Upon approval by Owner, the Servicer shall manage, conserve, protect and operate each REO Property related to a Non-Agency Mortgage Loan for the Owner solely for the purpose of its prompt disposition and sale. The Servicer, either itself or through an agent selected by the Servicer, shall manage, conserve, protect and operate such REO Property in accordance with Accepted Servicing Practices and in the same manner that similar property in the same locality as such REO Property is managed. The Servicer shall attempt to sell the same (and may temporarily rent the same, except as otherwise provided below) on such terms and conditions as the Servicer deems to be in the best interest of the Owner in accordance with Accepted Servicing Practices. The Servicer shall provide the Owner on a monthly basis with a report on the status of each REO Property related to a Non-Agency Mortgage Loan.

The Servicer shall also maintain on each REO Property related to a Non-Agency Mortgage Loan fire and hazard insurance with extended coverage in an amount which is at least equal to the maximum insurable value of the improvements which are a part of such property, liability insurance and, to the extent required and available under the National Flood Insurance Act of 1968 or Flood Disaster Prevention Act of 1973, as amended, flood insurance in the amount required in Section 4.10 hereof, provided that the Servicer shall be required to maintain such insurance only if it determines that the proceeds to the Owner (after giving effect to the recovery of the Servicer’s out-of-pocket expenses) from payment on, or disposition of, the related REO Property would be increased as a result of the maintenance of such insurance. Such costs to maintain appropriate insurance coverage shall be treated as Servicing Advances for which the Servicer shall be entitled to full reimbursement in accordance with Section 4.05(iv). In addition, for the sale of each REO Property related to a Non-Agency Mortgage Loan, Owner shall pay to Servicer the Liquidation Fee.

The disposition of each REO Property related to a Non-Agency Mortgage Loan shall be carried out by the Servicer at such price, and upon such terms and conditions, as the Servicer deems to be in the best interests of the Owner in accordance with Accepted Servicing Practices. The proceeds of sale of such REO Property shall be promptly deposited in the Custodial Account pursuant to the terms of this Agreement but not later than the second Business Day following receipt thereof. As soon as practical thereafter, the expenses of such sale shall be paid and the Servicer shall reimburse itself for any related unreimbursed Servicing Advances and unpaid Servicing Fees made pursuant to this Section.

With respect to each REO Property related to a Non-Agency Mortgage Loan, the Servicer shall segregate and hold all funds collected and received in connection with the operation of the REO Property in the Custodial Account. The Servicer shall cause to be deposited on a daily basis in each Custodial Account all revenues received by Servicer (such revenues being those received by Servicer within two Business Days prior to actual deposit into the Escrow Account) with respect to the conservation and disposition of the related REO Property. Any advances made to maintain appropriate insurance coverage shall be treated as Servicing Advances for which the Servicer shall be entitled to full reimbursement in accordance with Section 4.05(iv).

The Servicer shall furnish to the Owner on a monthly basis the Servicer’s standard REO report on REO Property then serviced by the Servicer with respect to the Non-Agency Mortgage Loans.

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Section 4.16 Costs and Expenses.

With respect to the Non-Agency Mortgage Loans, Owner will be responsible for all losses including but not limited to unrecoverable interest, “out-of-pocket” costs and expenses from either the Mortgagor or Owner that are normal and customary that occur as the result of normal business activity associated with owning the loans.

Section 4.17 Liquidity and Litigation Reserves.

(a) Liquidity Reserve. The Servicer, in its discretion, may establish a liquidity reserve (the “Liquidity Reserve”) from which to fund Servicing Advances (including litigation costs and expenses (including attorneys’ fees)), P&I Advances and Interest Shortfall with respect to the Mortgage Loans. If the Servicer elects to establish a Liquidity Reserve it shall establish a Liquidity Reserve Account at a Qualified Depository. The Liquidity Reserve Account shall be held in trust for the benefit of the Owner and shall be established and maintained for the sole purpose of holding and distributing the Liquidity Reserve funds. The Servicer may fund the Liquidity Reserve with such portion of distributions on the Mortgage Loans (but such portion shall nonetheless be deemed to have been distributed to Owner) as it deems appropriate, in the exercise of its reasonable discretion, or otherwise request Owner to fund such Liquidity Reserve, in which case Owner shall fund such Liquidity Reserve as so requested. At the termination of this Agreement, all remaining funds held in the Liquidity Reserve shall be distributed to the Owner. Amounts on deposit in the Liquidity Reserve Account shall be invested in Eligible Investments, shall not be used to pay costs or expenses other than Servicing Advances (including litigation costs and expenses (including attorneys’ fees)), P&I Advances and Interest Shortfall, and shall be used to pay such amounts only in any month in which the distributions on the Mortgage Loans received during that month are insufficient to provide sufficient cash to pay all such amounts due and payable during that month. No funds from any other source (other than interest or earnings on the funds held in the Liquidity Reserve Account) shall be commingled in the Liquidity Reserve Account. Amounts on deposit in the Liquidity Reserve Account (including interest and earnings thereon) shall be used and may be withdrawn and disbursed only in accordance with the provisions of this paragraph. The Servicer shall be authorized and directed to withdraw funds from the Liquidity Reserve Account only to make disbursements in accordance with this Agreement and not for any other purpose. Notwithstanding anything in this Section 4.17(a) to the contrary, it is expressly understood that the Servicer’s failure to establish or require the Owner to establish or fund a Liquidity Reserve shall not preclude the Servicer from seeking reimbursement from the Owner for Servicing Advances (including litigation costs and expenses (including attorneys’ fees)), P&I Advances and Interest Shortfall, all of which remain the obligations of the Owner.

(b) Litigation Reserve. Without prejudice to its rights under Section 4.17(a), the Servicer, in its discretion, may establish a litigation reserve (the “Litigation Reserve”) from which to fund litigation costs and expenses (including attorneys’ fees) that constitute Servicing Advances with respect to the Mortgage Loans. If the Servicer elects to establish a Litigation Reserve it shall establish a Litigation Reserve Account at a Qualified Depository. The Litigation Reserve Account shall be held in trust for the benefit of the Owner and shall be established and maintained for the sole purpose of holding and distributing the Litigation Reserve funds. The Servicer may fund the Litigation Reserve with such portion of distributions on the Mortgage

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Loans (but such portion shall nonetheless be deemed to have been distributed to Owner) as it deems appropriate, in the exercise of its reasonable discretion, or otherwise request Owner to fund such Litigation Reserve, in which case Owner shall fund such Liquidity Reserve as so requested. At the termination of this Agreement, all remaining funds held in the Litigation Reserve shall be distributed to the Owner. Amounts on deposit in the Litigation Reserve Account shall be invested in Eligible Investments, shall not be used to pay costs or expenses other than litigation costs and expenses that constitute Servicing Advances, and shall be used to pay such litigation costs and expenses only in any month in which distributions on the Mortgage Loans received during that month are insufficient to provide sufficient cash to pay all Servicing Advances due and payable (without prepayment) during that month with respect to the Mortgage Loans. No funds from any other source (other than interest or earnings on the funds held in the Litigation Reserve Account) shall be commingled in the Litigation Reserve Account. Amounts on deposit in the Litigation Reserve Account (including interest and earnings thereon) shall be used and may be withdrawn and disbursed only in accordance with the provisions of this paragraph. The Servicer shall be authorized and directed to withdraw funds from the Litigation Reserve Account only to make disbursements in accordance with this Agreement and not for any other purpose.

(c) For the avoidance of doubt, references under this Section 4.17 to “Mortgage Loans” shall be deemed to include both Agency Mortgage Loans and Non-Agency Mortgage Loans; provided, however, that to the extent there is any conflict between the actions permitted to be taken by the Servicer under this Section 4.17 and the actions permitted to be taken by the Servicer pursuant to the requirements of the applicable Guide, the requirements of the applicable Guide shall control.

Section 4.18 Transfers of Mortgaged Properties.

The Servicer shall enforce any “due-on-sale” provision contained in any Mortgage or Mortgage Note under any Non-Agency Mortgage Loan and deny assumption by the Person to whom the related Mortgaged Property has been or is about to be sold whether by absolute conveyance or by contract of sale, and whether or not the related Mortgagor remains liable on such Mortgage and Mortgage Note. When the related Mortgaged Property has been conveyed by the Mortgagor, the Servicer shall, to the extent it has knowledge of such conveyance, exercise its rights to accelerate the maturity of such Mortgage Loan under the “due-on-sale” clause applicable thereto; provided, however, that the Servicer shall not exercise such rights if prohibited by law from doing so.

If the Servicer reasonably believes it is unable under applicable law to enforce such “due-on-sale” clause, the Servicer, shall, to the extent permitted by applicable law, enter into (i) an assumption and modification agreement with the Person to whom such property has been conveyed, pursuant to which such Person becomes liable under the related Mortgage Note and the original Mortgagor remains liable thereon or (ii) in the event the Servicer is unable under applicable law to require that the original Mortgagor remain liable under the Mortgage Note and the Servicer has the prior consent of the primary mortgage guarantee insurer, a substitution of liability agreement with the purchaser of the Mortgaged Property pursuant to which the original Mortgagor is released from liability and the purchaser of the Mortgaged Property is substituted as Mortgagor and becomes liable under the Mortgage Note. If an assumption fee is collected by

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the Servicer for entering into an assumption agreement, such fee will be retained by the Servicer as additional servicing compensation. In connection with any such assumption, neither the Mortgage Interest Rate borne by the related Mortgage Note, the term of the Mortgage Loan nor the outstanding principal amount of the Mortgage Loan shall be changed. Where an assumption is allowed pursuant to this Section 4.18, the Servicer, with the prior written consent of the insurer under the PMI Policy or LPMI Policy, if any, is authorized to enter into a substitution of liability agreement with the Person to whom the Mortgaged Property has been conveyed or is proposed to be conveyed pursuant to which the original Mortgagor is released from liability and such Person is substituted as Mortgagor and becomes liable under the related Mortgage Note. Any such substitution of liability agreement shall be in lieu of an assumption agreement. The Servicer shall notify the Owner that any such substitution of liability or assumption agreement has been completed by forwarding to the Owner, or its designee, the original of any such substitution of liability or assumption agreement, which document shall be added to the related Mortgage File and shall, for all purposes, be considered a part of such Mortgage File to the same extent as all other documents and instruments constituting a part thereof.

To the extent that any Non-Agency Mortgage Loan is assumable, the Servicer shall inquire diligently into the creditworthiness of the proposed transferee, and shall follow Accepted Servicing Practices and the underwriting practices and procedures of prudent mortgage lenders in the respective states where the related Mortgaged Properties are located including but not limited to Servicer conducting a review of the credit and financial capacity of the individual receiving the property, and may approve the assumption if it believes the recipient is capable of assuming the mortgage obligations. If the credit of the proposed transferee does not satisfy the relevant underwriting criteria and the transfer of ownership actually occurs, the Servicer diligently shall, to the extent permitted by the Mortgage or the Mortgage Note and by applicable law, accelerate the maturity of the Non-Agency Mortgage Loan.

The Servicer shall be required to take any action otherwise required by this Section 4.18 only if it determines that the proceeds to the Owner (after giving effect to the recovery of the Servicer’s out-of-pocket expenses) from payment on, or disposition of the related Mortgage Loan or REO Property would be increased as a result of the taking of such action.

Section 4.19 Satisfaction of Mortgages and Release of Mortgage Files.

Upon the payment in full of any Non-Agency Mortgage Loan, or the receipt by the Servicer of a notification that payment in full will be escrowed in a manner customary for such purposes, the Servicer shall notify the Owner in the Monthly Remittance Advice as provided in Section 5.02, and may request the release of any Mortgage Loan Documents from the Owner in accordance with this Section 4.19. The Servicer shall obtain discharge of the related Mortgage Loan as of record within any related time limit required by applicable law (unless prevented from complying as a result of the failure of the local recording office to comply with its obligations on a timely basis).

In connection with any instrument of satisfaction or deed of reconveyance with respect to a Non-Agency Mortgage Loan, the Servicer shall be entitled to a reconveyance fee. Such reconveyance fee shall only be reimbursable to the Servicer by the Owner to the extent the reconveyance fee is uncollectible from the related Mortgagor based on the terms of the security instrument or in the Servicer’s reasonable opinion that such fee is not allowable by statute.

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Upon receipt of such request, the Owner or its designee shall within five (5) Business Days release or cause to be released the related Mortgage Loan Documents to Servicer and Servicer shall prepare and process any satisfaction or release. If the Owner or its designee or the Custodian does not release the related Mortgage Loan Documents to Servicer within five (5) Business Days of receipt of request to do so, Servicer may retain a third party to complete the reconveyance and charge the Owner the actual cost of services provided by such third party. Except as set forth in this paragraph, Servicer shall have no liability for third party delays that may result in assessed penalties.

If the Servicer satisfies or releases a Mortgage securing a Non-Agency Mortgage Loan without first having obtained payment in full of the indebtedness secured by the Mortgage (or such lesser amount in connection with a discounted payoff accepted by the Servicer with respect to a defaulted Mortgage Loan) or should the Servicer otherwise prejudice any rights the Owner may have under the mortgage instruments, the Servicer shall deposit the shortfall amount of the paid indebtedness in the Custodial Account (unless such shortfall is $500 or less, in which case no deposit shall be required) within five (5) Business Days of receipt of such demand by the Owner.

The Servicer shall cause the Fidelity Bond and Errors and Omissions Insurance Policy required under Section 4.12 to insure the Servicer against any loss it may sustain with respect to any Non-Agency Mortgage Loan not satisfied in accordance with the procedures set forth herein.

Section 4.20 Notification of Adjustments.

With respect to each Non-Agency Mortgage Loan that is an Adjustable-Rate Mortgage Loan, the Servicer shall adjust the Mortgage Interest Rate on the related Interest Rate Adjustment Date in compliance with the requirements of applicable law and the related Mortgage and Mortgage Note. If, pursuant to the terms of the related Mortgage Note, another Index is selected for determining the Mortgage Interest Rate because the original Index is no longer available, the same Index will be used with respect to each Mortgage Note which requires a new Index to be selected provided that such selection does not conflict with the terms of the related Mortgage Note. The Servicer shall execute and deliver any and all necessary notices required under applicable law and the terms of the related Mortgage Note and Mortgage regarding the Mortgage Interest Rate and the Monthly Payment adjustments. The Servicer shall promptly deliver to the Owner such notifications and any additional applicable data regarding such adjustments and the methods used to calculate and implement such adjustments. Upon the discovery by the Servicer or the Owner that the Servicer has failed to adjust a Mortgage Interest Rate or a Monthly Payment pursuant to the terms of the related Mortgage Note and Mortgage related to a Non-Agency Mortgage Loan, the Servicer shall immediately deposit in the Custodial Account from its own funds the amount of any interest loss caused the Owner thereby without reimbursement therefor.

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Section 4.21 Recordation of Assignments of Mortgage.

Except in connection with Accepted Servicing Practices for defaulted Mortgage Loans, the Servicer shall not be responsible for the preparation or recording of the Assignments of Mortgage relating to the Non-Agency Mortgage Loans to the Owner, or any other party; provided, however, that in the event the Servicer agrees (which agreement shall be in Servicer’s sole discretion) to record any mortgage assignment, any expense, including the fees of third party service providers, incurred by the Servicer in connection with the preparation and recordation of Assignments of Mortgage shall be reimbursable by the Owner, or, if not reimbursed by the Owner, advanced or paid as a Servicing Advance.

Section 4.22 [Reserved].

Section 4.23 Credit Reporting.

With respect to the Non-Agency Mortgage Loans, the Servicer shall fully furnish, in accordance with the Fair Credit Reporting Act and its implementing regulations, accurate and complete information (e.g. favorable and unfavorable) on the Mortgagor credit files to Equifax, Experian and Trans Union Credit Information Company (or their respective successors) on a monthly basis and in accordance with applicable federal, state and local laws.

Section 4.24 Superior Liens.

With respect to the Non-Agency Mortgage Loans, if the Servicer is notified that any superior lienholder has accelerated or intends to accelerate the obligations secured by the superior lien, or has declared or intends to declare a default under the superior mortgage or the promissory note secured thereby, or has filed or intends to file an election to have the related Mortgaged Property sold or foreclosed, the Servicer shall take whatever actions are necessary to protect the interests of the Owner, and/or to preserve the security of the related Mortgage Loan, subject to any requirements applicable to real estate mortgage investment conduits pursuant to the Code. The Servicer shall make a Servicing Advance of the funds necessary to cure such default or reinstate such superior lien if the Servicer determines that such Servicing Advance is in the best interests of the Owner and would be in accordance with Accepted Servicing Practices. The Servicer shall not make such a Servicing Advance except to the extent that it determines that such advance would not be a Nonrecoverable Advance from Liquidation Proceeds on the related Mortgage Loan. The Servicer shall thereafter take such action as is necessary to recover the amount so advanced.

If a Non-Agency Mortgage Loan is identified on the Notice of Inbound Transfer as a Second Lien Mortgage Loan, then the Servicer may consent to the refinancing of the prior senior lien on the related Mortgaged Property, provided that the following requirements are met:

1. the resulting CLTV of such Second Lien is no higher than its CLTV prior to such refinancing; and

2. the interest rate, or, in the case of an adjustable-rate existing senior lien, the maximum interest rate, for the loan evidencing the refinanced senior lien is no more than 2.0% (or such higher rate that the Servicer determines to be in the Owner’s best interest) higher than the interest rate or the maximum interest rate, as the case may be, on the loan evidencing the existing senior lien immediately prior to the date of such refinancing; and

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3. the loan evidencing the refinanced senior lien is not subject to the possibility of negative amortization.

Section 4.25 Reserved.

Section 4.26 Tax and Flood Service Contracts.

The Servicer, at the Owner’s expense, shall cause each Non-Agency Mortgage Loan that is a First Lien Mortgage Loan and is transferred to the Servicer for servicing to be covered (to the extent not already covered) by a Tax Service Contract and/or Flood Service Contract, by (a) a Tax Service Contract and/or (b) a Flood Zone Service Contract. If any Non-Agency Mortgage Loan is missing a required Tax Service Contract or if any Non-Agency Mortgage Loan is missing a required Flood Zone Service Contract at the time of the Inbound Transfer Date, Servicer shall place such Tax Service Contract or Flood Zone Service Contract, as applicable, and shall be entitled to the fee associated with acquiring such contracts as set forth in Exhibit 9.

Section 4.27 Maintenance of PMI Policies and LPMI Policies; Collections Thereunder.

The Servicer shall maintain in full force and effect, a PMI Policy, issued by a Qualified Insurer, with respect to each Non-Agency Mortgage Loan for which such coverage is required, provided that the Servicer’s obligations to pay premiums in respect of any such Policy shall terminate if the Servicer determines that the related insurer is unwilling or unable to make all payments due under such policy. Such coverage shall be maintained until the LTV Ratio or CLTV, as applicable, of the related Non-Agency Mortgage Loan is reduced to that amount for which Fannie Mae would no longer require such insurance. The Servicer will not cancel or refuse to renew any PMI Policy in effect on the related Inbound Transfer Date that is required to be kept in force under this Agreement with respect to a Non-Agency Mortgage Loan unless a replacement PMI Policy or LPMI Policy for such cancelled or non-renewed policy is obtained from and maintained with a Qualified Insurer. The Servicer shall not take any action which would result in non-coverage under any applicable PMI Policy or LPMI Policy of any loss which, but for the actions of the Servicer, would have been covered thereunder. In connection with any assumption or substitution agreement entered into or to be entered into pursuant to Section 4.18 with respect to a Non-Agency Mortgage Loan, the Servicer shall promptly notify the insurer under the related PMI Policy or LPMI Policy, if any, of such assumption or substitution of liability in accordance with the terms of such policy and shall take all actions which may be required by such insurer as a condition to the continuation of coverage under the PMI Policy or LPMI Policy. If such PMI Policy is terminated as a result of such assumption or substitution of liability, the Servicer shall obtain a replacement PMI Policy as provided above.

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In connection with its activities as servicer with respect to the Non-Agency Mortgage Loans, the Servicer agrees to prepare and present, on behalf of itself, and the Owner, claims to the insurer under any PMI Policy or LPMI Policy in a timely fashion in accordance with the terms of such policies and, in this regard, to take such action as shall be necessary to permit recovery under any PMI Policy or LPMI Policy respecting a defaulted Non-Agency Mortgage Loan. Pursuant to Section 4.04, any amounts collected by the Servicer under any PMI Policy or LPMI Policy shall be deposited in the related Custodial Account, subject to withdrawal pursuant to Section 4.05.

Section 4.28 Reliability of Information/Exceptional Expenses.

The Servicer may rely on all data and materials relating to the Non-Agency Mortgage Loans supplied to it by the Owner or the Owner’s designee(s) and the authenticity and accuracy of such data and materials, including any signatures contained therein. The Servicer shall not be obligated to conduct an independent investigation of any data materials or audit of any data, materials or Mortgage File, and may rely on the authenticity and accuracy of such data and materials as provided, including any signatures contained therein and shall not be held accountable for data integrity, missing information or missing documents that prevent the boarding of a Non-Agency Mortgage Loan to the Servicer’s mortgage loan administration system. The Servicer shall deliver notification to the Owner of any material data deficiencies discovered by the Servicer. If such error was identified prior to the Inbound Transfer Date, the Owner shall have the ability to correct such errors or provide missing data at no additional cost to Servicer. Should the Owner decline to provide such data corrections or provide such missing data, Servicer shall be entitled to charge the Owner a manual data backfill fee as set forth on Exhibit 9. If such error was identified after the Inbound Transfer Date and such error was not the result of Servicer’s negligence, the Servicer shall provide the Owner with a written cost estimate to correct such errors, and upon the Owner’s approval, which approval should not be unreasonably withheld, the Owner shall reimburse the Servicer for all documented costs and expenses incurred by the Servicer, including but not limited to, costs and expenses resulting from the Owner’s actions, instructions or any failure by the Owner to provide the Servicer complete, accurate and timely Mortgage Loan information.

Section 4.29 Escrow Obligations.

In connection with impounded Non-Agency Mortgage Loans, the Owner shall (i) cause all taxes and assessments with respect to which the related tax bill is due within thirty (30) days following the related Inbound Transfer Date to be paid prior to such Inbound Transfer Date, and (b) cause all hazard, flood, earthquake, PMI Policy and other insurance premiums that are due on or prior to the thirtieth (30th) day following such Inbound Transfer Date to be paid on or prior to such Inbound Transfer Date. The Owner shall be responsible for any losses including but not limited to tax penalties (including any loss of discount for which any related Mortgagor or any third party for the benefit of the related Mortgagor has a legal claim) for the current tax due period or for any tax period that ends no more than twelve (12) months earlier than the date of the last paid installment of the Non-Agency Mortgage Loan, as well as for its advances to pay the delinquent taxes themselves in connection with any Non-Agency Mortgage Loan for which the Owner failed to pay taxes as required by this Section 4.29 as the result of an action or inaction of a previous servicer.

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Section 4.30 No Obligation to Advance Delinquent Payments.

The Servicer shall have no obligation to advance amounts constituting delinquent principal and interest payments on any Non-Agency Mortgage Loan.

Section 4.31 MERS Transfers.

The Servicer shall comply in all material respects with the rules and procedures of MERS in connection with the servicing of the Non-Agency Mortgage Loans that are MERS Mortgage Loans for as long as such Non-Agency Mortgage Loans are registered with MERS.

To the extent the Owner requests the Servicer to register or transfer a Non-Agency Mortgage Loan with Mortgage Electronic Registration System, Inc., the Owner shall promptly transfer or cause to be transferred to Servicer the required mortgage loan information. For such services, the Owner agrees to pay the Servicer the fee set forth on Exhibit 9 upon the boarding or release of such Non-Agency Mortgage Loan on the Servicer’s mortgage loan administration system.

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ARTICLE V

PAYMENTS; REPORTS

Section 5.01 Remittances.

On each Remittance Date, the Servicer shall remit by wire transfer of immediately available funds to the Owner (or as otherwise directed in writing by the Owner) (i) with respect to the Agency Mortgage Loans, subject to the requirements of the applicable Guide, all amounts on deposit in the custodial accounts maintained with respect to the Agency Mortgage Loans (net of amounts required to remain on deposit therein or paid to or for the benefit of the related Agency pursuant to the applicable Guide) and (ii) with respect to the Non-Agency Mortgage Loans, all amounts on deposit in the Custodial Account related to the Due Period (net of charges against or withdrawals from the Custodial Account pursuant to Section 4.05). The Servicer shall remit to the Owner (or as otherwise directed in writing by the Owner) all Principal Prepayments with respect to the Non-Agency Mortgage Loans, in full or in part, on the Remittance Date pursuant to Section 4.05.

With respect to any remittance received by the Owner after the day on which such payment was due, the Servicer shall pay to the Owner interest on any such late payment at an annual rate equal to the Prime Rate, adjusted as of the date of each change, plus one percentage point, but in no event greater than the maximum amount permitted by applicable law. Such interest shall be remitted to the Owner by the Servicer on the date such late payment is made and shall cover the period commencing with the day such payment was due and ending with the Business Day on which such payment is made, both inclusive. The payment by the Servicer of any such interest shall not be deemed an extension of time for payment or a waiver of any Event of Default.

All remittances made to the Owner pursuant to this Section 5.01 are to be made in accordance with the wire transfer instructions provided by Owner.

Section 5.02 Reports to the Owner.

Not later than the twentieth (20th) calendar day of each month or, if the 20th day is not a Business Day, the next succeeding Business Day, the Servicer shall furnish to the Owner standard monthly reports as set forth on Exhibit 1 attached hereto or in a format mutually agreed upon (which shall be provided in Excel format). For all purposes of this Agreement, delinquency status shall be determined in accordance with standard MBA methodology, as is appropriate, as determined by the Owner for the applicable Mortgage Loan type and set forth in the related Notice of Inbound Transfer.

Not less frequently than quarterly, commencing in the second calendar quarter following the calendar quarter in which this Agreement is executed and delivered, the Servicer shall deliver to the Owner a reasonably detailed report regarding the Servicer’s financial results. Not less frequently than annually, commencing in the calendar year following the year in which this Agreement is executed and delivered, the Servicer shall deliver to the Owner relevant market data on management and servicing fees.

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Section 5.03 Tax Reporting.

In addition, on or before March 15th of each calendar year, the Servicer shall furnish to each Person who was an Owner (or subsequent owner of a Mortgage Loans subject to this Agreement) at any time during such calendar year an annual statement in accordance with the requirements of applicable federal income tax law as to the aggregate of remittances for the applicable portion of such year.

Such obligation of the Servicer shall be deemed to have been satisfied to the extent that substantially comparable information shall be provided by the Servicer pursuant to any requirements of the Code as from time to time are in force.

The Servicer shall prepare and file any and all tax returns, information statements or other filings required to be delivered to any governmental taxing authority or to the Owner pursuant to any applicable law with respect to the Mortgage Loans and the transactions contemplated hereby. In addition, the Servicer shall provide the Owner with such information concerning the Mortgage Loans as is necessary for the Owner to prepare its federal income tax return as the Owner may reasonably request from time to time and which is reasonably available to the Servicer.

Section 5.04 Cost of Funds.

With respect to any Servicing Advances made by Servicer from its own funds under the terms of this Agreement, the Servicer shall be entitled to collect from the Owner monthly for the Cost of Funds on such Servicing Advances.

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ARTICLE VI

RECORDS, INFORMATION AND COMPLIANCE DOCUMENTS

Section 6.01 Possession of Servicing Files.

The contents of each Servicing File related to a Non-Agency Mortgage Loan are and shall be held in trust by the Servicer for the benefit of the Owner as the owner thereof. The Servicer shall maintain in the Servicing File a hard or electronic copy, if available, of each Mortgage Loan Document received by the Owner or its designee and the originals or copies of documents not delivered to the Owner in the Servicer’s possession received during the term of this Agreement. The possession of the Servicing File by the Servicer is at the will of the Owner for the sole purpose of servicing the related Non-Agency Mortgage Loan, pursuant to this Agreement, and such retention and possession by the Servicer is in its capacity as Servicer only and at the election of the Owner. The Servicer shall release its custody of the contents of any Servicing File only in accordance with written instructions from the Owner, unless such release is required as incidental to the Servicer’s servicing of the Non-Agency Mortgage Loans pursuant to this Agreement.

The Servicer shall be responsible for maintaining, and shall maintain, a complete set of books and records for each Non-Agency Mortgage Loan which shall be marked clearly to reflect the ownership of each Non-Agency Mortgage Loan by the Owner. In particular, the Servicer shall maintain in its possession, available for inspection by the Owner, and shall deliver to the Owner if so directed by the Owner, upon written demand, evidence of compliance with all federal, state and local laws, rules and regulations, and requirements of Fannie Mae, including but not limited to documentation as to the method used in determining the applicability of the provisions of the National Flood Insurance Act of 1968 or Flood Disaster Prevention Act of 1973, as amended, to the related Mortgaged Property, documentation evidencing insurance coverage and eligibility of any condominium project for approval by Fannie Mae and periodic inspection reports as required by Section 4.13, as applicable.

The Servicer shall keep at its servicing office books and records in which, subject to such reasonable regulations as it may prescribe, the Servicer shall note transfers of Mortgage Loans.

Section 6.02 Annual Statement as to Compliance.

(a) So long as any Mortgage Loans are being serviced hereunder, or were serviced hereunder during the prior calendar year, the Servicer shall, at its own expense, deliver to the Owner, on or before March 28th of each year (but in no event later than the next to the last Business Day of such month), a statement of compliance addressed to the Owner and signed by a Servicing Officer, to the effect that (i) a review of the Servicer’s servicing activities during the immediately preceding calendar year (or applicable portion thereof) and of its performance under the servicing provisions of this Agreement during such period has been made under such officer’s supervision, and (ii) to the best of such officer’s knowledge, based on such review, the Servicer has fulfilled all of its servicing obligations under this Agreement in all material respects throughout such calendar year (or applicable portion thereof) or, if there has been a failure to fulfill any such obligation in any material respect, specifically identifying each such failure known to such officer, the nature and the status thereof.

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Section 6.03 Annual Independent Public Accountants’ Servicing Report.

(a) So long as any Mortgage Loans are being serviced hereunder, or were serviced hereunder during the prior calendar year, the Servicer shall, at its own expense, deliver to the Owner, on or before March 28th of each year (but in no event later than the next to the last Business Day of such month), a report of a registered public accounting firm stating that (i) it has obtained a letter of representation regarding certain matters from the management of the Servicer which includes an assertion that the Servicer has complied with certain minimum residential mortgage loan servicing standards, identified in the Uniform Single Attestation Program for Mortgage Bankers established by the Mortgage Bankers Association of America, with respect to the servicing of residential mortgage loans during the most recently completed fiscal year and (ii) on the basis of an examination conducted by such firm in accordance with standards established by the American Institute of Certified Public Accountants, such representation is fairly stated in all material respects, subject to such exceptions and other qualifications that may be appropriate. In rendering its report such firm may rely, as to matters relating to the direct servicing of residential mortgage loans by Subservicers, upon comparable reports of firms of independent certified public accountants rendered on the basis of examinations conducted in accordance with the same standards (rendered within one year of such report) with respect to those Subservicers.

Section 6.04 Provision of Information.

The Servicer shall furnish to the Owner all reports required hereunder, and such other periodic, special, or other reports or information, whether or not provided for herein, as shall be necessary, reasonable, or appropriate with respect to the Owner or the purposes of this Agreement to the extent such reports or information are readily accessible to the Servicer without undue expense. All such reports or information shall be provided by and in accordance with all reasonable instructions and directions which the Owner may give and to the extent the Servicer incurs any material cost or expense related to this Section 6.04 not otherwise required to be incurred pursuant to this Agreement, such expense shall be at the sole cost and expense of the Owner.

Section 6.05 Right to Examine Servicer Records.

The Owner shall have the right during the term of this Agreement to examine and audit any and all of the books, records, or other information of the Servicer, whether held by the Servicer or by another on its behalf, with respect to or concerning this Agreement or the Mortgage Loans, during normal business hours, upon reasonable advance notice and at the sole cost and expense of the Owner; provided, however, that unless otherwise required by law, the Servicer shall not be required to provide access to such information if the provision thereof would violate any law or legal obligation of the Servicer, or would compromise the Servicer’s information disclosure and security policies, including the legal right to privacy of any Mortgagor.

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Section 6.06 Compliance with Gramm-Leach-Bliley Act of 1999.

With respect to each Mortgage Loan and the related Mortgagor, each party shall comply with Title V of the Gramm-Leach-Bliley Act of 1999 and all applicable regulations and guidelines promulgated thereunder, and shall provide all notices required of the party thereunder.

Section 6.07 Reserved.

Section 6.08 Financial Statements; Servicing Facilities.

In connection with marketing the Mortgage Loans or a proposed Reconstitution, the Owner shall make available to a prospective purchaser audited financial statements of the consolidated group that includes the Servicer for the most recently completed three fiscal years for which such statements are available, as well as a “Consolidated Statement of Condition” at the end of the last two fiscal years for which such statements are available covered by any “Consolidated Statement of Operations.” The Servicer also shall make available any comparable interim statements to the extent any such statements have been prepared by or on behalf of the corporate group that includes the Servicer (and are available upon request to the public at large). The Servicer shall furnish to the Owner or a prospective purchaser copies of the statements specified above.

The Servicer shall make available to the Owner or any prospective purchaser a knowledgeable representative for the purpose of answering questions respecting recent developments affecting the Servicer or the financial statements of the corporate group that includes the Servicer, and to permit any prospective purchaser (upon reasonable notice) to inspect the Servicer’s servicing facilities (no more than 6 times per year unless mutually agreed to between the parties) for the purpose of satisfying such prospective purchaser that the Servicer has the ability to service the Mortgage Loans as provided in this Agreement provided that such access is necessary, reasonable, or appropriate with respect to the Owner or the purposes of this Agreement to the extent such access or information are readily accessible to the Servicer without undue expense.

Section 6.09 Use of Subservicers.

It shall not be necessary for the Servicer to seek the consent of the Owner to the utilization of any Subservicer, including an Affiliate acting as a Subservicer; provided, however, that the Servicer delivers any notices or obtains any consents or approvals otherwise required by the applicable Guide. The Servicer shall be responsible for obtaining from each Subservicer and delivering to the Owner any servicer compliance statement required to be delivered by such Subservicer under Section 6.02 and any assessment of compliance and attestation required to be delivered by such Subservicer under Section 6.03.

Section 6.10 Mortgage Loans Held by Wholly Owned Subsidiaries of Owner.

The Servicer acknowledges that certain Mortgage Loans may be held by the Owner through one or more of its wholly owned subsidiaries. The Servicer shall service such Mortgage Loans in accordance with the provisions of this Agreement in the same manner as it services Mortgage Loans held directly by the Owner. The Servicing Fee and Other Fees in

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respect of Mortgage Loans held through wholly owned subsidiaries of the Owner may, at the option of the Owner, be paid directly by the Owner or by the subsidiary holding the related Mortgage Loan.

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ARTICLE VII

SERVICING COMPENSATION

Section 7.01 Servicing Compensation.

As consideration for servicing the Mortgage Loans, the Owner shall pay the Servicer the applicable Servicing Fee and Other Fees the Servicer is entitled to each month. The obligation of the Owner to pay the Servicing Fee and Other Fees with regard to the Mortgage Loans shall be irrespective of Monthly Payments collected by the Servicer on the Mortgage Loans (but this shall not be construed to limit the effect of any provision hereof, including Exhibit 9, for the calculation of any fee by reference to one or more specified amounts collected on or in respect of the Mortgage Loans). Notwithstanding anything in this Agreement to the contrary, the Servicer shall not be entitled to collect more than one of any of the following Other Fees within any twelve month period: Liquidation Fee, Reperformance Fee and Modification Fee.

The Servicer shall deliver to the Owner on the tenth (10th) calendar day of each month or, if the 10th day is not a Business Day, the next succeeding Business Day, an invoice setting forth the Servicing Fees and Other Fees, including accrued and unpaid Servicing Fees and Other Fees, with respect to the Mortgage Loans serviced by the Servicer during the preceding calendar month, and the Owner shall pay such invoice via wire transfer (in accordance with written instructions to be provided by the Servicer) no later than the last day of the calendar month in which such invoice was delivered. With respect to amounts due to the Servicer that remain unpaid after the Remittance Date pursuant to this Section, interest shall accrue at an annual rate equal to the Prime Rate, adjusted as of the date of each change, plus one percentage point, but in no event greater than the maximum amount permitted by applicable law. Such interest shall accrue from and including the day following the Business Day on which such payment was due to and including the Business Day when such payment is made and shall be payable on the date when such payment is so made. The Servicer shall be entitled to deduct such unpaid amounts due to Servicer on the Remittance Date following the Remittance Date that such amounts were due if Owner has not already made payment.

Additional servicing compensation in the form of Ancillary Income shall be retained by the Servicer.

The Servicer shall be required to pay all expenses incurred by it in connection with its servicing activities hereunder and shall not be entitled to reimbursement thereof except as specifically provided for herein.

Notwithstanding anything set forth in this section related to Ancillary Income, the Servicer shall not collect from the Mortgagor, pass through as an advance or as a liquidation expense any charges other than bona fide fees, which fees must be in compliance with local law. Servicer cannot add on a processing, or review fee or any additional fee, mark up or otherwise directly make a profit on or from services or activities rendered by a third party or affiliate (examples include but not limited to: letters and notices, force placed insurance, BPOs, appraisals, inspections, property preservation costs). The Servicer may collect any third party fees which are charged in accordance with Accepted Servicing Practices. In no event shall Servicer retain the Prepayment Penalties.

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In the event of a dispute arising from any act or omission by the Servicer or the Owner hereunder during the course of this Agreement, the Servicer and the Owner shall use reasonable efforts to cooperate with each other in good faith to resolve such dispute within a time period that is reasonable under the circumstances surrounding the dispute. Except in the case of a monetary error, the Owner and the Servicer shall use reasonable efforts to cooperate with each other in good faith to resolve the dispute within thirty (30) days of a formal notice from either party. In the case of a monetary error, the party holding the amounts due the other party shall use reasonable efforts to submit the amount in error within ten (10) Business Days following the discovery of the error. With respect to amounts due a party after the tenth (10th) Business Day following the discovery of the error, interest shall be accrue on such late payment at an annual rate equal to the federal funds rate as is publicly announced from time to time, plus three hundred basis points (3.00%), but in no event greater than the maximum amount permitted by applicable law. Such interest shall accrue from and including the day following the Business Day on which such payment was due to and including the Business Day when such late payment is made and shall be payable on the date when such late payment is so made.

Notwithstanding anything to the contrary contained herein, upon the written request (a “Fee Negotiation Request”) of the Owner or the Servicer following a determination by the Owner or the Servicer that the rates of compensation payable to the Servicer hereunder differ materially from market rates of compensation for services comparable to those provided hereunder, which request includes a proposal for revised rates of compensation hereunder, the parties hereto shall negotiate in good faith to amend the provisions of this Agreement relating to the compensation of the Servicer in order to cause such compensation to be materially consistent with market rates of compensation for services comparable to those provided hereunder (a “Fee Amendment”); provided, however, that no such request shall be made until the second anniversary of the effective date of this Agreement, after which time each party may make such request (i) once with respect to fees to be paid during the remainder of the Initial Term, which request shall be made prior to the expiration of the Initial Term, and (ii) once with respect to fees to be paid during any Automatic Renewal Term, which request shall be made at least 210 days prior to the start of such Automatic Renewal Term. If the parties are unable to reach agreement on the terms of a Fee Amendment within thirty (30) days of the date of delivery of the relevant Fee Negotiation Request, then the terms of such Fee Amendment shall be determined by final and binding arbitration as described below.

All disputes, differences and controversies of the Owner or the Servicer relating to a Fee Amendment (individually, a “Dispute” and, collectively, “Disputes”) shall be resolved by final and binding arbitration administered by the American Arbitration Association (“AAA”) under its Commercial Arbitration Rules, subject to the following provisions:

(a) Following the delivery of a written demand for arbitration by either the Owner or the Servicer, each party shall choose one (1) arbitrator within ten (10) Business Days after the date of such written demand and the two chosen arbitrators shall mutually, within ten (10) Business Days after selection select a third (3rd) arbitrator (each, an “Arbitrator” and together, the “Arbitrators”), each of whom shall be a retired judge selected from a roster of

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arbitrators provided by the AAA. If the third (3rd) Arbitrator is not selected within fifteen (15) Business Days after delivery of the written demand for arbitration (or such other time period as the Owner and the Servicer may agree), the Owner and the Servicer shall promptly request that the commercial panel of the AAA select an independent Arbitrator meeting such criteria.

(b) The rules of arbitration shall be the Commercial Rules of the American Arbitration Association; provided, however, that notwithstanding any provisions of the Commercial Arbitration Rules to the contrary, unless otherwise mutually agreed to by the Owner and the Servicer, the sole discovery available to each party shall be its right to conduct up to two (2) non-expert depositions of no more than three (3) hours of testimony each.

(c) The Arbitrators shall render a decision by majority decision within three (3) months after the date of appointment, unless the Owner and the Servicer agree to extend such time. The decision shall be final and binding upon the Owner and the Servicer; provided, however, that such decision shall not restrict either the Owner or the Servicer from terminating this Agreement pursuant to the terms hereof.

(d) Each party shall pay its own expenses in connection with the resolution of Disputes, including attorneys’ fees, unless determined otherwise by the Arbitrator.

(e) The Owner and the Servicer agree that the existence, conduct and content of any arbitration pursuant to this Section 7.01 shall be kept confidential and neither the Owner nor the Servicer shall disclose to any Person any information about such arbitration, except in connection with such arbitration or as may be required by law or by any regulatory authority (or any exchange on which such party’s securities are listed) or for financial reporting purposes in such party’s financial statements.

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ARTICLE VIII

TERMINATION

Section 8.01 Termination.

(a) This Agreement shall continue in full force and effect until terminated in accordance with the provisions of this paragraph. This Agreement shall have an initial term of four years from the date of the Amended and Restated Flow Servicing Agreement dated as of February 1, 2013 (the “Initial Term”). After the Initial Term, this Agreement shall be deemed renewed automatically every 18 months for an additional 18 month period (an “Automatic Renewal Term”) unless the Owner or the Servicer terminates this Agreement upon the expiration of the Initial Term or any Automatic Renewal Term and upon at least 180 days’ prior written notice to the Owner or the Servicer, as applicable. If (i) either of the Mortgage Banking and Warehouse Servicing Agreement, between the Servicer and PennyMac Corp., dated as of February 1, 2013 (the “MBWS Agreement”), or the MSR Recapture Agreement is terminated by PennyMac Corp. without cause as provided in each such agreement or (ii) the Management Agreement is terminated by PennyMac REIT without cause as provided in such agreement, the Servicer shall have the right to terminate this Agreement without cause upon notice to the Owner. If (i) either of the MBWS Agreement or the MSR Recapture Agreement is terminated by PennyMac Loan Services without cause or (ii) the Management Agreement is terminated by PennyMac REIT Manager as provided in such agreement, the Owner shall have the right to terminate this Agreement without cause upon notice to the Servicer. This Agreement shall also terminate:

(i) in whole with respect to all of the Mortgage Loans and REO Properties, without the payment of any Service Release Fee or other termination fee, upon the earlier of (A) the termination of the Servicer at the election of the Owner following an Event of Default pursuant to Section 11.01 or (B) the termination of the Management Agreement;

(ii) in whole with respect to all of the Mortgage Loans and REO Properties, at the election of the Servicer, if, after thirty (30) days’ written notice thereof by Servicer, (A) the Owner fails to remit any compensation due to the Servicer within the time periods set forth in this Agreement or (B) the Owner fails to perform any material obligations of the Owner hereunder;

(iii) in part with respect to one or more individual Mortgage Loans, at the election of the Owner, in connection with a Reconstitution involving such Mortgage Loans, subject to the payment of the applicable Service Release Fees;

(iv) in part with respect to an individual Mortgage Loan at the election of the Owner, and subject to the payment of the applicable Service Release Fee, if (a) such Mortgage Loan becomes delinquent for a period of one hundred and twenty (120) days or more (a “Delinquent Mortgage Loan”) or (B) the Mortgaged Property securing such Mortgage Loan becomes an REO Property; provided, however, upon such termination, the Owner shall pay to the Servicer any related

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unpaid Servicing Fee, any related outstanding and unreimbursed Servicing Advances and any other outstanding and unreimbursed fees and costs of the Servicer relating to such Delinquent Mortgage Loan or REO Property for which the Servicer would be entitled to reimbursement from the Owner;

(v) in whole, at the election of the Owner, if the Servicer in its capacity as “Servicer” under the MSR Recapture Agreement fails to duly observe or perform in any material respect any covenant or agreement on the part of the Servicer set forth in the MSR Recapture Agreement that continues unremedied for a period of thirty (30) days after the date on which notice of such failure, requiring the same to be remedied, is given to the Servicer by the “MSR Owner” under the MSR Recapture Agreement; provided, however, that, with respect to any such failure that is susceptible to cure but not curable within such 30-day period, the Servicer shall have an additional cure period of thirty (30) days to effect such cure so long as the Servicer has commenced to cure such failure within the initial 30-day period, the Servicer is diligently pursuing a full cure and the Servicer has provided evidence of such curability and such diligent pursuit that is reasonably satisfactory to the Owner; and

(vi) in whole, at the election of the Servicer, if the “MSR Owner” under the MSR Recapture Agreement fails to duly observe or perform in any material respect any covenant or agreement on the part of such “MSR Owner” set forth in the MSR Recapture Agreement that continues unremedied for a period of thirty (30) days after the date on which notice of such failure, requiring the same to be remedied, is given to such “MSR Owner” by the Servicer in its capacity as “Servicer” under the MSR Recapture Agreement; provided, however, that, with respect to any such failure that is susceptible to cure but not curable within such 30-day period, such “MSR Owner” shall have an additional cure period of thirty (30) days to effect such cure so long as such “MSR Owner” has commenced to cure such failure within the initial 30-day period, such “MSR Owner” is diligently pursuing a full cure and such “MSR Owner” has provided evidence of such curability and such diligent pursuit that is reasonably satisfactory to the Servicer.

(b) In the event that the Servicer’s duties, responsibilities and liabilities under this Agreement are terminated pursuant to Section 8.01(a), the Servicer shall discharge such duties and responsibilities during the period from the date it acquires notice or knowledge of such termination until the Outbound Transfer Date, with the same degree of diligence and prudence which it is obligated to exercise under this Agreement, and shall take no action whatsoever that might impair or prejudice the rights or financial condition of its successor. Following any such termination, the Owner shall act diligently to appoint a successor servicer. No termination pursuant to Section 8.01(a) shall become effective until a successor servicer is appointed by the Owner. No termination pursuant to Section 8.01(a) shall limit any indemnification obligations of the Servicer, which obligations shall survive such termination.

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Section 8.02 Outbound Transfer of Servicing.

On each Outbound Transfer Date or upon any termination of the Servicer as Servicer pursuant to Section 8.01 or resignation of the Servicer permitted under Section 9.03, the Owner or a successor servicer appointed by the Owner, shall assume all servicing responsibilities related to, and the Servicer shall cease all servicing responsibilities related to the Mortgage Loans. Any successor servicer shall have the right to negotiate a new Servicing Fee with the Owner.

Owner shall provide the Servicer not less than twenty (20) days’ prior written notice of the Outbound Transfer Date. Any Mortgage Loan service released by the Servicer shall be released on actual balances as of the Outbound Transfer Date. Upon receipt of such notification from Owner the Servicer shall, at its sole cost and expense, take such steps as may be necessary or appropriate to effectuate and evidence the transfer of the servicing of the related Mortgage Loans to the successor servicer, including but not limited to the following:

(a) Notice to Mortgagors. The Servicer shall mail to the Mortgagor of each related Mortgage Loan a letter advising such Mortgagor of the transfer of the servicing of the related Mortgage Loan to the Owner, or its designee, in accordance with RESPA; provided, however, such letters shall be in the form mutually agreed upon by the Owner and the Servicer prior to a pending transfer.

(b) Mortgage Loans in Foreclosure. The servicing with respect to Mortgage Loans in foreclosure on or before the related Outbound Transfer Date shall not be transferred from the Servicer to the Owner or the successor servicer, as the case may be, and such Mortgage Loans shall continue to be serviced by the Servicer pursuant to the terms of this Agreement. However, if the Owner so elects, the Owner may waive the provisions of this paragraph (a) and accept transfer of servicing of such Mortgage Loans and all amounts received by the Servicer thereunder.

(c) Servicing Advances. Subject to the limitations set forth in the definition of “Nonrecoverable Advances”, the Servicer shall be entitled to be reimbursed for all unreimbursed Servicing Advances and any other advances made by the Servicer pursuant to this Agreement with respect to any Mortgage Loan on the related Outbound Transfer Date, but only if the successor servicer after the related Outbound Transfer Date is not the Servicer or an Affiliate. In addition, the Owner shall cause the Servicer to be reimbursed for any accrued and unpaid Servicing Fees, unpaid Ancillary Income, Other Fees and for any trailing expenses representing Servicing Advances for which invoices are received by the Servicer after the Outbound Transfer Date. The Owner shall cause the Servicer to be reimbursed for such trailing expenses within five (5) Business Days of receipt of such invoice.

Anything to the contrary in this Section 8.02(c) notwithstanding, in the event that Servicer is terminated for cause as a result of the occurrence of an Event of Default under this Agreement, the payments required in this Section 8.02(c) shall be made in the amounts and at the times otherwise provided in this Agreement.

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(d) Notice to Taxing Authorities and Insurance Companies. The Servicer shall transmit to the applicable taxing authorities and insurance companies (including primary mortgage insurance policy insurers, if applicable) and/or agents, notification of the transfer of the servicing to the Owner, or its designee, and instructions to deliver all notices, tax bills and insurance statements, as the case may be, to the Owner from and after the related Outbound Transfer Date.

(e) Delivery of Servicing Records. The Servicer shall forward to the Owner, or its designee, all servicing records and the Servicing File in the Servicer’s possession relating to each related Mortgage Loan.

(f) Escrow Payments. The Servicer shall provide the Owner, or its designee, with immediately available funds by wire transfer in the amount of the net Escrow Payments and suspense balances and all loss draft balances associated with the related Mortgage Loans. The Servicer shall also provide the Owner with an accounting statement of Escrow Payments and suspense balances and loss draft balances sufficient to enable the Owner to reconcile the amount of such payment with the accounts of the Mortgage Loans. Additionally, the Servicer shall wire transfer to the Owner the amount of any agency, trustee or prepaid Mortgage Loan payments and all other similar amounts held by the Servicer.

(g) Payoffs and Assumptions. The Servicer shall provide to the Owner, or its designee, copies of all assumption and payoff statements generated by the Servicer on the related Mortgage Loans from the related Cut-off Date to the related Outbound Transfer Date.

(h) Mortgage Payments Received Prior to the Related Outbound Transfer Date. Prior to the related Outbound Transfer Date all payments received by the Servicer on each related Mortgage Loan shall be properly applied to the account of the particular Mortgagor.

(i) Mortgage Payments Received After Outbound Transfer Date. The amount of any related Monthly Payments received by the Servicer after the related Outbound Transfer Date shall be forwarded to the Owner or its designee within two (2) Business Days after the date of receipt. The Servicer shall notify the Owner or its designee of the particulars of the payment, which notification requirement shall be satisfied if the Servicer forwards with its payment sufficient information to permit appropriate processing of the payment by the Owner or its designee. The Servicer shall assume full responsibility for the necessary and appropriate legal application of such Monthly Payments received by the Servicer after the related Outbound Transfer Date with respect to related Mortgage Loans then in foreclosure or bankruptcy; provided, however, that for purposes of this Agreement, necessary and appropriate legal application of such Monthly Payments shall include, but not be limited to, endorsement of a Monthly Payment to the Owner with the particulars of the payment such as the account number, dollar amount, date received and any special Mortgagor application instructions and the Servicer shall comply with the foregoing requirements with respect to all Monthly Payments received by it.

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(j) Misapplied Payments. Misapplied payments shall be processed as follows:

(i) All parties shall cooperate in correcting misapplication errors;

(ii) The party receiving notice of a misapplied payment occurring prior to the related Outbound Transfer Date and discovered after the related Outbound Transfer Date shall immediately notify the other party;

(iii) If a misapplied payment which occurred prior to the related Outbound Transfer Date cannot be identified and said misapplied payment has resulted in a shortage in a Custodial Account or Escrow Account, and such misapplied payment was the direct result of the Servicer’s error, the Servicer shall be liable for the amount of such shortage. In such case, the Servicer shall reimburse the Owner for the amount of such shortage within thirty (30) days after receipt of written demand therefor from the Owner;

(iv) If a misapplied payment which occurred prior to the related Outbound Transfer Date has created an improper Purchase Price as the result of an inaccurate outstanding principal balance and such misapplied payment was the direct result of the Servicer’s error, a check shall be issued to the party shorted by the improper payment application within thirty (30) days after notice thereof by the other party; and

(v) Any check issued under the provisions of this Section 8.02(j) shall be accompanied by a statement indicating the Owner Mortgage Loan identification number and an explanation of the allocation of any such payments.

(k) Books and Records. The Servicer shall cause the books, records and accounts with respect to the related Mortgage Loans to be in accordance with all Accepted Servicing Practices on the related Outbound Transfer Date.

Without limiting the foregoing, the Servicer shall comply with all of the provisions of this Agreement to effect a complete transfer of the servicing with respect to the related Mortgage Loans on the related Outbound Transfer Date. This Agreement shall terminate with respect to the related Mortgage Loans on the related Outbound Transfer Date, except that Articles VI, VIII, IX, and XII, and Sections 13.14, 13.15, 13.16, 13.17 and 13.18 shall survive such termination.

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ARTICLE IX

INDEMNIFICATION AND ASSIGNMENT AND

OTHER MATTERS RELATED TO SERVICER

Section 9.01 Indemnification.

(a) The Servicer agrees to indemnify and hold the Owner and any successor servicer harmless from any liability, claim, loss or damage (including, without limitation, any reasonable legal fees, judgments or expenses relating to such liability, claim, loss or damage) to the Owner directly or indirectly resulting from the Servicer’s failure:

(i) to observe and perform any or all of the Servicer’s duties, obligations, covenants, agreements, warranties or representations contained in this Agreement; or

(ii) to comply with all applicable requirements with respect to the servicing of the Mortgage Loans as set forth herein.

The Servicer immediately shall notify the Owner if a claim is made by a third party with respect to this Agreement. For purposes of this Section 8.01(a), “Owner” shall mean the Person then acting as the Owner under this Agreement and any and all Persons who previously were “Owners” under this Agreement.

(b) The Owner agrees to indemnify and hold the Servicer harmless from any liability, claim, loss or damage (including without limitation, any reasonable legal fees, judgments or expenses relating to such liability, claim, loss or damage) to the Servicer (a) directly or indirectly resulting from the Owner’s failure to observe and perform any or all of the Owner’s duties, obligations, covenants, agreements, warranties or representations contained in this Agreement or (b) directly resulting from the Servicer taking any legal actions with respect to any Mortgage Loans and/or REO Properties in the name of the Servicer and without reference to the Owner, or (c) any act or omission on the part of any prior servicer or (d) directly resulting from any third party act or omission which occurred in connection with the origination, processing, funding or servicing of a mortgage loan; but, in each case set forth in clauses (a) - (d) above, only to the extent such loss does not result from the Servicer’s own gross negligence, bad faith or willful misconduct or failure of the Servicer (i) to observe and perform any or all of Servicer’s duties, obligations, covenants, agreements, warranties or representations contained in this Agreement; or (ii) to comply with all applicable requirements with respect to the servicing of the Mortgage Loans as set forth herein.

(c) If the indemnification provided for herein is unavailable or insufficient to hold harmless the indemnified party, then the indemnifying party agrees that it shall contribute to the amount paid or payable by such indemnified party as a result of any claims, losses, damages or liabilities uncured by such indemnified party in such proportion as is appropriate to reflect the relative fault of such indemnified party on the one hand and the indemnifying party on the other.

(d) The indemnifications provided for in this Section shall survive the termination of Servicing Agreement or the termination of any party to this Agreement.

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Section 9.02 Limitation on Liability of Servicer and Others.

Neither the Servicer nor any of the directors, officers, employees or agents of the Servicer shall be under any liability to the Owner for any action taken or for refraining from the taking of any action in good faith pursuant to this Agreement, or for errors in judgment, provided, however, that this provision shall not protect the Servicer or any such person against any breach of warranties or representations made herein, its own grossly negligent actions, or failure to perform its obligations in compliance with any standard of care set forth in this Agreement, or any liability which would otherwise be imposed by reason of any breach of the terms and conditions of this Agreement. The Servicer and any director, officer, employee or agent of the Servicer may rely in good faith on any document of any kind prima facie properly executed and submitted by any Person respecting any matters arising hereunder. The Servicer shall not be under any obligation to appear in, prosecute or defend any legal action which is not incidental to its duties to service the Mortgage Loans in accordance with this Agreement and which in its opinion may involve it in any expense or liability; provided, however, that the Servicer may undertake any such action which it may deem necessary or desirable in respect to this Agreement and the rights and duties of the parties hereto. In such event, the Servicer shall be entitled to reimbursement from the Owner of the reasonable legal expenses and costs of such action.

Section 9.03 Limitation on Resignation and Assignment by Servicer.

The Owner has entered into this Agreement with the Servicer and subsequent purchasers will purchase the Mortgage Loans in reliance upon the independent status of the Servicer, and the representations as to the adequacy of its servicing facilities, plant, personnel, records and procedures, its integrity, reputation and financial standing, and the continuance thereof. The Servicer shall not assign this Agreement or the servicing hereunder or delegate its rights or duties hereunder or any portion hereof (except as provided in the next succeeding paragraph or Section 6.09) or sell or otherwise dispose of all or substantially all of its property or assets without the prior written consent of the Owner, which consent shall be granted or withheld in the reasonable discretion of the Owner.

The Servicer may, without the consent of the Owner, retain third party contractors to perform certain servicing and loan administration functions, including without limitation, hazard insurance administration, tax payment and administration, flood certification and administration, collection services and similar functions; provided, however, that the retention of such contractors by Servicer shall not limit the obligation of the Servicer to service the Mortgage Loans pursuant to the terms and conditions of this Agreement.

The Servicer shall not resign from the obligations and duties hereby imposed on it except by mutual consent of the Servicer and the Owner or upon the determination that its duties hereunder are no longer permissible under applicable law and such incapacity cannot be cured by the Servicer. Any such determination permitting the resignation of the Servicer shall be evidenced by an Opinion of Counsel to such effect delivered to the Owner which Opinion of Counsel shall be in form and substance acceptable to the Owner. No such resignation shall become effective until a successor shall have assumed the Servicer’s responsibilities and obligations hereunder in the manner provided in Section 8.02.

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Section 9.04 Assignment by Owner.

The Owner shall have the right, to assign, in whole or in part, its interest under this Agreement with respect to some or all of the Mortgage Loans, and designate any Person to exercise all or any of the rights of the Owner hereunder.

Section 9.05 Merger or Consolidation of the Servicer.

The Servicer will keep in full effect its existence, rights and franchises as a limited partnership under the laws of the state of its filing except as permitted herein, and will obtain and preserve its qualification to do business as a foreign corporation in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement, or any of the Mortgage Loans and to perform its duties under this Agreement. Any Person into which the Servicer may be merged or consolidated, or any corporation resulting from any merger, conversion or consolidation (including by means of the sale of all or substantially all of the Servicer’s assets to such Person) to which the Servicer shall be a party, or any Person succeeding to the substantially all of the servicing business (whether alone or together with one or more other businesses of the Servicer), shall be the successor of the Servicer hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding.

Section 9.06 Additional Activities of the Servicer.

Subject to the restrictions set forth in the MBWS Agreement, the Servicer and its Affiliates shall be entitled to engage in any business or transaction of any kind or nature, including the issuance of mortgage-backed securities and performing monitoring, administrative or servicing activities of any kind for the benefit of any other Person, including (i) acting as servicer or subservicer of residential mortgage loans for government-sponsored entities and other government-related entities under arrangements not governed by this Agreement and (ii) acting as a servicer or subservicer for distressed residential mortgage loans, and otherwise conducting special servicing activities relating to residential mortgage loans or real estate acquired in respect thereof, for itself or other Persons. The preceding statement shall not be construed to limit the effect of any express restriction or limitation that may be set forth in the another provision of this Agreement.

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ARTICLE X

REPRESENTATIONS AND WARRANTIES

Section 10.01 Representations and Warranties of the Owner.

(a) As of the date hereof and on each date on which a Mortgage Loan becomes subject to the terms of this Agreement, the Owner represents and warrants to, and covenants and agrees with, the Servicer as follows:

(i) Due Organization and Good Standing. The Owner is duly organized, validly existing and in good standing as a limited partnership under the laws of the State of Delaware and has the power and authority to own its assets and to transact the business in which it is currently engaged.

(ii) No Violation of Organizational Documents or Agreements. The execution and delivery of this Agreement by the Owner, and the performance and compliance with the terms of this Agreement by the Owner, will not violate the Owner’s organizational documents or constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or result in the breach of, any material agreement or other instrument to which the Owner is a party or which is applicable to it or any of its assets.

(iii) Full Power and Authority. The Owner has the full power and authority to enter into and consummate all transactions contemplated by this Agreement, has duly authorized the execution, delivery and performance of this Agreement, and has duly executed and delivered this Agreement.

(iv) Binding Obligation. This Agreement, assuming due authorization, execution and delivery by the other parties hereto, constitutes a valid, legal and binding obligation of the Owner, enforceable against the Owner in accordance with the terms hereof, subject to (A) applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors’ rights generally, and (B) general principles of equity, regardless of whether such enforcement is considered in a proceeding in equity or at law.

(v) No Violation of Law, Regulation or Order. The Owner is not in violation of, and its execution and delivery of this Agreement and its performance and compliance with the terms of this Agreement will not constitute a violation of, any law, any order or decree of any court or arbiter, or, to the Owner’s knowledge, any order, regulation or demand of any federal, state or local governmental or regulatory authority, which violation, in the Owner’s good faith and reasonable judgment, is likely to affect materially and adversely either the ability of the Owner to perform its obligations under this Agreement or the financial condition of the Owner.

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(vi) No Material Litigation. No litigation is pending or, to the best of the Owner’s knowledge, threatened against the Owner that, if determined adversely to the Owner, would prohibit the Owner from entering into this Agreement or that, in the Owner’s good faith and reasonable judgment, is likely to materially and adversely affect either the ability of the Owner to perform its obligations under this Agreement or the financial condition of the Owner.

(vii) No Consent Required. Any consent, approval, authorization or order of any court or governmental agency or body required under federal or state law for the execution, delivery and performance by the Owner of or compliance by the Owner with this Agreement or the consummation of the transactions contemplated by this Agreement has been obtained and is effective except where the lack of consent, approval, authorization or order would not have a material adverse effect on the performance by the Owner under this Agreement.

(b) The representations and warranties of the Owner set forth in Section 9.02(a) shall survive the execution and delivery of this Agreement and each date on which a Mortgage Loan becomes subject to the terms of this Agreement. Upon discovery by the Owner of any breach of any of the foregoing representations and warranties, the Owner shall give prompt written notice thereof to the Servicer.

Section 10.02 Representations and Warranties of the Servicer.

(a) As of the date hereof and on each date on which a Mortgage Loan becomes subject to the terms of this Agreement, the Servicer represents and warrants to, and covenants and agrees with, the Owner as follows:

(i) Due Organization and Good Standing. The Servicer is duly organized, validly existing and in good standing a limited liability company under the laws of the State of Delaware and has the power and authority to own its assets and to transact the business in which it is currently engaged, and the Servicer is in compliance with the laws of each state or other jurisdiction in which any Mortgaged Property is located to the extent necessary to perform its obligations under this Agreement.

(ii) No Violation of Organizational Documents or Agreements. The execution and delivery of this Agreement by the Servicer, and the performance and compliance with the terms of this Agreement by the Servicer, will not violate the Servicer’s organizational documents or constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or result in the breach of, any material agreement or other instrument to which the Servicer is a party or which is applicable to it or any of its assets.

(iii) Full Power and Authority. The Servicer has the full power and authority to enter into and consummate all transactions contemplated by this Agreement, has duly authorized the execution, delivery and performance of this Agreement, and has duly executed and delivered this Agreement.

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(iv) Binding Obligation. This Agreement, assuming due authorization, execution and delivery by the other parties hereto, constitutes a valid, legal and binding obligation of the Servicer, enforceable against the Servicer in accordance with the terms hereof, subject to (A) applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors’ rights generally, and (B) general principles of equity, regardless of whether such enforcement is considered in a proceeding in equity or at law.

(v) No Violation of Law, Regulation or Order. The Servicer is not in violation of, and its execution and delivery of this Agreement and its performance and compliance with the terms of this Agreement will not constitute a violation of, any law, any order or decree of any court or arbiter, or, to the Servicer’s knowledge, any order, regulation or demand of any federal, state or local governmental or regulatory authority, which violation, in the Servicer’s good faith and reasonable judgment, is likely to affect materially and adversely either the ability of the Servicer to perform its obligations under this Agreement or the financial condition of the Servicer.

(vi) No Material Litigation. No litigation is pending or, to the best of the Servicer’s knowledge, threatened against the Servicer that, if determined adversely to the Servicer, would prohibit the Servicer from entering into this Agreement or that, individually or in the aggregate, in the Servicer’s good faith and reasonable judgment, is likely to materially and adversely affect either the ability of the Servicer to perform its obligations under this Agreement or the financial condition of the Servicer.

(vii) No Consent Required. Any consent, approval, authorization or order of any court or governmental agency or body required under federal or state law for the execution, delivery and performance by the Servicer of or compliance by the Servicer with this Agreement or the consummation of the transactions contemplated by this Agreement has been obtained and is effective except where the lack of consent, approval, authorization or order would not have a material adverse effect on the performance by the Servicer under this Agreement.

(viii) Ordinary Course of Business. The consummation of the transactions contemplated by this Agreement are in the ordinary course of business of the Servicer.

(ix) Able to Perform. The Servicer does not believe, nor does it have any reason or cause to believe, that it cannot perform, each and every covenant contained in this Agreement.

(x) Fidelity Bond and Errors and Omissions Coverage. The Fidelity Bond and an Errors and Omissions Insurance Policy required pursuant to Section 4.12 of this Agreement are in effect.

(xi) No Untrue or Misleading Information. No statement, report or other document relating to the Servicer furnished or to be furnished by the Servicer pursuant to this Agreement or in connection with the transactions contemplated hereby contains any untrue statement of material fact or omits to state a material fact necessary to make the statements contained therein not misleading.

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(xii) MERS Membership. The Servicer is a member of MERS in good standing.

(b) The representations and warranties of the Servicer set forth in Section 9.02(a) shall survive the execution and delivery of this Agreement and each date on which a Mortgage Loan becomes subject to the terms of this Agreement. Upon discovery by the Servicer of any breach of any of the foregoing representations and warranties, the Servicer shall give prompt written notice thereof to the Owner.

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ARTICLE XI

DEFAULT

Section 11.01 Events of Default.

(a) The following shall constitute an Event of Default under this Agreement on the part of the Servicer:

(i) any failure by the Servicer to remit to the Owner (or as otherwise directed by the Owner) any payment required to be made under the terms of this Agreement which continues unremedied for a period of five (5) Business Days after the date upon which notice of such failure is given to the Servicer, requiring the same to be remedied, shall have been given to the Servicer by the Owner; or

(ii) the failure by the Servicer duly to observe or perform in any material respect any other covenant or agreement on the part of the Servicer set forth in this Agreement that continues unremedied for a period of thirty (30) days (except that such number of days shall be fifteen (15) in the case of a failure to pay any premium for any insurance policy under this Agreement) after the date on which notice of such failure, requiring the same to be remedied, is given to the Servicer by the Owner; provided, however, that, with respect to any such failure that is susceptible to cure but not curable within such 30-day or 15-day period, the Servicer shall have an additional cure period of thirty (30) days to effect such cure so long as the Servicer has commenced to cure such failure within the initial 30-day period, the Servicer is diligently pursuing a full cure and the Servicer has provided evidence of such curability and such diligent pursuit that is reasonably satisfactory to the Owner; or

(iii) any breach of any representation or warranty on the part of the Servicer set forth in this Agreement that continues unremedied for a period of thirty (30) days after the date on which notice of such breach, requiring the same to be remedied, is given to the Servicer by the Owner; provided, however, that, with respect to any such breach that is susceptible to cure but not curable within such 30-day period, the Servicer shall have an additional cure period of thirty (30) days to effect such cure so long as the Servicer has commenced to cure such failure within the initial 30-day period, the Servicer is diligently pursuing a full cure and the Servicer has provided evidence of such curability and such diligent pursuit that is reasonably satisfactory to the Owner; or

(iv) a decree or order of a court or agency or supervisory authority having jurisdiction for the appointment of a conservator or receiver or liquidator in any insolvency, bankruptcy, readjustment of debt, marshaling of assets and liabilities or similar proceedings, or for the winding up or liquidation of its affairs, shall have been entered against the Servicer and such decree or order shall have remained in force undischarged or unstayed for a period of 60 days; or

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(v) the Servicer shall consent to the appointment of a conservator or receiver or liquidator in any insolvency, bankruptcy, readjustment of debt, marshaling of assets and liabilities or similar proceedings of or relating to the Servicer or of or relating to all or substantially all of its property; or

(vi) the Servicer shall admit in writing its inability to pay its debts generally as they become due, file a petition to take advantage of any applicable insolvency or reorganization statute, make an assignment for the benefit of its creditors, or voluntarily suspend payment of its obligations; or

(vii) the Servicer fails to maintain its license to do business or service residential mortgage loans in any jurisdiction where the Mortgaged Properties are located for more than ninety (90) days after receiving notice from any Person thereof, provided that such failure shall not constitute an Event of Default if, prior to the expiration of such ninety (90) day period, that Servicer transfers the affected Mortgaged Properties to one or more Subservicers that satisfy the licensing requirements for the jurisdiction where such Mortgaged Properties are located;

(viii) without the prior consent of the Owner or as expressly permitted or required by the other provisions of this Agreement, the Servicer attempts to assign this Agreement or its right to servicing compensation hereunder, or to delegate its duties hereunder, in each case whether in whole or in part, or the Servicer sells or otherwise disposes of all or substantially all of its property or assets; or

(ix) the Servicer or any Subservicer fails to deliver any information, report, certification, accountants’ letter or other material when and as required under Section 4.02, Section 4.03 or Section 4.06 and such failure continues unremedied for three Business Days after receipt by the Servicer and (if applicable) such Subservicer of written notice of such failure from the Owner.

In each and every such case, so long as an Event of Default shall not have been remedied, in addition to whatsoever rights the Owner may have at law or equity to damages, including injunctive relief and specific performance, the Owner, by notice in writing to the Servicer, may terminate without compensation all the rights and obligations of the Servicer under this Agreement and in and to the Mortgage Loans and the proceeds thereof.

(b) In case one or more Events of Default by Servicer occur and shall not have been remedied, the Owner, by notice in writing to Servicer shall be entitled, in addition to whatever rights the Owner may have at law or equity to damages, including injunctive relieve and specific performance, to terminate all the rights and obligations of Servicer under this Agreement and in and to the Mortgage Loans and the proceeds thereof, by notice in writing to the Servicer and without payment of any Service Release Fees or other compensation; provided, however, that the Servicer shall continue to be obligated to pay and entitled to receive all amounts accrued or owing by or to it under this Agreement on or prior to the date of such termination, whether in respect of Servicing Fees, Servicing Advances or otherwise and such amounts shall be due and payable at the times and in the manner as if the Servicer were not

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terminated. Upon receipt by the Servicer of such written notice, all authority and power of the Servicer under this Agreement, whether with respect to the Mortgage Loans or otherwise, shall pass to and be vested in the successor appointed pursuant to Section 8.02. Upon written request from the Owner, the Servicer shall prepare, execute and deliver any and all documents and other instruments, place in such successor’s possession all Mortgage Files to the extent initially provided to the Servicer, and do or accomplish all other acts or things necessary or appropriate to effect the purposes of such notice of termination, whether to complete the transfer and endorsement or assignment of the Mortgage Loans and related documents, or otherwise, at the Servicer’s sole expense or as otherwise provided under Accepted Servicing Practices. The Servicer agrees to cooperate with the Owner and such successor in effecting the termination of the Servicer’s responsibilities and rights hereunder, including, without limitation, the transfer to such successor for administration by it of all cash amounts which shall at the time be credited by the Servicer to the Custodial Account or Escrow Account or thereafter received with respect to the Mortgage Loans.

Section 11.02 Waiver of Defaults.

The Owner may waive any default by the Servicer in the performance of its obligations hereunder and its consequences. Upon any such waiver of a default, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been remedied for every purpose of this Agreement. No such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon except to the extent expressly so waived.

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ARTICLE XII

RECONSTITUTIONS

Section 12.01 Cooperation of Servicer with a Reconstitution.

(a) The Servicer and the Owner agree that with respect to some or all of the Mortgage Loans, on one or more dates (each a “Reconstitution Date”), at the Owner’s sole option, the Owner may effect a sale (each, a “Reconstitution”) of some or all of the Mortgage Loans then subject to this Agreement, without recourse, to:

(i) Fannie Mae or Freddie Mac in one or more Whole Loan Transfers;

(ii) one or more other third-party purchasers in one or more Whole Loan Transfers;

(iii) one or more trusts or other entities to be formed as part of one or more Private Securitization Transactions; or

(iv) one or more trusts or other entities to be formed as part of one or more Public Securitization Transactions.

(b) With respect to each Whole Loan Transfer, Private Securitization Transaction or Public Securitization Transaction, as the case may be, entered into by the Owner, the Servicer shall:

(i) upon request of the Owner, service the Mortgage Loans included in such Reconstitution pursuant to a security servicing agreement or other agreement;

(ii) if the Servicer will continue servicing the Mortgage Loans included in the Reconstitution, provide as applicable:

(A) information pertaining to the Servicer of the type and scope customarily included in offering documents for residential mortgage-backed securities transactions involving single or multiple loan originators including information regarding financial condition and mortgage loan delinquency, foreclosure and loss experience or other information as is otherwise reasonably requested by the Owner, and to deliver to the Owner any non-public, unaudited financial information, in which case the Owner shall bear the cost of having such information audited by certified public accountants if the Owner desires such an audit, or as is otherwise reasonably requested by the Owner and which the Servicer is capable of providing without unreasonable effort or expense (collectively “Servicer Information”), and to indemnify the Owner and its affiliates for material misstatements or omissions contained in the Servicer Information; provided, however, Owner shall indemnify and hold harmless Servicer and its affiliates for material misstatements or omissions contained in all other information in any offering document, other than Servicer Information; and

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(B) such opinions of counsel, letters from auditors, and certificates of public officials or officers of Servicer as are reasonably believed necessary by the trustee, any Rating Agency or the Owner, as the case may be, in connection with such Private Securitization Transaction or Public Securitization Transaction. The Owner shall pay all third party costs associated with the preparation of the information described in clause (ii)(A) above and the delivery of any opinions (other than opinions by in-house counsel), letters or certificates described in this clause (ii)(B).

(iii) if the Servicer will continue servicing the Mortgage Loans included in the Reconstitution, to negotiate and execute one or more custodial agreements among the Owner, the Servicer and a third party custodian/trustee which is generally considered to be a prudent custodian/trustee in the secondary mortgage market designated by the Owner in its sole discretion after consultation with the Servicer, in either case for the purpose of pooling the Mortgage Loans with other Mortgage Loans for resale or securitization; and

(iv) if the Servicer will continue servicing the Mortgage Loans included in the Reconstitution, (1) cooperate fully with the Owner, any prospective purchaser, any Rating Agency or any party to any agreement to be executed in connection with such Whole Loan Transfer, Private Securitization Transaction or Public Securitization Transaction, with respect to all reasonable requests and due diligence procedures, including participating in meetings with Rating Agencies, bond insurers and such other parties as the Owner shall designate and participating in meetings with prospective purchasers of the Mortgage Loans or interests therein and providing information reasonably requested by such purchasers; (2) to execute, deliver and perform all reconstitution agreements required by the Owner, and to use its best reasonable, good faith efforts to facilitate such Whole Loan Transfer, Private Securitization Transaction or Public Securitization Transaction, as the case may be; (3) (a) to restate the representations and warranties set forth in this Agreement as of the Reconstitution Date which shall not be materially more onerous than those required under this Agreement or (b) make the representations and warranties with respect to the servicing of the Mortgage Loans set forth in the related selling/servicing guide of the master servicer or issuer, as the case may be, or such representations and warranties with respect to the servicing of the Mortgage Loans as may be required by any Rating Agency or prospective purchaser of the related securities or such Mortgage Loans, in connection with such Reconstitution; provided, however, that such representations and warranties shall not be materially more onerous than those required under this Agreement. The Servicer shall use its reasonable best efforts to provide to such master servicer or issuer, as the case may be, and any other participants in such Reconstitution: (i) any and all information and appropriate verification of information which may be reasonably available to the Servicer or its affiliates, whether through letters of its

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auditors and counsel or otherwise, as the Owner or any such other participant shall reasonably request and (ii) subject to the provisions of this Section 12.01(b), to execute, deliver and satisfy all conditions set forth in any indemnity agreement required by the Owner or any such participant; provided that the Servicer is given an opportunity to review and reasonably negotiate in good faith provisions of such indemnity.

(c) Any execution of a security servicing agreement or reconstitution agreement by the Servicer shall be conditioned on the Servicer receiving the Servicing Fee or such other servicing fee acceptable to Servicer. All Mortgage Loans not sold or transferred pursuant to a Whole Loan Transfer, Private Securitization Transaction or Public Securitization Transaction shall be subject to this Agreement and shall continue to be serviced in accordance with the terms of this Agreement and with respect thereto this Agreement shall remain in full force and effect. Notwithstanding any provision to the contrary in this Agreement, in the event that the Servicer is the servicer with respect to a Reconstitution, the Owner agrees that in such Reconstitution any servicing performance termination triggers shall be substantially similar to those contained in this Agreement or otherwise subject to approval by the Servicer in its reasonable discretion.

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ARTICLE XIII

MISCELLANEOUS PROVISIONS

Section 13.01 Notices.

All notices, requests, demands and other communications which are required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given upon the delivery or mailing thereof, as the case may be, sent by registered or certified mail, return receipt requested:

(a) If to the Owner to:

PennyMac Operating Partnership, L.P.

Attn: Chief Operating Officer

6101 Condor Drive

Moorpark, CA 93021

With copies to:

PennyMac Operating Partnership, L.P.

Attn: General Counsel

6101 Condor Drive

Moorpark, CA 93021

and

Latham & Watkins LLP

Attn: Charles Ruck and Scott Shean

650 Town Center Drive, 20th Floor

Costa Mesa, California 92626

(b) If to the Servicer:

PennyMac Loan Services, LLC

Attn: Director, Servicing Operations

6101 Condor Drive

Moorpark, CA 93021

With a copy to:

PennyMac Loan Services, LLC

Attn: General Counsel

6101 Condor Drive

Moorpark, CA 93021

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Section 13.02 Amendment.

Neither this Agreement, nor any terms hereof, may be amended, supplemented or modified except in an instrument in writing executed by the parties hereto.

Section 13.03 Entire Agreement.

This Agreement contains the entire agreement and understanding among the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof. The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof.

Section 13.04 Binding Effect; Beneficiaries.

The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns. Except as set forth in Section 9.04, no provision of this Agreement is intended or shall be construed to give to any Person, other than the parties hereto, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein.

Section 13.05 Headings.

The section and subsection headings in this Agreement are for convenience of reference only and shall not be deemed to alter or affect the interpretation of any provisions hereof.

Section 13.06 Further Assurances.

The Servicer agrees to execute and deliver such instruments and take such further actions as the Owner may, from time to time, reasonably request in order to effectuate the purposes and to carry out the terms of this Agreement.

Section 13.07 Governing Law.

This Agreement shall be construed in accordance with the substantive laws of the State of New York applicable to agreements made and to be performed entirely in such State, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws. The parties hereto intend that the provisions of Section 5-1401 of the New York General Obligations Law shall apply to this Agreement.

Section 13.08 Relationship of Parties.

Nothing herein contained shall be deemed or construed to create a partnership or joint venture between the parties. The duties and responsibilities of the Servicer shall be rendered by it as an independent contractor and not as an agent of the Owner. The Servicer shall have full control of all of its acts, doings, proceedings, relating to or requisite in connection with the discharge of its duties and responsibilities under this Agreement.

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Section 13.09 Severability of Provisions.

If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be held invalid for any reason whatsoever, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement.

Section 13.10 No Waiver; Cumulative Remedies.

No failure to exercise and no delay in exercising, on the part of a party hereto, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

Section 13.11 Recordation of Assignments of Mortgage.

To the extent permitted by applicable law, each of the Assignments of Mortgage is subject to recordation in all appropriate public offices for real property records in all the counties or other comparable jurisdictions in which any or all of the Mortgaged Properties are situated, and in any other appropriate public recording office or elsewhere, such recordation to be effected by the Owner or the Owner’s designee.

Section 13.12 Exhibits.

The exhibits to this Agreement are hereby incorporated and made a part hereof and form integral parts of this Agreement.

Section 13.13 Counterparts.

This Agreement may be executed by the parties to this Agreement on any number of separate counterparts (including by telecopy), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

Section 13.14 Trademarks.

The Owner and the Servicer agree that they and their employees, subcontractors and agents, shall not, without the prior written consent of the other party in each instance, (i) use in advertising, publicity or otherwise the name of each and every other party to this Agreement or their Affiliates or any of their managing directors, partners or employees, nor any trade name, trademark, trade device, service mark, symbol or any abbreviation, contraction or simulation thereof owned by the other party or their Affiliates, or (ii) represent, directly or indirectly, any product or any service provided by the Owner and the Servicer as approved or endorsed by the other parties to this Agreement or their Affiliates.

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Section 13.15 Confidentiality of Information.

If, during the term of this Agreement, the Owner requests that the Servicer provide to the Owner non-public, confidential information related to the Servicer and other affiliates of the Servicer (collectively, “Parent”), and if Parent, in its sole discretion agrees to provide this information, the parties agree that they shall enter into a confidentiality agreement in form and substance mutually agreeable to the parties prior to the release of such information (which obligation shall not be assigned by the Owner).

Section 13.16 WAIVER OF TRIAL BY JURY.

EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND, THEREFORE, EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

Section 13.17 LIMITATION OF DAMAGES.

NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, THE PARTIES AGREE THAT NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES WHATSOEVER, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY), OR ANY OTHER LEGAL OR EQUITABLE PRINCIPLE, PROVIDED, HOWEVER, THAT SUCH LIMITATION SHALL NOT BE APPLICABLE WITH RESPECT TO THIRD PARTY CLAIM MADE AGAINST A PARTY.

Section 13.18 SUBMISSION TO JURISDICTION; WAIVERS.

EACH OF THE OWNER AND THE SERVICER HEREBY IRREVOCABLY (I) SUBMITS, FOR ITSELF IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE JURISDICTION OF ANY NEW YORK STATE AND FEDERAL COURTS SITTING IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY WITH RESPECT TO MATTERS ARISING OUT OF OR RELATING TO THIS AGREEMENT; (II) AGREES THAT ALL CLAIMS WITH RESPECT TO ANY ACTION OR PROCEEDING REGARDING SUCH MATTERS MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURTS; (III) WAIVES, TO THE FULLEST POSSIBLE EXTENT, WITH RESPECT TO SUCH COURTS, THE DEFENSE OF AN INCONVENIENT FORUM; (IV) AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED

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IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW; AND (V) WAIVES TO THE EXTENT PERMITTED BY APPLICABLE LAW ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, CLAIM, SUIT, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) RELATING TO OR ARISING OUT OF THIS AGREEMENT.

[SIGNATURES APPEAR ON NEXT PAGE]

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IN WITNESS WHEREOF, the parties have caused their names to be signed hereto by their respective officers thereunto duly authorized as of the date first above written.

PENNYMAC OPERATING PARTNERSHIP, L.P., a         Delaware limited partnership (Owner)
By:	PENNYMAC GP OP, INC., its General Partner
By:	/s/ Stanford L. Kurland
	Name: Stanford L. Kurland
	Title: Chief Executive Officer
PENNYMAC LOAN SERVICES, LLC, a Delaware limited liability company (Servicer)
By:	/s/ Anne D. McCallion
	Name: Anne D. McCallion
	Title: Vice President, Finance

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EXHIBIT 1

MONTHLY REPORTS

Remittance

Delinquency

Inventory Flow

Exh. 1-1

EXHIBIT 2

CUSTODIAL ACCOUNT CERTIFICATION

                     , 20    

As Servicer under the Second Amended and Restated Flow Servicing Agreement, Fixed- and Adjustable-Rate Mortgage Loans, dated as of March 1, 2013 (the “Servicing Agreement”), we hereby certify that the Servicer has established the account described below as a Custodial Account (as such term is defined in the Servicing Agreement) pursuant to Section 4.04 of the Servicing Agreement. The Custodial Account shall be a Special Deposit Account as such term is defined in the Servicing Agreement.

Title of Account:	[            ], in trust for [                    ]
Account Number:
Address of office or branch of the Servicer at which Account is maintained:
	PennyMac Loan Services, LLC, as Servicer
	By:
		Name:
		Title:
		Date:

Exh. 2-1

EXHIBIT 3

RESERVED

Exh. 3-1

EXHIBIT 4

ESCROW ACCOUNT CERTIFICATION

                             , 20    

As Servicer under the Second Amended and Restated Flow Servicing Agreement, Fixed- and Adjustable-Rate Mortgage Loans, dated as of March 1, 2013 (the “Servicing Agreement”), we hereby certify that the Servicer has established the account described below as an Escrow Account pursuant to Section 4.06 of the Agreement. The Escrow Account shall be a Special Deposit Account as such term is defined in the Servicing Agreement.

Title of Account:	[            ], in trust for [                    ]
Account Number:
Address of office or branch of the Servicer at which Account is maintained:
	PennyMac Loan Services, LLC, as Servicer
	By:
		Name:
		Title:
		Date:

Exh. 4-1

EXHIBIT 5

RESERVED

Exh. 5-1

EXHIBIT 6

FORM OF OFFICER’S CERTIFICATE

I,                             , hereby certify that I am the duly elected [                    ],of PennyMac Loan Services, LLC, a Delaware limited liability company (the “Company”) and further as follows:

1. Attached hereto as Exhibit 1 is a true, correct and complete copy of the Certificate of Formation of the Company which is in full force and effect on the date hereof and which has been in effect without amendment, waiver, rescission or modification.

2. Attached hereto as Exhibit 2 is an original certificate of good standing of the Company issued within ten days of the date hereof, and no event has occurred since the date thereof which would impair such standing.

3. Attached hereto as Exhibit 3 is a true, correct and complete copy of the resolutions of the [            ] of the Company authorizing the Company to execute and deliver the Second Amended and Restated Flow Servicing Agreement, dated as of March 1, 2013 (the “Servicing Agreement”), between the Company and PennyMac Operating Partnership, L.P. (the “Owner”), and such resolutions are in effect on the date hereof.

4. Each person listed on Exhibit 4 attached hereto who, as an officer or representative of the Company, signed (a) the Servicing Agreement, and (b) any other document delivered or on the date hereof in connection with any purchase described in the agreements set forth above was, at the respective times of such signing and delivery, and is now, a duly elected or appointed, qualified and acting officer or representative of the Company, who holds the office set forth opposite his or her name on Exhibit 4, and the signatures of such persons appearing on such documents are their genuine signatures.

Exh. 6-1

IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal of the Company.

Date:
	By:	PennyMac Loan Services, LLC
		Name:
		Title:

I,                             , an [Assistant] Secretary of the Company, hereby certify that                      is the duly elected, qualified and acting [Vice] President of the Company and that the signature appearing above is [her] [his] genuine signature.

IN WITNESS WHEREOF, I have hereunto signed my name.

Date:
	By:	PennyMac Loan Services, LLC
[Seal]		Name:
		Title:

Exh. 6-2

EXHIBIT 4 to

Company’s Officer’s Certificate

NAME TITLE SIGNATURE

Exh. 6-3

EXHIBIT 7

MORTGAGE LOAN DOCUMENTS

The following documents shall constitute the Mortgage Loan Documents with respect to each Mortgage Loan:

(a) the original Mortgage Note bearing all intervening endorsements, endorsed “Pay to the order of             , without recourse” and signed in the name of the last endorsee (the “Last Endorsee”) by an authorized officer. To the extent that there is no room on the face of the Mortgage Notes for endorsements, the endorsement may be contained on an allonge, if state law so allows and the Custodian is so advised by the Owner that state law so allows. If the Mortgage Loan was acquired by the Seller in a merger, the endorsement must be by “[Last Endorsee], successor by merger to [name of predecessor]”. If the Mortgage Loan was acquired or originated by the Last Endorsee while doing business under another name, the endorsement must be by “[Last Endorsee], formerly known as [previous name]”; the original of any guarantee executed in connection with the Mortgage Note;

(b) the original Mortgage with evidence of recording thereon. If in connection with any Mortgage Loan, the Owner cannot deliver or cause to be delivered the original Mortgage with evidence of recording thereon because of a delay caused by the public recording office where such Mortgage has been delivered for recordation or because such Mortgage has been lost or because such public recording office retains the original recorded Mortgage, the Seller shall deliver or cause to be delivered to the Custodian, a photocopy of such Mortgage, together with (i) in the case of a delay caused by the public recording office, an Officer’s Certificate of the Seller (or certified by the title company, escrow agent, or closing attorney) stating that such Mortgage has been dispatched to the appropriate public recording office for recordation and that the original recorded Mortgage or a copy of such Mortgage certified by such public recording office to be a true and complete copy of the original recorded Mortgage will be promptly delivered to the Custodian upon receipt thereof by the Seller; or (ii) in the case of a Mortgage where a public recording office retains the original recorded Mortgage or in the case where a Mortgage is lost after recordation in a public recording office, a copy of such Mortgage certified by such public recording office to be a true and complete copy of the original recorded Mortgage; the originals of all assumption, modification, consolidation or extension agreements, if any, with evidence of recording thereon;

(c) the original Assignment of Mortgage for each Mortgage Loan, in form and substance acceptable for recording. The Assignment of Mortgage must be duly recorded only if recordation is either necessary under applicable law or commonly required by private institutional mortgage investors in the area where the Mortgaged Property is located or on direction of the Owner as provided in this Agreement. If the Assignment of Mortgage is to be recorded, the Mortgage shall be assigned to the Owner or as directed by the Owner. If the Assignment of Mortgage is not to be recorded, the Assignment of Mortgage shall be delivered in blank. If the Mortgage Loan was acquired by the Seller in a merger, the Assignment of Mortgage must be made by “[Seller], successor by merger to

Exh. 7-1

[name of predecessor]”. If the Mortgage Loan was acquired or originated by the Seller while doing business under another name, the Assignment of Mortgage must be by “[Seller], formerly known as [previous name]”;

(d) the originals of all intervening assignments of mortgage (if any) evidencing a complete chain of assignment from the Originator to the Last Endorsee with evidence of recording thereon, or if any such intervening assignment has not been returned from the applicable recording office or has been lost or if such public recording office retains the original recorded assignments of mortgage, the Seller shall deliver or cause to be delivered to the Custodian, a photocopy of such intervening assignment, together with (i) in the case of a delay caused by the public recording office, an Officers Certificate of the Seller (or certified by the title company, escrow agent, or closing attorney) stating that such intervening assignment of mortgage has been dispatched to the appropriate public recording office for recordation and that such original recorded intervening assignment of mortgage or a copy of such intervening assignment of mortgage certified by the appropriate public recording office to be a true and complete copy of the original recorded intervening assignment of mortgage will be promptly delivered to the Custodian upon receipt thereof by the Seller; or (ii) in the case of an intervening assignment where a public recording office retains the original recorded intervening assignment or in the case where an intervening assignment is lost after recordation in a public recording office, a copy of such intervening assignment certified by such public recording office to be a true and complete copy of the original recorded intervening assignment;

(e) The original mortgagee policy of title insurance or, in the event such original title policy is unavailable, a certified true copy of the related policy binder or commitment for title certified to be true and complete by the title insurance company (provided, that the original mortgagee policy of title insurance shall be added when available);

(f) original powers of attorney, if applicable, or, if in connection with any Mortgage Loan, the Seller cannot deliver or cause to be delivered the original power of attorney with evidence of recording thereon, if applicable, because of a delay caused by the public recording office, the Seller shall deliver or cause to be delivered to the Custodian, a photocopy of such power of attorney, together with an Officer’s Certificate of the Seller (or certified by the title company, escrow agent, or closing attorney) stating that such power of attorney has been dispatched to the appropriate public recording office for recordation and that the original recorded power of attorney or a copy of such power of attorney certified by such public recording office to be a true and complete copy of the original recorded power of attorney will be promptly delivered to the Custodian upon receipt thereof by the Seller; and

(g) security agreement, chattel mortgage or equivalent document executed in connection with the Mortgage.

Exh. 7-2

The following documents, together with the Mortgage Loan Documents, shall constitute the Mortgage File with respect to each Mortgage Loan:

(a) The original hazard insurance policy and, if required by law, flood insurance policy.

(b) Residential loan application.

(c) Mortgage Loan closing statement.

(d) Verification of employment and income except for Mortgage Loans originated under a Limited Documentation Program.

(e) Verification of acceptable evidence of source and amount of downpayment.

(f) Credit report on the Mortgagor.

(g) Residential appraisal report, if available.

(h) Photograph of the Mortgaged Property.

(i) Survey of the Mortgaged Property, if any.

(j) Copy of each instrument necessary to complete identification of any exception set forth in the exception schedule in the title policy, i.e., map or plat, restrictions, easements, sewer agreements, home association declarations, etc. All required disclosure statements.

(l) If available, termite report, structural engineer’s report, water potability and septic certification.

(m) Sales contract, if applicable.

(n) Tax receipts, insurance premium receipts, ledger sheets, payment history from date of origination, insurance claim files, correspondence, current and historical computerized data files, and all other processing, underwriting and closing papers and records which are customarily contained in a mortgage loan file and which are required to document the Mortgage Loan or to service the Mortgage Loan.

(o) Amortization schedule, if applicable.

Exh. 7-3

EXHIBIT 8

FORM OF LIMITED POWER OF ATTORNEY

PennyMac Operating Partnership, L.P., a limited partnership, organized under the laws of Delaware and having its principal place of business at 6101 Condor Drive, Moorpark, CA 93021, as Owner (hereinafter called “Owner”) hereby appoints PennyMac Loan Services, LLC. (hereinafter called the “Servicer”), as its true and lawful attorney in fact to act in the name, place and stead of Owner solely for the purposes set forth below.

The said attorney in fact is hereby authorized and empowered, solely with respect to the Mortgage Loans and REO Properties, as defined in, and subject to the terms of, that certain Second Amended and Restated Flow Servicing Agreement, between the Servicer and Owner, dated as of March 1, 2013 (the “Servicing Agreement”), as follows:

1. To execute, acknowledge, seal and deliver deed of trust/mortgage note endorsements, lost note affidavits, assignments of deed of trust/mortgage and other recorded documents, satisfactions/releases/reconveyances of deed of trust/mortgage, subordinations and modifications, tax authority notifications and declarations, deeds, bills of sale, and other instruments of sale, conveyance, and transfer, appropriately completed, with all ordinary or necessary endorsements, acknowledgments, affidavits, and supporting documents as may be necessary or appropriate to effect its execution, delivery, conveyance, recordation or filing.

2. To execute and deliver insurance filings and claims, affidavits of debt, substitutions of trustee, substitutions of counsel, non military affidavits, notices of rescission, foreclosure deeds, transfer tax affidavits, affidavits of merit, verifications of complaints, notices to quit, bankruptcy declarations for the purpose of filing motions to lift stays, and other documents or notice filings on behalf of Owner in connection with insurance, foreclosure, bankruptcy and eviction actions.

3. To endorse any checks or other instruments received by the Servicer and made payable to Owner.

4. To pursue any deficiency, debt or other obligation, secured or unsecured, including but not limited to those arising from foreclosure or other sale, promissory note or check. This power also authorizes the Servicer to collect, negotiate or otherwise settle any deficiency claim, including interest and attorney’s fees.

5. To do any other act or complete any other document that arises in the normal course of servicing of all Mortgage Loans and REO Properties, as defined in, and subject to the terms of the Servicing Agreement.

Exh. 8-1

This Limited Power of Attorney shall expire on _____ __, 20__.

		[NAME]
Dated:	, 20
		By:
Witness:			Name:
			Title:
Name:
Name:

Exh. 8-2

EXHIBIT 9

TERM SHEET

THIRD PARTY LOANS

BASE SERVICING FEES

(per loan)

With respect to each Mortgage Loan that is a Third Party Loan and not a Distressed Whole Loan, the Base Servicing Fee shall be:

(i) if such Mortgage Loan is a Fixed-Rate Mortgage Loan, $7.50; or

(ii) if such Mortgage Loan is an Adjustable-Rate Mortgage Loan, $8.50.

ADDITIONAL SERVICING FEES

(per loan)

With respect to each Mortgage Loan that is a Third Party Loan, the Additional Servicing Fee shall be one of the following:

(i) if, as of the first day of the relevant month, such Mortgage Loan is not delinquent, or is delinquent by less than 30 days, and no bankruptcy proceeding is pending by or against the Mortgagor, 0;

(ii) if, as of the first day of the relevant month, such Mortgage Loan is delinquent by 30 days or more and less than 60 days, and no bankruptcy proceeding is pending by or against the Mortgagor and no foreclosure proceeding has been initiated, $10.00;

(iii) if, as of the first day of the relevant month, such Mortgage Loan is delinquent by 60 days or more and less than 90 days, and no bankruptcy proceeding is pending by or against the Mortgagor and no foreclosure proceeding has been initiated, $20.00;

(iv) if, as of the first day of the relevant month, such Mortgage Loan is delinquent by 90 days or more, and no bankruptcy proceeding is pending by or against the Mortgagor and no foreclosure proceeding has been initiated, $50.00;

(v) if, as of the first day of the relevant month, a bankruptcy proceeding is pending by or against the Mortgagor, $45.00;

Exh. 9-1

(vi) if, as of the first day of the relevant month, foreclosure proceedings have been commenced and the Mortgaged Property has not become an REO Property, $55.00; or

(vii) if, as of the first day of the relevant month, the Mortgaged Property has become an REO Property, $75.00.

SUPPLEMENTAL SERVICING FEES

With respect to each Mortgage Loan that is a Third Party Loan and is not a Distressed Whole Loan, the Supplemental Servicing Fee shall be $3.25.

Exh. 9-2

DISTRESSED WHOLE LOANS

BASE SERVICING FEES

(per loan)

With respect to each Mortgage Loan that is a Distressed Whole Loan, the Base Servicing Fee shall be one of the following:

(i) if, as of the first day of the relevant month, such Mortgage Loan is not delinquent, or is delinquent by less than 30 days, and no bankruptcy proceeding is pending by or against the Mortgagor, $30.00;

(ii) if, as of the first day of the relevant month, such Mortgage Loan is delinquent by 30 days or more and less than 90 days, and no bankruptcy proceeding is pending by or against the Mortgagor and no foreclosure proceeding has been initiated, $60.00;

(iii) if, as of the first day of the relevant month, such Mortgage Loan is delinquent by 90 days or more, and no bankruptcy proceeding is pending by or against the Mortgagor and no foreclosure proceeding has been initiated, $125.00;

(iv) if, as of the first day of the relevant month, such Mortgage Loan is not delinquent, or is delinquent by less than 30 days, and a bankruptcy proceeding is pending by or against the Mortgagor, $100.00;

(v) if, as of the first day of the relevant month, such Mortgage Loan is delinquent by 30 days or more, and a bankruptcy proceeding is pending by or against the Mortgagor, $100.00;

(vi) if, as of the first day of the relevant month, foreclosure proceedings have been commenced and the Mortgaged Property has not become an REO Property, $125.00; or

(vii) if, as of the first day of the relevant month, the Mortgaged Property has become an REO Property, $75.00.

SUPPLEMENTAL SERVICING FEES

With respect to each Mortgage Loan that is a Distressed Whole Loan, the Supplemental Servicing Fee shall be $25.00.

Exh. 9-3

OTHER KEY PARAMETERS

Remittance Types	Actual/Actual Basis during Interim Servicing Period
Remittance Date	See definition of Remittance Date
Servicing Advances	Servicer to be reimbursed monthly for all unpaid Servicing Advances incurred by Servicer in the prior month including Cost of Funds.
Cost of Funds on Servicing Advances	Refer to Section 5.04
Prepayment Penalties	Owner will retain 100% of the prepayment penalties.
Late Charges Collected	Servicer will retain 100% of late charges collected by Servicer
Ancillary Income	Servicer will retain 100% of all Ancillary Income
Delegated Authority	Refer to Exhibit 10
Contract Term	Refer to Section 8.01
Eligible Mortgage Loan	See definition of Eligible Mortgage Loan

ANCILLARY INCOME AND OTHER FEES

Notwithstanding anything to the contrary in Section 5.01 of the Agreement, with respect to each Third Party Loan, the Servicer shall be entitled to all Ancillary Income and the following Other Fees in addition to the Servicing Fee:

Setup Fee: With respect to each Mortgage Loan, other than a Distressed Whole Loan, $10.00 if information is provided to Servicer in a format that enables electronic boarding or $25.00 if information is provided to Servicer in format that necessitates manual boarding. With respect to each Distressed Whole Loan, $15.00 if information is provided to Servicer in format that enables electronic boarding or $25.00 if information is provided to Servicer in format that necessitates manual boarding.

Service Release Fee: With respect to each Mortgage Loan, other than a Distressed Whole Loan, $25.00 if released on or prior to the first anniversary of boarding, $23.00 if released after the first anniversary of boarding and on or prior to the second anniversary of boarding, and $18.00 if released thereafter. With respect to each Distressed Whole Loan, $500.00 if released within one year of boarding, $40.00 if released within two years of boarding and $40.00 if released thereafter.

Exh. 9-4

Deed in Lieu Fee: $500, unless the deed in lieu is completed under the U.S. Treasury’s Home Affordable Foreclosure Alternatives initiative, in which case no Deed in Lieu Fee shall apply

Liquidation Fee: 150 basis points of the gross proceeds received in connection with either the disposition of a Mortgage Loan (including the sale of the related Mortgage Note) or an REO Property or a full or discounted payoff accepted by the Servicer with respect to a Mortgage Loan, including a full or discounted payoff accepted in connection with the sale of the Mortgaged Property to a third party.

Tax Service Contract: Servicer’s cost

Flood Zone Service Contract: Servicer’s cost

MERS Fee: Servicer’s cost

Reperformance Fee: 150 basis points of the unpaid principal balance of the Mortgage Loan (as then in effect) if the Mortgage Loan is brought current (after having been delinquent for a period of 90 days or more) without any modification and remains current for a consecutive period of 12 months or is sold prior to the expiration of such 12 months.

Modification Fee: 150 basis points of the unpaid principal balance of the Mortgage Loan (as in effect immediately after the consummation of the modification) if the modification includes an interest rate reduction or is classified by the Servicer (acting in accordance with Accepted Servicing Practices) as a full modification; or, if the Servicer participates in the U.S. Treasury’s Home Affordable Modification program (or other similar mortgage loan modification programs) and enters into a transaction involving the Mortgage Loan that results in the payment or retention of any incentive payment to the Servicer or Owner and the Servicer is not otherwise entitled to a Modification Fee as set forth above, 150 basis points of the unpaid principal balance of the Mortgage Loan (as in effect immediately after the consummation of the transaction).

If the Servicer enters into a transaction involving the Mortgage Loan under the U.S. Treasury Department’s Home Affordable Modification program (or other similar mortgage loan modification programs) that results in any incentive payment to the Servicer or Owner and the Servicer has already collected a Modification Fee, the Servicer shall reimburse the Owner the amount of such incentive payments.

In the event the Servicer effects a refinancing of a Distressed Whole Loan on behalf of the Owner and not through a third party lender and the resulting Mortgage Loan is readily saleable, or the Servicer originates a Mortgage Loan to facilitate the disposition of REO Property, the Servicer shall be entitled to fees and other compensation in connection with such originations based on market-based pricing and terms that are consistent with the pricing and terms offered by the Servicer to unaffiliated third parties on a retail basis. The amount of the compensation and the pricing and terms offered by the Servicer shall be subject to review by the Owner and the Servicer from time to time to reflect market rates. The Owner shall reimburse the Servicer for any out of pocket expenses that the Servicer incurs in connection with any such origination, including title fees, legal fees and closing costs.

Exh. 9-5

EXHIBIT 10

DELEGATION OF AUTHORITY MATRIX

FUNCTION	DELEGATION
Delinquent Taxes on Non-escrowed Loans	Authority is granted to Servicer to make payment of delinquent taxes on non-escrowed loans.
Advances on Escrowed Loans	Authority is granted to Servicer to advance corporate funds in payment of escrowed items.
New Escrow Accounts	Authority is granted to Servicer to establish escrow accounts upon borrower request.
Escrow Shortage Pro-ration	Authority is granted to Servicer to negotiate extended escrow shortage repayment periods as the situation warrants.
Escrow Cushion Requirement	Authority is granted to Servicer to negotiate down or remove any escrow cushion requirement used for escrow analysis.
Escrow Account Waiver	Authority is granted to Servicer to waive an escrow account following Fannie Mae Servicing Guidelines Part III, Chapter 103.01.
Loss Drafts	Authority is granted to Servicer to process insurance losses as described in the Fannie Mae Servicing Guide Part II, Chapter 5.
Private Mortgage Insurance Waiver	Authority is granted to Servicer to waive Private Mortgage Insurance requirement as described in the Fannie Mae Servicing Guide Part II, Chapters 102.03, 102.04 and 102.05.
Transfer of Ownership – Exempt Transactions	Authority is granted to Servicer to follow guidelines as stated in the Fannie Mae Servicing Guide Part III, 408.02. In addition to Fannie Mae servicing guidelines, there must be evidence of insurance with Owner named in mortgagee clause; mortgage payments must be current; and if required, approval of the private mortgage insurance company, FHA or VA must be obtained.

Exh. 10-1

Prepayment Penalties	No authority is granted to Servicer to negotiate reduction of prepayment penalties without Owner approval unless the mortgage loan is accelerated in which case Servicer may waive in accordance with the Fannie Mae Servicing Guide Part I, Chapter 203.05. This clause excludes the waiving of pre-payment penalties/early closure fees extending more than 36 months from Mortgage Loan origination date.
Waiver of Fees	Authority is granted to Servicer to waive any fee that it is entitled to receive as Ancillary Income without Owner’s consent. Servicer shall be entitled to waive late charges based on Servicer’s policies and procedures.
Subordination Requests	Servicer may approve a request to subordinate a second mortgage in favor of a refinanced loan if: 1.)    The new loan to value of the refinanced loan is equal to or less than the original LTV of the first mortgage (no cash-out refinancing allowed unless substantiated through a new appraisal to reflect increased value), and 2.)    The loan has had no delinquencies in past 12 months, and 3.)    The new senior lien is not a HELOC, Land Contract, Recapture Lien, Texas A6, Cal Vet, Bond with recapture Taxes, All Inclusive Trust Deed, Option ARM, Flex 100, or Reverse Mortgage. Without Owner’s approval, Servicer MAY NOT approve a subordination request if any of the following conditions exist: 1.)    The first lien amount increases and the first lien LTV increases; or 2.)    Any senior lien is a private party; or 3.)    The new senior lien has the potential for negative amortization. Owner shall review the subordination request prior to final approval if the request has any of the MAY NOT conditions listed above.
Partial Release, Acquisitions, Easement	Authority is granted to Servicer to approve requests for Partial Release, Acquisitions, and Easements in accordance with the standards specified in the Fannie Mae Servicing Guide.

Exh. 10-2

Lien Releases	Authority is granted to Servicer to approve full lien releases upon full payoff of the loan without the prior approval of Owner. Full lien releases to be completed in compliance with applicable law, and penalties for non-compliance accrue to Servicer. Servicer shall not be responsible for penalties as a result of third party delays if Servicer has timely processed a lien release pursuant to applicable law.
Assumptions	Authority is granted to Servicer to negotiate Simple Assumptions according to the Fannie Mae Servicing Guide Part III, Chapter 4. Qualified Assumption requests will be referred to Owner for approval.
Foreclosure Approval	Authority is granted to Servicer to proceed with foreclosure using prudent servicing guidelines.
Property Evaluations (BPO’s)/Drive-By Appraisal	Authority is granted to Servicer to order a brokers price opinion (BPO) or drive-by appraisal using prudent servicing guidelines. The cost of the BPO or drive-by appraisal shall be passed on to the borrower if the BPO or drive-by appraisal is related to a borrower requested forbearance plan as reasonably determined by Servicer.
Impact Analysis	Authority is granted to Servicer to complete an impact analysis using prudent servicing guidelines.
REO Marketing	Authority is granted to Servicer to follow Servicer’s current guidelines to make REO marketing decisions.
Property Preservation	Authority is granted to Servicer to use Fannie Mae Property Preservation guidelines as outlined in the Fannie Mae Servicing Guide for loans owned by Owner and following internal state guidelines.
Bidding Instruction	Owner approval is required on bidding instructions.
Short Term Forbearance – Written agreement to reduce or suspend payments not to exceed 6 months	Authority is granted to Servicer to permit forbearance or allow for suspension of monthly payments up to 90 days, if the mortgagor is in default or Servicer determines that default is imminent and granting such forbearance is in the best interest of Owner. Mortgagor must be current as to all fees and costs prior to any forbearance plan. Owner approval is required to permit forbearance or allow for suspension of monthly payments of 91 days or more.

Exh. 10-3

Long Term Forbearance – Written agreement to reduce or suspend payments up to 12 months	Unless pursuant to the PennyMac Property Preservation Program, Owner approval is required. Servicer to provide approval package including financials, credit report, valuation, hardship description and recommendation.
Repayment Plan – Written agreement where the mortgagor must immediately make payments in addition to regular monthly payments to cure the delinquency	Authority is granted pursuant to the PennyMac Property Preservation Program, and to Servicer to negotiate Repayment Plans where borrower must cure through full reinstatement within 6 months, including fees and costs. Any Repayment Plan over 6 months requires Owner approval.
Modifications – Formal agreement to change payment amount based upon one or more terms of the original loan (i.e. interest rate reduction, extended term, capitalized arrearage)	Authority is granted pursuant to the PennyMac Property Preservation Program, and all modification requests to capitalize arrearages are to be processed in accordance with the Fannie Mae Servicing Guide Part VII, Chapter 502 and will require Owner approval. Servicer will obtain pre-qualification information as prescribed by Owner (credit report, financial statements and cash flow information from all obligors).
Pre-foreclosure Sale – Borrower allowed to sell or refinance property to avoid foreclosure	Authority is granted pursuant to the PennyMac Property Preservation Program, and authority is granted to Servicer to negotiate Pre-foreclosure Sales according to the Fannie Mae Servicing Guide Part VII, Chapter 504. Authority is granted to Servicer to accept pre-foreclosure sale offers as long as the loss from the pre-foreclosure sale is equal to or less than the loss anticipated and the negotiated price is at least 95% of the Asset Balance. For all other pre-foreclosure sales, Owner approval to accept the sale is required.
Discounted Payoff	Authority is granted pursuant to the PennyMac Property Preservation Program. For all discounted payoffs with the exception of those covered by mortgage insurance, Owner approval to accept the payoff is required. Authority is granted to Servicer to negotiate a discounted payoff where the loss amount is fully covered by the applicable mortgage insurance policy.
Deed-in-Lieu – Borrower voluntarily deeds property to lender, avoiding foreclosure	Authority is granted pursuant to the PennyMac Property Preservation Program, otherwise, Owner must approve deed-in-lieu requests on all transactions.
Partial Claims – PMI remits funds to bring account current. If mortgage is subsequently foreclosed, prepaid claim amounts are deducted from final claim	Authority is granted pursuant to the PennyMac Property Preservation Program, and authority is granted to Servicer to negotiate and accept Partial Claims subject to account being brought current; no associated pre-foreclosure sale, modification or repayment plan.

Exh. 10-4

Bankruptcy Actions	1st Liens – Authority is granted to Servicer to process bankruptcy filing following Fannie Mae Servicing Guidelines and refer to the delegations listed in this Exhibit (impact analysis, charge-off, foreclosure) for final disposition in Bankruptcy. Junior Liens – Authority is granted to Servicer to process bankruptcy filing in accordance with Servicer’s guidelines for owned assets and refer to the above delegations for final disposition in Bankruptcy. Decisions on how to proceed with charge-off/foreclosure revert to Owner at impact analysis stage.
Review and Approval of Walk Analysis	Servicer will review collection activities and complete an “Impact Analysis” which begins the pre-foreclosure review process. The analysis assists in determining the economic impact of foreclosure (equity position/loss severity). Servicer will provide the analysis to Owner with a recommendation of future loss mitigation actions. Servicer takes no responsibility for these recommendations, and will contact Owner for final approval and direction as to what those actions will be.
Charge-off of Loans	Authority is granted to Servicer to charge off loans that are 180 days contractually delinquent, with the approval by Owner of an impact analysis form. Authority is granted to Servicer to charge off loans that are 120 days contractually delinquent, with Owner’s approval of an impact analysis, for loans that are in Chapter 7 bankruptcy and have no equity, per Owner’s approval of an impact analysis form.
Post Charge-off Transfer	Authority is granted to Servicer to initiate service transfer for loans that have been fully charged-off, or have been sold from REO, with a resulting loss.
Payoff Processing	Authority is granted to Servicer to accept as payment in full a payment amount within $100 of the total indebtedness. Owner shall reimburse Servicer for any shortfall that is $100 or less of the indebtedness.

Exh. 10-5

EX-10.50

Exhibit 10.50

EXECUTION VERSION

AMENDMENT NO. 2

TO AMENDED AND RESTATED

MASTER REPURCHASE AGREEMENT

Amendment No. 2, dated as of March 28, 2013 (this “Amendment”), among CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC (the “Buyer”), PENNYMAC CORP. (“PennyMac Corp.”) and PENNYMAC MORTGAGE INVESTMENT TRUST HOLDINGS I, LLC (“PennyMac Holdings”, and together with PennyMac Corp., each a “Seller” and collectively, the “Sellers”) and PENNYMAC MORTGAGE INVESTMENT TRUST (the “Guarantor”).

RECITALS

The Buyer, the Sellers and the Guarantor are parties to that certain Amended and Restated Master Repurchase Agreement, dated as of August 25, 2011 (the “Existing Repurchase Agreement”; and as amended by Amendment No. 1, dated as of June 6, 2012 and this Amendment, the “Repurchase Agreement”). The Guarantor is party to that certain Guaranty (the “Guaranty”), dated as June 8, 2011, as the same may be amended from time to time, by the Guarantor in favor of Buyer. Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Existing Repurchase Agreement and Guaranty, as applicable.

The Buyer, the Sellers and the Guarantor have agreed, subject to the terms and conditions of this Amendment, that the Existing Repurchase Agreement be amended to add an additional Trust Interest referred to as PENNYMAC CORP Pooled Mortgage Loan REMIC 2010-3 (“REMIC 2010-3”). As a condition precedent to amending the Existing Repurchase Agreement, the Buyer has required the Guarantor to ratify and affirm the Guaranty on the date hereof.

Accordingly, the Buyer, the Sellers and the Guarantor hereby agree, in consideration of the mutual promises and mutual obligations set forth herein, that the Existing Repurchase Agreement is hereby amended as follows:

SECTION 1. Regarding REMIC 2010-3. The parties hereby agree that although referred to as a Trust Interest for purposes of the Repurchase Agreement, REMIC 2010-3, is a pool of Mortgage Loans and REO Properties that have been identified as a participation taxable as a REMIC, wherein legal title to the Mortgage Loans and REO Properties is retained by PennyMac Corp. (as title holder as defined thereunder, the “Title Holder”) and the Regular Interest (as defined thereunder) of which is owned by PennyMac Holdings. Accordingly:

1.1 each of PennyMac Corp. and PennyMac Holdings intends to grant a security interest in their respective interests under the Class A Participation Certificate as defined in the REMIC Agreement (the “Class A Participation Certificate”), REMIC Mortgage Loans and the REMIC Agreement;

1.2 all references in the Repurchase Agreement to the Trust Subsidiary owning Trust Mortgage Loans or REO Properties shall, in the case of REMIC 2010-3, be deemed to refer to PennyMac Corp. solely in its capacity as the Title Holder under the REMIC Agreement owning such assets for the benefit of the participants under the REMIC Agreement, as their interests may appear;

1.3 all references in the Repurchase Agreement to the transfer of Trust Mortgage Loans or REO Properties to the Trust Subsidiary shall, in the case of REMIC 2010-3, be deemed to be inapplicable;

1.4 all references in the Repurchase Agreement to the Trust Subsidiary taking or refraining from taking actions shall, in the case of REMIC 2010-3, be deemed to refer to PennyMac Corp. solely in its capacity as the Title Holder under the REMIC Agreement taking or refraining from taking such actions on behalf of REMIC 2010-3;

1.5 all references in the Repurchase Agreement to the Trust Subsidiary entering into any agreements shall, in the case of REMIC 2010-3, be deemed to refer to PennyMac Corp. solely in its capacity as the Title Holder under the REMIC Agreement entering into such agreements for the benefit of the REMIC 2010-3;

1.6 all references in the Repurchase Agreement to the Trust Certificates shall, in the case of REMIC 2010-3, be deemed to refer to the Class A Participation Certificate;

1.7 all references in the Repurchase Agreement to the Trust Agreement and organizational documents shall, in the case of REMIC 2010-3, be deemed to refer to the REMIC Agreement;

1.8 all references in the Repurchase Agreement to the due formation and authority of the Trust Subsidiaries, shall not apply in the case of REMIC 2010-3; and

1.9 all references in the Repurchase Agreement to a Trust Account or Trust Account Control Agreement shall, in the case of REMIC 2010-3, be deemed to refer to the Collection Account and the Collection Account Control Agreement, respectively.

1.10 For purposes of Section 12(h) of the Repurchase Agreement, the REMIC Mortgage Loans shall be deemed to be Purchased Mortgage Loans that are conveyed to Buyer on a “servicing released” basis.

SECTION 2. Definitions.

2.1 Section 2 of the Existing Repurchase Agreement is hereby amended by deleting the definitions of “Servicing Agreements” and “Trust Subsidiary” each in its entirety and replacing each with the following:

“Servicing Agreements” means (a) that certain Second Amended and Restated Flow Servicing Agreement, dated as of March 1, 2013, by and between PennyMac Operating Partnership, L.P. and PennyMac Loan Services, LLC, (b) that certain Servicing Agreement, dated as of December 20, 2010, by and between SWDNSI Trust Series 2010-3 and Specialized Loan Servicing LLC (“SLS”), (c) that certain Servicing Agreement, dated as of December 20, 2010, by and between SWDNSI Trust Series 2010-4 and SLS, (d) that certain Servicing Agreement, dated as of February 25, 2011, by and between SWDNSI Trust Series 2010-3 and

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PennyMac Loan Services, LLC, (e) that certain Servicing Agreement, dated as of February 25, 2011, by and between SWDNSI Trust Series 2010-4 and PennyMac Loan Services, LLC, and (f) in the case of the 2010-3 REMIC, the REMIC Agreement and the Servicing Agreement identified in clause (a) hereof, in each case, as the same may be amended from time to time.

“Trust Subsidiary” means each of (a) SWDNSI Trust Series 2010-3, a wholly owned Subsidiary of PennyMac Corp., (b) SWDNSI Trust Series 2010-4, a wholly owned Subsidiary of PennyMac Holdings, and (c) REMIC 2010-3, each of which is a Special Purpose Entity formed for the sole purpose of holding REO Property and Trust Mortgage Loans and any other wholly owned Subsidiary of either Seller that has been approved by Buyer in writing in its sole discretion and is subject to a Transaction Request.

2.2 Section 2 of the Existing Repurchase Agreement is hereby amended by adding the following definitions, each in their proper alphabetical order:

“REMIC” means a real estate mortgage investment conduit within the meaning of Section 860D of the Code.

“REMIC 2010-3” means that certain entity designated PENNYMAC CORP Pooled Mortgage Loan REMIC 2010-3, as created by the REMIC Agreement.

“REMIC Agreement” means that certain Amended and Restated REMIC Declaration, Servicing and Participation Agreement, for PENNYMAC CORP Pooled Mortgage Loan REMIC 2010-3, dated as of March 28, 2013, between PennyMac Corp., PennyMac Holdings, PennyMac Loan Services, LLC and Buyer, as the same may be amended, supplemented or otherwise modified from time to time.

“REMIC Mortgage Loan” means each Trust Mortgage Loan that is part of the REMIC 2010-3, and all proceeds thereof.

SECTION 3. Conveyance; Security Interest; REO Property. Section 8(a) of the Existing Repurchase Agreement is hereby amended by deleting such Section in its entirety and replacing it with the following:

“a. Conveyance and Security Interest. On the Initial Purchase Date, Sellers hereby sold, assigned, and conveyed all right, title and interest in the Trust Interests with respect to REO Subsidiary and all other Purchased Assets identified on a Transaction Request and/or Trust Receipt and the related Repurchase Assets. On each subsequent Purchase Date, Sellers hereby sell, assign and convey all right, title and interest in all Trust Interests and Purchased Assets identified on a Transaction Request and/or Trust Receipt and the related Repurchase Assets. Although the parties intend that all Transactions hereunder be sales and purchases and not loans, in the event any such Transactions are deemed to be loans, and in any event, Sellers hereby pledge to Buyer as security for the performance by Sellers of their Obligations and hereby grant, assign and pledge to Buyer a fully perfected first priority security interest in the Purchased Assets, the REMIC Mortgage Loans, the Records, and all related Servicing Rights, the Program Agreements (to the extent such Program Agreements and Sellers’ right thereunder

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relate to the Purchased Assets), any related Take-out Commitments, any Property relating to Purchased Mortgage Loans, Trust Mortgage Loans or REO Properties, all insurance policies and insurance proceeds relating to any Purchased Mortgage Loan, Trust Mortgage Loan or REO Property or the related Mortgaged Property, including, but not limited to, any payments or proceeds under any related primary insurance, hazard insurance and mortgage insurance contracts and loan guaranty agreements (if any), to the extent of the Purchased Mortgage Loans, Trust Mortgage Loans or REO Properties protected thereby, Income, the Buydown Amount and any account to which such amount is deposited, each of the Collection Account, any Trust Account and the REO Account and all amounts deposited therein, the obligations of Sellers to deliver and convey each REO Property to the REO Subsidiary or a Trust Subsidiary, as applicable, accounts (including any interest of Sellers and any Trust Subsidiary in escrow accounts) and any other contract rights, instruments, accounts, payments, rights to payment (including payments of interest or finance charges), general intangibles and other assets relating to the Purchased Assets (including, without limitation, any other accounts) or any interest in the Purchased Assets, and any proceeds of the Purchased Assets, Trust Mortgage Loans and REO Properties (including the related securitization proceeds) and distributions with respect to any of the foregoing and any other property, rights, title or interests as are specified on a Transaction Request and/or Trust Receipt, in all instances, whether now owned or hereafter acquired, now existing or hereafter created (collectively, the “Repurchase Assets”).”

SECTION 4. Covenants. Section 14(u) of the Existing Repurchase Agreement is hereby amended with respect to the REMIC 2010-3 only to read as follows:

“(u) Special Purpose Entity with Respect to REMIC 2010-3. The Sellers shall cause REMIC 2010-3 to: (a) own no assets, and not engage in any business, other than the assets and transactions specifically contemplated by the REMIC Agreement, (b) comply with the provisions of the REMIC Agreement, (c) do all things necessary to observe organizational formalities of the REMIC 2010-3 and to preserve its existence, and not amend, modify, waive provisions of or otherwise change the REMIC Agreement without the consent of the Buyer, (d) not commingle its funds or other assets with those of any Person and maintain its properties and assets in such a manner that it would not be costly or difficult to identify, segregate or ascertain its properties and assets from those of others, (e) maintain its properties, assets and accounts separate from those of any Person, (f) outside of the REMIC Agreement and this Agreement, not enter into any transaction with any Person except on commercially reasonable terms similar to those available to unaffiliated parties in an arm’s length transaction, and (g) not have the assets pledged to secure the obligations of any Person other than the Buyer.”

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SECTION 5. Schedules.

5.1 Schedule 1-B is hereby amended by adding the following representation at the end thereof:

“(n) REMIC 2010-3. REMIC 2010-3 shall not own any REO Properties.”

5.2 Schedule 1-C is hereby amended by adding the following representation at the end thereof:

“(h) REMIC 2010-3. REMIC 2010-3 is a REMIC, has been a REMIC since the date of its organization, and shall continue at all times hereafter to qualify as a REMIC.”

SECTION 6. Conditions Precedent. This Amendment shall become effective as of the date hereof (the “Amendment Effective Date”), subject to the satisfaction of the following conditions precedent:

6.1 Delivered Documents. On the Amendment Effective Date, the Buyer shall have received the following documents, each of which shall be satisfactory to the Buyer in form and substance:

(a) this Amendment, executed and delivered by duly authorized officers of the Buyer, the Sellers and the Guarantor;

(b) the REMIC Agreement, executed and delivered by duly authorized officers of the parties thereto;

(c) a copy of the originally issued Residual Participation Certificate for REMIC 2010-3 in the name of PennyMac Corp. (“Residual Certificate”) to be cancelled by Buyer as Participant Registrar;

(d) a Lost Certificate Affidavit, executed and delivered by a duly authorized officer of PennyMac Corp. with respect to each of the Regular Certificate and the Residual Certificate;

(e) the originally issued Amended and Restated Residual Participation Certificate for REMIC 2010-3 in the name of PennyMac Corp. (“REMIC Residual Certificate”), executed by a duly authorized officer of Buyer as Participant Registrar, and to be delivered to PennyMac Corp.;

(f) a copy of the originally issued Regular Participation Certificate for REMIC 2010-3 in the name of PennyMac Holdings (“Regular Certificate”) to be cancelled by Buyer as Participant Registrar;

(g) a Lost Certificate Affidavit, executed and delivered by a duly authorized officer of Wells Fargo Bank, National Association with respect to the Regular Certificate;

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(h) an Assignment of Regular Certificate, executed in blank and delivered by a duly authorized officer of PennyMac Holdings to Buyer (“Assignment of Regular Certificate”);

(i) the originally issued Amended and Restated Regular Participation Certificate for REMIC 2010-3 in the name of PennyMac Holdings (“REMIC Regular Certificate”), executed by a duly authorized officer of Buyer as Participant Registrar, and to be delivered to PennyMac Holdings;

(j) that certain Second Amended and Restated Servicer Notice and Pledge Agreement, dated as of March 28, 2013 executed and delivered by duly authorized officers of PennyMac Loan Services, LLC, PennyMac Corp, PennyMac Holdings and the Buyer;

(k) a Trust Receipt from the Custodian acknowledging its receipt of:

(A) REMIC Regular Certificate;

(B) Assignment of Regular Certificate;

(C) Transferor Certificate in the form of Exhibit E to the REMIC Agreement executed by PennyMac Holdings in blank;

(l) that certain Assignment and Acceptance Agreement, executed and delivered by duly authorized officers of Wells Fargo Bank, National Association and Buyer, assigning the role of Participation Registrar and Paying Agent from Wells Fargo Bank, National Association to Buyer;

(m) the Warehouse Provider Release, executed and delivered by a duly authorized officer of Wells Fargo Bank, National Association evidencing a release of lien on the REMIC Mortgage Loans and REMIC Trust;

(n) UCC Search Report with respect to each Seller;

(o) UCC-3 terminations with respect to each Seller, terminating the existing facility with Wells Fargo Bank, National Association; and

(p) UCC-3 amendments with respect to each Seller, amending the collateral description in accordance with amendments to Section 8(a) herein.

(q) such other documents as the Buyer or counsel to the Buyer may reasonably request.

SECTION 7. Representations and Warranties. Each Seller hereby represents and warrants to the Buyer that each Seller is in compliance with all the terms and provisions set forth in the Existing Repurchase Agreement on its part to be observed or performed, and that no Event of Default has occurred and is continuing, and hereby confirms and reaffirms the representations and warranties contained in Section 13 of the Existing Repurchase Agreement.

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SECTION 8. Fees and Expenses. Sellers hereby agree to pay to Buyer, on demand, any and all reasonable out-of-pocket fees, costs and expenses (including reasonable fees and expenses of counsel) incurred by Buyer in connection with the development, preparation and execution of this Amendment, irrespective of whether any transactions hereunder are executed.

SECTION 9. Limited Effect. Except as expressly amended and modified by this Amendment, the Existing Repurchase Agreement shall continue to be, and shall remain, in full force and effect in accordance with its terms and the execution of this Amendment by the Buyer.

SECTION 10. Severability. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement.

SECTION 11. Counterparts. This Amendment may be executed by each of the parties hereto on any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument.

SECTION 12. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE CHOICE OF LAW PROVISIONS THEREOF.

SECTION 13. Reaffirmation of Guaranty. The Guarantor hereby ratifies and affirms all of the terms, covenants, conditions and obligations of the Guaranty and acknowledges and agrees that the term “Obligations” as used in the Guaranty shall apply to all of the Obligations of the Sellers to Buyer under the Repurchase Agreement, as amended hereby.

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IN WITNESS WHEREOF, the parties have caused their names to be signed hereto by their respective officers thereunto duly authorized as of the day and year first above written.

Credit Suisse First Boston Mortgage Capital LLC, as Buyer
By:	/s/ Margaret Dellafera
	Name:	Margaret Dellafera
	Title:	Vice President

PennyMac Corp., as a Seller
By:	/s/ Pamela Marsh
	Name:	Pamela Marsh
	Title:	Managing Director, Treasurer

PennyMac Mortgage Investment Trust Holdings I, LLC, as a Seller
By:	/s/ Pamela Marsh
	Name:	Pamela Marsh
	Title:	Managing Director, Treasurer

PennyMac Mortgage Investment Trust, as Guarantor
By:	/s/ Pamela Marsh
	Name:	Pamela Marsh
	Title:	Managing Director, Treasurer

Signature Page to Amendment No. 2 to Amended and Restated Master Repurchase Agreement

EX-10.51

Exhibit 10.51

EXECUTION

AMENDMENT NO. 3

TO AMENDED AND RESTATED

MASTER REPURCHASE AGREEMENT

Amendment No. 3, dated as of May 8, 2013 (this “Amendment”), among CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC (the “Buyer”), PENNYMAC CORP. and PENNYMAC MORTGAGE INVESTMENT TRUST HOLDINGS I, LLC (each a “Seller” and collectively, the “Sellers”) and PENNYMAC MORTGAGE INVESTMENT TRUST (the “Guarantor”).

RECITALS

The Buyer, the Sellers and the Guarantor are parties to that certain Amended and Restated Master Repurchase Agreement, dated as of August 25, 2011 (as amended by Amendment No. 1, dated as of June 6, 2012, and Amendment No. 2, dated as of March 28, 2013, the “Existing Repurchase Agreement”; and as further amended by this Amendment, the “Repurchase Agreement”). The Guarantor is party to that certain Guaranty (the “Guaranty”), dated as of June 8, 2011, as the same may be amended from time to time, by the Guarantor in favor of Buyer. Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Existing Repurchase Agreement and Guaranty, as applicable.

The Buyer, the Sellers and the Guarantor have agreed, subject to the terms and conditions of this Amendment, that the Existing Repurchase Agreement be amended to reflect certain agreed upon revisions to the terms of the Existing Repurchase Agreement. As a condition precedent to amending the Existing Repurchase Agreement, the Buyer has required the Guarantor to ratify and affirm the Guaranty on the date hereof.

Accordingly, the Buyer, the Sellers and the Guarantor hereby agree, in consideration of the mutual promises and mutual obligations set forth herein, that the Existing Repurchase Agreement is hereby amended as follows:

SECTION 1. Definitions.

1.1 Section 2 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Termination Date” in its entirety and replacing it with the following:

“Termination Date” means the earliest of (a) the Rolling Termination Date; provided that if the Buyer does not deliver a Rolling Termination Notice on or before November 1, 2013, the Termination Date shall be October 31, 2014 and (b) the date of the occurrence of an Event of Default.

1.2 Section 2 of the Existing Repurchase Agreement is hereby amended by deleting the definitions of “Buyer’s Margin Amount” and “Buyer’s Margin Percentage” in their entirety.

1.3 Section 2 of the Existing Repurchase Agreement is hereby amended by adding the definitions of “Asset Value”, “Rolling Termination Date” and “Rolling Termination Notice” in their appropriate alphabetical order:

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“Asset Value” has the meaning assigned to such term in the Pricing Side Letter.

“Rolling Termination Date” means, with respect to any date, the date which is 364 days from such date; provided, that on and after the date, if any, on which the Buyer delivers to the Seller a Rolling Termination Notice (the “Rolling Termination Notice Date”), the Rolling Termination Date shall be fixed at the date that is 364 days following the Rolling Termination Notice Date.

“Rolling Termination Notice” means written notice that the Buyer shall no longer roll the Rolling Termination Date forward.

SECTION 2. Margin Maintenance.

2.1 Section 6 of the Existing Repurchase Agreement is hereby amended by deleting Section 6.a in its entirety and replacing it with the following:

“a. If at any time the outstanding Purchase Price of any Purchased Mortgage Loan, Trust Mortgage Loan or REO Property subject to a Transaction is greater than the Asset Value of such Purchased Mortgage Loan, Trust Mortgage Loan or REO Property subject to a Transaction (a “Margin Deficit”), then Buyer may by notice to Sellers require Sellers to transfer to Buyer cash in an amount at least equal to the Margin Deficit subject to or related to a Transaction or solely with the consent of Buyer in its sole discretion, additional Mortgage Loans or REO Property with an Asset Value equal to such Margin Deficit (such requirement, a “Margin Call”).”

2.2 Section 6 of the Existing Repurchase Agreement is hereby amended by deleting Section 6.d in its entirety and replacing it with the following:

“d. In the event that Sellers reasonably believe that the Asset Value of all Purchased Assets exceeds the aggregate Purchase Price of all Purchased Assets by more than $3,000,000, Sellers may request that Buyer remit additional Purchase Price with respect to specific Purchased Assets to be identified by Sellers to Buyer, and Buyer will consider such request; provided that Buyer will make such determination in its sole discretion. Any additional Purchase Price remitted by Buyer to Sellers hereunder (and in the case of REO Properties and Trust Mortgage Loans, Purchase Price Increase) shall be added to the Purchase Price for the applicable Purchased Assets. For the avoidance of doubt, Buyer shall have no obligation to advance additional Purchase Price hereunder, and Buyer’s agreement to do so in any instance, shall not be deemed as Buyer’s agreement to do so in the future.”

SECTION 3. Covenants. Section 14 of the Existing Repurchase Agreement is hereby amended by deleting Section 14.dd in its entirety and replacing it with the following:

“dd. Financial Covenants. Each Seller and PMIT, as applicable, shall or shall cause at all times the compliance with any and all financial covenants and/or financial ratios set forth in this Section 14.dd and Section 2 of the Pricing Side Letter.

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(i) Adjusted Tangible Net Worth. (A) PennyMac Corp. shall maintain an Adjusted Tangible Net Worth of at least $150,000,000, (B) PennyMac Holdings shall maintain an Adjusted Tangible Net Worth of at least $250,000,000 and (C) PMIT shall maintain an Adjusted Tangible Net Worth of at least $860,000,000.

(ii) Indebtedness to Adjusted Tangible Net Worth Ratio. PennyMac Corp.’s ratio of Indebtedness (on and off balance sheet) to Adjusted Tangible Net Worth shall not exceed 10:1. PennyMac Holdings’ ratio of Indebtedness (on and off balance sheet) to Adjusted Tangible Net Worth shall not exceed 5:1. PMIT’s ratio of Indebtedness (on and off balance sheet) to Adjusted Tangible Net Worth shall not exceed 5:1.

(iii) Maintenance of Profitability. Each Seller shall maintain profitability of at least $1.00 in Net Income for at least one of the two prior Test Periods.

(iv) Maintenance of Liquidity. The Sellers and PMIT shall ensure that, as of the end of each calendar month, they have consolidated cash and Cash Equivalents other than Restricted Cash in amounts not less than (i) with respect to PennyMac Corp., $10,000,000, (ii) with respect to PennyMac Holdings, $10,000,000, (iii) with respect to the Sellers, $25,000,000 in the aggregate, and (iv) with respect to PMIT, $40,000,000.”

SECTION 4. Representations and Warranties. Section 15 of the Existing Repurchase Agreement is hereby amended by deleting Section 15.h in its entirety and replacing it with the following:

“h. Breach of Non-Specified Representation or Covenant. A breach by any Seller or Guarantor of any other representation, warranty or covenant set forth in this Agreement in any material respect (and not otherwise specified in Sections 15(f) and (g) above), if such breach is not cured within five (5) Business Days (other than the representations and warranties set forth in Schedule 1, which shall be considered solely for the purpose of determining the Asset Value, the existence of a Margin Deficit and the obligation to repurchase such Purchased Mortgage Loan or pay the Release Price with respect to such REO Property or Trust Mortgage Loan, as applicable) unless (i) such party shall have made any such representations and warranties with knowledge that they were materially false or misleading at the time made, (ii) any such representations and warranties have been determined by Buyer in its sole discretion to be materially false or misleading on a regular basis, or (iii) Buyer, in its sole discretion, determines that such breach of a material representation, warranty or covenant materially and

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adversely affects (A) the condition (financial or otherwise) of such party, its Subsidiaries or Affiliates; or (B) Buyer’s determination to enter into this Agreement or Transactions or Purchase Price Increases, as applicable, with such party, then such breach shall constitute an immediate Event of Default and Sellers shall have no cure right hereunder).”

SECTION 5. Notice Information. Section 20 of the Existing Repurchase Agreement is hereby amended by deleting the notice information for PennyMac Corp., PennyMac Mortgage Investment Trust Holdings I, LLC and Guarantor and replacing it with the following:

“If to Sellers or Guarantor:

PennyMac Corp.

6101 Condor Drive

Moorpark, CA 93021

Attention: Pamela Marsh/Michael Wong

Phone Number: (805) 330-6059/(818) 224-7055

E-mail: pamela.marsh@pnmac.com; michael.wong@pnmac.com

with a copy to:

PennyMac Corp.

6101 Condor Drive

Moorpark, CA 93021

Attention: Jeff Grogin

Phone Number: (818) 224-7050

E-mail: jeff.grogin@pnmac.com”

SECTION 6. Commitment Fee. Section 34 of the Existing Repurchase Agreement is hereby amended by deleting such Section in its entirety and replacing it with the following:

“34. Commitment Fee. Sellers shall pay to Buyer in immediately available funds, due and owing on the date hereof, a non-refundable Commitment Fee. The Commitment Fee shall be a per annum amount set forth in the Pricing Side Letter paid in equal installments every three months on the applicable Price Differential Payment Date. All such payments shall be made in Dollars, in immediately available funds, without deduction, set-off or counterclaim, to Buyer at such account designated by Buyer.”

SECTION 7. Conditions Precedent. This Amendment shall become effective as of the date hereof (the “Amendment Effective Date”), subject to the satisfaction of the following conditions precedent:

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7.1 Delivered Documents. On the Amendment Effective Date, the Buyer shall have received the following documents, each of which shall be satisfactory to the Buyer in form and substance:

(a) this Amendment, executed and delivered by duly authorized officers of the Buyer, the Sellers and the Guarantor;

(b) Amendment No. 2, dated as of the date hereof to that certain Amended and Restated Pricing Side Letter dated August 25, 2011, among Buyer, Sellers and Guarantor; and

(c) such other documents as the Buyer or counsel to the Buyer may reasonably request.

SECTION 8. Representations and Warranties. Each Seller hereby represents and warrants to the Buyer that each Seller is in compliance with all the terms and provisions set forth in the Repurchase Agreement on its part to be observed or performed, and that no Event of Default has occurred and is continuing, and hereby confirms and reaffirms the representations and warranties contained in Section 13 of the Repurchase Agreement.

SECTION 9. Limited Effect. Except as expressly amended and modified by this Amendment, the Existing Repurchase Agreement shall continue to be, and shall remain, in full force and effect in accordance with its terms.

SECTION 10. Counterparts. This Amendment may be executed by each of the parties hereto on any number of separate counterparts (including by facsimile or .pdf), each of which shall be an original and all of which taken together shall constitute one and the same instrument.

SECTION 11. Severability. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement.

SECTION 12. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE CHOICE OF LAW PROVISIONS THEREOF.

SECTION 13. Reaffirmation of Guaranty. The Guarantor hereby ratifies and affirms all of the terms, covenants, conditions and obligations of the Guaranty and acknowledges and agrees that the term “Obligations” as used in the Guaranty shall apply to all of the Obligations of the Sellers to Buyer under the Repurchase Agreement and Pricing Side Letter, as amended hereby.

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IN WITNESS WHEREOF, the parties have caused their names to be signed hereto by their respective officers thereunto duly authorized as of the day and year first above written.

Credit Suisse First Boston Mortgage Capital LLC, as Buyer
By:	/s/ Adam Loskove
	Name:	Adam Loskove
	Title:	Vice President

PennyMac Corp., as a Seller
By:	/s/ Pamela Marsh
	Name:	Pamela Marsh
	Title:	Managing Director, Treasurer

PennyMac Mortgage Investment Trust Holdings I, LLC, as a Seller
By:	/s/ Pamela Marsh
	Name:	Pamela Marsh
	Title:	Managing Director, Treasurer

PennyMac Mortgage Investment Trust, as Guarantor
By:	/s/ Pamela Marsh
	Name:	Pamela Marsh
	Title:	Managing Director, Treasurer

Signature Page to Amendment No. 3 to Amended and Restated Master Repurchase Agreement

EX-10.72

Exhibit 10.72

EXECUTION

AMENDMENT NUMBER THREE

to the

MASTER REPURCHASE AGREEMENT

Dated as of May 24, 2012,

among

PENNYMAC CORP.,

PENNYMAC LOAN SERVICES, LLC

and

CITIBANK, N.A.

This AMENDMENT NUMBER THREE (this “Amendment Number Three”) is made this 31^st day of December, 2012, among PENNYMAC CORP. (“Seller”), PENNYMAC LOAN SERVICES, LLC (“Servicer”) and CITIBANK, N.A. (“Buyer”), to the Master Repurchase Agreement, dated as of May 24, 2012, among Seller, Servicer and Buyer, as such agreement may be amended from time to time (the “Agreement”). Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Agreement.

RECITALS

WHEREAS, Seller and Buyer have agreed to amend the Agreement to modify certain definitions, financial and reporting representations, warranties, certifications and covenants, as more specifically set forth herein; and

WHEREAS, as of the date hereof, Seller represents to Buyer that the Seller Parties are in full compliance with all of the terms and conditions of the Agreement and each other Program Document and no Default or Event of Default has occurred and is continuing under the Agreement or any other Program Document.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and for the mutual covenants herein contained, the parties hereto hereby agree as follows:

SECTION 1. Amendment. Effective as of December 31, 2012 (the “Amendment Effective Date”), the Agreement is hereby amended as follows:

(a) Section 2 of the Agreement is hereby amended by deleting the definition of “Adjusted Tangible Net Worth” in its entirety and replacing it with the following:

“Adjusted Tangible Net Worth” shall mean, with respect to any Person, as of any date of determination, the excess of such Person’s total assets (including mortgage servicing rights in an amount less than or equal to the MSR Value Cap), net of goodwill and intangible assets, over its total liabilities, calculated in accordance with GAAP as reflected on such Person’s financial statements.

(b) Section 2 of the Agreement is hereby amended by adding the new definition of “MSR Value Cap” as follows:

“MSR Value Cap” shall mean the value assigned to a Person’s aggregate portfolio of mortgage servicing rights; provided, however, in any case such value shall not exceed the product of (i) 4.0, multiplied by (ii) the weighted average servicing fee for all mortgage loans underlying the mortgage servicing rights, multiplied by (iii) the unpaid principal balance of the mortgage loans underlying the mortgage servicing rights.

(c) Section 2 of the Agreement is hereby amended by deleting the definition of “Valuation Agent” in its entirety and replacing it with the following:

“Valuation Agent” shall mean a qualified, unaffiliated third party (acceptable to Buyer in its sole discretion including but not limited to any independent third party appointed by the Buyer in its sole discretion pursuant to Section 43(e)) that specializes in establishing a fair market value of servicing portfolios with respect to mortgage loans substantially similar to the Loans originated or acquired by a Seller Party, as applicable.

(d) Section 12 of the Agreement is hereby amended by deleting clause “(p)(i)” contained therein, in its entirety and replacing it with the following:

(i) (A) the ratio of Seller’s Total Indebtedness to its Adjusted Tangible Net Worth is not greater than 10:1; (B) Seller’s Liquidity is not less than $7,500,000 as of the last day of the prior calendar month; (C) Seller’s consolidated net income has been equal to or greater than $1.00 for at least one (1) of the previous two (2) consecutive fiscal quarters, as of the end of the last fiscal quarter; and (D) Seller’s Adjusted Tangible Net Worth is greater than or equal to $140,000,000.

(e) Section 13 of the Agreement is hereby amended by adding new clause “(a)(xvii)” thereto as follows:

(xvii) Within (i) three (3) Business Days after receipt by a Seller Party (to the extent such Seller Party owns any servicing rights with respect to any mortgage loans) of a request from Buyer, the servicing valuation conducted by such Seller Party and used to support the calculation of the servicing multiple used in determining the book value of such Seller Party’s servicing portfolio in accordance with GAAP; and (ii) if so requested by Buyer, within (3) Business Days of its completion, the servicing valuation conducted by a Valuation Agent with respect to the value of such Seller Party’s servicing portfolio in accordance with GAAP;

(f) Section 13 of the Agreement is hereby amended by deleting clause (q)(i) contained therein and replacing it with the following:

(i) Financial Covenants of Seller. Seller shall comply with the following financial covenants: (A) the ratio of Seller’s Total Indebtedness to its Adjusted Tangible Net Worth shall not at any time be greater than 10:1; (B) Seller shall maintain Liquidity as of the last day of the prior calendar month in an amount of not less than $7,500,000; (C) the Adjusted Tangible Net Worth of Seller shall at all times be greater than $140,000,000; and (D) Seller’s consolidated net income shall be equal to or greater than $1.00 for at least one (1) of the previous two (2) consecutive fiscal quarters, as of the end of each fiscal quarter.

(a) Exhibit A of the Agreement is hereby amended by deleting the Exhibit in its entirety and replacing it with Exhibit A attached hereto.

SECTION 2. Fees and Expenses. Seller agrees to pay to Buyer all reasonable out of pocket costs and expenses incurred by Buyer in connection with this Amendment Number Three (including any Commitment Fee due an payable, all reasonable fees and out of pocket costs and expenses of the Buyer’s legal counsel) in accordance with Sections 23 and 25 of the Agreement.

2

SECTION 3. Representations. Seller hereby represents to Buyer that as of the date hereof, Seller is in full compliance with all of the terms and conditions of the Agreement and each other Program Document and no Default or Event of Default has occurred and is continuing under the Agreement or any other Program Document.

SECTION 4. Binding Effect; Governing Law. This Amendment Number Three shall be binding and inure to the benefit of the parties hereto and their respective successors and permitted assigns. THIS AMENDMENT NUMBER THREE SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF (EXCEPT FOR SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

SECTION 5. Counterparts. This Amendment Number Three may be executed by each of the parties hereto on any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument.

SECTION 6. Limited Effect. Except as amended hereby, the Agreement shall continue in full force and effect in accordance with its terms. Reference to this Amendment Number Three need not be made in the Agreement or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to, or with respect to, the Agreement, any reference in any of such items to the Agreement being sufficient to refer to the Agreement as amended hereby.

[Signature Page Follows]

3

IN WITNESS WHEREOF, Seller, Servicer and Buyer have caused this Amendment Number Three to be executed and delivered by their duly authorized officers as of the day and year first above written.

PENNYMAC CORP.
(Seller)
By:	/s/ Anne D. McCallion
Name: Anne D. McCallion
Title: Chief Financial Officer

PENNYMAC LOAN SERVICES, LLC,
(Servicer)
By:	/s/ Anne D. McCallion
Name: Anne D. McCallion
Title: Vice President, Finance

CITIBANK, N.A.
(Buyer)
By:	Susan Mills
Name: Susan Mills
Title: Vice President, Citibank, N.A.

Amendment Number Three to Master Repurchase Agreement (PMAC Agency)

EX-10.80

Exhibit 10.80

EXECUTION

AMENDMENT NO. 1

TO MASTER REPURCHASE AGREEMENT

Amendment No. 1, dated as of May 8, 2013 (this “Amendment”), among CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC (the “Buyer”), PENNYMAC OPERATING PARTNERSHIP, L.P. (the “Seller”) and PENNYMAC MORTGAGE INVESTMENT TRUST (the “Guarantor”).

RECITALS

The Buyer, the Seller and the Guarantor are parties to that certain Master Repurchase Agreement, dated as of September 28, 2012 (as amended, the “Existing Repurchase Agreement”; and as further amended by this Amendment, the “Repurchase Agreement”). The Guarantor is a party to that certain Guaranty (the “Guaranty”), dated as of September 28, 2012, as the same may be further amended from time to time, by the Guarantor in favor of Buyer. Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Existing Repurchase Agreement and Guaranty, as applicable.

The Buyer, the Seller and the Guarantor have agreed, subject to the terms and conditions of this Amendment, that the Existing Repurchase Agreement be amended to reflect certain agreed upon revisions to the terms of the Existing Repurchase Agreement. As a condition precedent to amending the Existing Repurchase Agreement, the Buyer has required the Guarantor to ratify and affirm the Guaranty on the date hereof.

Accordingly, the Buyer, the Seller and the Guarantor hereby agree, in consideration of the mutual promises and mutual obligations set forth herein, that the Existing Repurchase Agreement is hereby amended as follows:

SECTION 1. Definitions. Section 2 of the Existing Repurchase Agreement is hereby amended by:

1.1 deleting the definitions of “Aged 75 Day Loan”, “Aged 90 Day Loan”, “Aging Limit”, “Mortgage Loan” and “Termination Date” in their entirety and replacing them with the following:

“Aged 75 Day Loan” means a Mortgage Loan other than a Jumbo Mortgage Loan which has been subject to a Transaction hereunder for a period of greater than 60 days but not greater than 75 days.

“Aged 90 Day Loan” means a Mortgage Loan other than a Jumbo Mortgage Loan which has been subject to a Transaction hereunder for a period of greater than 75 days but not greater than 90 days.

“Aging Limit” means (i) with respect to Aged Loans other than Aged Jumbo Loans, 90 days and (ii) with respect to Aged Jumbo Loans, 60 days.

- 1 -

“Mortgage Loan” means any closed Conforming Mortgage Loan, FHA Loan, VA Loan, Jumbo Mortgage Loan or Conforming High LTV Loan, which is a fixed or floating-rate, one-to-four-family residential mortgage loan evidenced by a promissory note and secured by a first lien mortgage, which satisfies the requirements set forth in the Underwriting Guidelines and Section 13.b hereof; provided, however, that, except with respect to Conforming High LTV Loans and as expressly approved in writing by Buyer, Mortgage Loans shall not include any “high-LTV” loans (i.e., a mortgage loan having a loan-to-value ratio in excess of (a) with respect to FHA Loans or VA Loans, 97%, (b) with respect to Conforming Mortgage Loans, 95% (provided that Conforming Mortgage Loans, other than Conforming High LTV Loans, with an LTV of 80% or higher must be covered by primary mortgage insurance) or (c) such lower percentage set forth in the Underwriting Guidelines).

“Termination Date” means the earliest of (a) the Rolling Termination Date; provided that if the Buyer does not deliver a Rolling Termination Notice on or before November 1, 2013, the Termination Date shall be October 31, 2014 and (b) the date of the occurrence of an Event of Default.

1.2 adding the definitions of “Aged Jumbo Loan”, “Jumbo Mortgage Loan”, “Restricted Cash”, “Rolling Termination Date” and “Rolling Termination Notice” in their proper alphabetical order:

“Aged Jumbo Loan” means a Jumbo Mortgage Loan which is an Aged 60 Day Loan.

“Jumbo Mortgage Loan” means a Mortgage Loan with an original principal balance in an amount in excess of the then applicable conventional conforming limits, including general limits and high-cost area limits, for Mortgaged Properties securing Mortgage Loans in such county or local area; provided, however, that Jumbo Mortgage Loans shall not include any Mortgage Loan with an original principal balance in excess of $2,000,000.

“Restricted Cash” means for any Person, any amount of cash of such Person that is contractually required to be set aside, segregated or otherwise reserved.

“Rolling Termination Date” means, with respect to any date, the date which is 364 days from such date; provided, that on and after the date, if any, on which the Buyer delivers to the Seller a Rolling Termination Notice (the “Rolling Termination Notice Date”) the Rolling Termination Date shall be fixed at the date that is 364 days following the Rolling Termination Notice Date.

“Rolling Termination Notice” means written notice that the Buyer shall no longer roll the Rolling Termination Date forward.

SECTION 2. Covenants. Section 14 of the Existing Repurchase Agreement is hereby amended by deleting Section 14.dd in its entirety and replacing it with the following:

“dd. Financial Covenants. Seller and Guarantor shall at all times comply with all financial covenants and/or financial ratios set forth below.

- 2 -

(i) Adjusted Tangible Net Worth. (A) Seller shall maintain an Adjusted Tangible Net Worth of at least $700,000,000, and (B) Guarantor shall maintain an Adjusted Tangible Net Worth of at least $860,000,000.

(ii) Indebtedness to Adjusted Tangible Net Worth Ratio. Seller’s ratio of Indebtedness (on and off balance sheet) to Adjusted Tangible Net Worth shall not exceed 5:1. Guarantor’s ratio of Indebtedness (on and off balance sheet) to Adjusted Tangible Net Worth shall not exceed 5:1.

(iii) Maintenance of Profitability. Seller shall maintain profitability of at least $1.00 in Net Income for at least one of the two prior Test Periods.

(iv) Maintenance of Liquidity. The Seller and the Guarantor shall ensure that, as of the end of each calendar month, they have consolidated cash and Cash Equivalents other than Restricted Cash in amounts not less than (i) with respect to the Seller, $40,000,000, and (ii) with respect to the Guarantor, $40,000,000.”

SECTION 3. Conditions Precedent. This Amendment shall become effective as of the date hereof (the “Amendment Effective Date”), subject to the satisfaction of the following conditions precedent:

3.1 Delivered Documents. On the Amendment Effective Date, the Buyer shall have received the following documents, each of which shall be satisfactory to the Buyer in form and substance:

(a) this Amendment, executed and delivered by duly authorized officers of the Buyer, the Seller and the Guarantor;

(b) Amendment No. 2, dated as of the date hereof to that certain Pricing Side Letter dated September 28, 2012, among Buyer, Seller and Guarantor; and

(c) such other documents as the Buyer or counsel to the Buyer may reasonably request.

SECTION 4. Representations and Warranties. Seller hereby represents and warrants to the Buyer that it is in compliance with all the terms and provisions set forth in the Repurchase Agreement on its part to be observed or performed, and that no Event of Default has occurred and is continuing, and hereby confirms and reaffirms the representations and warranties contained in Section 13 of the Repurchase Agreement.

SECTION 5. Limited Effect. Except as expressly amended and modified by this Amendment, the Existing Repurchase Agreement shall continue to be, and shall remain, in full force and effect in accordance with its terms.

SECTION 6. Counterparts. This Amendment may be executed by each of the parties hereto on any number of separate counterparts (including by facsimile or .pdf), each of which shall be an original and all of which taken together shall constitute one and the same instrument.

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SECTION 7. Severability. Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

SECTION 8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE CHOICE OF LAW PROVISIONS THEREOF.

SECTION 9. Reaffirmation of Guaranty. The Guarantor hereby ratifies and affirms all of the terms, covenants, conditions and obligations of the Guaranty and acknowledge and agree that the term “Obligations” as used in the Guaranty shall apply to all of the Obligations of Seller to Buyer under the Pricing Side Letter and the Repurchase Agreement, as amended hereby.

[Remainder of page intentionally left blank]

- 4 -

IN WITNESS WHEREOF, the parties have caused their names to be signed hereto by their respective officers thereunto duly authorized as of the day and year first above written.

Credit Suisse First Boston Mortgage Capital LLC, as Buyer
By:	/s/ Adam Loskove
	Name:	Adam Loskove
	Title:	Vice President

PennyMac Operating Partnership, L.P., as Seller
By:	/s/ Pamela Marsh
	Name:	Pamela Marsh
	Title:	Managing Director, Treasurer

PennyMac Mortgage Investment Trust, as Guarantor
By:	/s/ Pamela Marsh
	Name:	Pamela Marsh
	Title:	Managing Director, Treasurer

Signature Page to Amendment No. 1 to Master Repurchase Agreement

EX-10.85

Exhibit 10.85

AMENDMENT NO. 1

TO MORTGAGE BANKING AND

WAREHOUSE SERVICES AGREEMENT

Amendment No. 1 to Mortgage Banking and Warehouse Services Agreement, dated as of March 1, 2013 (the “Amendment”), by and between PennyMac Loan Services, LLC, a Delaware limited liability company (the “Service Provider”), and PennyMac Corp., Delaware corporation (the “Company”).

RECITALS

WHEREAS, the Service Provider and the Company are parties to that certain Mortgage Banking and Warehouse Services Agreement, dated as of February 1, 2013 (the “Existing MBWS Agreement” and, as amended by this Amendment, the “MBWS Agreement”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Existing MBWS Agreement.

WHEREAS, the Service Provider and the Company have agreed, subject to the terms and conditions of this Amendment, that the Existing MBWS Agreement be amended to reflect certain agreed upon revisions to the terms of the Existing MBWS Agreement.

NOW, THEREFORE, in consideration of the mutual premises and mutual obligations set forth herein, the Service Provider and the Company hereby agree that the Existing MBWS Agreement is hereby amended as follows:

SECTION 1. Exhibits. Exhibit A of the Existing MBWS Agreement is hereby amended by deleting it in its entirety and replacing it with the form attached hereto as Exhibit A.

SECTION 2. Conditions Precedent. This Amendment shall become effective as of the date first set forth above (the “Amendment Effective Date”), subject to the satisfaction of the following conditions precedent:

2.1 Delivered Documents. On the Amendment Effective Date, each party shall have received the following documents, each of which shall be satisfactory to such party in form and substance:

(a) this Amendment, executed and delivered by duly authorized officers of the Service Provider and the Company; and

(b) such other documents as such party or counsel to such party may reasonably request.

SECTION 3. Representations and Warranties. Each party represents that it is in compliance in all material respects with all the terms and provisions set forth in the Existing MBWS Agreement on its part to be observed or performed.

1

SECTION 4. Limited Effect. Except as expressly amended and modified by this Amendment, the Existing MBWS Agreement shall continue to be, and shall remain, in full force and effect in accordance with its terms.

SECTION 5. GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

SECTION 6. Counterparts. This Amendment may be executed in one or more counterparts and by different parties hereto on separate counterparts, each of which, when so executed, shall constitute one and the same agreement.

SECTION 7. Conflicts. The parties hereto agree that in the event there is any conflict between the terms of this Amendment, and the terms of the Existing MBWS Agreement, the provisions of this Amendment shall control.

[SIGNATURE PAGE FOLLOWS]

2

IN WITNESS WHEREOF, the parties have caused their names to be signed hereto by their respective officers thereunto duly authorized as of the day and year first above written.

The Service Provider:	PENNYMAC LOAN SERVICES, LLC
	By:	/s/ Anne D. McCallion
		Name: Anne D. McCallion
		Title:   Vice President, Finance
The Company:	PENNYMAC CORP.
	By:	/s/ Stanford L. Kurland
		Name: Stanford L. Kurland
		Title:   Chief Executive Officer

3

EXHIBIT A

(Compensation)

Fulfillment Fees

The Fulfillment Fee for each Mortgage Loan purchased from an approved Correspondent shall equal the product of (a) in the case of a HARP Mortgage Loan with an LTV of 105% or less, the product of (i) .80%, and (ii) the aggregate unpaid principal balance of such HARP Mortgage Loan, (b) in the case of a HARP Mortgage Loan with an LTV of greater than 105%, the product of (i) 1.20%, and (ii) the aggregate unpaid principal balance of such HARP Mortgage Loan, (c) in the case of a Fannie Mae Mortgage Loan or a Freddie Mac Mortgage Loan, (i) the product of .50% and (ii) the aggregate unpaid principal balance of such Fannie Mae Mortgage Loan or Freddie Mac Mortgage Loan, (d) in the case of a Ginnie Mae Mortgage Loan, (i) the product of .88% and (ii) the aggregate unpaid principal balance of such Ginnie Mae Mortgage Loan, and (e) in the case of any other Mortgage Loan not otherwise contemplated in (a)-(d) above, the product of (i) .50%, and (ii) the aggregate unpaid principal balance of such Mortgage Loan. The Fulfillment Fee with respect to each such Mortgage Loan shall be due and payable by the Company upon the funding of such Mortgage Loan by the Company.

In the event the Company purchases Mortgage Loans with an aggregate unpaid principal balance in any month of greater than $2.5 billion and less than or equal to $5.0 billion, the Service Provider shall reimburse the Company an amount equal to the product of (i) .025%, (ii) the amount of unpaid principal balance in excess of $2.5 billion, and (iii) the percentage of the aggregate unpaid principal balance relating to Mortgage Loans for which the Service Provider collected Fulfillment Fees for such month. In the event the Company purchases Mortgage Loans with an aggregate unpaid principal balance in any month of greater than $5.0 billion, the Service Provider shall reimburse the Company an amount equal to the product of (i) .05%, (ii) the amount of unpaid principal balance in excess of $5.0 billion, and (iii) the percentage of the aggregate unpaid principal balance relating to Mortgage Loans for which the Service Provider collected Fulfillment Fees in such month. Any such reimbursement due from the Service Provider to the Company as provided herein shall be paid within five (5) Business Days of such determination.

Early Purchase Program Fees

With respect to each Early Purchase Program, the Service Provider shall be entitled to fees that accrue (a) at a rate equal to $25,000 per annum, and (b) in the amount of $50 with respect to each Mortgage Loan purchased by the Company thereunder. The fee described in clause (a) shall accrue and be payable monthly not later than the last Business Day of each month from and after the execution of the Early Purchase Program documentation. The fee described in clause (b) shall accrue and be payable monthly not later than the fifth (5^th) Business Day following the month during which the related Mortgage Loan first becomes subject to a Transaction.

A-1

Notwithstanding anything in the Agreement to the contrary, the Service Provider shall not be entitled to collect the Early Purchase Program Fees described in clause (b) above with respect to any Mortgage Loans purchased by the Company under an Early Purchase Program to the extent the Service Provider already collected Warehouse Fees with respect to such Mortgage Loan under a Facility. In such instances, the Service Provider shall be entitled to collect only the Warehouse Fees as described in clause (b) below under the heading Warehouse Fees.

Warehouse Fees

With respect to each Facility, the Service Provider shall be entitled to fees that accrue (a) at a rate equal to $25,000 per annum, and (b) in the amount of $50 with respect to each Mortgage Loan that is subject to a Transaction thereunder. The fee described in clause (a) shall accrue and be payable monthly not later than the last Business Day of each month from and after the execution of the related Facility Documents. The fee described in clause (b) shall accrue and be payable monthly not later than the fifth (5^th) Business Day following the month during which the related Mortgage Loan first becomes subject to a Transaction.

Notwithstanding anything in the Agreement to the contrary, the Service Provider shall not be entitled to collect the Warehouse Fees described in clause (a) above with respect to any Facility during any month in which the Transaction Counterparty thereunder is also a Correspondent under an Early Purchase Program. In such instances, the Service Provider shall be entitled to collect only the Early Purchase Program Fees as described in clause (a) above under the heading Early Purchase Program Fees.

A-2

EX-10.89

Exhibit 10.89

Execution Version

Amended and Restated Confidentiality Agreement

March 1, 2013

Private National Mortgage Acceptance Company, LLC

6101 Condor Drive

Moorpark, California 92021

Attention: Chief Executive Officer

Re: Confidentiality Agreement

Ladies and Gentlemen:

This Amended and Restated Confidentiality Agreement amends, supersedes and restates in its entirety that certain Confidentiality Agreement, dated February 6, 2013, by and between Private National Mortgage Acceptance Company, LLC and PennyMac Mortgage Investment Trust.

In connection with your provision of services pursuant to (i) the Amended and Restated Management Agreement, effective as of February 1, 2013, by and among PNMAC Capital Management, LLC, PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P., (ii) the Second Amended and Restated Flow Servicing Agreement, dated as of March 1, 2013, by and between PennyMac Operating Partnership, L.P. and PennyMac Loan Services, LLC, (iii) the Master Spread Acquisition and MSR Servicing Agreement, effective as of February 1, 2013, by and between PennyMac Loan Services, LLC and PennyMac Operating Partnership, L.P., (iv) the Mortgage Banking and Warehouse Services Agreement, effective as of February 1, 2013, by and between PennyMac Loan Services, LLC and PennyMac Corp., and (v) the MSR Recapture Agreement, effective as of February 1, 2013, by and between PennyMac Loan Services, LLC and PennyMac Corp. (as each may be amended from time to time and, collectively, the “Management Agreements”), PennyMac Mortgage Investment Trust and/or its subsidiaries, Affiliates (as hereinafter defined) or divisions (collectively, with such subsidiaries, Affiliates and divisions, the “Company”), has made and is prepared to continue to make available to you and your Representatives (as hereinafter defined) certain information concerning the business, financial condition, operations, assets and liabilities of the Company. As a condition to such information being furnished to you and your Representatives, you agree that you will, and will cause your Representatives to, treat the Confidential Material (as hereinafter defined) in accordance with the provisions of this letter agreement and take or abstain from taking certain other actions as set forth herein.

March 1, 2013

The terms “you,” “your” and “yourself” shall refer to Private National Mortgage Acceptance Company, LLC and its Affiliates, and Private National Mortgage Acceptance Company, LLC agrees to cause its Affiliates to be bound by the terms of this letter agreement.

The term “Affiliate” shall mean (i) any person or entity directly or indirectly controlled by Private National Mortgage Acceptance Company, LLC or the Company, as applicable, (ii) any executive officer or general partner of such entity and (iii) any legal entity for which such person or entity acts as an executive officer or general partner.

The term “Representatives” (i) with respect to you, shall only include your officers, managers, directors, general partners, employees, outside counsel, accountants and consultants and, subject to (a) receipt of prior consent of the Company and (b) compliance with Section 2 below, shall also include your financial advisors, potential sources of equity or debt financing (and their respective counsel), and (ii) with respect to the Company, shall include its members, directors, shareholders, officers, employees, agents, Affiliates, partners and advisors and those of its subsidiaries, Affiliates and/or divisions (including, without limitation, attorneys, accountants, consultants and financial advisors).

1. Confidential Material. The term “Confidential Material” shall mean all information relating, directly or indirectly, to the Company or the business, products, markets, condition (financial or other), operations, assets, liabilities, results of operations, cash flows or prospects of the Company (whether prepared by the Company, its advisors or otherwise) which is delivered, disclosed or furnished by or on behalf of the Company to you or to your Representatives, before, on or after the date hereof, regardless of the manner in which it is delivered, disclosed or furnished, or which you or your Representatives otherwise learn or obtain, through observation or through analysis of such information, data or knowledge, and shall also be deemed to include all notes, analyses, compilations, studies, forecasts, interpretations or other documents prepared by you or your Representatives that contain, reflect or are based upon, in whole or in part, the information delivered, disclosed or furnished to you or your Representatives pursuant hereto. Notwithstanding any other provision hereof, the term Confidential Material shall not include information which (i) is or becomes generally available to the public other than as a result of a disclosure by you or your Representatives, (ii) was within your possession and developed by you prior to it being furnished to you by or on behalf of the Company, provided that the source of such information was not known by you to be or you had no reasonable basis (after due inquiry) for concluding that the source of such information was bound by a confidentiality agreement with, or other contractual, legal or fiduciary obligation of confidentiality to, the Company or any other party with respect to such information or (iii) becomes available to you on a non-confidential basis from a source other than the Company or any of its Representatives, provided that such source is not known by you to be or you do not know or have reason to believe (after due inquiry) that the source is bound by a confidentiality agreement with, or other contractual, legal or fiduciary obligation of confidentiality to, the Company or any other party with respect to such information.

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March 1, 2013

2. Use and Disclosure of Confidential Material. You recognize and acknowledge the competitive value and confidential nature of the Confidential Material and the damage that could result to the Company if any information contained therein is disclosed to a third party. You hereby agree that you and your Representatives shall use the Confidential Material solely for the purpose of providing services pursuant to the Management Agreements and for no other purpose, that the Confidential Material will not be used in any way detrimental to the Company, that the Confidential Material will be kept confidential and that you and your Representatives will not disclose any of the Confidential Material in any manner whatsoever; provided, however, that (i) you may make any disclosure of the Confidential Material to which the Company gives its prior written consent and (ii) any of the Confidential Material may be disclosed to your Representatives who need to know such information for the purpose of providing services pursuant to the Management Agreements, who are provided with a copy of this letter agreement and who agree in a writing signed and delivered to us to be bound by the terms hereof. You shall maintain a list of those Representatives to whom Confidential Material has been disclosed (which list shall be presented to the Company upon request). In any event, you agree to undertake reasonable precautions to safeguard and protect the confidentiality of the Confidential Material, to accept responsibility for any breach of this letter agreement by you or any of your Representatives, and, at your sole expense, to take all reasonable measures (including, but not limited to, court proceedings) to restrain yourself and your Representatives from prohibited or unauthorized disclosure or uses of the Confidential Material.

In the event that you or any of your Representatives are requested or required (by oral questions, interrogatories, requests for information or documents in legal proceedings, subpoena, civil investigative demand or other similar legal process) to disclose any of the Confidential Material, you shall provide the Company with prompt written notice of any such request or requirement so that the Company may in its sole discretion seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this letter agreement. If, in the absence of a protective order or other remedy or the receipt of a waiver by the Company, you or any of your Representatives are nonetheless, in the written opinion of outside legal counsel, legally compelled to disclose Confidential Material to any tribunal or else stand liable for contempt or suffer other censure or penalty, you or your Representatives may, without liability hereunder, disclose to such tribunal only that portion of the Confidential Material which such counsel advises you is legally required to be disclosed, provided that you use your reasonable best efforts to preserve the confidentiality of the Confidential Material, including, without limitation, by cooperating with the Company to obtain an appropriate protective order or other reliable assurance that confidential treatment will be accorded the Confidential Material by such tribunal; and provided further that you shall promptly notify the Company of (i) your determination to make such disclosure and (ii) the nature, scope and contents of such disclosure.

3. Return and Destruction of Confidential Material. At any time upon the reasonable request of the Company (taking into account your duties under the Management Agreements), you will as directed by the Company promptly deliver, at your expense, to the Company or destroy Confidential Material (and any copies thereof) furnished to you or your Representatives by or on behalf of the Company pursuant hereto. In the event of such a decision or request, the Confidential Material prepared by you or on your behalf shall be returned or

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March 1, 2013

destroyed and no copy thereof shall be retained, and, upon the Company’s request, you shall provide the Company with prompt written confirmation of your compliance with this paragraph. It is understood that information in an intangible or electronic format containing Confidential Material cannot be removed, erased or otherwise deleted from archival systems (also known as computer or system back-ups) but that such information will continue to be protected under the confidentiality requirements contained in this letter agreement and you and your Representatives shall continue to be bound by the obligations of confidentiality hereunder. Notwithstanding the foregoing, you and your Representatives may retain one copy of any work product prepared by you or them that contains Confidential Material to the extent necessary or advisable pursuant to applicable legal or regulatory requirements; provided that you and your Representatives shall continue to be bound by the obligations of confidentiality hereunder. Notwithstanding the return or destruction of the Confidential Material, you and your Representatives shall continue to be bound by your obligations of confidentiality and other obligations and agreements hereunder.

4. No Representations or Warranties. You understand, acknowledge and agree that neither the Company nor any of its Representatives makes any representation or warranty, express or implied, as to the accuracy or completeness of the Confidential Material. You agree that neither the Company nor any of its Representatives shall have any liability to you or to any of your Representatives relating to or resulting from the use of the Confidential Material or any errors therein or omissions therefrom, except as expressly provided in the Management Agreements.

5. Material Non-Public Information. You acknowledge and agree that you are aware (and that your Representatives are aware or, upon receipt of any Confidential Material, will be advised by you) that (i) the Confidential Material being furnished to you or your Representatives contains material, non-public information regarding the Company and (ii) the United States securities laws prohibit any persons who have material, nonpublic information from purchasing or selling securities of a company or from communicating such information to any person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell such securities in reliance upon such information.

6. Manager Standstill. You agree that, for a period of three years from the date of this letter agreement, unless approved in writing by a majority of the independent trustees of the Company, neither you nor any of your subsidiaries or Representatives acting on your behalf or on behalf of other persons acting in concert with you will in any manner, directly or indirectly: (a) publicly offer or propose, or effect or seek to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in, (i) any acquisition of any securities (or beneficial ownership thereof), or rights or options to acquire any securities (or beneficial ownership thereof), or any indebtedness or businesses of the Company or any of its subsidiaries or Affiliates, (ii) any tender or exchange offer, merger or other business combination involving the Company, any of the subsidiaries or Affiliates or assets of the Company or the subsidiaries or Affiliates constituting a significant portion of the consolidated assets of the Company and its subsidiaries or Affiliates, (iii) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to the Company or any of

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March 1, 2013

its subsidiaries or Affiliates, or (iv) any “solicitation” of “proxies” (as such terms are used in the proxy rules of the Securities and Exchange Commission) or consents to vote any voting securities of the Company or any of its Affiliates; (b) form, join or in any way participate in a “group” (as defined under the Securities Exchange Act of 1934, as amended) with respect to the Company or otherwise act in concert with any person in respect of any such securities; (c) otherwise act, alone or in concert with others, to remove any independent trustee of the Company or expand the size of the Board of Trustees of the Company; (d) take any action which would or would reasonably be expected to force the Company to make a public announcement regarding any of the types of matters set forth in (a) above; or (e) enter into any arrangements with any third party with respect to any of the foregoing. You further agree that, if at any time during such period, you or any of your subsidiaries or Representatives acting on your behalf are approached by any third party concerning your or their participation in a transaction involving any assets, indebtedness or business of, or securities issued by, the Company or any of its subsidiaries, you will promptly inform the Company of the nature of such transaction and the parties involved. Notwithstanding the foregoing, nothing herein shall limit the ability of (A) Private National Mortgage Acceptance Company, LLC or its Affiliates from acquiring securities of the Company in connection with (I) incentive fees earned under the Management Agreements, or (II) ordinary course compensation from the Company, or (B) any individual who is an Affiliate of Private National Mortgage Acceptance Company, LLC or its Affiliates from purchasing securities for his or her own account.

7. REIT Standstill. The Company agrees that, for a period of three years from the date of this letter agreement, unless approved in writing by you, the Company shall not, directly or indirectly: (a) publicly offer or propose, or effect or seek to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in, (i) any acquisition of any of your securities (or beneficial ownership thereof), or rights or options to acquire any of your securities (or beneficial ownership thereof), or any of your indebtedness or businesses, (ii) any tender or exchange offer, merger or other business combination involving you or your assets constituting a significant portion of your consolidated assets, (iii) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to you, or (iv) any “solicitation” of “proxies” (as such terms are used in the proxy rules of the Securities and Exchange Commission) or consents to vote any of your voting securities; (b) form, join or in any way participate in a “group” (as defined under the Securities Exchange Act of 1934, as amended) with respect to you or otherwise act in concert with any person in respect of any such securities; (c) otherwise act, alone or in concert with others, to remove any of your board members or expand the size of your board of directors; (d) take any action which would or would reasonably be expected to force you to make a public announcement regarding any of the types of matters set forth in (a) above; or (e) enter into any arrangements with any third party with respect to any of the foregoing. The Company further agrees that, if at any time during such period, the Company is approached by any third party concerning its participation in a transaction involving any of your assets, indebtedness or business, or securities issued by you, the Company will promptly inform you of the nature of such transaction and the parties involved. Notwithstanding the foregoing, nothing herein shall limit the ability of any individual from purchasing securities for his or her own account.

Page 5 of 8

March 1, 2013

8. No Waiver of Rights. It is understood and agreed that no failure or delay by the Company in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder.

9. Remedies. It is understood and agreed that money damages would not be an adequate remedy for any breach of this letter agreement by you or any of your Representatives and that the Company shall be entitled to equitable relief, including, without limitation, injunction and specific performance, as a remedy for any such breach. Such remedies shall not be deemed to be the exclusive remedies for a breach by you of this letter agreement but shall be in addition to all other remedies available at law or equity to the Company. You further agree not to raise as a defense or objection to the request or granting of such relief that any breach of this letter agreement is or would be compensable by an award of money damages, and you agree to waive any requirements for the securing or posting of any bond in connection with such remedy. You also agree to reimburse the Company for all costs incurred by the Company in connection with the enforcement of this letter agreement (including, without limitation, reasonable legal fees in connection with any litigation, including any appeal therefrom).

10. Governing Law. This letter agreement is for the benefit of the Company (and its subsidiaries and Affiliates) and its Representatives, and shall be governed by and construed in accordance with the laws of the State of California, without regard to the conflict of law provisions thereof that would result in the application of the laws of any other jurisdiction. You hereby irrevocably and unconditionally consent to submit to the exclusive jurisdiction of the courts of the State of California and of the United States District Court for any district within such state for the purpose of any actions, suits or proceedings arising out of or relating to this letter agreement and the transactions contemplated hereby (and you agree not to commence any action, suit or proceeding relating thereto except in such courts, and further agree that service of any process, summons, notice or document by U.S. registered mail to your address set forth above shall be effective service of process for any action, suit or proceeding brought against you in any such court). You hereby irrevocably and unconditionally waive any objection which you may now or hereafter have to the laying of venue of any action, suit or proceeding arising out of this letter agreement or the transactions contemplated hereby in the courts of the State of California or the United States District Court for any district within such state, and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

11. Entire Agreement. This letter agreement contains the entire agreement between you and the Company regarding its subject matter and supersedes all prior agreements, understandings, arrangements and discussions between you and the Company regarding such subject matter. During the term of this letter agreement, should any inconsistency be identified between this letter agreement and any of the provisions of any of the Management Agreements relating to the confidentiality of the Confidential Material, the terms of this letter agreement shall govern.

Page 6 of 8

March 1, 2013

12. No Modification. No provision in this letter agreement can be waived, modified or amended except by written consent of you and the Company, which consent shall specifically refer to the provision to be waived, modified or amended and shall explicitly make such waiver, modification or amendment.

13. Counterparts. This letter agreement may be signed by facsimile and in one or more counterparts, each of which shall be deemed an original but all of which shall be deemed to constitute a single instrument.

14. Severability. If any provision of this letter agreement is found to violate any statute, regulation, rule, order or decree of any governmental authority, court, agency or exchange, such invalidity shall not be deemed to affect any other provision hereof or the validity of the remainder of this letter agreement, and such invalid provision shall be deemed deleted herefrom to the minimum extent necessary to cure such violation.

15. Successors. This letter agreement shall inure to the benefit of, and be enforceable by, the Company and its successors and assigns.

16. Third Party Beneficiaries. You agree and acknowledge that this letter agreement is being entered into by and on behalf of the Company and its Affiliates, subsidiaries and divisions and that they shall be third party beneficiaries hereof, having all rights to enforce this letter agreement. You further agree that, except for such parties, nothing herein expressed or implied is intended to confer upon or give any rights or remedies to any other person under or by reason of this letter agreement.

17. Term. This letter agreement will terminate three years from the date hereof.

[Signature Page Follows]

Page 7 of 8

March 1, 2013

Please confirm your agreement with the foregoing by having a duly authorized officer of your organization sign and return one copy of this letter to the undersigned, whereupon this letter agreement shall become a binding agreement among you and the Company.

Very truly yours,
	PENNYMAC MORTGAGE INVESTMENT TRUST
	By:	/s/ Anne D. McCallion
		Name:	Anne D. McCallion
		Title:	Chief Financial Officer

CONFIRMED AND AGREED

as of the date written above:

PRIVATE NATIONAL MORTGAGE ACCEPTANCE COMPANY, LLC
By:	/s/ Anne D. McCallion
	Name:	Anne D. McCallion
	Title:	Chief Financial Officer

Page 8 of 8

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Stanford L. Kurland, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of PennyMac Mortgage Investment Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13(a)-15(e) and 15(d)-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15(d)-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Trustees (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2013

/s/ STANFORD L. KURLAND

Stanford L. Kurland

Chairman of the Board and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Anne D. McCallion, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of PennyMac Mortgage Investment Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13(a)-15(e) and 15(d)-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15(d)-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Trustees (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2013

/s/ ANNE D. MCCALLION

Anne D. McCallion

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of PennyMac Mortgage Investment Trust (the “Company”) for the quarter ended March 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stanford L. Kurland, Chairman of the Board and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ STANFORD L. KURLAND

Stanford L. Kurland

Chairman of the Board and Chief Executive Officer

May 10, 2013

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to PennyMac Mortgage Investment Trust and will be retained by PennyMac Mortgage Investment Trust and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of PennyMac Mortgage Investment Trust (the “Company”) for the quarter ended March 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Anne D. McCallion, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ ANNE D. MCCALLION

Anne D. McCallion

Chief Financial Officer

May 10, 2013

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to PennyMac Mortgage Investment Trust and will be retained by PennyMac Mortgage Investment Trust and furnished to the Securities and Exchange Commission or its staff upon request.

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Concentration of Risks (Tables)

3 Months Ended

Mar. 31, 2013

Consolidated Statements of Income and Cash Flows

As a result of consolidating the silo, the Company’s consolidated statements of income and cash flows for the three months ended March 31, 2012 include the following amounts related to the silo:

	Quarter ended March 31, 2012
	(in thousands)
Net income:
Net gain on mortgage loans	$	6,700
Interest income on mortgage loans	$	502
Interest expense	$	1,515
Loan servicing fees	$	585
Cash flows:
Repayments of mortgage loans	$	8,701
Repayments of borrowings under forward purchase agreements	$	27,129

Fair Value of Mortgage Loans (Including Forward Purchase Agreements) and REO Purchased for Investment Portfolio

The following table presents the fair value of mortgage loans (including forward purchase agreements) and REO purchased for its investment portfolio, including the CGM Assets:

	Quarter ended March 31,
	2013		2012
	(in thousands)
Investment portfolio purchases:
Loans	$	200,473	$	286
REO		—		53
	$	200,473	$	339
Investment portfolio purchases above through one or more subsidiaries of Citigroup, Inc.:
Loans	$	200,297	$	286
REO		—		53
	$	200,297	$	339

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Subsequent Events - Additional Information (Detail) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		1 Months Ended					1 Months Ended
	Mar. 31, 2013	Apr. 19, 2013 Subsequent Event [Member]	Apr. 30, 2013 Subsequent Event [Member] Exchangeable Senior Notes due 2020 [Member]	May 08, 2013 Subsequent Event [Member] NPL Facility [Member]	May 08, 2013 Subsequent Event [Member] NPL Facility [Member] PMITH [Member]	May 08, 2013 Subsequent Event [Member] NPL Facility [Member] PennyMac Corp. [Member]	May 08, 2013 Subsequent Event [Member] NPL Facility [Member] PMITH and PMC [Member]	May 08, 2013 Subsequent Event [Member] Re-warehouse Facility [Member]	May 08, 2013 Subsequent Event [Member] Re-warehouse Facility [Member] Operating Partnership [Member]	Mar. 31, 2013 Dividend Declared [Member]
Subsequent Event [Line Items]
Total purchase price of mortgage loans		$ 294.1
Cash dividend per share	$ 0.57
Dividend payable and declared date	May 31, 2013									April 23, 2013
Dividend recorded date	May 16, 2013
Issuance of debt through private offering			250
Percentage of interest on debt			5.375%
Approximate percentage of conversion premium			25.00%
Maturity date of debt instrument			May 01, 2020
Minimum tangible net worth				860	250	150		860	700
Unrestricted cash and cash equivalents				$ 40	$ 10	$ 10	$ 25	$ 40	$ 40
Maximum ratio of total liabilities to tangible net worth				5	5	10		5	10
Line of credit facility, covenant terms				Under the terms of the amendment to the NPL Facility, the Company modified certain of its financial covenants, which now include maintaining the following: (i) a minimum tangible net worth of $860 million at the Company, $250 million at PMITH and $150 million at PMC, (ii) unrestricted cash and cash equivalents, on a consolidated basis, in minimum amounts of $40 million at the Company, $10 million at each of PMITH and PMC, and $25 million at PMITH and PMC in the aggregate, (iii) a maximum ratio of total liabilities to tangible net worth of less than 5:1 at each of the Company and PMITH and 10:1 at PMC; and (iv) profitability at each of PMITH and PMC for at least one (1) of the previous two (2) consecutive fiscal quarters, as of the end of each fiscal quarter.				Under the terms of the amendment to the Re-warehouse Facility, we modified certain of our financial covenants, which now include maintaining the following: (i) a minimum tangible net worth of $860 million at the Company and $700 million at the Operating Partnership, (ii) unrestricted cash and cash equivalents, on a consolidated basis, in minimum amounts of $40 million at each of the Company and the Operating Partnership, (iii) a maximum ratio of total liabilities to tangible net worth of less than 5:1 at each of the Company and the Operating Partnership; and (iv) profitability at the Operating Partnership for at least one (1) of the previous two (2) consecutive fiscal quarters, as of the end of each fiscal quarter.

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Mortgage Loans at Fair Value Sold Under Agreements to Repurchase - Summary of Financial Information Relating to Mortgage Loans (Parenthetical) (Detail) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013 Mortgage Loans At Fair Value Sold Under Agreements To Repurchase [Member]	Dec. 31, 2012 Mortgage Loans At Fair Value Sold Under Agreements To Repurchase [Member]
Repurchase Agreement Counterparty [Line Items]
Debt issuance costs	$ 1,700,000	$ 417,000.0	$ 563,000	$ 199,000

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Real Estate Acquired in Settlement of Loans Financed Under Agreements to Repurchase (Tables)

3 Months Ended

Mar. 31, 2013

Summary of Financial Information Relating to REO Financed under Agreements to Repurchase

Following is a summary of financial information relating to REO financed under agreements to repurchase:

	Quarter ended March 31,
	2013			2012
	(dollar amounts in thousands)
Period end:
Balance	$	3,546		$	21,744
Unused amount (1)	$	96,454		$	78,256
Weighted-average interest rate		3.95	%		3.99	%
Fair value of loans and REO held in a consolidated subsidiary whose stock is pledged to secure agreements to repurchase	$	7,523		$	43,269
During the period:
Weighted-average interest rate (2)		4.21	%		4.21	%
Average balance of REO sold under agreements to repurchase	$	5,198		$	24,589
Total interest expense	$	180		$	387
Maximum daily amount outstanding	$	7,391		$	27,494

(1) The amount the Company is able to borrow under repurchase agreements is subject to a sublimit of the commitment amount available pursuant to the repurchase facility for mortgage loans at fair value. The facility is tied to the fair value of unencumbered REO eligible for contribution to the subsidiary, whose stock is pledged to secure those agreements, and the Company’s ability to fund the agreements’ margin requirements relating to the collateral so contributed.

(2) Weighted-average interest rate during the period excludes the effect of amortization of debt issuance costs of $125,000 for the quarters ended March 31, 2013 and 2012, respectively.

Summary of Amount of Risk Relating to Company's REO Held in Consolidated Subsidiary

The amount at risk (the fair value of the assets pledged plus the related margin deposit, less the amount advanced by the counterparty and interest payable) relating to the Company’s REO held in a consolidated subsidiary, whose stock is pledged to secure agreements to repurchase is summarized by counterparty below as of March 31, 2013:

Counterparty	Amount at risk		Weighted-average repurchase agreement maturity
	(in thousands)
Credit Suisse First Boston Mortgage Capital LLC	$	3,972	June 5, 2013

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Real Estate Acquired in Settlement of Loans (Tables)

3 Months Ended

Mar. 31, 2013

Summary of Activity in REO

Following is a summary of the activity in REO:

	Quarter ended March 31,
	2013			2012
	(in thousands)
Balance at beginning of period	$	88,078		$	80,570
Transfers from mortgage loans at fair value and advances		31,510			25,419
Results of REO:
Valuation adjustments, net		(6,089	)		(2,554	)
Gain on sale, net		2,836			4,551
		(3,253	)		1,997
Sale proceeds		(31,849	)		(26,777	)
Balance at period end	$	84,486		$	81,209
At period end:
REO pledged to secure agreements to repurchase	$	8,233		$	9,061
REO held in a consolidated subsidiary whose stock is pledged to secure financings of such properties	$	7,122		$	14,773

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Recourse Liability - Summary of Company's Recourse Liability (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Guarantor Obligations [Line Items]
Balance, beginning of period	$ 4,441	$ 205
Provisions for losses	1,790	426
Incurred losses
Balance, end of period	$ 6,231	$ 631

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Transactions with Related Parties - Summary of Corresponding Lending Activity (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Related Party Transaction [Line Items]
Sourcing fees received	$ 1,010	$ 244
Fulfillment fees	28,136	6,124
Fair value of loans sold to PLS	3,548,397	838,120
Fair value of mortgage loans included in mortgage loans acquired for sale pending sale to PLS at period end	$ 542,490	$ 41,247

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Shareholders' Equity - Additional Information (Detail) (USD $)	1 Months Ended	3 Months Ended
	Feb. 01, 2013	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Proceeds from public offering of common shares			$ 45,690,000
Reimbursement paid for every $100 of performance incentive fees earned		10
Performance incentive fees earned		100
Amount paid by underwriters		5,883,000		5,883,000
Reimbursement agreement expiry date	February 1, 2019
Maximum [Member]
Reimbursement payable in a 12-month period		980,422
Underwriting cost paid		2,900,000
Cantor Fitzgerald & Co. [Member]
Proceeds from offerings of common shares (in shares)			2,531,310
Weighted average price per share			$ 18.41
Proceeds from public offering of common shares			45,700,000
Amount paid to sales agent			917,000
Average commission of gross sales price			2.00%
Initial Public Offering [Member]
Reimbursement paid for every $100 of performance incentive fees earned		20
Performance incentive fees earned		100
Amount paid by underwriters		5,883,000
Reimbursement agreement expiry date		February 1, 2019
Initial Public Offering [Member] | Maximum [Member]
Reimbursement payable in a 12-month period		$ 1,960,844

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Borrowings under Forward Purchase Agreements (Tables)

3 Months Ended

Mar. 31, 2013

Summary of Financial Information Relating to Borrowings under Forward Purchase Agreements

Following is a summary of financial information relating to borrowings under forward purchase agreements:

	Quarter ended March 31, 2012
	(dollar amounts in thousands)
Period end:
Balance	$	127,591
Weighted-average interest rate		4.24	%
Fair value of underlying loans and REO	$	127,411
During the period:
Weighted-average interest rate		4.09	%
Average balance	$	146,512
Interest expense	$	1,515
Maximum daily amount outstanding	$	152,428

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Netting of Financial Instruments - Summary of Derivative Liabilities, Financial Liabilities, and Collateral Held by Counterparty (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Derivative [Line Items]
Net liabilities in the balance sheet	$ 1,617,129	$ 1,257,069
Gross amounts not offset in the balance sheet, Financial instruments	(1,615,050)	(1,256,102)
Gross amounts not offset in the balance sheet, Cash collateral pledged
Net amount	2,079	967
Citibank, N.A. [Member]
Derivative [Line Items]
Net liabilities in the balance sheet	778,701	474,625
Gross amounts not offset in the balance sheet, Financial instruments	(777,825)	(474,625)
Gross amounts not offset in the balance sheet, Cash collateral pledged
Net amount	876
Bank of America, N.A. [Member]
Derivative [Line Items]
Net liabilities in the balance sheet	259,858	256,711
Gross amounts not offset in the balance sheet, Financial instruments	(259,858)	(256,711)
Gross amounts not offset in the balance sheet, Cash collateral pledged
Credit Suisse First Boston Mortgage Capital LLC [Member]
Derivative [Line Items]
Net liabilities in the balance sheet	372,985	243,525
Gross amounts not offset in the balance sheet, Financial instruments	(372,663)	(243,525)
Gross amounts not offset in the balance sheet, Cash collateral pledged
Net amount	322
Morgan Stanley Bank, N.A. [Member]
Derivative [Line Items]
Net liabilities in the balance sheet	133,413	155,321
Gross amounts not offset in the balance sheet, Financial instruments	(133,413)	(155,321)
Gross amounts not offset in the balance sheet, Cash collateral pledged
Barclays Bank PLC [Member]
Derivative [Line Items]
Net liabilities in the balance sheet	71,291	79,253
Gross amounts not offset in the balance sheet, Financial instruments	(71,291)	(78,780)
Gross amounts not offset in the balance sheet, Cash collateral pledged
Net amount		473
Wells Fargo Bank, N.A. [Member]
Derivative [Line Items]
Net liabilities in the balance sheet	88	47,140
Gross amounts not offset in the balance sheet, Financial instruments		(47,140)
Gross amounts not offset in the balance sheet, Cash collateral pledged
Net amount	88
Other [Member]
Derivative [Line Items]
Net liabilities in the balance sheet	793	494
Gross amounts not offset in the balance sheet, Cash collateral pledged
Net amount	$ 793	$ 494

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Mortgage Servicing Rights - Summary of Net Loan Servicing Fees (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Components of Net Servicing Fee Income [Line Items]
Contractual servicing fees	$ 8,937	$ 646
Late charges
Ancillary fees
Servicing fees	$ 8,937	$ 646

XML

Derivative Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2013

Derivative Assets and Liabilities and Related Margin Deposits Recorded within Derivative Assets and Derivative Liabilities

The Company had the following derivative assets and liabilities and related margin deposits recorded within the Derivative assets and Derivative liabilities on the consolidated balance sheets:

	March 31, 2013								December 31, 2012
			Fair value								Fair value
Instrument	Notional amount		Derivative assets			Derivative liabilities			Notional amount		Derivative assets			Derivative liabilities
	(in thousands)
Derivatives not designated as hedging instruments:
Free-standing derivatives (economic hedges):
Interest rate lock commitments	$	933,768	$	11,052		$	—		$	1,694,739	$	19,479		$	—
Forward purchase contracts		1,890,960		6,460			462			2,206,539		2,617			1,741
Forward sales contracts		3,224,190		1,121			8,560			4,266,983		3,458			4,520
MBS put options		225,000		326			—			495,000		977			—
MBS call options		350,000		1,052			—			—		—			—
Total derivative instruments before netting		6,623,918		20,011			9,022			8,663,261		26,531			6,261
Netting		—		(4,825	)		(6,943	)		—		(2,825	)		(5,294	)
Total	$	6,623,918	$	15,186		$	2,079		$	8,663,261	$	23,706		$	967
Margin deposits with derivatives counterparties			$	2,118							$	2,469

Summary of Activity in Notional Amount of Derivative Contracts

The following table summarizes the notional amount activity for derivative contracts used to hedge the Company’s IRLCs, inventory of mortgage loans acquired for sale and Agency MBS:

Period/Instrument	Balance, beginning of period		Additions		Dispositions/ expirations			Balance, end of period
	(in thousands)
Quarter ended March 31, 2013
MBS put options		495,000		1,480,000		(1,750,000	)		225,000
MBS call options		—		900,000		(550,000	)		350,000
Forward purchase contracts		2,206,539		12,442,344		(12,757,923	)		1,890,960
Forward sales contracts		4,266,983		17,850,273		(18,893,066	)		3,224,190

Period/Instrument	Balance, beginning of period		Additions		Dispositions/ expirations			Balance, end of period
	(in thousands)
Quarter ended March 31, 2012
MBS put options		28,000		97,500		(55,500	)		70,000
MBS call options		5,000		25,000		(10,000	)		20,000
Forward purchase contracts		398,400		1,381,283		(1,017,359	)		762,324
Forward sales contracts		756,691		2,835,824		(2,377,235	)		1,215,280

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Income Taxes

3 Months Ended

Mar. 31, 2013

Income Taxes

Note 26—Income Taxes

The Company has elected to be taxed as a REIT for U.S. federal income tax purposes under Sections 856 through 860 of the Internal Revenue Code. Therefore, PMT generally will not be subject to corporate federal or state income tax to the extent that qualifying distributions are made to shareholders and the Company meets REIT requirements including certain asset, income, distribution and share ownership tests. The Company believes that it has met the distribution requirements, as it has declared dividends sufficient to distribute substantially all of its taxable income. Taxable income will generally differ from net income. The primary difference between net income and the REIT taxable income (before deduction for qualifying distributions) is the income of the taxable REIT subsidiary (“TRS”) and the method of determining the income or loss related to valuation of the mortgage loans owned by the qualified REIT subsidiary (“QRS”). Other differences between REIT book income and REIT taxable income are not material.

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 Company had elected to treat two of its subsidiaries as TRSs. In the quarter ended September 30, 2012, the Company revoked the election to treat its wholly owned subsidiary that is the sole general partner of the Operating Partnership as a TRS. As a result, beginning September 1, 2012, one subsidiary, PMC, is treated as a 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 the REIT. No such dividend distributions have been made to date. A TRS is subject to corporate federal and state income tax. Accordingly, a provision for income taxes for PMC and, for the periods for which TRS treatment had been elected, the sole general partner of the Company’s Operating Partnership is included in the consolidated statements of income.

The Company files U.S. federal and state income tax returns for both the REIT and TRSs. These returns for 2009 and forward are subject to examination. No returns are currently under examination.

The following table details the Company’s income tax expense (benefit) which relates primarily to the TRSs:

	Quarter ended March 31,
	2013			2012
	(in thousands)
Current (benefit) expense:
Federal	$	(10,725	)	$	706
State		(2,489	)		245
Total current (benefit) expense		(13,214	)		951
Deferred expense:
Federal		12,678			3,389
State		3,175			1,177
Total deferred expense		15,853			4,566
Total provision for income taxes	$	2,639		$	5,517

The provision for deferred income taxes for the quarter ended March 31, 2013 and March 31, 2012 primarily relates to a net unrealized valuation loss on REO and to mortgage servicing rights the Company received pursuant to sales of mortgage loans with servicing rights retained as detailed below.

The following table is a reconciliation of the Company’s provision for income taxes at statutory rates to the provision for income taxes at the Company’s effective rate:

	Quarter ended March 31,
	2013						2012
	Amount			Rate			Amount			Rate
	(dollars in thousands)
Federal income tax expense at statutory tax rate	$	19,577			35.0	%	$	8,601			35.0	%
Effect of non-taxable REIT income		(17,491	)		(31.3	)%		(3,990	)		(16.2	)%
State income taxes, net of federal benefit		446			0.8	%		925			3.8	%
Other		107			0.2	%		(19	)		(0.1	)%
Valuation allowance		—			0.0	%		—			0.0	%
Provision for income taxes	$	2,639			4.7	%	$	5,517			22.5	%

The Company’s components of the provision for deferred income taxes are as follows:

	Quarter ended March 31,
	2013			2012
	(in thousands)
Real estate valuation gain (loss)	$	221		$	(388	)
Mortgage servicing rights		22,500			5,133
Net operating loss carryforward		(6,115	)		—
Other		(753	)		(179	)
Valuation allowance		—			—
Total provision for deferred income taxes	$	15,853		$	4,566

The components of the income taxes, net are as follows:

	March 31, 2013			December 31, 2012
	(in thousands)
Taxes currently receivable	$	19,062		$	5,374
Deferred income taxes payable		(57,543	)		(41,690	)
Income taxes, net	$	(38,481	)	$	(36,316	)

The tax effects of temporary differences that gave rise to deferred income tax assets and liabilities are presented below:

	March 31, 2013			December 31, 2012
	(in thousands)
Deferred income tax assets:
REO valuation loss	$	8,178		$	8,399
Net operating loss carryforward		6,115			—
Other		2,620			1,867
Gross deferred tax assets		16,913			10,266
Deferred income tax liabilities:
Mortgage servicing rights		(74,456	)		(51,956	)
Gross deferred tax liabilities		(74,456	)		(51,956	)
Net deferred income tax liability	$	(57,543	)	$	(41,690	)

The net deferred income tax liability is recorded in Income taxes payable in the consolidated balance sheets as of March 31, 2013 and December 31, 2012.

At March 31, 2013 and December 31, 2012, the Company had no unrecognized tax benefits and does not anticipate any increase in unrecognized tax benefits. Should the accrual of any interest or penalties relative to unrecognized tax benefits be necessary, it is the Company’s policy to record such accruals in the Company’s income tax accounts. No such accruals existed at March 31, 2013 and December 31, 2012.

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Fair Value - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2013
Mortgage Loans on Real Estate [Line Items]
Initial interest rates	More than 4.5%
Interest rate	4.50%
Mortgage loans description	Note rate pools of 50 basis point ranges for fixed-rate mortgage loans
Basis point for mortgage loan	0.50%
Fixed-rate mortgage loans, Minimum	3.00%
Fixed-rate mortgage loans, Maximum	4.50%

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Real Estate Acquired in Settlement of Loans Financed Under Agreements to Repurchase - Additional Information (Detail) (Real Estate Acquired in Settlement of Loans Financed under Agreements to Repurchase [Member])	Mar. 31, 2013
Real Estate Acquired in Settlement of Loans Financed under Agreements to Repurchase [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Term of repurchase agreements	2 months 6 days

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Share-Based Compensation Plans - Additional Information (Detail) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of Company's issued and outstanding shares	8.00%
Estimated fair value of assumed guarantee forfeiture rate	15.00%
Number of share units outstanding expected to vest		541,630
Weighted average grant date fair value of shares expected to vest		$ 16.53
Weighted average remaining vesting period of shares expected to vest		2 years 2 months 12 days
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	1 year
Percentage of minimum exercise price of fair value of company's shares on the date of grant award	100.00%
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	4 years
Share option award under the equity incentive plan	10 years

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Income Taxes - Summary of Deferred Income Tax Assets and Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Deferred income tax assets:
REO valuation loss	$ 8,178	$ 8,399
Net operating loss carryforward	6,115
Other	2,620	1,867
Gross deferred tax assets	16,913	10,266
Deferred income tax liabilities:
Mortgage servicing rights	(74,456)	(51,956)
Gross deferred tax liabilities	(74,456)	(51,956)
Net deferred income tax liability	$ (57,543)	$ (41,690)

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Earnings Per Share - Summary of Basic and Diluted Earnings per Share (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Basic earnings per share:
Net income	$ 53,296	$ 19,058
Effect of participating securities-share-based compensation instruments	(518)	(213)
Net income attributable to common shareholders	52,778	18,845
Weighted-average shares outstanding	58,927	29,076
Basic earnings per share	$ 0.90	$ 0.65
Diluted earnings per share:
Net income	$ 53,296	$ 19,058
Weighted-average shares outstanding	58,927	29,076
Dilutive potential common shares-shares issuable under share-based compensation plan	392	279
Diluted weighted-average number of common shares outstanding	59,319	29,355
Diluted earnings per common share	$ 0.90	$ 0.65

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Fair Value - Key Assumptions Used in Determining Fair Value of MSRs at Time of Initial Recognition (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Amortized cost, Pricing spread during period	5.40%	7.50%
Amortized cost, Life (in years)	2 years 8 months 12 days	2 years 9 months 18 days
Amortized cost, Annual prepayment speed during period	8.50%	6.70%
Amortized cost, Annual per loan cost of servicing during period	$ 68	$ 68
Fair value inputs pricing spread during period	7.50%	7.50%
Fair value inputs weighted average life during period	2 years 9 months 18 days	2 years 9 months 18 days
Fair value inputs annual prepayment speed during period	10.40%	7.90%
Fair value inputs annual per loan cost of servicing during period	68	68
Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Amortized cost, Pricing spread during period	14.40%	14.50%
Amortized cost, Life (in years)	6 years 10 months 24 days	7 years
Amortized cost, Annual prepayment speed during period	22.70%	27.40%
Amortized cost, Annual per loan cost of servicing during period	140	140
Fair value inputs pricing spread during period	14.40%	14.50%
Fair value inputs weighted average life during period	6 years 9 months 18 days	7 years
Fair value inputs annual prepayment speed during period	27.00%	27.40%
Fair value inputs annual per loan cost of servicing during period	68	140
Weighted average [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Amortized cost, Pricing spread during period	7.00%	7.50%
Amortized cost, Life (in years)	6 years 4 months 24 days	6 years 6 months
Amortized cost, Annual prepayment speed during period	9.10%	7.90%
Amortized cost, Annual per loan cost of servicing during period	68	69
Fair value inputs pricing spread during period	8.50%	8.30%
Fair value inputs weighted average life during period	6 years 1 month 6 days	5 years 9 months 18 days
Fair value inputs annual prepayment speed during period	14.40%	13.10%
Fair value inputs annual per loan cost of servicing during period	$ 68	$ 89

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Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2013

Company's Outstanding Contractual Loan Commitments

The following table summarizes the Company’s outstanding contractual loan commitments:

	March 31, 2013
	(in thousands)
Commitments to purchase mortgage loans:
Correspondent lending	$	933,768
Other mortgage loans	$	—

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Mortgage Loans Acquired for Sale Sold Under Agreements to Repurchase - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Deposit with loan repurchase agreement counterparties	$ 3.0	$ 4.1

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Segments and Related Information - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2013 Segment
Segment Reporting Information [Line Items]
Number of business segment	2

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Netting of Financial Instruments - Summary of Derivative Assets, and Collateral Held by Counterparty (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Derivative [Line Items]
Net amount of assets in the balance sheet	$ 15,186	$ 23,706
Financial instruments
Cash collateral received
Net amount	15,186	23,706
Interest rate lock commitments [Member]
Derivative [Line Items]
Net amount of assets in the balance sheet	11,052	19,479
Financial instruments
Cash collateral received
Net amount	11,052	19,479
Barclays [Member]
Derivative [Line Items]
Net amount of assets in the balance sheet	1,400	15
Financial instruments
Cash collateral received
Net amount	1,400	15
Bank of America, N.A. [Member]
Derivative [Line Items]
Net amount of assets in the balance sheet	596	1,219
Financial instruments
Cash collateral received
Net amount	596	1,219
Cantor Fitzgerald & Co. [Member]
Derivative [Line Items]
Net amount of assets in the balance sheet	579	581
Financial instruments
Cash collateral received
Net amount	579	581
Citibank, N.A. [Member]
Derivative [Line Items]
Net amount of assets in the balance sheet	456	1,009
Financial instruments
Cash collateral received
Net amount	456	1,009
Credit Suisse First Boston Mortgage Capital LLC [Member]
Derivative [Line Items]
Net amount of assets in the balance sheet	166	820
Financial instruments
Cash collateral received
Net amount	166	820
Morgan Stanley Bank, N.A. [Member]
Derivative [Line Items]
Net amount of assets in the balance sheet	104	316
Financial instruments
Cash collateral received
Net amount	104	316
Other [Member]
Derivative [Line Items]
Net amount of assets in the balance sheet	833	267
Financial instruments
Cash collateral received
Net amount	$ 833	$ 267

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Fair Value - Summary of Total Gains (Losses) on Assets Measured at Estimated Fair Values on Nonrecurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Real estate asset acquired in settlement of loans	$ (4,954)	$ (2,782)
Real estate asset acquired in settlement of loans under forward purchase agreements		(348)
Mortgage servicing assets at lower of amortized cost or fair value	2,486	(106)
Total assets, gains (losses) recognized	$ (2,468)	$ (3,236)

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Fair Value - Summary of Changes in Items Measured Using Level 3 Inputs on Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Assets:
Beginning balance	$ 1,210,796	$ 899,138
Purchases	200,473	306
Repayments	(61,421)	(45,974)
Accrual of unearned discounts		335
Interest rate lock commitments issued, net	35,414
Capitalization of interest	5,230
Servicing received as proceeds from sales of mortgage loans	26	520
Changes in fair value included in income arising from:
Changes in instrument-specific credit risk	8,445	9,447
Other factors	55,468	1,852
Total	63,913	11,299
Transfers of mortgage loans to REO	(31,311)	(24,201)
Transfer from mortgage loans acquired for sale		18
Transfers of interest rate lock commitments to mortgage loans acquired for sale	(43,841)
Transfers of mortgage loans under forward purchase agreements to REO under forward purchase agreements		(5,256)
Transfers of mortgage loans under forward purchase agreements to mortgage loans
Ending balance	1,379,279	836,185
Changes in fair value recognized during the period relating to assets still held at March 31, 2012	61,593	4,782
Liabilities:
Beginning balance		115,493
Changes in fair value included in income
Sales		291,914
Repurchases		(354,339)
Ending balance		53,068
Changes in fair value recognized during the period relating to liabilities
Mortgage loans [Member]
Assets:
Beginning balance	1,189,971	696,266
Purchases	200,473
Repayments	(61,421)	(26,187)
Accrual of unearned discounts
Interest rate lock commitments issued, net
Capitalization of interest	5,230
Servicing received as proceeds from sales of mortgage loans
Changes in fair value included in income arising from:
Changes in instrument-specific credit risk	8,445	7,704
Other factors	55,535	(3,367)
Total	63,980	4,337
Transfers of mortgage loans to REO	(31,311)	(24,201)
Transfer from mortgage loans acquired for sale		18
Transfers of interest rate lock commitments to mortgage loans acquired for sale
Transfers of mortgage loans under forward purchase agreements to REO under forward purchase agreements
Transfers of mortgage loans under forward purchase agreements to mortgage loans		17,309
Ending balance	1,366,922	667,542
Changes in fair value recognized during the period relating to assets still held at March 31, 2012	50,608	26
Accumulated changes in fair value relating to assets still held at March 31, 2012	147,627	58,748
Mortgage Servicing Rights [Member]
Assets:
Beginning balance	1,346	749
Purchases		20
Repayments
Accrual of unearned discounts
Interest rate lock commitments issued, net
Capitalization of interest
Servicing received as proceeds from sales of mortgage loans	26	520
Changes in fair value included in income arising from:
Changes in instrument-specific credit risk
Other factors	(67)	(101)
Total	(67)	(101)
Transfers of mortgage loans to REO
Transfer from mortgage loans acquired for sale
Transfers of interest rate lock commitments to mortgage loans acquired for sale
Transfers of mortgage loans under forward purchase agreements to REO under forward purchase agreements
Transfers of mortgage loans under forward purchase agreements to mortgage loans
Ending balance	1,305	1,188
Changes in fair value recognized during the period relating to assets still held at March 31, 2012	(67)	(101)
Interest rate lock commitments [Member]
Assets:
Beginning balance	19,479
Purchases
Repayments
Interest rate lock commitments issued, net	35,414
Capitalization of interest
Servicing received as proceeds from sales of mortgage loans
Changes in fair value included in income arising from:
Changes in instrument-specific credit risk
Other factors
Total
Transfers of mortgage loans to REO
Transfers of interest rate lock commitments to mortgage loans acquired for sale	(43,841)
Ending balance	11,052
Changes in fair value recognized during the period relating to assets still held at March 31, 2012	11,052
Accumulated changes in fair value relating to assets still held at March 31, 2012	11,052
Mortgage-backed securities [Member]
Assets:
Beginning balance		72,813
Purchases
Repayments		(11,086)
Accrual of unearned discounts		335
Servicing received as proceeds from sales of mortgage loans
Changes in fair value included in income arising from:
Changes in instrument-specific credit risk
Other factors		363
Total		363
Transfers of mortgage loans to REO
Transfer from mortgage loans acquired for sale
Transfers of mortgage loans under forward purchase agreements to REO under forward purchase agreements
Transfers of mortgage loans under forward purchase agreements to mortgage loans
Ending balance		62,425
Changes in fair value recognized during the period relating to assets still held at March 31, 2012		363
Accumulated changes in fair value relating to assets still held at March 31, 2012		(2,288)
Mortgage loans under forward purchase agreements [Member]
Assets:
Beginning balance		129,310
Purchases		286
Repayments		(8,701)
Accrual of unearned discounts
Servicing received as proceeds from sales of mortgage loans
Changes in fair value included in income arising from:
Changes in instrument-specific credit risk		1,743
Other factors		4,957
Total		6,700
Transfers of mortgage loans to REO
Transfer from mortgage loans acquired for sale
Transfers of mortgage loans under forward purchase agreements to REO under forward purchase agreements		(5,256)
Transfers of mortgage loans under forward purchase agreements to mortgage loans		(17,309)
Ending balance		105,030
Changes in fair value recognized during the period relating to assets still held at March 31, 2012		4,494
Accumulated changes in fair value relating to assets still held at March 31, 2012		$ 9,091

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Fair Value - Quantitative Summary of Key Inputs Used in Valuation of Mortgage Loans at Fair Value (Detail)	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount rate	8.30%	8.80%
Twelve-month projected housing price index change	2.10%	0.40%
Prepayment speed	0.00%	0.40%
Total prepayment speed	0.60%	5.90%
Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount rate	20.50%	20.70%
Twelve-month projected housing price index change	5.60%	1.50%
Prepayment speed	4.60%	4.40%
Total prepayment speed	41.20%	31.20%
Weighted average [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount rate	12.50%	13.10%
Twelve-month projected housing price index change	3.60%	1.10%
Prepayment speed	2.50%	2.20%
Total prepayment speed	21.00%	20.60%

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Netting of Financial Instruments - Schedule of Offsetting of Derivative Liabilities and Financial Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Derivative [Line Items]
Gross amounts of recognized liabilities	$ 1,624,072	$ 1,262,363
Gross amounts offset in the balance sheet	(6,943)	(5,294)
Net amounts of liabilities presented in the balance sheet	1,617,129	1,257,069
Forward purchase contracts [Member]
Derivative [Line Items]
Gross amounts of recognized liabilities	462	1,741
Net amounts of liabilities presented in the balance sheet	462	1,741
Forward sales contracts [Member]
Derivative [Line Items]
Gross amounts of recognized liabilities	8,560	4,520
Net amounts of liabilities presented in the balance sheet	8,560	4,520
Netting [Member]
Derivative [Line Items]
Gross amounts offset in the balance sheet	(6,943)	(5,294)
Net amounts of liabilities presented in the balance sheet	(6,943)	(5,294)
Total derivatives, subject to a master netting arrangement [Member)
Derivative [Line Items]
Gross amounts of recognized liabilities	9,022	6,261
Gross amounts offset in the balance sheet	(6,943)	(5,294)
Net amounts of liabilities presented in the balance sheet	2,079	967
Total derivatives [Member]
Derivative [Line Items]
Gross amounts of recognized liabilities	9,022	6,261
Gross amounts offset in the balance sheet	(6,943)	(5,294)
Net amounts of liabilities presented in the balance sheet	2,079	967
Mortgage loans acquired for sale at fair value [Member]
Derivative [Line Items]
Gross amounts of recognized liabilities	1,035,486	894,906
Net amounts of liabilities presented in the balance sheet	1,035,486	894,906
Mortgage loans [Member]
Derivative [Line Items]
Gross amounts of recognized liabilities	576,018	353,805
Net amounts of liabilities presented in the balance sheet	576,018	353,805
Real Estate Acquired in Settlement of Loans Financed under Agreements to Repurchase [Member]
Derivative [Line Items]
Gross amounts of recognized liabilities	3,546	7,391
Net amounts of liabilities presented in the balance sheet	3,546	7,391
Securities sold under agreements to repurchase [Member]
Derivative [Line Items]
Gross amounts of recognized liabilities	1,615,050	1,256,102
Net amounts of liabilities presented in the balance sheet	$ 1,615,050	$ 1,256,102

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Transactions with Related Parties - Summary of Foregoing Expenses (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Related Party Transaction [Line Items]
Reimbursement of expenses incurred on PMT's behalf	$ 1,358	$ 2,410
Reimbursement of common overhead incurred by PCM and its affiliates	2,606	386
Total expenses incurred in transaction with affiliates	3,964	2,796
Payments and settlements during the period	$ 33,362	$ 5,485

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Real Estate Acquired in Settlement of Loans Financed Under Agreements to Repurchase

3 Months Ended

Mar. 31, 2013

Real Estate Acquired in Settlement of Loans Financed Under Agreements to Repurchase

Note 18—Real Estate Acquired in Settlement of Loans Financed Under Agreements to Repurchase

Following is a summary of financial information relating to REO financed under agreements to repurchase:

	Quarter ended March 31,
	2013			2012
	(dollar amounts in thousands)
Period end:
Balance	$	3,546		$	21,744
Unused amount (1)	$	96,454		$	78,256
Weighted-average interest rate		3.95	%		3.99	%
Fair value of loans and REO held in a consolidated subsidiary whose stock is pledged to secure agreements to repurchase	$	7,523		$	43,269
During the period:
Weighted-average interest rate (2)		4.21	%		4.21	%
Average balance of REO sold under agreements to repurchase	$	5,198		$	24,589
Total interest expense	$	180		$	387
Maximum daily amount outstanding	$	7,391		$	27,494

(1) The amount the Company is able to borrow under repurchase agreements is subject to a sublimit of the commitment amount available pursuant to the repurchase facility for mortgage loans at fair value. The facility is tied to the fair value of unencumbered REO eligible for contribution to the subsidiary, whose stock is pledged to secure those agreements, and the Company’s ability to fund the agreements’ margin requirements relating to the collateral so contributed.

(2) Weighted-average interest rate during the period excludes the effect of amortization of debt issuance costs of $125,000 for the quarters ended March 31, 2013 and 2012, respectively.

The repurchase agreement collateralized by REO has a remaining term of approximately 2.2 months at March 31, 2013.

The Company is subject to margin calls during the period the agreements are outstanding and therefore may be required to repay a portion of the borrowings before the respective agreements mature if the value (as determined by the applicable lender) of the REOs decreases. The Company had no margin deposits as of March 31, 2013 and as of December 31, 2012.

The amount at risk (the fair value of the assets pledged plus the related margin deposit, less the amount advanced by the counterparty and interest payable) relating to the Company’s REO held in a consolidated subsidiary, whose stock is pledged to secure agreements to repurchase is summarized by counterparty below as of March 31, 2013:

Counterparty	Amount at risk		Weighted-average repurchase agreement maturity
	(in thousands)
Credit Suisse First Boston Mortgage Capital LLC	$	3,972	June 5, 2013

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Condensed Consolidating Financial Statements - Schedule of Condensed Consolidating Cash Flows (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Schedule Of Condensed Consolidating Statement Of Cash Flows [Line Items]
Cash flows from operating activities	$ (225,145)	$ 47,918
Cash flows from investing activities:
Purchases of mortgage loans at fair value	(200,473)
Sales of real estate and repayments of mortgage loans at fair value	93,445	77,046
Purchases of short-term investments	(6,007)	(33,125)
Repayments of mortgage-backed and U.S. Treasury Securities		61,086
Purchases and sales of MSRs		(29)
Other investment activities	(1,493)	4,540
Net cash (used) provided by investing activities	(114,528)	109,518
Cash flows from financing activities:
Sales of securities under agreements to repurchase		291,914
Repurchases of securities sold under agreements to repurchase		(354,339)
Proceeds from sale of assets under agreements to repurchase	8,510,958	1,731,977
Repayments of assets under agreements to repurchase	(8,152,010)	(1,855,170)
Issuance of stock		45,690
Dividends paid	(33,577)	(15,692)
Change in intercompany advances
Other financing activities	(78)
Net cash provided (used) by financing activities	325,293	(155,620)
Net change in cash and cash equivalents	(14,380)	1,816
Cash at beginning of period	33,756	14,589
Cash at end of period	19,376	16,405
PennyMac Mortgage Investment Trust [Member]
Schedule Of Condensed Consolidating Statement Of Cash Flows [Line Items]
Cash flows from operating activities	33,187	35,848
Cash flows from investing activities:
Sales of real estate and repayments of mortgage loans at fair value		(43,694)
Purchases of short-term investments	468	(22,152)
Net cash (used) provided by investing activities	468	(65,846)
Cash flows from financing activities:
Issuance of stock		45,690
Dividends paid	(33,577)	(15,692)
Change in intercompany advances
Other financing activities	(78)
Net cash provided (used) by financing activities	(33,655)	29,998
Cash at end of period		43,693
PennyMac Corp. [Member]
Schedule Of Condensed Consolidating Statement Of Cash Flows [Line Items]
Cash flows from operating activities	(201,367)	(563)
Cash flows from investing activities:
Purchases of mortgage loans at fair value	(36,914)
Sales of real estate and repayments of mortgage loans at fair value	60,630	63,054
Purchases of short-term investments	5,665
Purchases and sales of MSRs		(23)
Other investment activities	(1,303)	400
Net cash (used) provided by investing activities	28,078	63,431
Cash flows from financing activities:
Proceeds from sale of assets under agreements to repurchase	8,301,595	1,724,841
Repayments of assets under agreements to repurchase	(8,105,279)	(1,826,462)
Proceeds from borrowings with affiliated entities	177,624	103,794
Repayment of borrowings with affiliated entities	(214,328)	(106,153)
Change in intercompany advances
Cash investment from parent		43,696
Net cash provided (used) by financing activities	159,612	(60,284)
Net change in cash and cash equivalents	(13,677)	2,584
Cash at beginning of period	32,040	12,833
Cash at end of period	18,363	15,417
Non-Guarantor Subsidiaries [Member]
Schedule Of Condensed Consolidating Statement Of Cash Flows [Line Items]
Cash flows from operating activities	(11,372)	28,324
Cash flows from investing activities:
Purchases of mortgage loans at fair value	(163,559)
Sales of real estate and repayments of mortgage loans at fair value	36,950	22,584
Intercompany purchases of assets under agreements to resell	(179,721)	(53,341)
Intercompany sales of assets purchased under agreements to resell	197,719	47,108
Purchases of short-term investments	(12,139)	(10,973)
Repayments of mortgage-backed and U.S. Treasury Securities		61,086
Purchases and sales of MSRs		(6)
Other investment activities	190	4,140
Net cash (used) provided by investing activities	(120,560)	70,598
Cash flows from financing activities:
Sales of securities under agreements to repurchase		291,914
Repurchases of securities sold under agreements to repurchase		(354,339)
Proceeds from sale of assets under agreements to repurchase	209,363	7,136
Repayments of assets under agreements to repurchase	(46,731)	(28,708)
Proceeds from borrowings with affiliated entities	2,097	(50,453)
Repayment of borrowings with affiliated entities		50,453
Dividends paid	(33,500)	(15,693)
Change in intercompany advances
Net cash provided (used) by financing activities	131,229	(99,690)
Net change in cash and cash equivalents	(703)	(768)
Cash at beginning of period	1,716	1,756
Cash at end of period	1,013	988
Eliminations [Member]
Schedule Of Condensed Consolidating Statement Of Cash Flows [Line Items]
Cash flows from operating activities	(45,593)	(15,691)
Cash flows from investing activities:
Sales of real estate and repayments of mortgage loans at fair value	(4,135)	35,102
Intercompany purchases of assets under agreements to resell	179,721	53,341
Intercompany sales of assets purchased under agreements to resell	(197,719)	(47,108)
Purchases of short-term investments	(1)
Other investment activities	(380)
Net cash (used) provided by investing activities	(22,514)	41,335
Cash flows from financing activities:
Proceeds from borrowings with affiliated entities	(179,721)	(53,341)
Repayment of borrowings with affiliated entities	214,328	55,700
Dividends paid	33,500	15,693
Change in intercompany advances
Cash investment from parent		(43,696)
Net cash provided (used) by financing activities	$ 68,107	$ (25,644)

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Mortgage Servicing Rights (Tables)

3 Months Ended

Mar. 31, 2013

Summary Activity in MSRs Carried at Fair Value

The activity in MSRs carried at fair value is as follows:

	Quarter ended March 31,
	2013			2012
	(in thousands)
Balance at beginning of period	$	1,346		$	749
Additions:
Purchases		—			20
MSRs resulting from loan sales		26			520
Total additions		26			540
Change in fair value:
Due to changes in valuation inputs or assumptions used in valuation model (1)		—			(64	)
Other changes in fair value (2)		(67	)		(37	)
		(67	)		(101	)
Balance at period end	$	1,305		$	1,188

(1) Principally reflects changes in discount rates and prepayment speed assumptions, primarily due to changes in interest rates.

(2) Represents changes due to realization of expected cash flows.

Summary Activity in MSRs Carried at Lower of Amortized Cost or Fair Value

The activity in MSRs carried at amortized cost is summarized below:

	Quarter ended March 31,
	2013			2012
	(in thousands)
Mortgage Servicing Rights:
Balance at beginning of period	$	132,977		$	5,282
MSRs received as proceeds from loan sales		56,190			12,409
Purchases		—			9
Sales		—			—
Amortization		(4,970	)		(248	)
Application of valuation allowance to write down MSRs with other-than temporary impairment		—			—
Balance at period end		184,197			17,452
Valuation Allowance for Impairment of Mortgage Servicing Rights:
Balance at beginning of period		(7,547	)		—
Reversals (additions)		2,486			(106	)
Application of valuation allowance to write down MSRs with other-than temporary impairment		—			—
Balance at period end		(5,061	)		(106	)
Mortgage Servicing Rights, net at period end	$	179,136		$	17,346
Estimated Fair Value of MSRs at period end	$	186,209		$	17,396

Summary of Company's Estimate of Amortization of Existing MSRs Carried at Amortized Cost

The following table summarizes the Company’s estimate of amortization of its existing MSRs carried at amortized cost. This projection was developed using the assumptions made by management in its March 31, 2013 valuation of MSRs. The assumptions underlying the following estimate will change as market conditions and portfolio composition and behavior change, causing both actual and projected amortization levels to change over time. Therefore, the following estimates will change in a manner and amount not presently determinable by management.

Twelve month period ending March 31,	Estimated MSR amortization
	(in thousands)
2014	$	20,897
2015		19,373
2016		17,487
2017		15,936
2018		14,669
Thereafter		95,835
Total	$	184,197

Summary of Net Loan Servicing Fees

Net loan servicing fees is summarized below:

	Quarter ended March 31,
	2013			2012
	(in thousands)
Servicing fees (1)	$	11,104		$	652
MSR recapture fee from affiliate		133			—
Effect of MSRs:
Amortization		(4,970	)		(248	)
Impairment reversal (provision) for MSRs carried at lower of amortized cost or fair value		2,486			(106	)
Change in fair value of MSRs carried at fair value		(67	)		(101	)
Losses on hedging derivatives		(1,988	)		—
		(4,539	)		(455	)
	$	6,698		$	197

(1) Includes contractually specified servicing and ancillary fees.

Mortgage Servicing Rights [Member]

Summary of Net Loan Servicing Fees

Servicing fees relating to MSRs are recorded in Net loan servicing fees on the consolidated statements of income and are summarized below:

	Quarter ended March 31,
	2013		2012
	(in thousands)
Contractual servicing fees	$	8,937	$	646
Late charges		—		—
Ancillary fees		—		—
	$	8,937	$	646

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Loan Sales (Tables)

3 Months Ended

Mar. 31, 2013

Summary of Cash Flows Between Company and Transferees Upon Sale of Loans in Transactions

The following table summarizes cash flows between the Company and transferees upon sale of loans in transactions whereby the Company maintains continuing involvement with the mortgage loan as well as unpaid principal balance information at period end:

	Quarter ended March 31,
	2013		2012
	(in thousands)
Cash flows:
Proceeds from sales	$	8,683,133	$	1,931,024
Service fees received	$	16,965	$	701
Period-end information:
Unpaid principal balance of loans outstanding at period-end	$	16,642,130	$	1,532,615
Delinquencies:
30-89 days	$	38,272	$	1,487
90 or more days or in foreclosure or bankruptcy	$	4,257	$	—

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Netting of Financial Instruments - Summary of Offsetting of Derivative Assets (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Derivative [Line Items]
Gross amounts of recognized assets	$ 20,011	$ 26,531
Gross amounts offset in the balance sheet	(4,825)	(2,825)
Net amount of assets presented in the balance sheet	15,186	23,706
MBS put options [Member]
Derivative [Line Items]
Gross amounts of recognized assets	326	977
Net amount of assets presented in the balance sheet	326	977
MBS call options [Member]
Derivative [Line Items]
Gross amounts of recognized assets	1,052
Net amount of assets presented in the balance sheet	1,052
Forward purchase contracts [Member]
Derivative [Line Items]
Gross amounts of recognized assets	6,460	2,617
Net amount of assets presented in the balance sheet	6,460	2,617
Forward sales contracts [Member]
Derivative [Line Items]
Gross amounts of recognized assets	1,121	3,458
Net amount of assets presented in the balance sheet	1,121	3,458
Netting [Member]
Derivative [Line Items]
Gross amounts offset in the balance sheet	(4,825)	(2,825)
Net amount of assets presented in the balance sheet	(4,825)	(2,825)
Total derivatives, subject to a master netting arrangement [Member)
Derivative [Line Items]
Gross amounts of recognized assets	8,959	7,052
Gross amounts offset in the balance sheet	(4,825)	(2,825)
Net amount of assets presented in the balance sheet	4,134	4,227
Total derivatives, not subject to a master netting arrangement [Member)
Derivative [Line Items]
Gross amounts of recognized assets	11,052	19,479
Net amount of assets presented in the balance sheet	$ 11,052	$ 19,479

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Mortgage Loans at Fair Value - Summary of Certain Concentrations of Credit Risk in Portfolio of Mortgage Loans at Fair Value (Detail)	Mar. 31, 2013	Dec. 31, 2012
Unusual Risk or Uncertainty [Line Items]
Portion of mortgage loans originated between 2005 and 2007	74.00%	74.00%
Percentage of fair value of mortgage loans with unpaid-principal-balance-to current-property-value in excess of 100%	69.00%	68.00%
Percentage of mortgage loans secured by California real estate	19.00%	18.00%
Additional states contributing 5% or more of mortgage loans	New York Florida New Jersey	New York Florida New Jersey

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Condensed Consolidating Financial Statements

3 Months Ended

Mar. 31, 2013

Condensed Consolidating Financial Statements

Note 30—Condensed Consolidating Financial Statements

After March 31, 2013, PMC issued approximately $250.0 million in exchangeable notes guaranteed by the Company. The notes are fully and unconditionally guaranteed by the Company as to all payments due on the notes whether at their stated maturity date, by acceleration, repurchase or otherwise. In the case of PMC’s failure to pay punctually any principal, premium or interest on the notes, PMT will cause any such payment to be made (without duplication) as it becomes due and payable, whether at maturity, upon acceleration, repayment or otherwise.

The guarantee is PMT’s senior unsecured obligation and will rank senior in right of payment to any of PMT’s indebtedness that is expressly subordinated in right of payment to the guarantee, equal to any of PMT’s other unsecured indebtedness that is not so subordinated, effectively junior to any of PMT’s secured indebtedness to the extent of the value of the assets securing such indebtedness and structurally junior to all indebtedness and other liabilities (including trade payables) and preferred equity of PMT’s subsidiaries.

The following supplemental financial information sets forth, on a consolidating basis, the condensed consolidating balance sheets and statements of income and cash flows for the Company as guarantor, for PMC as the issuer of the exchangeable notes, and for the Company’s non-guarantor subsidiaries as of and for the periods presented:

PennyMac Mortgage Investment Trust

Condensed Consolidating Balance Sheet

March 31, 2013

	PennyMac Mortgage Investment Trust		PennyMac Corp.		Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(“Guarantor”)		(“Issuer”)
	(in thousands)
Assets:
Cash and short-term investments	$	2,931	$	25,846	$	35,623	$	—		$	64,400
Mortgage-backed securities		—		—		36,359		(36,359	)		—
Mortgage loans held for sale		—		1,123,348		—		—			1,123,348
Mortgage loans at fair value		—		503,194		863,728		—			1,366,922
Real estate acquired in settlement of loans		—		84,335		188		(37	)		84,486
Mortgage servicing rights		—		180,441		—		—			180,441
Investment in subsidiaries		1,229,392		—		751,355		(1,980,747	)		—
Other assets		1,964		82,892		547,287		(524,580	)		107,563
	$	1,234,287	$	2,000,056	$	2,234,540	$	(2,541,723	)	$	2,927,160
Liabilities:
Accounts payable and accrued liabilities	$	2,089	$	18,042	$	2,128	$	—		$	22,259
Assets sold under agreements to repurchase		—		1,192,157		422,893		—			1,615,050
Notes payable		—		—		—		—			—
Borrowings under forward purchase agreement		—		—		—		—			—
Intercompany borrowings		—		403,299		151,098		(554,397	)		—
Other liabilities		9,456		54,884		9,625		(6,543	)		67,422
		11,545		1,668,382		585,744		(560,940	)		1,704,731
Shareholders’ equity		1,222,742		331,674		1,648,796		(1,980,783	)		1,222,429
	$	1,234,287	$	2,000,056	$	2,234,540	$	(2,541,723	)	$	2,927,160

PennyMac Mortgage Investment Trust

Condensed Consolidating Balance Sheet

December 31, 2012

	PennyMac Mortgage Investment Trust		PennyMac Corp.		Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(“Guarantor”)		(“Issuer”)
	(in thousands)
Assets:
Cash and short-term investments	$	3,399	$	45,187	$	24,187	$	—		$	72,773
Mortgage-backed securities		—		—		39,967		(39,967	)		—
Mortgage loans held for sale		—		975,184		—		—			975,184
Mortgage loans at fair value		—		505,072		684,899		—			1,189,971
Real estate acquired in settlement of loans		—		87,536		582		(40	)		88,078
Mortgage servicing rights		—		126,776		—		—			126,776
Investment in subsidiaries		1,207,471		—		705,321		(1,912,792	)		—
Other assets		205		108,524		548,087		(549,935	)		106,881
	$	1,211,075	$	1,848,279	$	2,003,043	$	(2,502,734	)	$	2,559,663
Liabilities:
Accounts payable and accrued liabilities	$	524	$	39,309	$	2,569	$	—		$	42,402
Assets sold under agreements to repurchase		—		1,042,946		213,156		—			1,256,102
Notes payable		—		—		—		—			—
Borrowings under forward purchase agreement		—		—		—		—			—
Intercompany borrowings		—		117,904		—		(117,904	)		—
Other liabilities		8,903		322,178		203,333		(474,591	)		59,823
		9,427		1,522,337		419,058		(592,495	)		1,358,327
Shareholders’ equity		1,201,648		325,942		1,583,985		(1,910,239	)		1,201,336
	$	1,211,075	$	1,848,279	$	2,003,043	$	(2,502,734	)	$	2,559,663

PennyMac Mortgage Investment Trust

Condensed Consolidating Income Statement

Quarter ended March 31, 2013

	PennyMac Mortgage Investment Trust		PennyMac Corp.		Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(“Guarantor”)		(“Issuer”)
	(in thousands)
Gain on sale of correspondent lending loans	$	—	$	29,279	$	—	$	—		$	29,279
Gains on investments		—		22,704		41,276		—			63,980
Interest income		197		11,306		19,678		(14,306	)		16,875
Equity in earnings of subsidiaries		54,041		—		46,034		(100,075	)		—
Other income		—		8,334		581		3			8,918
Net investment income		54,238		71,623		107,569		(114,378	)		119,052
Expenses
Compensation		87		1,830		172		—			2,089
Management Fees		—		5,935		557		—			6,492
Fulfillment fees		—		28,136		—		—			28,136
Interest		198		14,724		6,145		(9,831	)		11,236
Other		652		11,184		3,328		—			15,164
		937		61,809		10,202		(9,831	)		63,117
Pre-tax income		53,301		9,814		97,367		(104,547	)		55,935
Provision for income taxes		—		4,436		84		(1,881	)		2,639
Net income	$	53,301	$	5,378	$	97,283	$	(102,666	)	$	53,296

PennyMac Mortgage Investment Trust

Condensed Consolidating Income Statement

Quarter ended March 31, 2012

	PennyMac Mortgage Investment Trust		PennyMac Corp.		Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(“Guarantor”)		(“Issuer”)
	(in thousands)
Gain on sale of correspondent lending loans	$	—	$	13,370	$	—	$	—		$	13,370
Gains on investments		—		4,594		6,894		—			11,488
Interest income		12		10,872		5,541					16,425
Equity in earnings of subsidiaries		17,658		439		177		(18,274	)		—
Other income		—		4,261		216		889			5,366
Net investment income		17,670		33,536		12,828		(17,385	)		46,649
Expenses
Compensation		63		1,008		230		—			1,301
Management Fees		—		1,469		335		—			1,804
Fulfillment fees		—		6,124		—		—			6,124
Interest		106		4,119		2,449		—			6,674
Other		9		4,300		1,862		—			6,171
		178		17,020		4,876		—			22,074
Pre-tax income		17,492		16,516		7,952		(17,385	)		24,575
Provision for income taxes		—		5,442		75		—			5,517
Net income	$	17,492	$	11,074	$	7,877	$	(17,385	)	$	19,058

PennyMac Mortgage Investment Trust

Condensed Consolidating Cash Flows

Quarter Ended March 31, 2013

	PennyMac Mortgage Investment Trust			PennyMac Corp.			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(“Guarantor”)			(“Issuer”)
	(in thousands)
Cash flows from operating activities	$	33,187		$	(201,367	)	$	(11,372	)	$	(45,593	)	$	(225,145	)
Cash flows from investing activities:
Purchases of mortgage loans at fair value		—			(36,914	)		(163,559	)		—			(200,473	)
Sales of real estate and repayments of mortgage loans at fair value		—			60,630			36,950			(4,135	)		93,445
Intercompany purchases of assets under agreements to resell		—			—			(179,721	)		179,721			—
Intercompany sales of assets purchased under agreements to resell		—			—			197,719			(197,719	)		—
Purchases of short-term investments		468			5,665			(12,139	)		(1	)		(6,007	)
Other investment activities		—			(1,303	)		190			(380	)		(1,493	)
Cash flows from investing activities		468			28,078			(120,560	)		(22,514	)		(114,528	)
Cash flows from financing activities:
Proceeds from sale of assets under agreements to repurchase		—			8,301,595			209,363			—			8,510,958
Repayments of assets under agreements to repurchase		—			(8,105,279	)		(46,731	)		—			(8,152,010	)
Proceeds from borrowings with affiliated entities		—			177,624			2,097			(179,721	)		—
Repayment of borrowings with affiliated entities		—			(214,328	)		—			214,328			—
Dividends paid		(33,577	)		—			(33,500	)		33,500			(33,577	)
Other financing activities		(78	)		—			—			—			(78	)
Cash flows from financing activities		(33,655	)		159,612			131,229			68,107			325,293
Net change in cash and cash equivalents		—			(13,677	)		(703	)		—			(14,380	)
Cash at beginning of period		—			32,040			1,716			—			33,756
Cash at end of period	$	—		$	18,363		$	1,013		$	—		$	19,376

PennyMac Mortgage Investment Trust

Condensed Consolidating Cash Flows

Quarter Ended March 31, 2012

	PennyMac Mortgage Investment Trust			PennyMac Corp.			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(“Guarantor”)			(“Issuer”)
	(in thousands)
Cash flows from operating activities	$	35,848		$	(563	)	$	28,324		$	(15,691	)	$	47,918
Cash flows from investing activities:
Sales of real estate and repayments of mortgage loans at fair value		(43,694	)		63,054			22,584			35,102			77,046
Intercompany purchases of assets under agreements to resell		—			—			(53,341	)		53,341			—
Intercompany sales of assets purchased under agreements to resell		—			—			47,108			(47,108	)		—
Purchases of short-term investments		(22,152	)		—			(10,973	)		—			(33,125	)
Repayments of mortgage-backed and U.S. Treasury Securities		—			—			61,086			—			61,086
Purchases and sales of MSRs		—			(23	)		(6	)		—			(29	)
Other investment activities		—			400			4,140			—			4,540
Cash flows from investing activities		(65,846	)		63,431			70,598			41,335			109,518
Cash flows from financing activities:
Sales of securities under agreements to repurchase		—			—			291,914			—			291,914
Repurchases of securities sold under agreements to repurchase		—			—			(354,339	)		—			(354,339	)
Proceeds from sale of assets under agreements to repurchase		—			1,724,841			7,136			—			1,731,977
Repayments of assets under agreements to repurchase		—			(1,826,462	)		(28,708	)		—			(1,855,170	)
Proceeds from borrowings with affiliated entities		—			103,794			(50,453	)		(53,341	)		—
Repayment of borrowings with affiliated entities		—			(106,153	)		50,453			55,700			—
Issuance of stock		45,690			—			—			—			45,690
Dividends paid		(15,692	)		—			(15,693	)		15,693			(15,692	)
Change in intercompany advances		—			—			—			—			—
Cash investment from parent		—			43,696			—			(43,696	)		—
Cash flows from financing activities		29,998			(60,284	)		(99,690	)		(25,644	)		(155,620	)
Net change in cash and cash equivalents		—			2,584			(768	)		—			1,816
Cash at beginning of period		—			12,833			1,756			—			14,589
Cash at end of period	$	—		$	15,417		$	988		$	—		$	16,405

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Mortgage Loans Acquired for Sale Sold Under Agreements to Repurchase (Tables)

3 Months Ended

Mar. 31, 2013

Summary of Financial Information Relating to Mortgage Loans Acquired

Following is a summary of financial information relating to mortgage loans acquired for sale sold under agreements to repurchase:

	Quarter ended March 31,
	2013			2012
	(dollar amounts in thousands)
Period end:
Balance	$	1,035,486		$	143,819
Unused amount (1)	$	664,514		$	246,181
Weighted-average interest rate		2.39	%		2.27	%
Fair value of mortgage loans acquired for sale securing agreements to repurchase	$	1,122,940		$	155,295
During the period:
Weighted-average interest rate during the period (2)		2.30	%		2.11	%
Average balance of loans sold under agreements to repurchase	$	774,417		$	177,864
Total interest expense	$	6,175		$	1,364
Maximum daily amount outstanding	$	1,035,613		$	263,890

(1) The amount the Company is able to borrow under loan repurchase agreements is tied to the fair value of unencumbered mortgage loans eligible to secure those agreements and the Company’s ability to fund the agreements’ margin requirements relating to the collateral sold.

(2) Weighted-average interest rate during the periods excludes the effect of amortization of debt issuance costs of $1.7 million and $417,000 during the quarters ended March 31, 2013 and 2012, respectively.

Summary of Maturities of Outstanding Advances under Repurchase Agreements by Maturity Date

Following is a summary of maturities of outstanding advances under repurchase agreements by maturity date:

Remaining maturity at March 31, 2013	Balance
	(in thousands)
Within 30 days	$	246,210
Over 30 to 90 days		789,276
Over 90 days to 180 days		—
Over 180 days to 1 year		—
	$	1,035,486
Weighted average maturity (in months)		1.97

Amount at Risk Relating to Loans Acquired for Sale Sold Under Agreements to Repurchase by Counterparty

The amount at risk (the fair value of the assets pledged plus the related margin deposit, less the amount advanced by the counterparty and interest payable) relating to the Company’s mortgage loans acquired for sale sold under agreements to repurchase is summarized by counterparty below as of March 31, 2013:

Counterparty	Amount at risk		Weighted-average repurchase agreement maturity
	(in thousands)
Citibank	$	25,794	May 23, 2013
Credit Suisse First Boston Mortgage Capital LLC	$	27,062	October 29, 2013
Bank of America, N.A.	$	22,678	January 4, 2014
Morgan Stanley Bank, N.A.	$	7,233	November 19, 2013
Barclays Bank PLC	$	6,647	July 1, 2013

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Transactions with Related Parties - Additional Information (Detail) (USD $)	1 Months Ended	3 Months Ended
	Feb. 01, 2013	Mar. 31, 2013	Dec. 31, 2012
Mortgage Loans on Real Estate [Line Items]
Performance incentive fee		20.00%
Base management fee annual rate		1.50%
Hurdle rate		8.00%
Performance incentive fee description		The performance incentive fee is calculated quarterly and is equal to: (a) 10% of the amount by which net income for the quarter exceeds (i) an 8% return on equity plus the high watermark, up to (ii) a 12% return on equity; plus (b) 15% of the amount by which net income for the quarter exceeds (i) a 12% return on equity plus the high watermark, up to (ii) a 16% return on equity; plus (c) 20% of the amount by which net income for the quarter exceeds a 16% return on equity plus the high watermark.
Percentage of change in net income due to quarterly adjustments		8.00%
Maximum percentage of performance incentive fee paid in common shares		50.00%
Mortgage loans at fair value minimum service fee rate paid to affiliate		0.50%
Mortgage loans at fair value maximum service fee rate paid to affiliate		1.00%
Services agreement expiry date		Feb. 01, 2017
Renewal period of servicing agreement		18-month periods
Basis point for fulfillment fee		0.50%
Performance incentive fees payable		$ 10
Amount of performance incentive fees for every targeted performance earned		100
Performance incentive fees paid		10
Reimbursement agreement expiration date	February 1, 2019
Interest income and sourcing fee		0.03%
Percentage of aggregate unpaid principal balance of loans		30.00%
PMT agreed to reimburse PCM for a payment	2,900,000
Amounts due from affiliates		6,000,000	4,800,000
Number of common shares held by affiliate		75,000	75,000
Whole Loan [Member]
Mortgage Loans on Real Estate [Line Items]
Base servicing fees per month		30
Supplemental fee received per month		25
Delinquent and Foreclosure [Member]
Mortgage Loans on Real Estate [Line Items]
Base servicing fees per month		125
Subserviced loan [Member]
Mortgage Loans on Real Estate [Line Items]
Supplemental fee received per month		3.25
Conventional Mortgage Loan [Member]
Mortgage Loans on Real Estate [Line Items]
Basis point for fulfillment fee		0.50%
Ginnie Mae Mortgage Backed Securities [Member]
Mortgage Loans on Real Estate [Line Items]
Basis point for fulfillment fee		0.88%
Other Mortgage Loans [Member]
Mortgage Loans on Real Estate [Line Items]
Basis point for fulfillment fee		0.50%
Fixed-Rate Mortgage Loans [Member] | Subserviced loan [Member]
Mortgage Loans on Real Estate [Line Items]
Base servicing fees per month		7.5
Adjustable Rate Mortgage Loans [Member] | Subserviced loan [Member]
Mortgage Loans on Real Estate [Line Items]
Base servicing fees per month		8.5
Mortgage Banking Services [Member]
Mortgage Loans on Real Estate [Line Items]
Mortgage loan fees per year		25,000
Warehouse Services [Member]
Mortgage Loans on Real Estate [Line Items]
Mortgage loan fees per loan		50
Mortgage Banking and Warehouse Services Agreement [Member]
Mortgage Loans on Real Estate [Line Items]
Services agreement expiry date		Feb. 01, 2017
Renewal period of servicing agreement		18-months
Mortgage Servicing Rights [Member]
Mortgage Loans on Real Estate [Line Items]
Services agreement expiry date		Feb. 01, 2017
Renewal period of servicing agreement		18-month
IPO underwriters [Member]
Mortgage Loans on Real Estate [Line Items]
Amount of performance incentive fees for every targeted performance earned		100
Performance incentive fees paid		20
Reimbursement agreement expiration date		February 1, 2019
MaximumAmountReimbursableToRelatedPartyPerYear	at a rate of $20 of payments for every $100 of performance incentive fees earned by PCM
Maximum reimbursement amount for a year	2,000,000
Maximum reimbursement amount	5,900,000
Management [Member]
Mortgage Loans on Real Estate [Line Items]
MaximumAmountReimbursableToRelatedPartyPerYear	at a rate of $10 in reimbursement for every $100 of performance incentive fees earned
Maximum reimbursement amount for a year	1,000,000
Maximum reimbursement amount	2,900,000
Maximum [Member]
Mortgage Loans on Real Estate [Line Items]
Additional servicing fees per loan per month		75
Aggregate unpaid principal balance of mortgage loans purchased		5,000,000,000
Percentage of fulfillment fees agreed to reimburse		0.05%
Amount of reimbursement		1,000,000
Maximum [Member] | Reimbursement Agreement [Member]
Mortgage Loans on Real Estate [Line Items]
Amount of reimbursement		2,900,000
Maximum [Member] | Home Affordable Refinance Program [Member]
Mortgage Loans on Real Estate [Line Items]
Basis point for fulfillment fee		1.20%
Loan-to-value ratio		105.00%
Maximum [Member] | IPO underwriters [Member]
Mortgage Loans on Real Estate [Line Items]
Amount of reimbursement		2,000,000
Maximum [Member] | IPO underwriters [Member] | Reimbursement Agreement [Member]
Mortgage Loans on Real Estate [Line Items]
Amount of reimbursement		5,900,000
Minimum [Member]
Mortgage Loans on Real Estate [Line Items]
Additional servicing fees per loan per month		10
Aggregate unpaid principal balance of mortgage loans purchased		2,500,000,000
Percentage of fulfillment fees agreed to reimburse		0.025%
Minimum [Member] | Home Affordable Refinance Program [Member]
Mortgage Loans on Real Estate [Line Items]
Basis point for fulfillment fee		0.80%
Loan-to-value ratio		105.00%
1.5% per annum of stockholders equity [Member]
Mortgage Loans on Real Estate [Line Items]
Base management fee annual rate	1.50%
1.5% per annum of stockholders equity [Member] | Maximum [Member]
Mortgage Loans on Real Estate [Line Items]
Base management fee shareholders' equity limit	2,000,000,000
1.375% per annum of stockholders equity [Member]
Mortgage Loans on Real Estate [Line Items]
Base management fee annual rate	1.375%
1.375% per annum of stockholders equity [Member] | Maximum [Member]
Mortgage Loans on Real Estate [Line Items]
Base management fee shareholders' equity limit	5,000,000,000
1.375% per annum of stockholders equity [Member] | Minimum [Member]
Mortgage Loans on Real Estate [Line Items]
Base management fee shareholders' equity limit	2,000,000,000
1.25% per annum of stockholders equity [Member]
Mortgage Loans on Real Estate [Line Items]
Base management fee annual rate	1.25%
1.25% per annum of stockholders equity [Member] | Minimum [Member]
Mortgage Loans on Real Estate [Line Items]
Base management fee shareholders' equity limit	$ 5,000,000,000
Net Income Exceeds 10% [Member]
Mortgage Loans on Real Estate [Line Items]
Percentahge of net income for calcualation of performance incentive fees		10.00%
Percentage of return on equity		12.00%
Net Income Exceeds 10% [Member] | Maximum [Member]
Mortgage Loans on Real Estate [Line Items]
Percentage of return on equity		8.00%
Net Income Exceeds 15% [Member]
Mortgage Loans on Real Estate [Line Items]
Percentahge of net income for calcualation of performance incentive fees		15.00%
Percentage of return on equity		16.00%
Net Income Exceeds 15% [Member] | Maximum [Member]
Mortgage Loans on Real Estate [Line Items]
Percentage of return on equity		12.00%
Net Income Exceeds 20% [Member]
Mortgage Loans on Real Estate [Line Items]
Percentahge of net income for calcualation of performance incentive fees		20.00%
Net Income Exceeds 20% [Member] | Maximum [Member]
Mortgage Loans on Real Estate [Line Items]
Percentage of return on equity		16.00%

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Mortgage Loans at Fair Value Sold Under Agreements to Repurchase - Summary of Financial Information Relating to Mortgage Loans (Detail) (USD $) In Thousands, unless otherwise specified			3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2013 Mortgage Loans At Fair Value Sold Under Agreements To Repurchase [Member]	Mar. 31, 2012 Mortgage Loans At Fair Value Sold Under Agreements To Repurchase [Member]
Period end:
Balance	$ 576,018	$ 353,805	$ 576,018	$ 282,810
Unused amount			173,982	167,190
Weighted-average interest rate			3.45%	3.85%
Fair value of mortgage loans at fair value and REO securing agreements to repurchase			1,211,620	631,945
During the period:
Weighted-average interest rate during the period			3.43%	4.07%
Average balance of loans sold under agreements to repurchase			442,151	285,817
Total interest expense			4,357	3,138
Maximum daily amount outstanding			$ 576,018	$ 299,091

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Segments and Related Information (Tables)

3 Months Ended

Mar. 31, 2013

Financial Highlights by Operating Segment

Financial highlights by operating segment are summarized below:

Quarter ended March 31, 2013	Correspondent lending		Investment activities		Intersegment elimination & other			Total
	(in thousands)
Revenues:
External
Net gain on mortgage loans acquired for sale	$	29,279	$	—	$	—		$	29,279
Net gain on investments		—		63,980		—			63,980
Interest		6,324		10,592		(41	)		16,875
Other		5,473		3,445		—			8,918
		41,076		78,017		(41	)		119,052
Expenses:
Loan fulfillment fees		24,852		—		3,284	(1)		28,136
Interest		5,647		5,630		(41	)		11,236
Loan servicing		150		7,940		—			8,090
Other		1,547		14,108		—			15,655
		32,196		27,678		3,243			63,117
Pre-tax net income	$	8,880	$	50,339	$	(3,284	)	$	55,935
Total assets at period end	$	1,142,774	$	1,829,246	$	(44,860	)	$	2,927,160

(1) Corporate absorption of fulfillment fees for transition adjustment related to the amended and restated management agreement effective February 1, 2013.

Quarter ended March 31, 2012	Correspondent lending			Investment activities		Intersegment eliminations  & other		Total
	(in thousands)
Revenues:
External
Net gain on mortgage loans acquired for sale	$	13,370		$	—	$	—	$	13,370
Net gain on investments		—			11,488		—		11,488
Interest income		2,792			13,638		—		16,430
Other income		1,461			3,900		—		5,361
Intersegment		(16	)		16		—		—
		17,607			29,042		—		46,649
Expenses:
Loan fulfillment fees payable to affiliate		6,124			—		—		6,124
Interest		927			5,747		—		6,674
Other		255			9,021		—		9,276
		7,306			14,768		—		22,074
Pre-tax net income	$	10,301		$	14,274	$	—	$	24,575

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Mortgage Loans at Fair Value (Tables)

3 Months Ended

Mar. 31, 2013

Summary of Distribution of Company's Mortgage Loans at Fair Value

Following is a summary of the distribution of the Company’s mortgage loans at fair value:

	March 31, 2013				December 31, 2012
Loan type	Fair value		Unpaid principal balance		Fair value		Unpaid principal balance
	(in thousands)				(in thousands)
Nonperforming loans	$	918,868	$	1,679,842	$	785,955	$	1,483,311
Performing loans:
Fixed		226,329		344,652		201,212		322,005
Adjustable rate/hybrid		143,239		194,475		134,196		195,381
Interest rate step-up		78,343		134,339		68,475		123,117
Balloon		143		218		133		219
		448,054		673,684		404,016		640,722
	$	1,366,922	$	2,353,526	$	1,189,971	$	2,124,033
Mortgage loans at fair value pledged to secure borrowings at period end:
Sales of loans under agreements to repurchase	$	1,203,387			$	947,522
Mortgage loans held in a consolidated subsidiary whose stock is pledged to secure financings of such loans	$	8,233			$	9,061

Summary of Certain Concentrations of Credit Risk in Portfolio of Mortgage Loans at Fair Value

Following is a summary of certain concentrations of credit risk in the portfolio of mortgage loans at fair value:

Concentration	March 31, 2013	December 31, 2012
Portion of mortgage loans originated between 2005 and 2007	74%	74%
Percentage of fair value of mortgage loans with unpaid-principal-balance-to current-property-value in excess of 100%	69%	68%
Percentage of mortgage loans secured by California real estate	19%	18%
Additional states contributing 5% or more of mortgage loans	New York Florida New Jersey	New York Florida New Jersey

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Concentration of Risks

3 Months Ended

Mar. 31, 2013

Concentration of Risks

Note 2—Concentration of Risks

As discussed in Note 1—Organization and Basis of Presentation above, PMT’s operations and investing activities are centered in real estate-related assets, a substantial portion of which are distressed at acquisition. Because of the Company’s investment strategy, many of the mortgage loans in its targeted asset class are purchased at discounts reflecting their distressed state or perceived higher risk of default, as well as a greater likelihood of collateral documentation deficiencies. Before acquiring loans or other assets, PCM validates key information provided by the sellers that is necessary to determine the value of the acquired asset. A substantial portion of the distressed loans purchased by the Company has been acquired from or through one or more subsidiaries of Citigroup, Inc. Because of the Company’s investment focus, PMT is exposed, to a greater extent than traditional mortgage investors, to the risks that borrowers may be in economic distress and/or may have become unemployed, bankrupt or otherwise unable or unwilling to make payments when due, and to the effects of fluctuations in the residential real estate market on the performance of its investments. Factors influencing these risks include, but are not limited to:

• changes in the overall economy and unemployment rates and residential real estate values in the markets where the properties securing the Company’s mortgage loans are located;

• PCM’s ability to identify and the Company’s loan servicers’ ability to execute optimal resolutions of problem mortgage loans;

• the accuracy of valuation information obtained during the Company’s due diligence activities;

• PCM’s ability to effectively model, and to develop appropriate model assumptions that properly anticipate, future outcomes;

• the level of government support for problem loan resolution and the effect of current and future proposed and enacted legislative and regulatory changes on the Company’s ability to effect cures or resolutions to distressed loans; and

• regulatory, judicial and legislative support of the foreclosure process, and the resulting effect on the Company’s ability to acquire and liquidate the real estate securing its portfolio of distressed mortgage loans in a timely manner or at all.

Due to these uncertainties, there can be no assurance that risk management activities identified and executed on PMT’s behalf will prevent significant losses arising from the Company’s investments in real estate-related assets.

On July 12, 2011 and December 20, 2011, the Company entered into forward purchase agreements with Citigroup Global Markets Realty Corp. (“CGM”), a subsidiary of Citigroup Inc., to purchase certain nonperforming residential mortgage loans and residential real property acquired in settlement of loans (collectively, the “CGM Assets”). The CGM Assets were acquired by CGM from unaffiliated money center banks. The commitment under the forward purchase agreement dated July 12, 2011 was settled during the quarter ended June 30, 2012. The commitment under the forward purchase agreement dated December 20, 2011 was settled during the quarter ended September 30, 2012. There were no similar forward purchase agreements entered into or outstanding as of March 31, 2013.

The CGM Assets were included on the Company’s consolidated balance sheet as Mortgage loans under forward purchase agreements at fair value and Real estate acquired in settlement of loans under forward purchase agreements and the related liabilities were included as Borrowings under forward purchase agreements. The CGM Assets were held by CGM within a separate trust entity deemed a variable interest entity. The Company’s interests in the CGM Assets were deemed to be contractually segregated from all other interests in the trust. When assets are contractually segregated, they are often referred to as a “silo.” For these transactions, the silo consisted of the CGM Assets and its related liability. The Company directed all of the activities that drive the economic results of the CGM Assets. All of the changes in the fair value and cash flows of the CGM Assets were attributable solely to the Company, and such cash flows could only be used to settle the related liability.

As a result of consolidating the silo, the Company’s consolidated statements of income and cash flows for the three months ended March 31, 2012 include the following amounts related to the silo:

	Quarter ended March 31, 2012
	(in thousands)
Net income:
Net gain on mortgage loans	$	6,700
Interest income on mortgage loans	$	502
Interest expense	$	1,515
Loan servicing fees	$	585
Cash flows:
Repayments of mortgage loans	$	8,701
Repayments of borrowings under forward purchase agreements	$	27,129

The Company has no other variable interests in the trust entity, or other exposure to the creditors of the trust entity which could expose the Company to loss.

The following table presents the fair value of mortgage loans (including forward purchase agreements) and REO purchased for its investment portfolio, including the CGM Assets:

	Quarter ended March 31,
	2013		2012
	(in thousands)
Investment portfolio purchases:
Loans	$	200,473	$	286
REO		—		53
	$	200,473	$	339
Investment portfolio purchases above through one or more subsidiaries of Citigroup, Inc.:
Loans	$	200,297	$	286
REO		—		53
	$	200,297	$	339

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Condensed Consolidating Financial Statements - Schedule of Condensed Consolidating Balance Sheet (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012	Dec. 31, 2011
Assets:
Cash and short-term investments	$ 64,400	$ 72,773
Mortgage loans held for sale	1,123,348	975,184
Mortgage loans at fair value	1,366,922	1,189,971
Real estate acquired in settlement of loans	84,486	88,078	81,209	80,570
Mortgage servicing rights	180,441	126,776
Other assets	14,164	13,922
Total assets	2,927,160	2,559,663
Liabilities:
Accounts payable and accrued liabilities	22,259	42,402
Assets sold under agreements to repurchase	1,615,050	1,256,102
Notes payable
Borrowings under forward purchase agreement
Other liabilities	67,422	59,823
Total liabilities	1,704,731	1,358,327
Shareholders' equity	1,222,429	1,201,336	595,956	546,017
Total liabilities and shareholders' equity	2,927,160	2,559,663
PennyMac Mortgage Investment Trust [Member]
Assets:
Cash and short-term investments	2,931	3,399
Investment in subsidiaries	1,229,392	1,207,471
Other assets	1,964	205
Total assets	1,234,287	1,211,075
Liabilities:
Accounts payable and accrued liabilities	2,089	524
Notes payable
Borrowings under forward purchase agreement
Other liabilities	9,456	8,903
Total liabilities	11,545	9,427
Shareholders' equity	1,222,742	1,201,648
Total liabilities and shareholders' equity	1,234,287	1,211,075
PennyMac Corp. [Member]
Assets:
Cash and short-term investments	25,846	45,187
Mortgage loans held for sale	1,123,348	975,184
Mortgage loans at fair value	503,194	505,072
Real estate acquired in settlement of loans	84,335	87,536
Mortgage servicing rights	180,441	126,776
Other assets	82,892	108,524
Total assets	2,000,056	1,848,279
Liabilities:
Accounts payable and accrued liabilities	18,042	39,309
Assets sold under agreements to repurchase	1,192,157	1,042,946
Notes payable
Borrowings under forward purchase agreement
Intercompany borrowings	403,299	117,904
Other liabilities	54,884	322,178
Total liabilities	1,668,382	1,522,337
Shareholders' equity	331,674	325,942
Total liabilities and shareholders' equity	2,000,056	1,848,279
Non-Guarantor Subsidiaries [Member]
Assets:
Cash and short-term investments	35,623	24,187
Mortgage-backed securities	36,359	39,967
Mortgage loans at fair value	863,728	684,899
Real estate acquired in settlement of loans	188	582
Investment in subsidiaries	751,355	705,321
Other assets	547,287	548,087
Total assets	2,234,540	2,003,043
Liabilities:
Accounts payable and accrued liabilities	2,128	2,569
Assets sold under agreements to repurchase	422,893	213,156
Notes payable
Borrowings under forward purchase agreement
Intercompany borrowings	151,098
Other liabilities	9,625	203,333
Total liabilities	585,744	419,058
Shareholders' equity	1,648,796	1,583,985
Total liabilities and shareholders' equity	2,234,540	2,003,043
Eliminations [Member]
Assets:
Mortgage-backed securities	(36,359)	(39,967)
Real estate acquired in settlement of loans	(37)	(40)
Investment in subsidiaries	(1,980,747)	(1,912,792)
Other assets	(524,580)	(549,935)
Total assets	(2,541,723)	(2,502,734)
Liabilities:
Notes payable
Borrowings under forward purchase agreement
Intercompany borrowings	(554,397)	(117,904)
Other liabilities	(6,543)	(474,591)
Total liabilities	(560,940)	(592,495)
Shareholders' equity	(1,980,783)	(1,910,239)
Total liabilities and shareholders' equity	$ (2,541,723)	$ (2,502,734)

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Real Estate Acquired in Settlement of Loans Financed Under Agreements to Repurchase - Summary of Financial Information Relating to REO Financed Under Agreements to Repurchase (Detail) (USD $) In Thousands, unless otherwise specified			3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2013 Real Estate Acquired in Settlement of Loans Financed under Agreements to Repurchase [Member]	Mar. 31, 2012 Real Estate Acquired in Settlement of Loans Financed under Agreements to Repurchase [Member]
Period end:
Balance	$ 3,546	$ 7,391	$ 3,546	$ 21,744
Unused amount			96,454	78,256
Weighted-average interest rate			3.95%	3.99%
Fair value of loans and REO held in a consolidated subsidiary whose stock is pledged to secure agreements to repurchase			7,523	43,269
During the period:
Weighted-average interest rate			4.21%	4.21%
Average balance of REO sold under agreements to repurchase			5,198	24,589
Total interest expense			180	387
Maximum daily amount outstanding			$ 7,391	$ 27,494

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Supplemental Cash Flow Information (Tables)

3 Months Ended

Mar. 31, 2013

Summary of Supplemental Cash Flow Information

	Quarter ended March 31,
	2013		2012
	(in thousands)
Cash paid for interest	$	11,192	$	6,954
Cash paid for income taxes	$	473	$	1,474
Non-cash investing activities:
Unsettled purchases of MBS and swaptions	$	—	$	115,636
Transfer of mortgage loans to REO	$	31,510	$	25,419
Purchase of mortgage loans financed through forward purchase agreements	$	—	$	286
Transfer of mortgage loans under forward purchase agreements to mortgage loans, at fair value	$	—	$	17,309
Transfer of mortgage loans under forward purchase agreements to REO under forward purchase agreements	$	—	$	5,696
Receipt of MSRs as proceeds from sales of loans	$	56,216	$	12,929
Transfer of REO under forward purchase agreements to REO	$	—	$	53
Non-cash financing activities:
Purchase of mortgage loans financed through forward purchase agreements	$	—	$	286
Purchase of REO financed through forward purchase agreements	$	—	$	53

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Share-Based Compensation Plans - Summary of Restricted Share Unit Activity and Compensation Expense (Detail) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Number of units:
Outstanding at beginning of period	665,617	491,809
Granted
Vested	85,769	(88,249)
Canceled	(2,784)	(171)
Outstanding at end of period	577,064	403,389
Weighted Average Grant Date Fair Value:
Outstanding at beginning of period	$ 15.92	$ 12.57
Granted
Vested	$ 16.28	$ 17.28
Expired or canceled	$ 14.81	$ 3.15
Outstanding at end of period	$ 15.89	$ 11.54
Compensation expense recorded during the period	$ 1,452,000	$ 883,000
Period end:
Units available for future awards	4,185,000	2,105,000
Unamortized compensation cost	$ 4,611,000	$ 2,758,000

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Supplemental Cash Flow Information - Summary of Supplemental Cash Flow Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Supplemental Cash Flow Information [Line Items]
Cash paid for interest	$ 11,192	$ 6,954
Cash paid for income taxes	473	1,474
Non-cash investing activities:
Unsettled purchases of MBS and swaptions		115,636
Transfer of mortgage loans to REO	31,510	25,419
Purchase of mortgage loans financed through forward purchase agreements		286
Transfer of mortgage loans under forward purchase agreements to mortgage loans, at fair value		17,309
Transfer of mortgage loans under forward purchase agreements to REO under forward purchase agreements		5,696
Receipt of MSRs as proceeds from sales of loans	56,216	12,929
Transfer of REO under forward purchase agreements to REO		53
Non-cash financing activities:
Purchase of mortgage loans financed through forward purchase agreements		286
Purchase of REO financed through forward purchase agreements		$ 53

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Netting of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2013

Summary of Offsetting of Derivative Assets

As of March 31, 2013 and December 31, 2012, the Company did not enter into reverse repurchase agreements or securities lending transactions that are required to be disclosed in the following table.

Offsetting of Derivative Assets

	March 31, 2013								December 31, 2012
	Gross amounts of recognized assets		Gross amounts offset in the balance sheet			Net amounts of assets presented in the balance sheet			Gross amounts of recognized assets		Gross amounts offset in the balance sheet			Net amounts of assets presented in the balance sheet
	(in thousands)
Derivatives:
MBS put options	$	326	$	—		$	326		$	977	$	—		$	977
MBS call options		1,052		—			1,052			—		—			—
Forward purchase contracts		6,460		—			6,460			2,617		—			2,617
Forward sale contracts		1,121		—			1,121			3,458		—			3,458
Netting		—		(4,825	)		(4,825	)		—		(2,825	)		(2,825	)
Total derivatives, subject to a master netting arrangement		8,959		(4,825	)		4,134			7,052		(2,825	)		4,227
Total derivatives, not subject to a master netting arrangement		11,052		—			11,052			19,479		—			19,479
Total	$	20,011	$	(4,825	)	$	15,186		$	26,531	$	(2,825	)	$	23,706

Summary of Derivative Assets, and Collateral Held by Counterparty

Derivative Assets, and Collateral Held by Counterparty

The following table summarizes by significant counterparty the amount of derivative asset positions after considering master netting arrangements and financial instruments or cash pledged that do not meet the accounting guidance qualifying for netting.

	March 31, 2013								December 31, 2012
			Gross amounts not offset in the balance sheet								Gross amounts not offset in the balance sheet
	Net amount of assets in the balance sheet		Financial instruments		Cash collateral received		Net amount		Net amount of assets in the balance sheet		Financial instruments		Cash collateral received		Net amount
	(in thousands)
Interest rate lock commitments	$	11,052	$	—	$	—	$	11,052	$	19,479	$	—	$	—	$	19,479
Barclays		1,400		—		—		1,400		15		—		—		15
Bank of America, N.A.		596		—		—		596		1,219		—		—		1,219
Cantor Fitzgerald LP		579		—		—		579		581		—		—		581
Citibank		456		—		—		456		1,009		—		—		1,009
Credit Suisse First Boston Mortgage Capital LLC		166		—		—		166		820		—		—		820
Morgan Stanley Bank, N.A.		104		—		—		104		316		—		—		316
Other		833		—		—		833		267		—		—		267
Total	$	15,186	$	—	$	—	$	15,186	$	23,706	$	—	$	—	$	23,706

Schedule of Offsetting of Derivative Liabilities and Financial Liabilities

Offsetting of Derivative Liabilities and Financial Liabilities

Following is a summary of net derivative liabilities and assets sold under agreements to repurchase. As discussed above, all derivatives with the exception of IRLCs are subject to master netting arrangements. Assets sold under agreements to repurchase do not qualify for offset.

	March 31, 2013								December 31, 2012
	Gross amounts of recognized liabilities		Gross amounts offset in the balance sheet			Net amounts of liabilities presented in the balance sheet			Gross amounts of recognized liabilities		Gross amounts offset in the balance sheet			Net amounts of liabilities presented in the balance sheet
	(in thousands)
Derivatives:
Forward purchase contracts	$	462	$	—		$	462		$	1,741	$	—		$	1,741
Forward sale contracts		8,560		—			8,560			4,520		—			4,520
Netting		—		(6,943	)		(6,943	)		—		(5,294	)		(5,294	)
Total derivatives, subject to a master netting arrangement		9,022		(6,943	)		2,079			6,261		(5,294	)		967
Total derivatives, not subject to a master netting arrangement		—		—			—			—		—			—
Total derivatives		9,022		(6,943	)		2,079			6,261		(5,294	)		967
Assets sold under agreements to repurchase:
Mortgage loans acquired for sale at fair value		1,035,486		—			1,035,486			894,906		—			894,906
Mortgage loans at fair value		576,018		—			576,018			353,805		—			353,805
Real estate acquired in settlement of loans		3,546		—			3,546			7,391		—			7,391
Total assets sold under agreements to repurchase		1,615,050		—			1,615,050			1,256,102		—			1,256,102
Total	$	1,624,072	$	(6,943	)	$	1,617,129		$	1,262,363	$	(5,294	)	$	1,257,069

Summary of Derivative Liabilities, Financial Liabilities, and Collateral Held by Counterparty

Derivative Liabilities, Financial Liabilities, and Collateral Held by Counterparty

The following table summarizes by significant counterparty the amount of derivative liabilities and assets sold under agreements to repurchase after considering master netting arrangements and financial instruments or cash pledged that does not meet the accounting guidance qualifying for offset. All assets sold under agreements to repurchase have sufficient collateral or exceed the liability amount recorded on the consolidated balance sheet.

	March 31, 2013									December 31, 2012
	Net liabilities in the balance sheet		Gross amounts not offset in the balance sheet					Net amount		Net liabilities in the balance sheet		Gross amounts not offset in the balance sheet					Net amount
			Financial instruments			Cash collateral pledged						Financial instruments			Cash collateral pledged
	(in thousands)
Citibank	$	778,701	$	(777,825	)	$	—	$	876	$	474,625	$	(474,625	)	$	—	$	—
Bank of America, N.A.		259,858		(259,858	)		—		—		256,711		(256,711	)		—		—
Credit Suisse First Boston Mortgage Capital LLC		372,985		(372,663	)		—		322		243,525		(243,525	)		—		—
Morgan Stanley Bank, N.A.		133,413		(133,413	)		—		—		155,321		(155,321	)		—		—
Barclays		71,291		(71,291	)		—		—		79,253		(78,780	)		—		473
Wells Fargo Bank, N.A.		88		—			—		88		47,140		(47,140	)		—		—
Other		793		—			—		793		494		—			—		494
Total	$	1,617,129	$	(1,615,050	)	$	—	$	2,079	$	1,257,069	$	(1,256,102	)	$	—	$	967

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Shareholders' Equity

3 Months Ended

Mar. 31, 2013

Shareholders' Equity

Note 22—Shareholders’ Equity

During the three months ended March 31, 2012, the Company sold common shares under a Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co. Pursuant to the Controlled Equity Offering Sales Agreement, the Company sold a total of 2,531,310 of its common shares at a weighted average price of $18.41 per share, providing net proceeds to the Company of approximately $45.7 million, net of sales commissions. The sales agent received a total of approximately $917,000, which represents an average commission of approximately 2.0% of the gross sales price.

As more fully described in the Company’s Annual Report, certain of the underwriting costs incurred in the Company’s IPO were paid on PMT’s behalf by PCM and a portion of the underwriting discount was deferred by agreement with the underwriters of the offering. On February 1, 2013, the Company entered into an Amended and Restated Underwriting Fee Reimbursement Agreement (“Reimbursement Agreement”), by and among the Company, the Operating Partnership and PCM. The Reimbursement Agreement provides that, to the extent the Company is required to pay PCM performance incentive fees under the management agreement, the Company will reimburse PCM for underwriting costs it paid on the offering date at a rate of $10 in reimbursement for every $100 of performance incentive fees earned. The reimbursement is subject to a maximum reimbursement in any particular 12-month period of $980,422, and the maximum amount that may be reimbursed under the agreement is $2.9 million.

The Reimbursement Agreement also provides for the payment to the IPO underwriters of the payment that the Company agreed to make to them at the time of the IPO if the Company satisfied certain performance measures over a specified period of time. As PCM earns performance incentive fees under the management agreement, the IPO underwriters will be paid at a rate of $20 of payments for every $100 of performance incentive fees earned by PCM. The payment to the underwriters is subject to a maximum reimbursement in any particular 12-month period of $1,960,844 and the maximum amount that may be paid under the agreement is $5.9 million. The reimbursement agreement expires on February 1, 2019. Management has concluded that these amounts are likely to be paid and has recognized a liability for reimbursement to PCM and payment of the contingent underwriting discount as a reduction of additional paid-in capital.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2013

Commitments and Contingencies

Note 21—Commitments and Contingencies

From time to time, the Company may be involved in various proceedings, claims and legal actions arising in the ordinary course of business. As of March 31, 2013, the Company was not involved in any such proceedings, claims or legal actions that would have a material adverse effect on the Company.

Mortgage Loan Commitments

The following table summarizes the Company’s outstanding contractual loan commitments:

	March 31, 2013
	(in thousands)
Commitments to purchase mortgage loans:
Correspondent lending	$	933,768
Other mortgage loans	$	—

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Real Estate Acquired in Settlement of Loans Under Forward Purchase Agreements - Summary of Activity in REO under Forward Purchase Agreements (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012
Real Estate Acquired Through Foreclosure Under Forward Purchase Agreements [Line Items]
Balance at beginning of period	$ 22,979
Purchases	53
Transfers from mortgage loans under forward purchase agreements at fair value and advances	5,696
Valuation adjustments, net	(381)
Gain on sale, net	2,101
Results of REO under forward purchase agreements	1,720
Sale proceeds	(6,787)
Balance at period end	$ 23,661

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Recourse Liability (Tables)

3 Months Ended

Mar. 31, 2013

Summary of Company's Recourse Liability

Following is a summary of the Company’s Recourse liability in the consolidated balance sheets:

	Quarter ended March 31,
	2013		2012
	(in thousands)
Balance, beginning of period	$	4,441	$	205
Provisions for losses		1,790		426
Incurred losses		—		—
Balance, end of period	$	6,231	$	631

Summary of Company's Repurchase Activity

Following is a summary of the Company’s repurchase activity:

	Quarter ended March 31,
	2013		2012
	(in thousands)
During the period:
Unpaid balance of mortgage loans repurchased	$	648	$	—
Incurred losses on repurchased loans	$	—	$	—
At period end:
Unpaid balance of mortgage loans subject to pending claims for repurchase	$	—	$	—

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Fair Value (Tables)

3 Months Ended

Mar. 31, 2013

Summary of Financial Statement Items Measured at Estimated Fair Value on Recurring Basis

Following is a summary of financial statement items that are measured at estimated fair value on a recurring basis:

	March 31, 2013
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Short-term investments	$	45,024	$	—	$	—	$	45,024
Mortgage loans acquired for sale at fair value		—		1,123,348		—		1,123,348
Mortgage loans at fair value		—		—		1,366,922		1,366,922
Mortgage servicing rights at fair value		—		—		1,305		1,305
Derivative assets:
Interest rate lock commitments		—		—		11,052		11,052
MBS put options		—		326		—		326
MBS call options		—		1,052		—		1,052
Forward purchase contracts		—		6,460		—		6,460
Forward sales contracts		—		1,121		—		1,121
Total derivative assets before netting		—		8,959		11,052		20,011
Netting (1)		—		—		—		(4,825	)
Total derivative assets		—		8,959		11,052		15,186
	$	45,024	$	1,132,307	$	1,379,279	$	2,551,785
Liabilities:
Derivative liabilities:
Forward purchase contracts	$	—	$	462	$	—	$	462
Forward sales contracts		—		8,560		—		8,560
Total derivative liabilities before netting		—		9,022		—		9,022
Netting (1)		—		—		—		(6,943	)
Total derivative liabilities	$	—	$	9,022	$	—	$	2,079

(1) Derivatives are reported net of cash collateral received and paid and, to the extent that the criteria of the accounting guidance covering the offsetting of amounts related to certain contracts are met, positions with the same counterparty are netted as part of a legally enforceable master netting agreement.

	December 31, 2012
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Short-term investments	$	39,017	$	—	$	—	$	39,017
Mortgage loans acquired for sale at fair value		—		975,184		—		975,184
Mortgage loans at fair value		—		—		1,189,971		1,189,971
Mortgage servicing rights at fair value		—		—		1,346		1,346
Derivative assets:
Interest rate lock commitments		—		—		19,479		19,479
MBS put options		—		977		—		977
Forward purchase contracts		—		2,617		—		2,617
Forward sales contracts		—		3,458		—		3,458
Total derivative assets before netting (1)		—		7,052		19,479		26,531
Netting (1)		—		—		—		(2,825	)
Total derivative assets		—		7,052		19,479		23,706
	$	39,017	$	982,236	$	1,210,796	$	2,229,224
Liabilities:
Derivative liabilities:
Forward purchase contracts	$	—	$	1,741	$	—	$	1,741
Forward sales contracts		—		4,520		—		4,520
Total derivative liabilities before netting		—		6,261		—		6,261
Netting (1)		—		—		—		(5,294	)
Total derivative liabilities	$	—	$	6,261	$	—	$	967

(1) Derivatives are reported net of cash collateral received and paid and, to the extent that the criteria of the accounting guidance covering the offsetting of amounts related to certain contracts are met, positions with the same counterparty are netted as part of a legally enforceable master netting agreement.

Summary of Changes in Items Measured Using Level 3 Inputs on Recurring Basis

The Company’s MBS, mortgage loans at fair value, mortgage loans under forward purchase agreements, MSRs, IRLCs and securities sold under agreements to repurchase were measured using Level 3 inputs on a recurring basis. The following is a summary of changes in those items:

	Quarter ended March 31, 2013
	Mortgage loans			Mortgage servicing rights			Interest rate lock commitments			Total
	(in thousands)
Assets:
Balance, December 31, 2012	$	1,189,971		$	1,346		$	19,479		$	1,210,796
Purchases		200,473			—			—			200,473
Repayments		(61,421	)		—			—			(61,421	)
Interest rate lock commitments issued, net		—			—			35,414			35,414
Capitalization of interest		5,230			—			—			5,230
Servicing received as proceeds from sales of mortgage loans		—			26			—			26
Changes in fair value included in income arising from:
Changes in instrument-specific credit risk		8,445			—			—			8,445
Other factors		55,535			(67	)		—			55,468
		63,980			(67	)		—			63,913
Transfers of mortgage loans to REO		(31,311	)		—			—			(31,311	)
Transfers of interest rate lock commitments to mortgage loans acquired for sale		—			—			(43,841	)		(43,841	)
Balance, March 31, 2013	$	1,366,922		$	1,305		$	11,052		$	1,379,279
Changes in fair value recognized during the period relating to assets still held at March 31, 2013	$	50,608		$	(67	)	$	11,052		$	61,593
Accumulated changes in fair value relating to assets still held at March 31, 2013	$	147,627					$	11,052

	Quarter ended March 31, 2012
	Mortgage- backed securities			Mortgage loans			Mortgage loans under forward purchase agreements			Mortgage servicing rights			Total
	(in thousands)
Assets:
Balance, December 31, 2011	$	72,813		$	696,266		$	129,310		$	749		$	899,138
Purchases		—			—			286			20			306
Repayments		(11,086	)		(26,187	)		(8,701	)		—			(45,974	)
Accrual of unearned discounts		335			—			—			—			335
Servicing received as proceeds from sales of mortgage loans		—			—			—			520			520
Changes in fair value included in income arising from:
Changes in instrument-specific credit risk		—			7,704			1,743			—			9,447
Other factors		363			(3,367	)		4,957			(101	)		1,852
		363			4,337			6,700			(101	)		11,299
Transfers of mortgage loans to REO		—			(24,201	)		—			—			(24,201	)
Transfer from mortgage loans acquired for sale		—			18			—			—			18
Transfers of mortgage loans under forward purchase agreements to REO under forward purchase agreements		—			—			(5,256	)		—			(5,256	)
Transfers of mortgage loans under forward purchase agreements to mortgage loans		—			17,309			(17,309	)		—			—
Balance, March 31, 2012	$	62,425		$	667,542		$	105,030		$	1,188		$	836,185
Changes in fair value recognized during the period relating to assets still held at March 31, 2012	$	363		$	26		$	4,494		$	(101	)	$	4,782
Accumulated changes in fair value relating to assets still held at March 31, 2012	$	(2,288	)	$	58,748		$	9,091
	Securities sold under agreements to repurchase
	(in thousands)
Liabilities:
Balance, December 31, 2011	$	115,493
Changes in fair value included in income		—
Sales		291,914
Repurchases		(354,339	)
Balance, March 31, 2012	$	53,068
Changes in fair value recognized during the period relating to liabilities still outstanding at March 31, 2012	$	—

Fair Values and Related Principal Amounts Due upon Maturity of Mortgage Loans Accounted for Under Fair Value Option

Following are the fair values and related principal amounts due upon maturity of mortgage loans accounted for under the fair value option (including mortgage loans acquired for sale, mortgage loans at fair value and mortgage loans under forward purchase agreements at fair value):

	March 31, 2013
	Fair value		Principal amount due upon maturity		Difference
	(in thousands)
Mortgage loans acquired for sale:
Current through 89 days delinquent	$	1,123,348	$	1,078,360	$	44,988
90 or more days delinquent (1)		—		—		—
		1,123,348		1,078,360		44,988
Other mortgage loans at fair value:
Current through 89 days delinquent		448,054		673,684		(225,630	)
90 or more days delinquent (1)		918,868		1,679,842		(760,974	)
		1,366,922		2,353,526		(986,604	)
	$	2,490,270	$	3,431,886	$	(941,616	)

	December 31, 2012
	Fair value		Principal amount due upon maturity		Difference
	(in thousands)
Mortgage loans acquired for sale:
Current through 89 days delinquent	$	975,184	$	931,787	$	43,397
90 or more days delinquent (1)		—		—		—
		975,184		931,787		43,397
Other mortgage loans at fair value:
Current through 89 days delinquent		404,016		640,722		(236,706	)
90 or more days delinquent (1)		785,955		1,483,311		(697,356	)
		1,189,971		2,124,033		(934,062	)
	$	2,165,155	$	3,055,820	$	(890,665	)

(1) Loans delinquent 90 or more days are placed on nonaccrual status and previously accrued interest is reversed.

Summary of Changes in Fair Value Included in Current Period Income

Following are the changes in fair value included in current period income by consolidated statement of income line item for financial statement items accounted for under the fair value option:

	Quarter ended March 31, 2013
	Net gain  on mortgage loans acquired for sale		Net gain on investments		Interest income		Net loan servicing fees			Total
	(in thousands)
Assets:
Short-term investments	$	—	$	—	$	—	$	—		$	—
Mortgage loans acquired for sale at fair value		24,757		—		—		—			24,757
Mortgage loans at fair value		—		63,980		—		—			63,980
Mortgage servicing rights at fair value		—		—		—		(67	)		(67	)
	$	24,757	$	63,980	$	—	$	(67	)	$	88,670

	Quarter ended March 31, 2012
	Net gain  on mortgage loans acquired for sale		Net gain on investments		Interest income		Net loan servicing fees			Total
	(in thousands)
Assets:
Short-term investments	$	—	$	—	$	—	$	—		$	—
Mortgage-backed securities at fair value		—		357		335		—			692
Mortgage loans acquired for sale at fair value		13,370		—		—		—			13,370
Mortgage loans at fair value		—		4,431		—		—			4,431
Mortgage loans under forward purchase agreements at fair value		—		6,700		—		—			6,700
Mortgage servicing rights at fair value		—		—		—		(101	)		(101	)
	$	13,370	$	11,488	$	335	$	(101	)	$	25,092

Summary of Financial Statement Items Measured at Estimated Fair Value on Nonrecurring Basis

Following is a summary of financial statement items that are measured at estimated fair value on a nonrecurring basis:

	March 31, 2013
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Real estate asset acquired in settlement of loans	$	—	$	—	$	42,254	$	42,254
Mortgage servicing assets at lower of amortized cost or fair value		—		—		111,935		111,935
	$	—	$	—	$	154,189	$	154,189

	December 31, 2012
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Real estate asset acquired in settlement of loans	$	—	$	—	$	56,156	$	56,156
Mortgage servicing rights at lower of amortized cost or fair value		—		—		86,215		86,215
	$	—	$	—	$	142,371	$	142,371

Summary of Total Gains (Losses) on Assets Measured at Estimated Fair Values on Nonrecurring Basis

The following table summarizes the total gains (losses) on assets measured at estimated fair values on a nonrecurring basis:

	Quarter ended March 31,
	2013			2012
	(in thousands)
Real estate asset acquired in settlement of loans	$	(4,954	)	$	(2,782	)
Real estate asset acquired in settlement of loans under forward purchase agreements		—			(348	)
Mortgage servicing assets at lower of amortized cost or fair value		2,486			(106	)
	$	(2,468	)	$	(3,236	)

Quantitative Summary of Key Inputs Used in Valuation of Mortgage Loans at Fair Value

Following is a quantitative summary of key inputs used in the valuation of mortgage loans at fair value:

	Range (Weighted Average)
Key Inputs	March 31, 2013	December 31, 2012
Discount rate	8.3% – 20.5%	8.8% – 20.7%
	(12.5%)	(13.1%)
Twelve-month projected housing price index change	2.1% – 5.6%	0.4% – 1.5%
	(3.6%)	(1.1%)
Prepayment speed (1)	0.0% – 4.6%	0.4% – 4.4%
	(2.5%)	(2.2%)
Total prepayment speed (2)	0.6% – 41.2%	5.9% – 31.2%
	(21.0%)	(20.6%)

(1) Prepayment speed is measured using life voluntary Conditional Prepayment Rate (“CPR”).

(2) Total prepayment speed is measured using life total CPR.

Quantitative Summary of Key Unobservable Inputs Used in Valuation of Interest Rate Lock Commitments

Following is a quantitative summary of key unobservable inputs used in the valuation of IRLCs:

	Range (Weighted average)
	March 31, 2013	December 31, 2012
Key Inputs	Range (Weighted average)
Pull-through rate	65.0% – 98.0%	44.2% – 98.0%
	(83.5%)	(80.6%)
MSR value expressed as:
Servicing fee multiple	0.9 – 5.2	1.8 – 4.8
	(4.5)	(4.5)
Percentage of unpaid principal balance	0.2% – 1.3%	0.4% – 1.2%
	(1.1%)	(1.1%)

Key Assumptions Used in Determining Fair Value of MSRs at Time of Initial Recognition

Following are the key inputs used in determining the fair value of MSRs at the time of initial recognition:

	Quarter ended March 31,
	2013		2012
	Range (Weighted average)
Key Inputs	Amortized cost	Fair value	Amortized cost	Fair value
Pricing spread (1)	5.4% – 14.4%	7.5% – 14.4%	7.5% – 14.5%	7.5% – 14.5%
	(7.0%)	(8.5%)	(7.5%)	(8.3%)
Life (in years)	2.7 – 6.9	2.8 – 6.8	2.8 – 7.0	2.8 – 7.0
	(6.4)	(6.1)	(6.5)	(5.8)
Annual total prepayment speed (2)	8.5% – 22.7%	10.4% – 27.0%	6.7% – 27.4%	7.9% – 27.4%
	(9.1%)	(14.4%)	(7.9%)	(13.1%)
Annual per-loan cost of servicing	$68 – $140	$68 – $68	$68 – $140	$68 – $140
	($68)	($68)	($69)	($89)

(1) Pricing spread represents a margin that is applied to a reference interest rate’s forward rate curve to develop periodic discount rates. The Company applies a pricing spread to the United States Dollar LIBOR curve for purposes of discounting cash flows relating to MSRs acquired as proceeds from the sale of mortgage loans.

(2) Prepayment speed is measured using CPR.

Quantitative Summary of Key Assumptions Used in Valuation of MSRs, and Effect on Estimated Fair Value from Adverse Changes in Those Assumptions

Following is a quantitative summary of key inputs used in the valuation of MSRs, and the effect on the estimated fair value from adverse changes in those assumptions (weighted averages are based upon unpaid principal balance or fair value where applicable):

	March 31, 2013						December 31, 2012
	Range (Weighted average)
Key Inputs	Amortized cost			Fair value			Amortized cost			Fair value
	(unpaid principal balance and effect on value amounts in thousands)
Unpaid principal balance of underlying loans	$	16,479,081		$	163,049		$	11,986,957		$	181,783
Pricing spread (1)		5.4% – 19.0	%		8.6% – 14.5	%		7.5% – 16.5	%		7.5% – 16.5%
		(6.8%)			(9.0%)			(7.7%)			(7.7%)
Effect on value of 5% adverse change	$	(3,056	)	$	(19	)	$	(2,052	)	$	(21	)
Effect on value of 10% adverse change	$	(6,020	)	$	(38	)	$	(4,041	)	$	(40	)
Effect on value of 20% adverse change	$	(11,686	)	$	(73	)	$	(7,845	)	$	(78	)
Average life (in years)		1.8 – 6.9			1.5 – 6.8			1.7 – 6.3			1.4 – 6.3
		(6.4)			(6.2)			(6.3)			(6.0)
Prepayment speed (2)		8.6% – 45.9	%		10.4% – 50.9	%		10.3% – 47.8	%		10.3% – 65.9	%
		(9.5%)			(15.1%)			(10.3%)			(13.2%)
Effect on value of 5% adverse change	$	(4,214	)	$	(43	)	$	(3,026	)	$	(52	)
Effect on value of 10% adverse change	$	(8,275	)	$	(83	)	$	(5,937	)	$	(100	)
Effect on value of 20% adverse change	$	(15,966	)	$	(159	)	$	(11,436	)	$	(190	)
Annual per-loan cost of servicing		$68 – $140			$68 – $140			$68 – $140			$68 – $140
		$(68)			$(73)			$(68)			$(74)
Effect on value of 5% adverse change	$	(1,138	)	$	(12	)	$	(778	)	$	(12	)
Effect on value of 10% adverse change	$	(2,275	)	$	(24	)	$	(1,556	)	$	(24	)
Effect on value of 20% adverse change	$	(4,551	)	$	(47	)	$	(3,112	)	$	(48	)

(1) Pricing spread represents a margin that is applied to a reference interest rate’s forward rate curve to develop periodic discount rates. The Company applies a pricing spread to the United States Dollar LIBOR curve for purposes of discounting cash flows relating to MSRs acquired as proceeds from the sale of mortgage loans and purchased MSRs not backed by pools of distressed mortgage loans.

(2) Prepayment speed is measured using CPR.

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Net Gain on Mortgage Loans Acquired For Sale

3 Months Ended

Mar. 31, 2013

Net Gain on Mortgage Loans Acquired For Sale

Note 23—Net Gain on Mortgage Loans Acquired For Sale

Net gain on mortgage loans acquired for sale is summarized below:

	Quarter ended March 31,
	2013			2012
	(in thousands)
Cash gain (loss):
Sales proceeds	$	(27,247	)	$	548
Hedging activities		13,614			(803	)
		(13,633	)		(255	)
Non cash gain (loss):
Change in fair value of IRLCs		(8,426	)		(1,464	)
Receipt of MSRs in loan sale transactions		56,216			12,929
Provision for losses relating to representations and warranties provided in loan sales		(1,790	)		(426	)
Change in fair value relating to loans and hedging derivatives held at year-end:
Mortgage loans		(2,422	)		1,181
Hedging derivatives		(666	)		1,405
		(3,088	)		2,586
	$	29,279		$	13,370

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Net Loan Servicing Fees

3 Months Ended

Mar. 31, 2013

Net Loan Servicing Fees

Note 24—Net Loan Servicing Fees

Net loan servicing fees is summarized below:

	Quarter ended March 31,
	2013			2012
	(in thousands)
Servicing fees (1)	$	11,104		$	652
MSR recapture fee from affiliate		133			—
Effect of MSRs:
Amortization		(4,970	)		(248	)
Impairment reversal (provision) for MSRs carried at lower of amortized cost or fair value		2,486			(106	)
Change in fair value of MSRs carried at fair value		(67	)		(101	)
Losses on hedging derivatives		(1,988	)		—
		(4,539	)		(455	)
	$	6,698		$	197

(1) Includes contractually specified servicing and ancillary fees.

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Organization and Basis of Presentation

3 Months Ended

Mar. 31, 2013

Organization and Basis of Presentation

Note 1—Organization and Basis of Presentation

PennyMac Mortgage Investment Trust (“PMT” or the “Company”) was organized in Maryland on May 18, 2009, and commenced operations on August 4, 2009, when it completed its initial offerings of common shares of beneficial interest (“shares”). The Company is a specialty finance company, which, through its subsidiaries (all of which are wholly-owned), invests primarily in residential mortgage loans and mortgage-related assets.

The Company operates in two segments: correspondent lending and investment activities:

• The correspondent lending segment represents the Company’s operations aimed at serving as an intermediary between mortgage lenders and the capital markets by purchasing, pooling and reselling newly originated prime credit quality mortgage loans either directly or in the form of mortgage backed securities (“MBS”), using the services of PNMAC Capital Management, LLC (“PCM” or the “Manager”) and PennyMac Loan Services, LLC (“PLS” or the “Servicer”).

Most of the loans the Company has acquired in its correspondent lending activities have been eligible for sale to government-sponsored entities such as the Federal National Mortgage Association (“Fannie Mae”) and Federal Home Loan Mortgage Corporation (“Freddie Mac”) or government agencies such as the U.S. Department of Housing and Urban Development’s Government National Mortgage Association (“Ginnie Mae”). Fannie Mae, Freddie Mac and Ginnie Mae are each referred to as an “Agency” and, collectively, as the “Agencies”.

• The investment activities segment represents the Company’s investments in distressed mortgage loans, real estate acquired in settlement of loans (“REO”), MBS and mortgage servicing rights (“MSRs”). The Company seeks to maximize the value of the distressed mortgage loans that it acquires through proprietary loan modification programs, special servicing or other initiatives focused on keeping borrowers in their homes. Where this is not possible, such as in the case of many nonperforming mortgage loans, the Company seeks to effect property resolution in a timely, orderly and economically efficient manner, including through the use of resolution alternatives to foreclosure.

The Company is externally managed by PCM, an investment adviser registered with the Securities and Exchange Commission (the “SEC”) that specializes in and focuses on residential mortgage loans. Under the terms of a management agreement, PCM is paid a management fee with a base component and a performance incentive component. Determination of the amount of management fees is discussed in Note 3—Transactions with Related Parties.

The Company believes that it qualifies, and has elected to be taxed, as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), beginning with its taxable period ended on December 31, 2009. To maintain its tax status as a REIT, the Company plans to distribute at least 90% of its taxable income in the form of qualifying distributions to shareholders.

The Company conducts substantially all of its operations and makes substantially all of its investments through its subsidiary, PennyMac Operating Partnership, L.P. (the “Operating Partnership”), and the Operating Partnership’s subsidiaries. A subsidiary of the Company is the sole general partner, and the Company is the sole limited partner, of the Operating Partnership.

The accompanying consolidated financial statements have been prepared in compliance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the SEC’s instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, these financial statements and notes do not include all of the information required by U.S. GAAP for complete financial statements. The interim consolidated information should be read together with the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 (the “Annual Report”).

Preparation of financial statements in compliance with U.S. GAAP requires management to make estimates and assumptions 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. Actual results will likely differ from those estimates.

In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the periods ended March 31, 2013 are not necessarily indicative of the results for the year ending December 31, 2013.

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Share-Based Compensation Plans

3 Months Ended

Mar. 31, 2013

Share-Based Compensation Plans

Note 25—Share-Based Compensation Plans

The Company has adopted an equity incentive plan which provides for the issuance of equity based awards, including share options, restricted shares, restricted share units, unrestricted common share awards, LTIP units (a special class of partnership interests in the Operating Partnership) and other awards based on PMT’s shares that may be made by the Company directly to its officers and trustees, and the members, officers, trustees, directors and employees of PCM, PLS, or their affiliates and to PCM, PLS and other entities that provide services to PMT and the employees of such other entities. The equity incentive plan is administered by the Company’s compensation committee, pursuant to authority delegated by the board of trustees, which has the authority to make awards to the eligible participants referenced above, and to determine what form the awards will take, and the terms and conditions of the awards.

The Company’s equity incentive plan allows for grants of equity-based awards up to an aggregate of 8% of PMT’s issued and outstanding shares on a diluted basis at the time of the award.

The shares underlying award grants will again be available for award under the equity incentive plan if:

• any shares subject to an award granted under the equity incentive plan are forfeited, cancelled, exchanged or surrendered;

• an award terminates or expires without a distribution of shares to the participant; or

• shares are surrendered or withheld by PMT as payment of either the exercise price of an award and/or withholding taxes for an award.

Restricted share units have been awarded to trustees and officers of the Company and to employees of PCM and PLS at no cost to the grantees. Such awards generally vest over a one- to four-year period. Each share option awarded under the equity incentive plan will have a term of no longer than ten years, and will have an exercise price that is no less than 100% of the fair value of the Company’s shares on the date of grant of the award.

The Company’s estimate of value included assumed grantee forfeiture rates of 15% per year for employees of PCM and its affiliates and no turnover for certain of PMT’s officers and its board of trustees.

The table below summarizes restricted share unit activity and compensation expense:

	Quarter ended March 31,
	2013			2012
Number of units:
Outstanding at beginning of period		665,617			491,809
Granted		—			—
Vested		85,769			(88,249	)
Canceled		(2,784	)		(171	)
Outstanding at end of period		577,064			403,389
Weighted Average Grant Date Fair Value:
Outstanding at beginning of period	$	15.92		$	12.57
Granted	$	—		$	—
Vested	$	16.28		$	17.28
Expired or canceled	$	14.81		$	3.15
Outstanding at end of period	$	15.89		$	11.54
Compensation expense recorded during the period	$	1,781,000		$	883,000
Period end:
Units available for future awards (1)		4,185,000			2,105,000
Unamortized compensation cost	$	4,611,000		$	2,758,000

(1) Based on shares outstanding as of March 31, 2013. Total units available for future awards may be adjusted in accordance with the equity incentive plan based on future issuances of PMT’s shares as described above.

As of March 31, 2012, 541,630 restricted share units with a weighted average grant date fair value of $16.53 per share unit are expected to vest over their average remaining vesting period of 2.2 years. The grant date fair values of share unit awards are based on the market value of the Company’s stock at the date of grant.

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Fair Value - Fair Values and Related Principal Amounts Due upon Maturity of Mortgage Loans Accounted for Under Fair Value Option (Parenthetical) (Detail)	3 Months Ended
	Mar. 31, 2013
Fair Value, Option, Quantitative Disclosures [Line Items]
Loans delinquent	90 or more days

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Mortgage Loans at Fair Value Sold Under Agreements to Repurchase - Additional Information (Detail) (Mortgage Loans At Fair Value Sold Under Agreements To Repurchase [Member], USD $)	Mar. 31, 2013	Dec. 31, 2012
Mortgage Loans At Fair Value Sold Under Agreements To Repurchase [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Deposit with loan repurchase agreement counterparties		$ 379,000

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Transactions with Related Parties (Tables)

3 Months Ended

Mar. 31, 2013

Summary of Management Fee Expense and Related Liability

Following is a summary of the base management and performance incentive fees recorded by the Company for the periods presented:

	Quarter ended March 31,
	2013		2012
	(in thousands)
Base management fee	$	4,364	$	1,804
Performance incentive fee		2,128		—
Total management fee incurred during the period	$	6,492	$	1,804

Summary of Mortgage Loan Servicing Fees Payable

Following is a summary of mortgage loan servicing fees payable to PLS for the periods presented:

	Quarter ended March 31,
	2013		2012
	(in thousands)
Loan servicing fees to PLS:
Base	$	4,361	$	3,028
Activity-based		3,729		1,910
	$	8,090	$	4,938

Summary of Corresponding Lending Activity

Following is a summary of correspondent lending activity between the Company and PLS for the periods presented:

	Quarter ended March 31,
	2013		2012
	(in thousands)
Sourcing fees received	$	1,010	$	244
Fulfillment fees	$	28,136	$	6,124
Fair value of loans sold to PLS	$	3,548,397	$	838,120
Fair value of mortgage loans included in mortgage loans acquired for sale pending sale to PLS at period end	$	542,490	$	41,247

Summary of Foregoing Expenses

The foregoing expenses are summarized below:

	Quarter ended March 31,
	2013		2012
	(in thousands)
Reimbursement of expenses incurred on PMT’s behalf	$	1,358	$	2,410
Reimbursement of common overhead incurred by PCM and its affiliates		2,606		386
	$	3,964	$	2,796
Payments and settlements during the period (1)	$	33,362	$	5,485

(1) Payments and settlements include payments for correspondent lending activities itemized in the preceding table and netting settlements made pursuant to master netting agreements between the Company and PCM and its affiliates.

Summary of Amounts Due to Affiliates

Amounts due to affiliates are summarized below as of the dates presented:

	March 31, 2013		December 31, 2012
	(in thousands)
Management fee	$	6,518	$	4,499
Contingent offering costs		2,941		2,941
Other expenses		5,289		4,776
	$	14,748	$	12,216

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Mortgage Loans at Fair Value Sold Under Agreements to Repurchase (Tables)

3 Months Ended

Mar. 31, 2013

Summary of Financial Information Relating to Mortgage Loans

Following is a summary of financial information relating to mortgage loans sold under agreements to repurchase:

	Quarter ended March 31,
	2013			2012
	(dollar amounts in thousands)
Period end:
Balance	$	576,018		$	282,810
Unused amount (1)	$	173,982		$	167,190
Weighted-average interest rate		3.45	%		3.85	%
Fair value of mortgage loans at fair value and REO securing agreements to repurchase	$	1,211,620		$	631,945
During the period:
Weighted-average interest rate (2)		3.43	%		4.07	%
Average balance of loans sold under agreements to repurchase	$	442,151		$	285,817
Total interest expense	$	4,357		$	3,138
Maximum daily amount outstanding	$	576,018		$	299,091

(1) The amount the Company is able to borrow under loan repurchase agreements is tied to the fair value of unencumbered mortgage loans eligible to secure those agreements and the Company’s ability to fund the agreements’ margin requirements relating to the collateral sold.

(2) Weighted-average interest rate during the period excludes the effect of amortization of debt issuance costs of $563,000 and $199,000 during the quarters ended March 31, 2013 and 2012, respectively.

Summary of Maturities of Repurchase Agreements

Following is a summary of maturities of repurchase agreements by maturity date:

Remaining Maturity at March 31, 2013	Balance
	(in thousands)
Within 30 days	$	484,185
Over 30 to 90 days		91,833
Over 90 days to 180 days		—
Over 180 days to 1 year		—
	$	576,018
Weighted average maturity (in months)		0.9

Summary of Amount of Risk Relating to Company's Mortgage Loans at Fair Value

The amount at risk (the fair value of the assets pledged plus the related margin deposit, less the amount advanced by the counterparty and interest payable) relating to the Company’s mortgage loans at fair value sold under agreements to repurchase is summarized by counterparty below as of March 31, 2013:

Counterparty	Amount at risk		Weighted-average repurchase agreement maturity
	(in thousands)
Citibank, N.A.	$	485,352	April 19, 2013
Credit Suisse First Boston Mortgage Capital LLC	$	149,897	June 5, 2013

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Transactions with Related Parties - Summary of Amounts Due to Affiliates (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Related Party Transaction Due From To Related Party [Line Items]
Management fee	$ 6,518	$ 4,499
Contingent offering costs	2,941	2,941
Other expenses	5,289	4,776
Total expense due to affiliate	$ 14,748	$ 12,216

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
ASSETS
Cash	$ 19,376	$ 33,756
Short-term investments	45,024	39,017
Mortgage loans acquired for sale at fair value	1,123,348	975,184
Mortgage loans at fair value	1,366,922	1,189,971
Real estate acquired in settlement of loans	84,486	88,078
Mortgage servicing rights at lower of amortized cost or fair value	179,136	125,430
Mortgage servicing rights at fair value	1,305	1,346
Principal and interest collections receivable	31,391	29,204
Interest receivable	3,136	3,029
Derivative assets	15,186	23,706
Servicing advances	37,695	32,191
Due from affiliates	5,991	4,829
Other assets	14,164	13,922
Total assets	2,927,160	2,559,663
Assets sold under agreements to repurchase:
Mortgage loans acquired for sale at fair value	1,035,486	894,906
Mortgage loans at fair value	576,018	353,805
Real estate acquired in settlement of loans	3,546	7,391
Derivative liabilities	2,079	967
Recourse liability	6,231	4,441
Accounts payable and accrued liabilities	22,259	42,402
Contingent underwriting fees payable	5,883	5,883
Payable to affiliates	14,748	12,216
Income taxes, net	38,481	36,316
Total liabilities	1,704,731	1,358,327
Commitments and contingencies
SHAREHOLDERS' EQUITY
Common shares of beneficial interest-authorized, 500,000,000 common shares of $0.01 par value; issued and outstanding, 58,990,225 and 58,904,456 common shares, respectively	590	589
Additional paid-in capital	1,131,231	1,129,858
Retained earnings	90,608	70,889
Total shareholders' equity	1,222,429	1,201,336
Total liabilities and shareholders' equity	$ 2,927,160	$ 2,559,663

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Mortgage Loans Acquired for Sale at Fair Value (Tables)

3 Months Ended

Mar. 31, 2013

Summary of Distribution of Company's Mortgage Loans Acquired for Sale at Fair Value

Following is a summary of the distribution of the Company’s mortgage loans acquired for sale at fair value:

	March 31, 2013				December 31, 2012
	Fair value		Unpaid principal balance		Fair value		Unpaid principal balance
Loan Type	(in thousands)
Government insured or guaranteed	$	542,490	$	516,633	$	153,326	$	144,619
Conventional:
Agency-eligible		574,006		555,061		820,492		785,830
Jumbo loans		6,852		6,666		1,366		1,338
	$	1,123,348	$	1,078,360	$	975,184	$	931,787
Loans pledged to secure loans sold under agreements to repurchase	$	1,122,940			$	972,079

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Mortgage Loans at Fair Value - Summary of Distribution of Company's Mortgage Loans at Fair Value (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Financing Receivable, Recorded Investment [Line Items]
Fair value	$ 1,366,922	$ 1,189,971
Unpaid principal balance	2,353,526	2,124,033
Sales of loans under agreements to repurchase	1,203,387	947,522
Mortgage loans held in a consolidated subsidiary whose stock is pledged to secure financings of such loans	8,233	9,061
Nonperforming loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Fair value	918,868	785,955
Unpaid principal balance	1,679,842	1,483,311
Performing loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Fair value	448,054	404,016
Unpaid principal balance	673,684	640,722
Performing loans [Member] | Fixed [Member]
Financing Receivable, Recorded Investment [Line Items]
Fair value	226,329	201,212
Unpaid principal balance	344,652	322,005
Performing loans [Member] | Adjustable rate/hybrid [Member]
Financing Receivable, Recorded Investment [Line Items]
Fair value	143,239	134,196
Unpaid principal balance	194,475	195,381
Performing loans [Member] | Interest rate step-up [Member]
Financing Receivable, Recorded Investment [Line Items]
Fair value	78,343	68,475
Unpaid principal balance	134,339	123,117
Performing loans [Member] | Balloon [Member]
Financing Receivable, Recorded Investment [Line Items]
Fair value	143	133
Unpaid principal balance	$ 218	$ 219

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Segments and Related Information - Financial Highlights by Operating Segment (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Revenues:
Net gain on mortgage loans acquired for sale	$ 29,279	$ 13,370
Net gain on investments	63,980	11,488
Interest income	16,875	16,430
Other income	8,918	5,361
Intersegment
Net investment income	119,052	46,649
Expenses:
Loan fulfillment fees	28,136	6,124
Interest	11,236	6,674
Loan servicing	8,090	4,938
Other	15,655	9,276
Total expenses	63,117	22,074
Pre-tax net income	55,935	24,575
Total assets at period end	2,927,160		2,559,663
Correspondent lending [Member]
Revenues:
Net gain on mortgage loans acquired for sale	29,279	13,370
Net gain on investments
Interest income	6,324	2,792
Other income	5,473	1,461
Intersegment		(16)
Net investment income	41,076	17,607
Expenses:
Loan fulfillment fees	24,852	6,124
Interest	5,647	927
Loan servicing	150
Other	1,547	255
Total expenses	32,196	7,306
Pre-tax net income	8,880	10,301
Total assets at period end	1,142,774
Investment activities [Member]
Revenues:
Net gain on mortgage loans acquired for sale
Net gain on investments	63,980	11,488
Interest income	10,592	13,638
Other income	3,445	3,900
Intersegment		16
Net investment income	78,017	29,042
Expenses:
Loan fulfillment fees
Interest	5,630	5,747
Loan servicing	7,940
Other	14,108	9,021
Total expenses	27,678	14,768
Pre-tax net income	50,339	14,274
Total assets at period end	1,829,246
Intersegment elimination & other [Member]
Revenues:
Net gain on mortgage loans acquired for sale
Net gain on investments
Interest income	(41)
Other income
Intersegment
Net investment income	(41)
Expenses:
Loan fulfillment fees	3,284
Interest	(41)
Loan servicing
Other
Total expenses	3,243
Pre-tax net income	(3,284)
Total assets at period end	$ (44,860)

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Mortgage Loans at Fair Value Sold Under Agreements to Repurchase - Summary of Maturities of Repurchase Agreements (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2013 Mortgage Loans At Fair Value Sold Under Agreements To Repurchase [Member]	Mar. 31, 2012 Mortgage Loans At Fair Value Sold Under Agreements To Repurchase [Member]	Mar. 31, 2013 Mortgage Loans At Fair Value Sold Under Agreements To Repurchase [Member] Within 30 days [Member]	Mar. 31, 2013 Mortgage Loans At Fair Value Sold Under Agreements To Repurchase [Member] Over 30 to 90 days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Mortgage loans at fair value	$ 576,018	$ 353,805	$ 576,018	$ 282,810	$ 484,185	$ 91,833
Weighted average maturity	1 month 30 days		27 days

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Dividends declared per share	$ 0.57	$ 0.55

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Derivative Financial Instruments - Summary of Activity in Notional Amount of Derivative Contracts (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Forward purchase contracts [Member]
Derivatives, Fair Value [Line Items]
Balance, beginning of period	$ 2,206,539	$ 398,400
Additions	12,442,344	1,381,283
Disposition/expirations	(12,757,923)	(1,017,359)
Balance, end of period	1,890,960	762,324
Forward sales contracts [Member]
Derivatives, Fair Value [Line Items]
Balance, beginning of period	4,266,983	756,691
Additions	17,850,273	2,835,824
Disposition/expirations	(18,893,066)	(2,377,235)
Balance, end of period	3,224,190	1,215,280
Hedging derivatives [Member] | MBS put options [Member]
Derivatives, Fair Value [Line Items]
Balance, beginning of period	495,000	28,000
Additions	1,480,000	97,500
Disposition/expirations	(1,750,000)	(55,500)
Balance, end of period	225,000	70,000
Hedging derivatives [Member] | MBS call options [Member]
Derivatives, Fair Value [Line Items]
Balance, beginning of period		5,000
Additions	900,000	25,000
Disposition/expirations	(550,000)	(10,000)
Balance, end of period	$ 350,000	$ 20,000

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Condensed Consolidating Financial Statements - Additional Information (Detail) (Subsequent Event [Member], Exchangeable Senior Notes due 2020 [Member], USD $) In Millions, unless otherwise specified	Apr. 30, 2013
Subsequent Event [Member] | Exchangeable Senior Notes due 2020 [Member]
Parent Company Only Financial Information [Line Items]
Issuance of exchangeable notes guaranteed by Company	$ 250

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Condensed Consolidating Financial Statements - Schedule of Condensed Consolidating Income Statement (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Schedule Of Condensed Consolidating Statement Of Income [Line Items]
Gain on sale of correspondent lending loans	$ 29,279	$ 13,370
Gains on investments	63,980	11,488
Interest income	16,875	16,425
Other income	8,918	5,366
Net investment income	119,052	46,649
Compensation	2,089	1,301
Management fees	6,492	1,804
Fulfillment fees	28,136	6,124
Interest	11,236	6,674
Other	4,690	791
Total expenses	63,117	22,074
Pre-tax income	55,935	24,575
Provision for income taxes	2,639	5,517
Net income	53,296	19,058
PennyMac Mortgage Investment Trust [Member]
Schedule Of Condensed Consolidating Statement Of Income [Line Items]
Interest income	197	12
Equity in earnings of subsidiaries	54,041	17,658
Net investment income	54,238	17,670
Compensation	87	63
Interest	198	106
Other	652	9
Total expenses	937	178
Pre-tax income	53,301	17,492
Net income	53,301	17,492
PennyMac Corp. [Member]
Schedule Of Condensed Consolidating Statement Of Income [Line Items]
Gain on sale of correspondent lending loans	29,279	13,370
Gains on investments	22,704	4,594
Interest income	11,306	10,872
Equity in earnings of subsidiaries		439
Other income	8,334	4,261
Net investment income	71,623	33,536
Compensation	1,830	1,008
Management fees	5,935	1,469
Fulfillment fees	28,136	6,124
Interest	14,724	4,119
Other	11,184	4,300
Total expenses	61,809	17,020
Pre-tax income	9,814	16,516
Provision for income taxes	4,436	5,442
Net income	5,378	11,074
Non-Guarantor Subsidiaries [Member]
Schedule Of Condensed Consolidating Statement Of Income [Line Items]
Gains on investments	41,276	6,894
Interest income	19,678	5,541
Equity in earnings of subsidiaries	46,034	177
Other income	581	216
Net investment income	107,569	12,828
Compensation	172	230
Management fees	557	335
Interest	6,145	2,449
Other	3,328	1,862
Total expenses	10,202	4,876
Pre-tax income	97,367	7,952
Provision for income taxes	84	75
Net income	97,283	7,877
Eliminations [Member]
Schedule Of Condensed Consolidating Statement Of Income [Line Items]
Interest income	(14,306)
Equity in earnings of subsidiaries	(100,075)	(18,274)
Other income	3	889
Net investment income	(114,378)	(17,385)
Interest	(9,831)
Total expenses	(9,831)
Pre-tax income	(104,547)	(17,385)
Provision for income taxes	(1,881)
Net income	$ (102,666)	$ (17,385)

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Share-Based Compensation Plans (Tables)

3 Months Ended

Mar. 31, 2013

Summary of Restricted Share Unit Activity and Compensation Expense

The table below summarizes restricted share unit activity and compensation expense:

	Quarter ended March 31,
	2013			2012
Number of units:
Outstanding at beginning of period		665,617			491,809
Granted		—			—
Vested		85,769			(88,249	)
Canceled		(2,784	)		(171	)
Outstanding at end of period		577,064			403,389
Weighted Average Grant Date Fair Value:
Outstanding at beginning of period	$	15.92		$	12.57
Granted	$	—		$	—
Vested	$	16.28		$	17.28
Expired or canceled	$	14.81		$	3.15
Outstanding at end of period	$	15.89		$	11.54
Compensation expense recorded during the period	$	1,781,000		$	883,000
Period end:
Units available for future awards (1)		4,185,000			2,105,000
Unamortized compensation cost	$	4,611,000		$	2,758,000

(1) Based on shares outstanding as of March 31, 2013. Total units available for future awards may be adjusted in accordance with the equity incentive plan based on future issuances of PMT’s shares as described above.

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Real Estate Acquired in Settlement of Loans - Summary of Activity in REO (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Summary Of Activity Related To Other Real Estate Owned [Line Items]
Balance at beginning of period	$ 88,078	$ 80,570
Transfers from mortgage loans at fair value and advances	31,510	25,419
Results of REO:
Valuation adjustments, net	(6,089)	(2,554)
Gain on sale, net	2,836	4,551
Total gain	(3,253)	1,997
Sale proceeds	(31,849)	(26,777)
Balance at period end	84,486	81,209
At period end:
REO pledged to secure agreements to repurchase	8,233	9,061
REO held in a consolidated subsidiary whose stock is pledged to secure financings of such properties	$ 7,122	$ 14,773

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Supplemental Cash Flow Information

3 Months Ended

Mar. 31, 2013

Supplemental Cash Flow Information

Note 28—Supplemental Cash Flow Information

	Quarter ended March 31,
	2013		2012
	(in thousands)
Cash paid for interest	$	11,192	$	6,954
Cash paid for income taxes	$	473	$	1,474
Non-cash investing activities:
Unsettled purchases of MBS and swaptions	$	—	$	115,636
Transfer of mortgage loans to REO	$	31,510	$	25,419
Purchase of mortgage loans financed through forward purchase agreements	$	—	$	286
Transfer of mortgage loans under forward purchase agreements to mortgage loans, at fair value	$	—	$	17,309
Transfer of mortgage loans under forward purchase agreements to REO under forward purchase agreements	$	—	$	5,696
Receipt of MSRs as proceeds from sales of loans	$	56,216	$	12,929
Transfer of REO under forward purchase agreements to REO	$	—	$	53
Non-cash financing activities:
Purchase of mortgage loans financed through forward purchase agreements	$	—	$	286
Purchase of REO financed through forward purchase agreements	$	—	$	53

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Income Taxes - Components of Provision for Deferred Income Taxes (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Real estate valuation gain (loss)	$ 221	$ (388)
Mortgage servicing rights	22,500	5,133
Net operating loss carryforward	(6,115)
Other	(753)	(179)
Valuation allowance
Total provision for deferred income taxes	$ 15,853	$ 4,566

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Concentration of Risks - Consolidated Statements of Income and Cash Flows (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012
Net income:
Net gain on mortgage loans	$ 6,700
Interest income on mortgage loans	502
Interest expense	1,515
Loan servicing fees	585
Cash flows:
Repayments of mortgage loans	8,701
Repayments of borrowings under forward purchase agreements	$ 27,129

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Securities Sold Under Agreements to Repurchase at Fair Value

3 Months Ended

Mar. 31, 2013

Securities Sold Under Agreements to Repurchase at Fair Value

Note 15—Securities Sold Under Agreements to Repurchase at Fair Value

As of and during the quarter ended March 31, 2013, the Company had no securities sold under agreements to repurchase outstanding. Following is a summary of financial information relating to securities sold under agreements to repurchase at fair value as of and for the quarter ended:

	Quarter ended March 31,  2012
	(dollar amounts in thousands)
Period end:
Balance	$	53,068
Weighted-average interest rate		0.99	%
Fair value of securities securing agreements to repurchase	$	62,425
During the period:
Weighted-average interest rate		0.90	%
Average balance of securities sold under agreements to repurchase	$	69,030
Total interest expense	$	157
Maximum daily amount outstanding	$	115,493

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Regulatory Net Worth Requirement

3 Months Ended

Mar. 31, 2013

Regulatory Net Worth Requirement

Note 29—Regulatory Net Worth Requirement

PMC is a seller-servicer for Fannie Mae and Freddie Mac. To retain its status as an approved seller-servicer, PMC is required to meet Fannie Mae’s and Freddie Mac’s capital standards, which require PMC to maintain a minimum net worth of $2.5 million for both Agencies. Management believes PMC complies with Fannie Mae’s and Freddie Mac’s net worth requirement as of March 31, 2013.

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Mortgage Loans at Fair Value - Summary of Certain Concentrations of Credit Risk in Portfolio of Mortgage Loans at Fair Value (Parenthetical) (Detail)	Mar. 31, 2013	Dec. 31, 2012
Unusual Risk or Uncertainty [Line Items]
Percentage of fair value of mortgage loans	100.00%	100.00%
Percentage of contribution by states in mortgage loans	5.00%	5.00%

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Commitments and Contingencies - Company's Outstanding Contractual Loan Commitments (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013
Commitments to purchase mortgage loans:
Correspondent lending	$ 933,768
Other mortgage loans

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Mortgage Loans at Fair Value Sold Under Agreements to Repurchase

3 Months Ended

Mar. 31, 2013

Mortgage Loans at Fair Value Sold Under Agreements to Repurchase

Note 17—Mortgage Loans at Fair Value Sold Under Agreements to Repurchase

Following is a summary of financial information relating to mortgage loans sold under agreements to repurchase:

	Quarter ended March 31,
	2013			2012
	(dollar amounts in thousands)
Period end:
Balance	$	576,018		$	282,810
Unused amount (1)	$	173,982		$	167,190
Weighted-average interest rate		3.45	%		3.85	%
Fair value of mortgage loans at fair value and REO securing agreements to repurchase	$	1,211,620		$	631,945
During the period:
Weighted-average interest rate (2)		3.43	%		4.07	%
Average balance of loans sold under agreements to repurchase	$	442,151		$	285,817
Total interest expense	$	4,357		$	3,138
Maximum daily amount outstanding	$	576,018		$	299,091

(1) The amount the Company is able to borrow under loan repurchase agreements is tied to the fair value of unencumbered mortgage loans eligible to secure those agreements and the Company’s ability to fund the agreements’ margin requirements relating to the collateral sold.

(2) Weighted-average interest rate during the period excludes the effect of amortization of debt issuance costs of $563,000 and $199,000 during the quarters ended March 31, 2013 and 2012, respectively.

Following is a summary of maturities of repurchase agreements by maturity date:

Remaining Maturity at March 31, 2013	Balance
	(in thousands)
Within 30 days	$	484,185
Over 30 to 90 days		91,833
Over 90 days to 180 days		—
Over 180 days to 1 year		—
	$	576,018
Weighted average maturity (in months)		0.9

The Company is subject to margin calls during the period the agreements are outstanding and therefore may be required to repay a portion of the borrowings before the respective agreements mature if the value (as determined by the applicable lender) of the loans securing those agreements decreases. The Company had no margin deposits as of March 31, 2013 and as of December 31, 2012, the Company had $379,000 on deposit with its loan repurchase agreement counterparties. Margin deposits are included in Other assets in the consolidated balance sheets.

The amount at risk (the fair value of the assets pledged plus the related margin deposit, less the amount advanced by the counterparty and interest payable) relating to the Company’s mortgage loans at fair value sold under agreements to repurchase is summarized by counterparty below as of March 31, 2013:

Counterparty	Amount at risk		Weighted-average repurchase agreement maturity
	(in thousands)
Citibank, N.A.	$	485,352	April 19, 2013
Credit Suisse First Boston Mortgage Capital LLC	$	149,897	June 5, 2013

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Transactions with Related Parties - Summary of Management Fee Expense and Related Liability (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Related Party Transaction [Line Items]
Base management fee	$ 4,364	$ 1,804
Performance incentive fee	2,128
Total management fee incurred during the period	$ 6,492	$ 1,804

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Mortgage Loans Acquired for Sale Sold Under Agreements to Repurchase - Summary of Maturities of Outstanding Advances under Repurchase Agreements by Maturity Date (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Repurchase Agreement Counterparty [Line Items]
Maturities of repurchase agreements	$ 1,035,486	$ 143,819
Weighted average maturity	1 month 30 days
Within 30 days [Member]
Repurchase Agreement Counterparty [Line Items]
Maturities of repurchase agreements	246,210
Over 30 to 90 days [Member]
Repurchase Agreement Counterparty [Line Items]
Maturities of repurchase agreements	789,276
Over 90 days to 180 days [Member]
Repurchase Agreement Counterparty [Line Items]
Maturities of repurchase agreements
Over 180 days to 1 year [Member]
Repurchase Agreement Counterparty [Line Items]
Maturities of repurchase agreements

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Cash flows from operating activities:
Net income	$ 53,296	$ 19,058
Adjustments to reconcile net income to net cash (used) provided by operating activities:
Net gain on mortgage loans acquired for sale at fair value	(29,279)	(13,370)
Net gain on mortgage-backed securities at fair value		(357)
Net gain on mortgage loans at fair value	(63,980)	(11,131)
Accrual of unearned discounts on mortgage-backed securities at fair value and capitalization of interest and advances on mortgage loans at fair value	(5,230)	(8,935)
Results of real estate acquired in settlement of loans	3,253	(3,717)
Change in fair value, amortization and impairment of mortgage servicing rights	4,539	455
Amortization of credit facility commitment fees	1,143	559
Accrual of costs related to forward purchase agreements		1,954
Share-based compensation expense	1,452	883
Purchases of mortgage loans acquired for sale at fair value	(8,849,152)	(1,858,147)
Sales of mortgage loans acquired for sale at fair value	8,683,133	1,931,024
Increase in principal and interest collections receivable	(2,187)	(6,286)
Increase in principal and interest collections receivable under forward purchase agreements		(2,379)
(Increase) decrease in interest receivable	(107)	113
Increase in due from affiliates	(1,161)	(5,117)
Increase in other assets	(5,420)	(6,491)
(Decrease) increase in accounts payable and accrued liabilities	(20,142)	579
Increase in payable to affiliates	2,532	5,181
Increase in income taxes, net	2,165	4,042
Net cash (used) provided by operating activities	(225,145)	47,918
Cash flows from investing activities
Net increase in short-term investments	(6,007)	(33,125)
Repayment of United States Treasury security		50,000
Repayments of mortgage-backed securities at fair value		11,086
Purchases of mortgage loans at fair value	(200,473)
Repayments of mortgage loans at fair value	61,421	34,781
Repayments of mortgage loans under forward purchase agreements at fair value		8,701
Sales of real estate acquired in settlement of loans	32,024	26,777
Sales of real estate acquired in settlement of loans under forward purchase agreements		6,787
Purchases of mortgage servicing rights		(29)
(Increase) decrease in margin deposits and restricted cash	(1,493)	4,540
Net cash (used) provided by investing activities	(114,528)	109,518
Cash flows from financing activities
Sales of securities under agreements to repurchase		291,914
Repurchases of securities sold under agreements to repurchase		(354,339)
Sale of mortgage loans acquired for sale at fair value under agreements to repurchase	8,224,637	1,721,043
Repurchases of mortgage loans acquired for sale at fair value sold under agreements to repurchase	(8,084,057)	(1,789,901)
Sale of mortgage loans at fair value under agreements to repurchase	286,321	7,137
Repurchases of mortgage loans at fair value sold under agreements to repurchase	(64,108)	(26,549)
Repayments of note payable secured by mortgage loans at fair value		(2,044)
Repayments of borrowings under forward purchase agreements		(27,129)
Sales of real estate acquired in settlement of loans financed under agreement to repurchase		3,797
Repurchases of real estate acquired in settlement of loans financed under agreement to repurchase	(3,845)	(9,547)
Proceeds from issuance of common shares		46,607
Payment of common share underwriting and offering costs	(78)	(917)
Payment of dividends	(33,577)	(15,692)
Net cash provided (used) by financing activities	325,293	(155,620)
Net (decrease) increase in cash	(14,380)	1,816
Cash at beginning of period	33,756	14,589
Cash at end of period	$ 19,376	$ 16,405

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Common shares, authorized	500,000,000	500,000,000
Common shares, par value	$ 0.01	$ 0.01
Common shares, issued	58,990,225	58,990,225
Common shares, outstanding	58,904,456	58,904,456

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Derivative Financial Instruments

3 Months Ended

Mar. 31, 2013

Derivative Financial Instruments

Note 10—Derivative Financial Instruments

The Company is exposed to price risk relative to its mortgage loans acquired for sale as well as to the IRLCs it issues to correspondent lenders. The Company bears price risk from the time a IRLC is issued to a correspondent lender to the time the purchased mortgage loan is sold. During this period, the Company is exposed to losses if mortgage interest rates increase, because the value of the purchase commitment or mortgage loan acquired for sale decreases.

The Company engages in interest rate risk management activities in an effort to reduce the variability of earnings caused by changes in interest rates. To manage this price risk resulting from interest rate risk, the Company uses derivative financial instruments acquired with the intention of moderating the risk that changes in market interest rates will result in unfavorable changes in the value of the Company’s IRLCs and inventory of mortgage loans acquired for sale.

The Company is also exposed to risk relative to the fair value of its MSRs. The Company is exposed to loss in value of its MSRs when interest rates decrease. Beginning in the fourth quarter of 2012, the Company includes MSRs in its hedging activities.

The Company does not use derivative financial instruments for purposes other than in support of its risk management activities. The Company records all derivative financial instruments at fair value and records changes in fair value in current period income.

The Company had the following derivative assets and liabilities and related margin deposits recorded within the Derivative assets and Derivative liabilities on the consolidated balance sheets:

	March 31, 2013								December 31, 2012
			Fair value								Fair value
Instrument	Notional amount		Derivative assets			Derivative liabilities			Notional amount		Derivative assets			Derivative liabilities
	(in thousands)
Derivatives not designated as hedging instruments:
Free-standing derivatives (economic hedges):
Interest rate lock commitments	$	933,768	$	11,052		$	—		$	1,694,739	$	19,479		$	—
Forward purchase contracts		1,890,960		6,460			462			2,206,539		2,617			1,741
Forward sales contracts		3,224,190		1,121			8,560			4,266,983		3,458			4,520
MBS put options		225,000		326			—			495,000		977			—
MBS call options		350,000		1,052			—			—		—			—
Total derivative instruments before netting		6,623,918		20,011			9,022			8,663,261		26,531			6,261
Netting		—		(4,825	)		(6,943	)		—		(2,825	)		(5,294	)
Total	$	6,623,918	$	15,186		$	2,079		$	8,663,261	$	23,706		$	967
Margin deposits with derivatives counterparties			$	2,118							$	2,469

The following table summarizes the notional amount activity for derivative contracts used to hedge the Company’s IRLCs, inventory of mortgage loans acquired for sale and Agency MBS:

Period/Instrument	Balance, beginning of period		Additions		Dispositions/ expirations			Balance, end of period
	(in thousands)
Quarter ended March 31, 2013
MBS put options		495,000		1,480,000		(1,750,000	)		225,000
MBS call options		—		900,000		(550,000	)		350,000
Forward purchase contracts		2,206,539		12,442,344		(12,757,923	)		1,890,960
Forward sales contracts		4,266,983		17,850,273		(18,893,066	)		3,224,190

Period/Instrument	Balance, beginning of period		Additions		Dispositions/ expirations			Balance, end of period
	(in thousands)
Quarter ended March 31, 2012
MBS put options		28,000		97,500		(55,500	)		70,000
MBS call options		5,000		25,000		(10,000	)		20,000
Forward purchase contracts		398,400		1,381,283		(1,017,359	)		762,324
Forward sales contracts		756,691		2,835,824		(2,377,235	)		1,215,280

The Company recorded net gains on derivative financial instruments used to hedge the Company’s IRLCs and inventory of mortgage loans totaling $10.9 million and $602 thousand for the quarters ending March 31, 2013 and 2012, respectively. Derivative gains and losses are included in Net gains on mortgage loans acquired for sale in the Company’s consolidated statements of income.

The Company recorded net losses on derivative financial instruments used as economic hedges of MSRs totaling $2.0 million for the quarter ending March 31, 2013. The derivative losses are included in Net loan servicing fees in the Company’s consolidated statements of income. The Company had no similar economic hedges in place for the quarter ending March 31, 2012.

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Mortgage Servicing Rights - Summary of Company's Estimate of Amortization of Existing MSRs Carried at Amortized Cost (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012	Dec. 31, 2011
Schedule Of Estimated Future Amortization Expense [Line Items]
2014	$ 20,897
2015	19,373
2016	17,487
2017	15,936
2018	14,669
Thereafter	95,835
Total	$ 184,197	$ 132,977	$ 17,452	$ 5,282

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Derivative Financial Instruments - Derivative Assets and Liabilities and Related Margin Deposits Recorded within Derivative Assets and Derivative Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Derivatives, Fair Value [Line Items]
Notional amount	$ 6,623,918	$ 8,663,261
Total derivative assets instruments before netting	20,011	26,531
Derivative assets, Netting	(4,825)	(2,825)
Derivative assets, Fair value, Total	15,186	23,706
Total derivative liabilities instruments fair value before netting	9,022	6,261
Derivative liabilities, Netting	(6,943)	(5,294)
Derivative liabilities, Fair value, Total	2,079	967
Margin deposits with derivatives counterparties	2,118	2,469
MBS put options [Member]
Derivatives, Fair Value [Line Items]
Notional amount	225,000	495,000
Total derivative assets instruments before netting	326	977
Derivative assets, Fair value, Total	326	977
Total derivative liabilities instruments fair value before netting
MBS call options [Member]
Derivatives, Fair Value [Line Items]
Notional amount	350,000
Total derivative assets instruments before netting	1,052
Derivative assets, Fair value, Total	1,052
Total derivative liabilities instruments fair value before netting
Interest rate lock commitments [Member]
Derivatives, Fair Value [Line Items]
Notional amount	933,768	1,694,739
Total derivative assets instruments before netting	11,052	19,479
Total derivative liabilities instruments fair value before netting
Forward purchase contracts [Member]
Derivatives, Fair Value [Line Items]
Notional amount	1,890,960	2,206,539
Total derivative assets instruments before netting	6,460	2,617
Derivative assets, Fair value, Total	6,460	2,617
Total derivative liabilities instruments fair value before netting	462	1,741
Forward sales contracts [Member]
Derivatives, Fair Value [Line Items]
Notional amount	3,224,190	4,266,983
Total derivative assets instruments before netting	1,121	3,458
Derivative assets, Fair value, Total	1,121	3,458
Total derivative liabilities instruments fair value before netting	$ 8,560	$ 4,520

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Mortgage Loans Acquired for Sale at Fair Value - Summary of Distribution of Company's Mortgage Loans Acquired for Sale at Fair Value (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage loans acquired for sale at fair value	$ 1,123,348	$ 975,184
Mortgage loan acquired at unpaid principal balance	1,078,360	931,787
Government insured or guaranteed [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage loans acquired for sale at fair value	542,490	153,326
Mortgage loan acquired at unpaid principal balance	516,633	144,619
Agency-eligible [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage loans acquired for sale at fair value	574,006	820,492
Mortgage loan acquired at unpaid principal balance	555,061	785,830
Jumbo loans [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage loans acquired for sale at fair value	6,852	1,366
Mortgage loan acquired at unpaid principal balance	6,666	1,338
Mortgage loans acquired for sale [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Loans pledged to secure sales of loans sold under agreements to repurchase	$ 1,122,940	$ 972,079

XML

Recourse Liability - Summary of Company's Repurchase Activity (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Guarantee Obligations Recourse Provisions [Line Items]
Unpaid balance of mortgage loans repurchased	$ 648
Incurred losses on repurchased loans
Unpaid balance of mortgage loans subject to pending claims for repurchase

XML

Income Taxes - Components of Income Taxes, Net (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Taxes currently receivable	$ 19,062	$ 5,374
Deferred income taxes payable	(57,543)	(41,690)
Income taxes, net	$ (38,481)	$ (36,316)

XML

Real Estate Acquired in Settlement of Loans Financed Under Agreements to Repurchase - Summary of Amount of Risk Relating to Company's REO Held in Consolidated Subsidiary (Detail) (Real Estate Acquired in Settlement of Loans Financed under Agreements to Repurchase [Member], Credit Suisse First Boston Mortgage Capital LLC [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013
Real Estate Acquired in Settlement of Loans Financed under Agreements to Repurchase [Member] | Credit Suisse First Boston Mortgage Capital LLC [Member]
Repurchase Agreement Counterparty [Line Items]
Amount at risk	$ 3,972
Weighted-average repurchase agreement maturity	Jun. 05, 2013

XML

Document and Entity Information	3 Months Ended
	Mar. 31, 2013	May 07, 2013
Entity Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Trading Symbol	PMT
Entity Registrant Name	PENNYMAC MORTGAGE INVESTMENT TRUST
Entity Central Index Key	0001464423
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		58,990,717

XML

Net Gain on Mortgage Loans Acquired for Sale - Summary of Net Gain on Mortgage Loans Acquired for Sale (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Cash gain (loss):
Sales proceeds	$ (27,247)	$ 548
Hedging activities	13,614	(803)
Cash gain, net of effects of cash hedging, on sale of mortgage loans acquired for sale	(13,633)	(255)
Non cash gain (loss):
Change in fair value of IRLCs	(8,426)	(1,464)
Receipt of MSRs in loan sale transactions	56,216	12,929
Provision for losses relating to representations and warranties provided in loan sales	(1,790)	(426)
Change in fair value relating to loans and hedging derivatives held at year-end:
Mortgage loans	(2,422)	1,181
Hedging derivatives	(666)	1,405
Total non cash portion of gain on mortgage loans acquired for sale	(3,088)	2,586
Net gain on mortgage loans acquired for sale	$ 29,279	$ 13,370

XML

Mortgage Loans at Fair Value

3 Months Ended

Mar. 31, 2013

Mortgage Loans at Fair Value

Note 11—Mortgage Loans at Fair Value

Mortgage loans at fair value are comprised of mortgage loans not acquired for resale. Such loans may be sold at a later date pursuant to a management determination that such a sale represents the most advantageous liquidation strategy for the identified loan.

Following is a summary of the distribution of the Company’s mortgage loans at fair value:

	March 31, 2013				December 31, 2012
Loan type	Fair value		Unpaid principal balance		Fair value		Unpaid principal balance
	(in thousands)				(in thousands)
Nonperforming loans	$	918,868	$	1,679,842	$	785,955	$	1,483,311
Performing loans:
Fixed		226,329		344,652		201,212		322,005
Adjustable rate/hybrid		143,239		194,475		134,196		195,381
Interest rate step-up		78,343		134,339		68,475		123,117
Balloon		143		218		133		219
		448,054		673,684		404,016		640,722
	$	1,366,922	$	2,353,526	$	1,189,971	$	2,124,033
Mortgage loans at fair value pledged to secure borrowings at period end:
Sales of loans under agreements to repurchase	$	1,203,387			$	947,522
Mortgage loans held in a consolidated subsidiary whose stock is pledged to secure financings of such loans	$	8,233			$	9,061

Following is a summary of certain concentrations of credit risk in the portfolio of mortgage loans at fair value:

Concentration	March 31, 2013	December 31, 2012
Portion of mortgage loans originated between 2005 and 2007	74%	74%
Percentage of fair value of mortgage loans with unpaid-principal-balance-to current-property-value in excess of 100%	69%	68%
Percentage of mortgage loans secured by California real estate	19%	18%
Additional states contributing 5% or more of mortgage loans	New York Florida New Jersey	New York Florida New Jersey

XML

Fair Value - Summary of Financial Statement Items Measured at Estimated Fair Value on Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Assets:
Short-term investments	$ 45,024	$ 39,017
Mortgage loans acquired for sale at fair value	1,123,348	975,184
Mortgage servicing rights at fair value	1,305	1,346
Derivative assets:
Gross derivative asset	15,186	23,706
Total Assets	154,189	142,371
Derivative liabilities:
Derivative liabilities, Netting	(6,943)	(5,294)
Gross derivative liability	2,079	967
Level 1 [Member]
Derivative assets:
Total Assets
Level 2 [Member]
Derivative assets:
Total Assets
Level 3 [Member]
Derivative assets:
Total Assets	154,189	142,371
Recurring [Member]
Assets:
Short-term investments	45,024	39,017
Mortgage loans acquired for sale at fair value	1,123,348	975,184
Mortgage loans at fair value	1,366,922	1,189,971
Mortgage servicing rights at fair value	1,305	1,346
Derivative assets:
Total derivative assets before netting	20,011	26,531
Derivative asset, Netting	(4,825)	(2,825)
Gross derivative asset	15,186	23,706
Total Assets	2,551,785	2,229,224
Derivative liabilities:
Total derivative liabilities before netting	9,022	6,261
Derivative liabilities, Netting	(6,943)	(5,294)
Gross derivative liability	2,079	967
Recurring [Member] | Interest rate lock commitments [Member]
Derivative assets:
Gross derivative asset	11,052	19,479
Recurring [Member] | MBS put options [Member]
Derivative assets:
Gross derivative asset	326	977
Recurring [Member] | MBS call options [Member]
Derivative assets:
Gross derivative asset	1,052
Recurring [Member] | Forward purchase contracts [Member]
Derivative assets:
Gross derivative asset	6,460	2,617
Derivative liabilities:
Gross derivative liability	462	1,741
Recurring [Member] | Forward sales contracts [Member]
Derivative assets:
Gross derivative asset	1,121	3,458
Derivative liabilities:
Gross derivative liability	8,560	4,520
Recurring [Member] | Level 1 [Member]
Assets:
Short-term investments	45,024	39,017
Mortgage loans acquired for sale at fair value
Mortgage loans at fair value
Mortgage servicing rights at fair value
Derivative assets:
Total derivative assets before netting
Derivative asset, Netting
Gross derivative asset
Total Assets	45,024	39,017
Derivative liabilities:
Total derivative liabilities before netting
Derivative liabilities, Netting
Gross derivative liability
Recurring [Member] | Level 1 [Member] | Interest rate lock commitments [Member]
Derivative assets:
Gross derivative asset
Recurring [Member] | Level 1 [Member] | MBS put options [Member]
Derivative assets:
Gross derivative asset
Recurring [Member] | Level 1 [Member] | MBS call options [Member]
Derivative assets:
Gross derivative asset
Recurring [Member] | Level 1 [Member] | Forward purchase contracts [Member]
Derivative assets:
Gross derivative asset
Derivative liabilities:
Gross derivative liability
Recurring [Member] | Level 1 [Member] | Forward sales contracts [Member]
Derivative assets:
Gross derivative asset
Derivative liabilities:
Gross derivative liability
Recurring [Member] | Level 2 [Member]
Assets:
Short-term investments
Mortgage loans acquired for sale at fair value	1,123,348	975,184
Mortgage loans at fair value
Mortgage servicing rights at fair value
Derivative assets:
Total derivative assets before netting	8,959	7,052
Derivative asset, Netting
Gross derivative asset	8,959	7,052
Total Assets	1,132,307	982,236
Derivative liabilities:
Total derivative liabilities before netting	9,022	6,261
Derivative liabilities, Netting
Gross derivative liability	9,022	6,261
Recurring [Member] | Level 2 [Member] | Interest rate lock commitments [Member]
Derivative assets:
Gross derivative asset
Recurring [Member] | Level 2 [Member] | MBS put options [Member]
Derivative assets:
Gross derivative asset	326	977
Recurring [Member] | Level 2 [Member] | MBS call options [Member]
Derivative assets:
Gross derivative asset	1,052
Recurring [Member] | Level 2 [Member] | Forward purchase contracts [Member]
Derivative assets:
Gross derivative asset	6,460	2,617
Derivative liabilities:
Gross derivative liability	462	1,741
Recurring [Member] | Level 2 [Member] | Forward sales contracts [Member]
Derivative assets:
Gross derivative asset	1,121	3,458
Derivative liabilities:
Gross derivative liability	8,560	4,520
Recurring [Member] | Level 3 [Member]
Assets:
Short-term investments
Mortgage loans acquired for sale at fair value
Mortgage loans at fair value	1,366,922	1,189,971
Mortgage servicing rights at fair value	1,305	1,346
Derivative assets:
Total derivative assets before netting	11,052	19,479
Derivative asset, Netting
Gross derivative asset	11,052	19,479
Total Assets	1,379,279	1,210,796
Derivative liabilities:
Total derivative liabilities before netting
Derivative liabilities, Netting
Gross derivative liability
Recurring [Member] | Level 3 [Member] | Interest rate lock commitments [Member]
Derivative assets:
Gross derivative asset	11,052	19,479
Recurring [Member] | Level 3 [Member] | MBS put options [Member]
Derivative assets:
Gross derivative asset
Recurring [Member] | Level 3 [Member] | MBS call options [Member]
Derivative assets:
Gross derivative asset
Recurring [Member] | Level 3 [Member] | Forward purchase contracts [Member]
Derivative assets:
Gross derivative asset
Derivative liabilities:
Gross derivative liability
Recurring [Member] | Level 3 [Member] | Forward sales contracts [Member]
Derivative assets:
Gross derivative asset
Derivative liabilities:
Gross derivative liability

XML

Fair Value - Quantitative Summary of Key Assumptions Used in Valuation of MSRs, and Effect on Estimated Fair Value from Adverse Changes in Those Assumptions (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Unpaid principal balance of underlying loans, Amortized cost	$ 16,479,081	$ 11,986,957
Unpaid principal balance of underlying loans, Fair value	163,049	181,783
Pricing spread [Member] | Effect on value of 5% adverse change [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Effect on value of percentage adverse change, Amortized cost	(3,056)	(2,052)
Effect on value of percentage adverse change, Fair value input	(19)	(21)
Pricing spread [Member] | Effect on value of 10% adverse change [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Effect on value of percentage adverse change, Amortized cost	(6,020)	(4,041)
Effect on value of percentage adverse change, Fair value input	(38)	(40)
Pricing spread [Member] | Effect on value of 20% adverse change [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Effect on value of percentage adverse change, Amortized cost	(11,686)	(7,845)
Effect on value of percentage adverse change, Fair value input	(73)	(78)
Prepayment speed [Member] | Effect on value of 5% adverse change [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Effect on value of percentage adverse change, Amortized cost	(4,214)	(3,026)
Effect on value of percentage adverse change, Fair value input	(43)	(52)
Prepayment speed [Member] | Effect on value of 10% adverse change [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Effect on value of percentage adverse change, Amortized cost	(8,275)	(5,937)
Effect on value of percentage adverse change, Fair value input	(83)	(100)
Prepayment speed [Member] | Effect on value of 20% adverse change [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Effect on value of percentage adverse change, Amortized cost	(15,966)	(11,436)
Effect on value of percentage adverse change, Fair value input	(159)	(190)
Cost of servicing [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Amortized Cost, Annual per- loan cost of servicing	(68)	(68)
Fair Value Inputs, Annual Per-loan cost of servicing	(73)	(74)
Cost of servicing [Member] | Effect on value of 5% adverse change [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Effect on value of percentage adverse change, Amortized cost	(1,138)	(778)
Effect on value of percentage adverse change, Fair value input	(12)	(12)
Cost of servicing [Member] | Effect on value of 10% adverse change [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Effect on value of percentage adverse change, Amortized cost	(2,275)	(1,556)
Effect on value of percentage adverse change, Fair value input	(24)	(24)
Cost of servicing [Member] | Effect on value of 20% adverse change [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Effect on value of percentage adverse change, Amortized cost	(4,551)	(3,112)
Effect on value of percentage adverse change, Fair value input	(47)	(48)
Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Amortized Cost, Pricing spread	5.40%	7.50%
Amortized Cost, Life (in years)	1 year 9 months 18 days	1 year 8 months 12 days
Amortized Cost, prepayment speed	8.60%	10.30%
Amortized Cost, Annual per- loan cost of servicing	68	68
Fair Value Inputs, Pricing spread	8.60%	7.50%
Fair Value Inputs, Average life (in years)	1 year 6 months	1 year 4 months 24 days
Fair Value Inputs, Prepayment speed	10.40%	10.30%
Fair Value Inputs, Annual Per-loan cost of servicing	68	68
Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Amortized Cost, Pricing spread	19.00%	16.50%
Amortized Cost, Life (in years)	6 years 10 months 24 days	6 years 3 months 18 days
Amortized Cost, prepayment speed	45.90%	47.80%
Amortized Cost, Annual per- loan cost of servicing	140	140
Fair Value Inputs, Pricing spread	14.50%	16.50%
Fair Value Inputs, Average life (in years)	6 years 9 months 18 days	6 years 3 months 18 days
Fair Value Inputs, Prepayment speed	50.90%	65.90%
Fair Value Inputs, Annual Per-loan cost of servicing	140	140
Weighted average [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Amortized Cost, Pricing spread	6.80%	7.70%
Amortized Cost, Life (in years)	6 years 4 months 24 days	6 years 3 months 18 days
Amortized Cost, prepayment speed	9.50%	10.30%
Amortized Cost, Annual per- loan cost of servicing	(68)	(68)
Fair Value Inputs, Pricing spread	9.00%	7.70%
Fair Value Inputs, Average life (in years)	6 years 2 months 12 days	6 years
Fair Value Inputs, Prepayment speed	15.10%	13.20%
Fair Value Inputs, Annual Per-loan cost of servicing	$ (73)	$ (74)

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CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Net Investment Income
Net gain on mortgage loans acquired for sale	$ 29,279	$ 13,370
Net gain on investments:
Mortgage-backed securities		357
Mortgage loans	63,980	11,131
Total net gain (loss) on investments	63,980	11,488
Interest income:
Short-term investments	31	9
Mortgage-backed securities		574
Mortgage loans	16,820	15,820
Other	24	22
Total Interest income	16,875	16,425
Loan origination fees	5,473	1,451
Results of real estate acquired in settlement of loans	(3,253)	3,717
Net loan servicing fees	6,698	197
Other		1
Net investment income	119,052	46,649
Expenses
Loan fulfillment fees	28,136	6,124
Interest	11,236	6,674
Loan servicing	8,090	4,938
Management fees	6,492	1,804
Compensation	2,089	1,301
Professional services	2,384	442
Other	4,690	791
Total expenses	63,117	22,074
Income before provision for income taxes	55,935	24,575
Provision for income taxes	2,639	5,517
Net income	$ 53,296	$ 19,058
Earnings per share
Basic	$ 0.90	$ 0.65
Diluted	$ 0.90	$ 0.65
Weighted-average shares outstanding
Basic	58,927	29,076
Diluted	59,319	29,355
Dividends declared per share	$ 0.57	$ 0.55

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Loan Sales

3 Months Ended

Mar. 31, 2013

Loan Sales

Note 5—Loan Sales

The Company purchases and sells mortgage loans into the secondary mortgage market without recourse for credit losses. However the Company maintains continuing involvement with the loans in the form of servicing arrangements and the potential liability under representations and warranties it makes to purchasers and insurers of the loans.

The following table summarizes cash flows between the Company and transferees upon sale of loans in transactions whereby the Company maintains continuing involvement with the mortgage loan as well as unpaid principal balance information at period end:

	Quarter ended March 31,
	2013		2012
	(in thousands)
Cash flows:
Proceeds from sales	$	8,683,133	$	1,931,024
Service fees received	$	16,965	$	701
Period-end information:
Unpaid principal balance of loans outstanding at period-end	$	16,642,130	$	1,532,615
Delinquencies:
30-89 days	$	38,272	$	1,487
90 or more days or in foreclosure or bankruptcy	$	4,257	$	—

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Earnings Per Share

3 Months Ended

Mar. 31, 2013

Earnings Per Share

Note 4—Earnings Per Share

Basic earnings per share is determined using net income divided by the weighted-average common shares outstanding during the period. Diluted earnings per share is determined by dividing net income attributable to common shareholders by the weighted-average common shares outstanding, assuming all potentially dilutive common shares were issued. In periods in which the Company records a loss, potentially dilutive common shares are excluded from the diluted loss per share calculation, as their effect on loss per share is anti-dilutive.

The Company makes grants of restricted share units which entitle the recipients to receive dividend equivalents during the vesting period on a basis equivalent to the dividends paid to holders of common shares. For purposes of calculating earnings per share, unvested share-based compensation awards containing non-forfeitable rights to receive dividends or dividend equivalents (collectively, “dividends”) are classified as “participating securities” and are included in the basic earnings per share calculation using the two-class method. Under the two-class method, all earnings (distributed and undistributed) are allocated to each class of common shares and participating securities, based on their respective rights to receive dividends.

The following table summarizes the basic and diluted earnings per share calculations:

	Quarter ended March 31,
	2013			2012
	(in thousands, except per share amounts)
Basic earnings per share:
Net income	$	53,296		$	19,058
Effect of participating securities—share-based compensation instruments		(518	)		(213	)
Net income attributable to common shareholders	$	52,778		$	18,845
Weighted-average shares outstanding		58,927			29,076
Basic earnings per share	$	0.90		$	0.65
Diluted earnings per share:
Net income	$	53,296		$	19,058
Weighted-average shares outstanding		58,927			29,076
Dilutive potential common shares—shares issuable under share-based compensation plan		392			279
Diluted weighted-average number of common shares outstanding		59,319			29,355
Diluted earnings per common share	$	0.90		$	0.65

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Mortgage Loans Acquired for Sale Sold Under Agreements to Repurchase

3 Months Ended

Mar. 31, 2013

Mortgage Loans Acquired for Sale Sold Under Agreements to Repurchase

Note 16—Mortgage Loans Acquired for Sale Sold Under Agreements to Repurchase

Following is a summary of financial information relating to mortgage loans acquired for sale sold under agreements to repurchase:

	Quarter ended March 31,
	2013			2012
	(dollar amounts in thousands)
Period end:
Balance	$	1,035,486		$	143,819
Unused amount (1)	$	664,514		$	246,181
Weighted-average interest rate		2.39	%		2.27	%
Fair value of mortgage loans acquired for sale securing agreements to repurchase	$	1,122,940		$	155,295
During the period:
Weighted-average interest rate during the period (2)		2.30	%		2.11	%
Average balance of loans sold under agreements to repurchase	$	774,417		$	177,864
Total interest expense	$	6,175		$	1,364
Maximum daily amount outstanding	$	1,035,613		$	263,890

(1) The amount the Company is able to borrow under loan repurchase agreements is tied to the fair value of unencumbered mortgage loans eligible to secure those agreements and the Company’s ability to fund the agreements’ margin requirements relating to the collateral sold.

(2) Weighted-average interest rate during the periods excludes the effect of amortization of debt issuance costs of $1.7 million and $417,000 during the quarters ended March 31, 2013 and 2012, respectively.

Following is a summary of maturities of outstanding advances under repurchase agreements by maturity date:

Remaining maturity at March 31, 2013	Balance
	(in thousands)
Within 30 days	$	246,210
Over 30 to 90 days		789,276
Over 90 days to 180 days		—
Over 180 days to 1 year		—
	$	1,035,486
Weighted average maturity (in months)		1.97

The Company is subject to margin calls during the period the agreements are outstanding and therefore may be required to repay a portion of the borrowings before the respective agreements mature if the value (as determined by the applicable lender) of the mortgage loans securing those agreements decreases. The Company had $3.0 million and $4.1 million on deposit with its loan repurchase agreement counterparties at March 31, 2013 and December 31, 2012, respectively. Margin deposits are included in Other assets in the consolidated balance sheets.

The amount at risk (the fair value of the assets pledged plus the related margin deposit, less the amount advanced by the counterparty and interest payable) relating to the Company’s mortgage loans acquired for sale sold under agreements to repurchase is summarized by counterparty below as of March 31, 2013:

Counterparty	Amount at risk		Weighted-average repurchase agreement maturity
	(in thousands)
Citibank	$	25,794	May 23, 2013
Credit Suisse First Boston Mortgage Capital LLC	$	27,062	October 29, 2013
Bank of America, N.A.	$	22,678	January 4, 2014
Morgan Stanley Bank, N.A.	$	7,233	November 19, 2013
Barclays Bank PLC	$	6,647	July 1, 2013

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Real Estate Acquired in Settlement of Loans

3 Months Ended

Mar. 31, 2013

Real Estate Acquired in Settlement of Loans

Note 12—Real Estate Acquired in Settlement of Loans

Following is a summary of the activity in REO:

	Quarter ended March 31,
	2013			2012
	(in thousands)
Balance at beginning of period	$	88,078		$	80,570
Transfers from mortgage loans at fair value and advances		31,510			25,419
Results of REO:
Valuation adjustments, net		(6,089	)		(2,554	)
Gain on sale, net		2,836			4,551
		(3,253	)		1,997
Sale proceeds		(31,849	)		(26,777	)
Balance at period end	$	84,486		$	81,209
At period end:
REO pledged to secure agreements to repurchase	$	8,233		$	9,061
REO held in a consolidated subsidiary whose stock is pledged to secure financings of such properties	$	7,122		$	14,773

XML

Fair Value - Summary of Changes in Fair Value Included in Current Period Income (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Fair Value Inputs Assets Liabilities Quantitative Information [Line Items]
Net gain on investments	$ 63,980	$ 11,488
Short-term investments [Member]
Fair Value Inputs Assets Liabilities Quantitative Information [Line Items]
Net gain on mortgage loans acquired for sale
Net gain on investments
Interest income
Net loan servicing fees
Total
Mortgage loans acquired for sale at fair value [Member]
Fair Value Inputs Assets Liabilities Quantitative Information [Line Items]
Net gain on mortgage loans acquired for sale	24,757	13,370
Net gain on investments
Interest income
Net loan servicing fees
Total	24,757	13,370
Mortgage loans [Member]
Fair Value Inputs Assets Liabilities Quantitative Information [Line Items]
Net gain on mortgage loans acquired for sale
Net gain on investments	63,980	4,431
Interest income
Net loan servicing fees
Total	63,980	4,431
Mortgage servicing rights at fair value [Member]
Fair Value Inputs Assets Liabilities Quantitative Information [Line Items]
Net gain on mortgage loans acquired for sale
Net gain on investments
Interest income
Net loan servicing fees	(67)	(101)
Total	(67)	(101)
Assets, Total [Member]
Fair Value Inputs Assets Liabilities Quantitative Information [Line Items]
Net gain on mortgage loans acquired for sale	24,757	13,370
Net gain on investments	63,980	11,488
Interest income		335
Net loan servicing fees	(67)	(101)
Total	88,670	25,092
Mortgage-backed securities at fair value [Member]
Fair Value Inputs Assets Liabilities Quantitative Information [Line Items]
Net gain on mortgage loans acquired for sale
Net gain on investments		357
Interest income		335
Net loan servicing fees
Total		692
Mortgage loans under forward purchase agreements at fair value [Member]
Fair Value Inputs Assets Liabilities Quantitative Information [Line Items]
Net gain on mortgage loans acquired for sale
Net gain on investments		6,700
Interest income
Net loan servicing fees
Total		$ 6,700

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Short-Term Investments

3 Months Ended

Mar. 31, 2013

Short-Term Investments

Note 8—Short-Term Investments

The Company’s short-term investments are comprised of money market accounts deposited with U.S. commercial banks.

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Income Taxes (Tables)

3 Months Ended

Mar. 31, 2013

Summary of Company's Income Tax Expense (Benefit)

The following table details the Company’s income tax expense (benefit) which relates primarily to the TRSs:

	Quarter ended March 31,
	2013			2012
	(in thousands)
Current (benefit) expense:
Federal	$	(10,725	)	$	706
State		(2,489	)		245
Total current (benefit) expense		(13,214	)		951
Deferred expense:
Federal		12,678			3,389
State		3,175			1,177
Total deferred expense		15,853			4,566
Total provision for income taxes	$	2,639		$	5,517

Reconciliation of Company's Provision for Income Taxes

The following table is a reconciliation of the Company’s provision for income taxes at statutory rates to the provision for income taxes at the Company’s effective rate:

	Quarter ended March 31,
	2013						2012
	Amount			Rate			Amount			Rate
	(dollars in thousands)
Federal income tax expense at statutory tax rate	$	19,577			35.0	%	$	8,601			35.0	%
Effect of non-taxable REIT income		(17,491	)		(31.3	)%		(3,990	)		(16.2	)%
State income taxes, net of federal benefit		446			0.8	%		925			3.8	%
Other		107			0.2	%		(19	)		(0.1	)%
Valuation allowance		—			0.0	%		—			0.0	%
Provision for income taxes	$	2,639			4.7	%	$	5,517			22.5	%

Components of Provision for Deferred Income Taxes

The Company’s components of the provision for deferred income taxes are as follows:

	Quarter ended March 31,
	2013			2012
	(in thousands)
Real estate valuation gain (loss)	$	221		$	(388	)
Mortgage servicing rights		22,500			5,133
Net operating loss carryforward		(6,115	)		—
Other		(753	)		(179	)
Valuation allowance		—			—
Total provision for deferred income taxes	$	15,853		$	4,566

Components of Income Taxes, Net

The components of the income taxes, net are as follows:

	March 31, 2013			December 31, 2012
	(in thousands)
Taxes currently receivable	$	19,062		$	5,374
Deferred income taxes payable		(57,543	)		(41,690	)
Income taxes, net	$	(38,481	)	$	(36,316	)

Summary of Deferred Income Tax Assets and Liabilities

The tax effects of temporary differences that gave rise to deferred income tax assets and liabilities are presented below:

	March 31, 2013			December 31, 2012
	(in thousands)
Deferred income tax assets:
REO valuation loss	$	8,178		$	8,399
Net operating loss carryforward		6,115			—
Other		2,620			1,867
Gross deferred tax assets		16,913			10,266
Deferred income tax liabilities:
Mortgage servicing rights		(74,456	)		(51,956	)
Gross deferred tax liabilities		(74,456	)		(51,956	)
Net deferred income tax liability	$	(57,543	)	$	(41,690	)

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Mortgage Loans Acquired for Sale Sold Under Agreements to Repurchase - Amount at Risk Relating to Loans Acquired for Sale Sold Under Agreements to Repurchase by Counterparty (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013
Citibank, N.A. [Member]
Repurchase Agreement Counterparty [Line Items]
Amount at risk	$ 25,794
Weighted-average repurchase agreement maturity	May 23, 2013
Credit Suisse First Boston Mortgage Capital LLC [Member]
Repurchase Agreement Counterparty [Line Items]
Amount at risk	27,062
Weighted-average repurchase agreement maturity	Oct. 29, 2013
Bank of America, N.A. [Member]
Repurchase Agreement Counterparty [Line Items]
Amount at risk	22,678
Weighted-average repurchase agreement maturity	Jan. 04, 2014
Morgan Stanley Bank, N.A. [Member]
Repurchase Agreement Counterparty [Line Items]
Amount at risk	7,233
Weighted-average repurchase agreement maturity	Nov. 19, 2013
Barclays Bank PLC [Member]
Repurchase Agreement Counterparty [Line Items]
Amount at risk	$ 6,647
Weighted-average repurchase agreement maturity	Jul. 01, 2013

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Netting of Financial Instruments

3 Months Ended

Mar. 31, 2013

Netting of Financial Instruments

Note 6—Netting of Financial Instruments

The Company uses derivative instruments to manage exposure to interest rate risk created by the commitments it makes to correspondent lenders to purchase loans at specified interest rates, also called interest rate lock commitments (“IRLCs”), mortgage loans acquired for sale at fair value and MSRs. All derivative financial instruments are recorded on the balance sheet at fair value. The Company has elected to net derivative asset and liability positions, and cash collateral obtained (or posted) by (or to) its counterparties when subject to an enforceable master netting arrangement. In the event of default, all counterparties are subject to legally enforceable master netting agreements. The derivatives that are not subject to a master netting arrangement are IRLCs. As of March 31, 2013 and December 31, 2012, the Company did not enter into reverse repurchase agreements or securities lending transactions that are required to be disclosed in the following table.

Offsetting of Derivative Assets

	March 31, 2013								December 31, 2012
	Gross amounts of recognized assets		Gross amounts offset in the balance sheet			Net amounts of assets presented in the balance sheet			Gross amounts of recognized assets		Gross amounts offset in the balance sheet			Net amounts of assets presented in the balance sheet
	(in thousands)
Derivatives:
MBS put options	$	326	$	—		$	326		$	977	$	—		$	977
MBS call options		1,052		—			1,052			—		—			—
Forward purchase contracts		6,460		—			6,460			2,617		—			2,617
Forward sale contracts		1,121		—			1,121			3,458		—			3,458
Netting		—		(4,825	)		(4,825	)		—		(2,825	)		(2,825	)
Total derivatives, subject to a master netting arrangement		8,959		(4,825	)		4,134			7,052		(2,825	)		4,227
Total derivatives, not subject to a master netting arrangement		11,052		—			11,052			19,479		—			19,479
Total	$	20,011	$	(4,825	)	$	15,186		$	26,531	$	(2,825	)	$	23,706

Derivative Assets, and Collateral Held by Counterparty

The following table summarizes by significant counterparty the amount of derivative asset positions after considering master netting arrangements and financial instruments or cash pledged that do not meet the accounting guidance qualifying for netting.

	March 31, 2013								December 31, 2012
			Gross amounts not offset in the balance sheet								Gross amounts not offset in the balance sheet
	Net amount of assets in the balance sheet		Financial instruments		Cash collateral received		Net amount		Net amount of assets in the balance sheet		Financial instruments		Cash collateral received		Net amount
	(in thousands)
Interest rate lock commitments	$	11,052	$	—	$	—	$	11,052	$	19,479	$	—	$	—	$	19,479
Barclays		1,400		—		—		1,400		15		—		—		15
Bank of America, N.A.		596		—		—		596		1,219		—		—		1,219
Cantor Fitzgerald LP		579		—		—		579		581		—		—		581
Citibank		456		—		—		456		1,009		—		—		1,009
Credit Suisse First Boston Mortgage Capital LLC		166		—		—		166		820		—		—		820
Morgan Stanley Bank, N.A.		104		—		—		104		316		—		—		316
Other		833		—		—		833		267		—		—		267
Total	$	15,186	$	—	$	—	$	15,186	$	23,706	$	—	$	—	$	23,706

Offsetting of Derivative Liabilities and Financial Liabilities

Following is a summary of net derivative liabilities and assets sold under agreements to repurchase. As discussed above, all derivatives with the exception of IRLCs are subject to master netting arrangements. Assets sold under agreements to repurchase do not qualify for offset.

	March 31, 2013								December 31, 2012
	Gross amounts of recognized liabilities		Gross amounts offset in the balance sheet			Net amounts of liabilities presented in the balance sheet			Gross amounts of recognized liabilities		Gross amounts offset in the balance sheet			Net amounts of liabilities presented in the balance sheet
	(in thousands)
Derivatives:
Forward purchase contracts	$	462	$	—		$	462		$	1,741	$	—		$	1,741
Forward sale contracts		8,560		—			8,560			4,520		—			4,520
Netting		—		(6,943	)		(6,943	)		—		(5,294	)		(5,294	)
Total derivatives, subject to a master netting arrangement		9,022		(6,943	)		2,079			6,261		(5,294	)		967
Total derivatives, not subject to a master netting arrangement		—		—			—			—		—			—
Total derivatives		9,022		(6,943	)		2,079			6,261		(5,294	)		967
Assets sold under agreements to repurchase:
Mortgage loans acquired for sale at fair value		1,035,486		—			1,035,486			894,906		—			894,906
Mortgage loans at fair value		576,018		—			576,018			353,805		—			353,805
Real estate acquired in settlement of loans		3,546		—			3,546			7,391		—			7,391
Total assets sold under agreements to repurchase		1,615,050		—			1,615,050			1,256,102		—			1,256,102
Total	$	1,624,072	$	(6,943	)	$	1,617,129		$	1,262,363	$	(5,294	)	$	1,257,069

Derivative Liabilities, Financial Liabilities, and Collateral Held by Counterparty

The following table summarizes by significant counterparty the amount of derivative liabilities and assets sold under agreements to repurchase after considering master netting arrangements and financial instruments or cash pledged that does not meet the accounting guidance qualifying for offset. All assets sold under agreements to repurchase have sufficient collateral or exceed the liability amount recorded on the consolidated balance sheet.

	March 31, 2013									December 31, 2012
	Net liabilities in the balance sheet		Gross amounts not offset in the balance sheet					Net amount		Net liabilities in the balance sheet		Gross amounts not offset in the balance sheet					Net amount
			Financial instruments			Cash collateral pledged						Financial instruments			Cash collateral pledged
	(in thousands)
Citibank	$	778,701	$	(777,825	)	$	—	$	876	$	474,625	$	(474,625	)	$	—	$	—
Bank of America, N.A.		259,858		(259,858	)		—		—		256,711		(256,711	)		—		—
Credit Suisse First Boston Mortgage Capital LLC		372,985		(372,663	)		—		322		243,525		(243,525	)		—		—
Morgan Stanley Bank, N.A.		133,413		(133,413	)		—		—		155,321		(155,321	)		—		—
Barclays		71,291		(71,291	)		—		—		79,253		(78,780	)		—		473
Wells Fargo Bank, N.A.		88		—			—		88		47,140		(47,140	)		—		—
Other		793		—			—		793		494		—			—		494
Total	$	1,617,129	$	(1,615,050	)	$	—	$	2,079	$	1,257,069	$	(1,256,102	)	$	—	$	967

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Fair Value

3 Months Ended

Mar. 31, 2013

Fair Value

Note 7—Fair Value

The Company’s consolidated financial statements include assets and liabilities that are measured based on their estimated fair values. The application of fair value estimates may be on a recurring or nonrecurring basis depending on the accounting principles applicable to the specific asset or liability and whether management has elected to carry the item at its estimated fair value as discussed in the following paragraphs.

Fair Value Accounting Elections

Management identified all of its non cash financial assets, including short-term investments and mortgage loans, as well as its MSRs relating to loans with initial interest rates of more than 4.5% that were acquired as a result of its correspondent lending operations, to be accounted for at estimated fair value so such changes in fair value will be reflected in income as they occur and more timely reflect the results of the Company’s performance.

For MSRs relating to mortgage loans with initial interest rates of less than or equal to 4.5% that were acquired as a result of the Company’s correspondent lending operations, management has concluded that such assets present different risks to the Company than MSRs relating to mortgage loans with initial interest rates of more than 4.5% and therefore require a different risk management approach. Management’s risk management efforts relating to these assets are aimed at moderating the effects of non-interest rate risks on fair value, such as the effect of changes in home prices on the assets’ values. Management has identified these assets for accounting at the lower of amortized cost or fair value.

The Company’s risk management efforts in connection with MSRs relating to mortgage loans with initial interest rates of more than 4.5% are generally aimed at moderating the effects of changes in interest rates on the assets’ values. During the period, a portion of the IRLCs, the fair value of which typically increases when prepayment speeds increase, were used to mitigate the effect of changes in fair value of the servicing assets, which typically decreases as prepayment speeds increase.

For loans sold under agreements to repurchase, REO financed through agreements to repurchase and borrowings under forward purchase agreements, management has determined that historical cost accounting is more appropriate because under this method debt issuance costs are amortized over the term of the debt, thereby matching the debt issuance cost to the periods benefiting from the usage of the debt.

Financial Statement Items Measured at Fair Value on a Recurring Basis

Following is a summary of financial statement items that are measured at estimated fair value on a recurring basis:

	March 31, 2013
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Short-term investments	$	45,024	$	—	$	—	$	45,024
Mortgage loans acquired for sale at fair value		—		1,123,348		—		1,123,348
Mortgage loans at fair value		—		—		1,366,922		1,366,922
Mortgage servicing rights at fair value		—		—		1,305		1,305
Derivative assets:
Interest rate lock commitments		—		—		11,052		11,052
MBS put options		—		326		—		326
MBS call options		—		1,052		—		1,052
Forward purchase contracts		—		6,460		—		6,460
Forward sales contracts		—		1,121		—		1,121
Total derivative assets before netting		—		8,959		11,052		20,011
Netting (1)		—		—		—		(4,825	)
Total derivative assets		—		8,959		11,052		15,186
	$	45,024	$	1,132,307	$	1,379,279	$	2,551,785
Liabilities:
Derivative liabilities:
Forward purchase contracts	$	—	$	462	$	—	$	462
Forward sales contracts		—		8,560		—		8,560
Total derivative liabilities before netting		—		9,022		—		9,022
Netting (1)		—		—		—		(6,943	)
Total derivative liabilities	$	—	$	9,022	$	—	$	2,079

(1) Derivatives are reported net of cash collateral received and paid and, to the extent that the criteria of the accounting guidance covering the offsetting of amounts related to certain contracts are met, positions with the same counterparty are netted as part of a legally enforceable master netting agreement.

	December 31, 2012
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Short-term investments	$	39,017	$	—	$	—	$	39,017
Mortgage loans acquired for sale at fair value		—		975,184		—		975,184
Mortgage loans at fair value		—		—		1,189,971		1,189,971
Mortgage servicing rights at fair value		—		—		1,346		1,346
Derivative assets:
Interest rate lock commitments		—		—		19,479		19,479
MBS put options		—		977		—		977
Forward purchase contracts		—		2,617		—		2,617
Forward sales contracts		—		3,458		—		3,458
Total derivative assets before netting (1)		—		7,052		19,479		26,531
Netting (1)		—		—		—		(2,825	)
Total derivative assets		—		7,052		19,479		23,706
	$	39,017	$	982,236	$	1,210,796	$	2,229,224
Liabilities:
Derivative liabilities:
Forward purchase contracts	$	—	$	1,741	$	—	$	1,741
Forward sales contracts		—		4,520		—		4,520
Total derivative liabilities before netting		—		6,261		—		6,261
Netting (1)		—		—		—		(5,294	)
Total derivative liabilities	$	—	$	6,261	$	—	$	967

(1) Derivatives are reported net of cash collateral received and paid and, to the extent that the criteria of the accounting guidance covering the offsetting of amounts related to certain contracts are met, positions with the same counterparty are netted as part of a legally enforceable master netting agreement.

The Company’s MBS, mortgage loans at fair value, mortgage loans under forward purchase agreements, MSRs, IRLCs and securities sold under agreements to repurchase were measured using Level 3 inputs on a recurring basis. The following is a summary of changes in those items:

	Quarter ended March 31, 2013
	Mortgage loans			Mortgage servicing rights			Interest rate lock commitments			Total
	(in thousands)
Assets:
Balance, December 31, 2012	$	1,189,971		$	1,346		$	19,479		$	1,210,796
Purchases		200,473			—			—			200,473
Repayments		(61,421	)		—			—			(61,421	)
Interest rate lock commitments issued, net		—			—			35,414			35,414
Capitalization of interest		5,230			—			—			5,230
Servicing received as proceeds from sales of mortgage loans		—			26			—			26
Changes in fair value included in income arising from:
Changes in instrument-specific credit risk		8,445			—			—			8,445
Other factors		55,535			(67	)		—			55,468
		63,980			(67	)		—			63,913
Transfers of mortgage loans to REO		(31,311	)		—			—			(31,311	)
Transfers of interest rate lock commitments to mortgage loans acquired for sale		—			—			(43,841	)		(43,841	)
Balance, March 31, 2013	$	1,366,922		$	1,305		$	11,052		$	1,379,279
Changes in fair value recognized during the period relating to assets still held at March 31, 2013	$	50,608		$	(67	)	$	11,052		$	61,593
Accumulated changes in fair value relating to assets still held at March 31, 2013	$	147,627					$	11,052

	Quarter ended March 31, 2012
	Mortgage- backed securities			Mortgage loans			Mortgage loans under forward purchase agreements			Mortgage servicing rights			Total
	(in thousands)
Assets:
Balance, December 31, 2011	$	72,813		$	696,266		$	129,310		$	749		$	899,138
Purchases		—			—			286			20			306
Repayments		(11,086	)		(26,187	)		(8,701	)		—			(45,974	)
Accrual of unearned discounts		335			—			—			—			335
Servicing received as proceeds from sales of mortgage loans		—			—			—			520			520
Changes in fair value included in income arising from:
Changes in instrument-specific credit risk		—			7,704			1,743			—			9,447
Other factors		363			(3,367	)		4,957			(101	)		1,852
		363			4,337			6,700			(101	)		11,299
Transfers of mortgage loans to REO		—			(24,201	)		—			—			(24,201	)
Transfer from mortgage loans acquired for sale		—			18			—			—			18
Transfers of mortgage loans under forward purchase agreements to REO under forward purchase agreements		—			—			(5,256	)		—			(5,256	)
Transfers of mortgage loans under forward purchase agreements to mortgage loans		—			17,309			(17,309	)		—			—
Balance, March 31, 2012	$	62,425		$	667,542		$	105,030		$	1,188		$	836,185
Changes in fair value recognized during the period relating to assets still held at March 31, 2012	$	363		$	26		$	4,494		$	(101	)	$	4,782
Accumulated changes in fair value relating to assets still held at March 31, 2012	$	(2,288	)	$	58,748		$	9,091
	Securities sold under agreements to repurchase
	(in thousands)
Liabilities:
Balance, December 31, 2011	$	115,493
Changes in fair value included in income		—
Sales		291,914
Repurchases		(354,339	)
Balance, March 31, 2012	$	53,068
Changes in fair value recognized during the period relating to liabilities still outstanding at March 31, 2012	$	—

Following are the fair values and related principal amounts due upon maturity of mortgage loans accounted for under the fair value option (including mortgage loans acquired for sale, mortgage loans at fair value and mortgage loans under forward purchase agreements at fair value):

	March 31, 2013
	Fair value		Principal amount due upon maturity		Difference
	(in thousands)
Mortgage loans acquired for sale:
Current through 89 days delinquent	$	1,123,348	$	1,078,360	$	44,988
90 or more days delinquent (1)		—		—		—
		1,123,348		1,078,360		44,988
Other mortgage loans at fair value:
Current through 89 days delinquent		448,054		673,684		(225,630	)
90 or more days delinquent (1)		918,868		1,679,842		(760,974	)
		1,366,922		2,353,526		(986,604	)
	$	2,490,270	$	3,431,886	$	(941,616	)

	December 31, 2012
	Fair value		Principal amount due upon maturity		Difference
	(in thousands)
Mortgage loans acquired for sale:
Current through 89 days delinquent	$	975,184	$	931,787	$	43,397
90 or more days delinquent (1)		—		—		—
		975,184		931,787		43,397
Other mortgage loans at fair value:
Current through 89 days delinquent		404,016		640,722		(236,706	)
90 or more days delinquent (1)		785,955		1,483,311		(697,356	)
		1,189,971		2,124,033		(934,062	)
	$	2,165,155	$	3,055,820	$	(890,665	)

(1) Loans delinquent 90 or more days are placed on nonaccrual status and previously accrued interest is reversed.

Following are the changes in fair value included in current period income by consolidated statement of income line item for financial statement items accounted for under the fair value option:

	Quarter ended March 31, 2013
	Net gain  on mortgage loans acquired for sale		Net gain on investments		Interest income		Net loan servicing fees			Total
	(in thousands)
Assets:
Short-term investments	$	—	$	—	$	—	$	—		$	—
Mortgage loans acquired for sale at fair value		24,757		—		—		—			24,757
Mortgage loans at fair value		—		63,980		—		—			63,980
Mortgage servicing rights at fair value		—		—		—		(67	)		(67	)
	$	24,757	$	63,980	$	—	$	(67	)	$	88,670

	Quarter ended March 31, 2012
	Net gain  on mortgage loans acquired for sale		Net gain on investments		Interest income		Net loan servicing fees			Total
	(in thousands)
Assets:
Short-term investments	$	—	$	—	$	—	$	—		$	—
Mortgage-backed securities at fair value		—		357		335		—			692
Mortgage loans acquired for sale at fair value		13,370		—		—		—			13,370
Mortgage loans at fair value		—		4,431		—		—			4,431
Mortgage loans under forward purchase agreements at fair value		—		6,700		—		—			6,700
Mortgage servicing rights at fair value		—		—		—		(101	)		(101	)
	$	13,370	$	11,488	$	335	$	(101	)	$	25,092

Financial Statement Items Measured at Fair Value on a Nonrecurring Basis

Following is a summary of financial statement items that are measured at estimated fair value on a nonrecurring basis:

	March 31, 2013
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Real estate asset acquired in settlement of loans	$	—	$	—	$	42,254	$	42,254
Mortgage servicing assets at lower of amortized cost or fair value		—		—		111,935		111,935
	$	—	$	—	$	154,189	$	154,189

	December 31, 2012
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Real estate asset acquired in settlement of loans	$	—	$	—	$	56,156	$	56,156
Mortgage servicing rights at lower of amortized cost or fair value		—		—		86,215		86,215
	$	—	$	—	$	142,371	$	142,371

The following table summarizes the total gains (losses) on assets measured at estimated fair values on a nonrecurring basis:

	Quarter ended March 31,
	2013			2012
	(in thousands)
Real estate asset acquired in settlement of loans	$	(4,954	)	$	(2,782	)
Real estate asset acquired in settlement of loans under forward purchase agreements		—			(348	)
Mortgage servicing assets at lower of amortized cost or fair value		2,486			(106	)
	$	(2,468	)	$	(3,236	)

Real Estate Acquired in Settlement of Loans

The Company measures its investment in REO at the respective properties’ estimated fair values less cost to sell on a nonrecurring basis. The initial carrying value of the REO is established as the lesser of (a) either the fair value of the loan at the date of transfer, (b) the fair value of the real estate less estimated costs to sell as of the date of transfer or (c) the purchase price of the property. REO may be subsequently revalued due to the Company receiving greater access to the property, the property being held for an extended period or management receiving indications that the property’s value may not be supported by developing market conditions. Any subsequent change in fair value to a level that is less than or equal to the value at which the property was initially recorded is recognized in Results of real estate acquired in settlement of loans in the consolidated statements of income.

Mortgage Servicing Rights at Lower of Amortized Cost or Fair Value

The Company evaluates its MSRs at lower of amortized cost or fair value for impairment with reference to the assets’ fair value. For purposes of performing its MSR impairment evaluation, the Company stratifies its MSRs at lower of amortized cost or fair value based on the interest rates borne by the mortgage loans underlying the MSRs. Mortgage loans are grouped into note rate pools of 50 basis point ranges for fixed-rate mortgage loans with note rates between 3% and 4.5% and a single pool for note rates below 3%. MSRs relating to adjustable rate mortgage loans with initial interest rates of 4.5% or less are evaluated in a single pool. If the fair value of MSRs in any of the note rate pools is below the carrying value of the MSRs for that pool reduced by the existing valuation allowance, those MSRs are impaired.

When MSRs are impaired, the impairment is recognized in current-period income and the carrying value of the MSRs is adjusted using a valuation allowance. If the value of the MSRs subsequently increases, the increase of value is recognized in current period earnings only to the extent of the valuation allowance for the respective stratum.

Management periodically reviews the various impairment strata to determine whether the value of the impaired MSRs in a given stratum is likely to recover. When management deems recovery of the value to be unlikely in the foreseeable future, a write-down of the cost of the MSRs for that stratum to its estimated fair value is charged to the valuation allowance.

Fair Value of Financial Instruments Carried at Amortized Cost

The Company’s cash balances as well as its borrowings secured by its inventory of mortgage loans acquired for sale and its investments in nonperforming loans and REO in the form of repurchase agreements are carried at amortized cost.

Management has concluded that the estimated fair values of Cash, Mortgage loans acquired for sale at fair value sold under agreements to repurchase, Mortgage loans at fair value sold under agreements to repurchase and Real estate acquired in settlement of loans financed under agreements to repurchase approximate the agreements’ carrying values due to the immediate realizability of cash at its carrying amount and to the borrowing agreements’ short terms and variable interest rates.

Cash is measured using Level 1 inputs. The Company’s borrowings carried at amortized cost do not have active markets or observable inputs and the fair value is measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation. The Company has classified these financial instruments as “Level 3” financial statement items as of March 31, 2013 due to the lack of current market activity and the Company’s reliance on unobservable inputs to estimate these instruments’ fair value.

Valuation Techniques and Assumptions

Most of the Company’s assets are carried at fair value with changes in fair value recognized in current period income. A substantial portion of those assets are “Level 3” financial statement items which require the use of significant unobservable inputs in the estimation of the assets’ values. Unobservable inputs reflect the Company’s own assumptions about the factors that market participants use in pricing an asset or liability, and are based on the best information available under the circumstances.

The Manager has assigned the responsibility for estimating the fair values of “Level 3” financial statement items to its Financial Analysis and Valuation group (the “FAV group”), which is responsible for valuing and monitoring the Company’s investment portfolios and maintenance of its valuation policies and procedures.

The FAV group reports to the Manager’s senior management valuation committee, which oversees and approves the valuations. The valuation committee includes the chief executive, financial, investment and credit officers of the Manager. The FAV group monitors the models used for valuation of the Company’s “Level 3” financial statement items, including the models’ performance versus actual results and reports those results to the valuation committee. The results developed in the FAV group’s monitoring activities are used to calibrate subsequent projections used for valuation.

The FAV group is responsible for reporting to the valuation committee on a monthly basis on the changes in the valuation of the portfolio, including major factors affecting the valuation and any changes in model methods and assumptions. To assess the reasonableness of its valuations, the FAV group presents an analysis of the effect on the valuation of each of the changes to the significant inputs to the models.

The following describes the valuation techniques and assumptions used in estimating the fair values of Level 2 and Level 3 financial statement items:

Mortgage Loans

Fair value of mortgage loans is estimated based on whether the mortgage loans are saleable into active markets:

• Mortgage loans that are saleable into active markets, comprised of the Company’s mortgage loans acquired for sale at fair value, are categorized as “Level 2” financial statement items and their fair values are estimated using their quoted market or contracted price or market price equivalent.

• Loans that are not saleable into active markets, comprised of the Company’s mortgage loans at fair value and mortgage loans under forward purchase agreements at fair value, are categorized as “Level 3” financial statement items, and their fair values are estimated using a discounted cash flow approach. Inputs to the discounted cash flow model include current interest rates, loan amount, payment status and property type, and forecasts of future interest rates, home prices, prepayment speeds, default speeds and loss severities. The valuation process includes the computation by stratum of loan population and a review for reasonableness of various measures such as weighted average life, projected prepayment and default speeds, and projected default and loss percentages. The FAV group computes the effect on the valuation of changes in input variables such as interest rates, home prices, and delinquency status to assess the reasonableness of changes in the loan valuation. The results of the estimates of fair value of “Level 3” mortgage loans are reported to PCM’s valuation committee as part of its review and approval of monthly valuation results.

Changes in fair value attributable to changes in instrument-specific credit risk are measured by the change in the respective loan’s delinquency status at period-end from the later of the beginning of the period or acquisition date.

The significant unobservable inputs used in the fair value measurement of the Company’s mortgage loans at fair value and mortgage loans under forward purchase agreements at fair value are discount rate, home price projections, voluntary prepayment speeds and default speeds. Significant changes in any of those inputs in isolation could result in a significant change to the loans’ fair value measurement. Increases in home price projections are generally accompanied by an increase in voluntary prepayment speeds.

Following is a quantitative summary of key inputs used in the valuation of mortgage loans at fair value:

	Range (Weighted Average)
Key Inputs	March 31, 2013	December 31, 2012
Discount rate	8.3% – 20.5%	8.8% – 20.7%
	(12.5%)	(13.1%)
Twelve-month projected housing price index change	2.1% – 5.6%	0.4% – 1.5%
	(3.6%)	(1.1%)
Prepayment speed (1)	0.0% – 4.6%	0.4% – 4.4%
	(2.5%)	(2.2%)
Total prepayment speed (2)	0.6% – 41.2%	5.9% – 31.2%
	(21.0%)	(20.6%)

(1) Prepayment speed is measured using life voluntary Conditional Prepayment Rate (“CPR”).

(2) Total prepayment speed is measured using life total CPR.

Derivative Financial Instruments

The Company estimates the fair value of an IRLC based on quoted Agency MBS prices, its estimate of the fair value of the MSRs it expects to receive in the sale of the loans and the percentage of loans that the Company expects to ultimately fund as a percentage of the commitments it has made (the “pull-through rate”).

The significant unobservable inputs used in the fair value measurement of the Company’s IRLCs are the pull-through rate and the MSR component of the Company’s estimate of the value of the mortgage loans it has committed to purchase. Significant changes in the pull-through rate and the MSR component of the IRLCs, in isolation, could result in a significant change in fair value measurement. The financial impact of these assumptions are generally inversely correlated as increasing interest rates have a positive effect on the fair value of the MSR component of IRLC value, but increase the pull-through rate for loans that have decreased in market value in comparison to the agreed-upon purchase price.

Following is a quantitative summary of key unobservable inputs used in the valuation of IRLCs:

	Range (Weighted average)
	March 31, 2013	December 31, 2012
Key Inputs	Range (Weighted average)
Pull-through rate	65.0% – 98.0%	44.2% – 98.0%
	(83.5%)	(80.6%)
MSR value expressed as:
Servicing fee multiple	0.9 – 5.2	1.8 – 4.8
	(4.5)	(4.5)
Percentage of unpaid principal balance	0.2% – 1.3%	0.4% – 1.2%
	(1.1%)	(1.1%)

The Company estimates the fair value of commitments to sell loans based on quoted MBS prices. The Company estimates the fair value of the interest rate options and futures it purchases and sells based on observed interest rate volatilities in the MBS market. The Company estimates the fair value of its MBS interest rate swaptions based on quoted market prices.

Real Estate Acquired in Settlement of Loans

REO is measured based on its fair value on a nonrecurring basis and is categorized as a “Level 3” financial statement item. Fair value of REO is determined by using a current estimate of value from a broker’s price opinion or a full appraisal, or the price given in a current contract of sale.

REO values are reviewed by PCM’s staff appraisers when the Company obtains multiple indications of value and there is a significant discrepancy between the values received. PCM’s staff appraisers will attempt to resolve the discrepancy between the indications of value. In circumstances where the appraisers are not able to generate adequate data to support a value conclusion, the staff appraisers will order an additional appraisal to resolve the property’s value.

Mortgage Servicing Rights

MSRs are categorized as “Level 3” financial statement items. The Company uses a discounted cash flow approach to estimate the fair value of MSRs. The key assumptions used in the estimation of the fair value of MSRs include prepayment and default rates of the underlying loans, the applicable discount rate, and cost to service loans. The key assumptions used in the Company’s discounted cash flow model are based on market factors which management believes are consistent with assumptions and data used by market participants valuing similar MSRs. The results of the estimates of fair value of MSRs are reported to PCM’s valuation committee as part of their review and approval of monthly valuation results.

The significant unobservable inputs used in the fair value measurement of the Company’s MSRs are pricing spreads, prepayment speeds (or life) and annual per-loan cost of servicing. Significant changes to any of those inputs in isolation could result in a significant change in the MSR fair value measurement. Changes in these key assumptions are not necessarily directly related.

MSRs are generally subject to loss in value when mortgage rates decrease. Decreasing mortgage rates normally encourage increased mortgage refinancing activity. Increased refinancing activity reduces the life of the loans underlying the MSRs, thereby reducing MSR value. Reductions in the value of MSRs affect income primarily through change in fair value and impairment charges. For MSRs backed by mortgage loans with historically low interest rates, factors other than interest rates (such as housing price changes) take on increasing influence on prepayment behavior of the underlying mortgage loans.

Following are the key inputs used in determining the fair value of MSRs at the time of initial recognition:

	Quarter ended March 31,
	2013		2012
	Range (Weighted average)
Key Inputs	Amortized cost	Fair value	Amortized cost	Fair value
Pricing spread (1)	5.4% – 14.4%	7.5% – 14.4%	7.5% – 14.5%	7.5% – 14.5%
	(7.0%)	(8.5%)	(7.5%)	(8.3%)
Life (in years)	2.7 – 6.9	2.8 – 6.8	2.8 – 7.0	2.8 – 7.0
	(6.4)	(6.1)	(6.5)	(5.8)
Annual total prepayment speed (2)	8.5% – 22.7%	10.4% – 27.0%	6.7% – 27.4%	7.9% – 27.4%
	(9.1%)	(14.4%)	(7.9%)	(13.1%)
Annual per-loan cost of servicing	$68 – $140	$68 – $68	$68 – $140	$68 – $140
	($68)	($68)	($69)	($89)

(1) Pricing spread represents a margin that is applied to a reference interest rate’s forward rate curve to develop periodic discount rates. The Company applies a pricing spread to the United States Dollar LIBOR curve for purposes of discounting cash flows relating to MSRs acquired as proceeds from the sale of mortgage loans.

(2) Prepayment speed is measured using CPR.

Following is a quantitative summary of key inputs used in the valuation of MSRs, and the effect on the estimated fair value from adverse changes in those assumptions (weighted averages are based upon unpaid principal balance or fair value where applicable):

	March 31, 2013						December 31, 2012
	Range (Weighted average)
Key Inputs	Amortized cost			Fair value			Amortized cost			Fair value
	(unpaid principal balance and effect on value amounts in thousands)
Unpaid principal balance of underlying loans	$	16,479,081		$	163,049		$	11,986,957		$	181,783
Pricing spread (1)		5.4% – 19.0	%		8.6% – 14.5	%		7.5% – 16.5	%		7.5% – 16.5%
		(6.8%)			(9.0%)			(7.7%)			(7.7%)
Effect on value of 5% adverse change	$	(3,056	)	$	(19	)	$	(2,052	)	$	(21	)
Effect on value of 10% adverse change	$	(6,020	)	$	(38	)	$	(4,041	)	$	(40	)
Effect on value of 20% adverse change	$	(11,686	)	$	(73	)	$	(7,845	)	$	(78	)
Average life (in years)		1.8 – 6.9			1.5 – 6.8			1.7 – 6.3			1.4 – 6.3
		(6.4)			(6.2)			(6.3)			(6.0)
Prepayment speed (2)		8.6% – 45.9	%		10.4% – 50.9	%		10.3% – 47.8	%		10.3% – 65.9	%
		(9.5%)			(15.1%)			(10.3%)			(13.2%)
Effect on value of 5% adverse change	$	(4,214	)	$	(43	)	$	(3,026	)	$	(52	)
Effect on value of 10% adverse change	$	(8,275	)	$	(83	)	$	(5,937	)	$	(100	)
Effect on value of 20% adverse change	$	(15,966	)	$	(159	)	$	(11,436	)	$	(190	)
Annual per-loan cost of servicing		$68 – $140			$68 – $140			$68 – $140			$68 – $140
		$(68)			$(73)			$(68)			$(74)
Effect on value of 5% adverse change	$	(1,138	)	$	(12	)	$	(778	)	$	(12	)
Effect on value of 10% adverse change	$	(2,275	)	$	(24	)	$	(1,556	)	$	(24	)
Effect on value of 20% adverse change	$	(4,551	)	$	(47	)	$	(3,112	)	$	(48	)

(1) Pricing spread represents a margin that is applied to a reference interest rate’s forward rate curve to develop periodic discount rates. The Company applies a pricing spread to the United States Dollar LIBOR curve for purposes of discounting cash flows relating to MSRs acquired as proceeds from the sale of mortgage loans and purchased MSRs not backed by pools of distressed mortgage loans.

(2) Prepayment speed is measured using CPR.

The preceding sensitivity analyses are limited in that they were performed at a particular point in time; only contemplate the movements in the indicated variables; do not incorporate changes in the variables in relation to other variables; are subject to the accuracy of various models and assumptions used; and do not incorporate other factors that would affect the Company’s overall financial performance in such scenarios, including operational adjustments made by management to account for changing circumstances. For these reasons, the preceding estimates should not be viewed as an earnings forecast.

Securities Sold Under Agreements to Repurchase

Fair value of securities sold under agreements to repurchase is based on the accrued cost of the agreements, which approximates the agreements’ fair values, due to the agreements’ short maturities.

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Regulatory Net Worth Requirement - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013
Minimum net worth amount	$ 2.5

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Mortgage Loans Acquired for Sale at Fair Value

3 Months Ended

Mar. 31, 2013

Mortgage Loans Acquired for Sale at Fair Value

Note 9—Mortgage Loans Acquired for Sale at Fair Value

Mortgage loans acquired for sale at fair value is comprised of recently originated mortgage loans purchased by the Company for resale. Following is a summary of the distribution of the Company’s mortgage loans acquired for sale at fair value:

	March 31, 2013				December 31, 2012
	Fair value		Unpaid principal balance		Fair value		Unpaid principal balance
Loan Type	(in thousands)
Government insured or guaranteed	$	542,490	$	516,633	$	153,326	$	144,619
Conventional:
Agency-eligible		574,006		555,061		820,492		785,830
Jumbo loans		6,852		6,666		1,366		1,338
	$	1,123,348	$	1,078,360	$	975,184	$	931,787
Loans pledged to secure loans sold under agreements to repurchase	$	1,122,940			$	972,079

The Company is not approved by Ginnie Mae as an issuer of Ginnie Mae-guaranteed securities which are backed by government-insured or guaranteed mortgage loans. As discussed in Note 3—Transactions with Related Parties, the Company transfers government insured or guaranteed mortgage loans that it purchases from correspondent lenders to PLS, which is a Ginnie Mae-approved issuer, and earns a sourcing fee of three basis points on the unpaid principal balance of each such loan.

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Organization and Basis of Presentation - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2013 Segment
Number of business segment	2
Percentage of taxable income for distributions	90.00%

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Borrowings under Forward Purchase Agreements - Summary of Financial Information Relating to Borrowings under Forward Purchase Agreements (Detail) (USD $) In Thousands, unless otherwise specified			3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012 Borrowings under forward purchase agreement [Member]
Period end:
Balance	$ 576,018	$ 353,805	$ 127,591
Weighted-average interest rate			4.24%
Fair value of underlying loans and REO			127,411
During the period:
Weighted-average interest rate			4.09%
Average balance			146,512
Interest expense			1,515
Maximum daily amount outstanding			$ 152,428

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Fair Value - Summary of Financial Statement Items Measured at Estimated Fair Value on Nonrecurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Assets:
Real estate asset acquired in settlement of loans	$ 42,254	$ 56,156
Mortgage servicing assets at lower of amortized cost or fair value	111,935	86,215
Total Assets	154,189	142,371
Level 1 [Member]
Assets:
Real estate asset acquired in settlement of loans
Mortgage servicing assets at lower of amortized cost or fair value
Total Assets
Level 2 [Member]
Assets:
Real estate asset acquired in settlement of loans
Mortgage servicing assets at lower of amortized cost or fair value
Total Assets
Level 3 [Member]
Assets:
Real estate asset acquired in settlement of loans	42,254	56,156
Mortgage servicing assets at lower of amortized cost or fair value	111,935	86,215
Total Assets	$ 154,189	$ 142,371

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Concentration of Risks - Fair Value of Mortgage Loans (Including Forward Purchase Agreements) and REO Purchased for Investment Portfolio (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Investment portfolio purchases:
Investment portfolio purchases, Loans	$ 200,473	$ 286
Investment portfolio purchases, REO		53
Investment portfolio purchases, total	200,473	339
Investment portfolio purchases above through one or more subsidiaries of Citigroup, Inc.:
Investment portfolio purchases above through one or more subsidiaries of Citigroup, Inc, Loans	200,297	286
Investment portfolio purchases above through one or more subsidiaries of Citigroup, Inc, REO		53
through one or more subsidiaries of Citigroup, Inc, total	$ 200,297	$ 339

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Mortgage Servicing Rights - Summary Activity in MSRs Carried at Lower of Amortized Cost or Fair Value (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Servicing Assets at Amortized Value [Line Items]
Balance at beginning of period	$ 132,977	$ 5,282
MSRs received as proceeds from loan sales	56,190	12,409
Purchases		9
Sales
Amortization	(4,970)	(248)
Application of valuation allowance to write down MSRs with other-than temporary impairment
Balance at period end	184,197	17,452
Balance at beginning of period	(7,547)
Reversals (additions)	2,486	(106)
Application of valuation allowance to write down MSRs with other-than temporary impairment
Balance at period end	(5,061)	(106)
Mortgage Servicing Rights, net at period end	179,136	17,346	125,430
Estimated Fair Value of MSRs at period end	$ 186,209	$ 17,396

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Condensed Consolidating Financial Statements (Tables)

3 Months Ended

Mar. 31, 2013

Schedule of Condensed Consolidating Balance Sheet

PennyMac Mortgage Investment Trust

Condensed Consolidating Balance Sheet

March 31, 2013

	PennyMac Mortgage Investment Trust		PennyMac Corp.		Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(“Guarantor”)		(“Issuer”)
	(in thousands)
Assets:
Cash and short-term investments	$	2,931	$	25,846	$	35,623	$	—		$	64,400
Mortgage-backed securities		—		—		36,359		(36,359	)		—
Mortgage loans held for sale		—		1,123,348		—		—			1,123,348
Mortgage loans at fair value		—		503,194		863,728		—			1,366,922
Real estate acquired in settlement of loans		—		84,335		188		(37	)		84,486
Mortgage servicing rights		—		180,441		—		—			180,441
Investment in subsidiaries		1,229,392		—		751,355		(1,980,747	)		—
Other assets		1,964		82,892		547,287		(524,580	)		107,563
	$	1,234,287	$	2,000,056	$	2,234,540	$	(2,541,723	)	$	2,927,160
Liabilities:
Accounts payable and accrued liabilities	$	2,089	$	18,042	$	2,128	$	—		$	22,259
Assets sold under agreements to repurchase		—		1,192,157		422,893		—			1,615,050
Notes payable		—		—		—		—			—
Borrowings under forward purchase agreement		—		—		—		—			—
Intercompany borrowings		—		403,299		151,098		(554,397	)		—
Other liabilities		9,456		54,884		9,625		(6,543	)		67,422
		11,545		1,668,382		585,744		(560,940	)		1,704,731
Shareholders’ equity		1,222,742		331,674		1,648,796		(1,980,783	)		1,222,429
	$	1,234,287	$	2,000,056	$	2,234,540	$	(2,541,723	)	$	2,927,160

PennyMac Mortgage Investment Trust

Condensed Consolidating Balance Sheet

December 31, 2012

	PennyMac Mortgage Investment Trust		PennyMac Corp.		Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(“Guarantor”)		(“Issuer”)
	(in thousands)
Assets:
Cash and short-term investments	$	3,399	$	45,187	$	24,187	$	—		$	72,773
Mortgage-backed securities		—		—		39,967		(39,967	)		—
Mortgage loans held for sale		—		975,184		—		—			975,184
Mortgage loans at fair value		—		505,072		684,899		—			1,189,971
Real estate acquired in settlement of loans		—		87,536		582		(40	)		88,078
Mortgage servicing rights		—		126,776		—		—			126,776
Investment in subsidiaries		1,207,471		—		705,321		(1,912,792	)		—
Other assets		205		108,524		548,087		(549,935	)		106,881
	$	1,211,075	$	1,848,279	$	2,003,043	$	(2,502,734	)	$	2,559,663
Liabilities:
Accounts payable and accrued liabilities	$	524	$	39,309	$	2,569	$	—		$	42,402
Assets sold under agreements to repurchase		—		1,042,946		213,156		—			1,256,102
Notes payable		—		—		—		—			—
Borrowings under forward purchase agreement		—		—		—		—			—
Intercompany borrowings		—		117,904		—		(117,904	)		—
Other liabilities		8,903		322,178		203,333		(474,591	)		59,823
		9,427		1,522,337		419,058		(592,495	)		1,358,327
Shareholders’ equity		1,201,648		325,942		1,583,985		(1,910,239	)		1,201,336
	$	1,211,075	$	1,848,279	$	2,003,043	$	(2,502,734	)	$	2,559,663

Schedule of Condensed Consolidating Income Statement

PennyMac Mortgage Investment Trust

Condensed Consolidating Income Statement

Quarter ended March 31, 2013

	PennyMac Mortgage Investment Trust		PennyMac Corp.		Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(“Guarantor”)		(“Issuer”)
	(in thousands)
Gain on sale of correspondent lending loans	$	—	$	29,279	$	—	$	—		$	29,279
Gains on investments		—		22,704		41,276		—			63,980
Interest income		197		11,306		19,678		(14,306	)		16,875
Equity in earnings of subsidiaries		54,041		—		46,034		(100,075	)		—
Other income		—		8,334		581		3			8,918
Net investment income		54,238		71,623		107,569		(114,378	)		119,052
Expenses
Compensation		87		1,830		172		—			2,089
Management Fees		—		5,935		557		—			6,492
Fulfillment fees		—		28,136		—		—			28,136
Interest		198		14,724		6,145		(9,831	)		11,236
Other		652		11,184		3,328		—			15,164
		937		61,809		10,202		(9,831	)		63,117
Pre-tax income		53,301		9,814		97,367		(104,547	)		55,935
Provision for income taxes		—		4,436		84		(1,881	)		2,639
Net income	$	53,301	$	5,378	$	97,283	$	(102,666	)	$	53,296

PennyMac Mortgage Investment Trust

Condensed Consolidating Income Statement

Quarter ended March 31, 2012

	PennyMac Mortgage Investment Trust		PennyMac Corp.		Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(“Guarantor”)		(“Issuer”)
	(in thousands)
Gain on sale of correspondent lending loans	$	—	$	13,370	$	—	$	—		$	13,370
Gains on investments		—		4,594		6,894		—			11,488
Interest income		12		10,872		5,541					16,425
Equity in earnings of subsidiaries		17,658		439		177		(18,274	)		—
Other income		—		4,261		216		889			5,366
Net investment income		17,670		33,536		12,828		(17,385	)		46,649
Expenses
Compensation		63		1,008		230		—			1,301
Management Fees		—		1,469		335		—			1,804
Fulfillment fees		—		6,124		—		—			6,124
Interest		106		4,119		2,449		—			6,674
Other		9		4,300		1,862		—			6,171
		178		17,020		4,876		—			22,074
Pre-tax income		17,492		16,516		7,952		(17,385	)		24,575
Provision for income taxes		—		5,442		75		—			5,517
Net income	$	17,492	$	11,074	$	7,877	$	(17,385	)	$	19,058

Schedule of Condensed Consolidating Cash Flows

PennyMac Mortgage Investment Trust

Condensed Consolidating Cash Flows

Quarter Ended March 31, 2013

	PennyMac Mortgage Investment Trust			PennyMac Corp.			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(“Guarantor”)			(“Issuer”)
	(in thousands)
Cash flows from operating activities	$	33,187		$	(201,367	)	$	(11,372	)	$	(45,593	)	$	(225,145	)
Cash flows from investing activities:
Purchases of mortgage loans at fair value		—			(36,914	)		(163,559	)		—			(200,473	)
Sales of real estate and repayments of mortgage loans at fair value		—			60,630			36,950			(4,135	)		93,445
Intercompany purchases of assets under agreements to resell		—			—			(179,721	)		179,721			—
Intercompany sales of assets purchased under agreements to resell		—			—			197,719			(197,719	)		—
Purchases of short-term investments		468			5,665			(12,139	)		(1	)		(6,007	)
Other investment activities		—			(1,303	)		190			(380	)		(1,493	)
Cash flows from investing activities		468			28,078			(120,560	)		(22,514	)		(114,528	)
Cash flows from financing activities:
Proceeds from sale of assets under agreements to repurchase		—			8,301,595			209,363			—			8,510,958
Repayments of assets under agreements to repurchase		—			(8,105,279	)		(46,731	)		—			(8,152,010	)
Proceeds from borrowings with affiliated entities		—			177,624			2,097			(179,721	)		—
Repayment of borrowings with affiliated entities		—			(214,328	)		—			214,328			—
Dividends paid		(33,577	)		—			(33,500	)		33,500			(33,577	)
Other financing activities		(78	)		—			—			—			(78	)
Cash flows from financing activities		(33,655	)		159,612			131,229			68,107			325,293
Net change in cash and cash equivalents		—			(13,677	)		(703	)		—			(14,380	)
Cash at beginning of period		—			32,040			1,716			—			33,756
Cash at end of period	$	—		$	18,363		$	1,013		$	—		$	19,376

PennyMac Mortgage Investment Trust

Condensed Consolidating Cash Flows

Quarter Ended March 31, 2012

	PennyMac Mortgage Investment Trust			PennyMac Corp.			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(“Guarantor”)			(“Issuer”)
	(in thousands)
Cash flows from operating activities	$	35,848		$	(563	)	$	28,324		$	(15,691	)	$	47,918
Cash flows from investing activities:
Sales of real estate and repayments of mortgage loans at fair value		(43,694	)		63,054			22,584			35,102			77,046
Intercompany purchases of assets under agreements to resell		—			—			(53,341	)		53,341			—
Intercompany sales of assets purchased under agreements to resell		—			—			47,108			(47,108	)		—
Purchases of short-term investments		(22,152	)		—			(10,973	)		—			(33,125	)
Repayments of mortgage-backed and U.S. Treasury Securities		—			—			61,086			—			61,086
Purchases and sales of MSRs		—			(23	)		(6	)		—			(29	)
Other investment activities		—			400			4,140			—			4,540
Cash flows from investing activities		(65,846	)		63,431			70,598			41,335			109,518
Cash flows from financing activities:
Sales of securities under agreements to repurchase		—			—			291,914			—			291,914
Repurchases of securities sold under agreements to repurchase		—			—			(354,339	)		—			(354,339	)
Proceeds from sale of assets under agreements to repurchase		—			1,724,841			7,136			—			1,731,977
Repayments of assets under agreements to repurchase		—			(1,826,462	)		(28,708	)		—			(1,855,170	)
Proceeds from borrowings with affiliated entities		—			103,794			(50,453	)		(53,341	)		—
Repayment of borrowings with affiliated entities		—			(106,153	)		50,453			55,700			—
Issuance of stock		45,690			—			—			—			45,690
Dividends paid		(15,692	)		—			(15,693	)		15,693			(15,692	)
Change in intercompany advances		—			—			—			—			—
Cash investment from parent		—			43,696			—			(43,696	)		—
Cash flows from financing activities		29,998			(60,284	)		(99,690	)		(25,644	)		(155,620	)
Net change in cash and cash equivalents		—			2,584			(768	)		—			1,816
Cash at beginning of period		—			12,833			1,756			—			14,589
Cash at end of period	$	—		$	15,417		$	988		$	—		$	16,405

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Mortgage Loans Acquired for Sale at Fair Value - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2013
Fair Value, Option, Quantitative Disclosures [Line Items]
Sourcing fee on the unpaid principal balance	0.03%

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Income Taxes - Summary of Company's Income Tax Expense (Benefit) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Current (benefit) expense:
Federal	$ (10,725)	$ 706
State	(2,489)	245
Total current (benefit) expense	(13,214)	951
Deferred expense:
Federal	12,678	3,389
State	3,175	1,177
Total deferred expense	15,853	4,566
Total provision for income taxes	$ 2,639	$ 5,517

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Segments and Related Information

3 Months Ended

Mar. 31, 2013

Segments and Related Information

Note 27—Segments and Related Information

The Company has two business segments: correspondent lending and investment activities.

• The correspondent lending segment represents the Company’s operations aimed at serving as an intermediary between mortgage originators, particularly mortgage lenders, and the capital markets by purchasing, pooling and reselling the loans either directly or in the form of MBS, using the operations of the Manager and the Servicer.

• The investment activities segment represents the Company’s investments in distressed mortgage loans, REO, MBS and MSRs. Management seeks to maximize the value of the mortgage loans acquired by the Company through proprietary loan modification programs, special servicing and other initiatives focused on keeping borrowers in their homes. Where this is not possible, such as in the case of many nonperforming mortgage loans, the Company seeks to effect property resolution in a timely, orderly and economically efficient manner. The Company also invests in mortgage-related securities and other mortgage-related real estate and financial assets.

Financial highlights by operating segment are summarized below:

Quarter ended March 31, 2013	Correspondent lending		Investment activities		Intersegment elimination & other			Total
	(in thousands)
Revenues:
External
Net gain on mortgage loans acquired for sale	$	29,279	$	—	$	—		$	29,279
Net gain on investments		—		63,980		—			63,980
Interest		6,324		10,592		(41	)		16,875
Other		5,473		3,445		—			8,918
		41,076		78,017		(41	)		119,052
Expenses:
Loan fulfillment fees		24,852		—		3,284	(1)		28,136
Interest		5,647		5,630		(41	)		11,236
Loan servicing		150		7,940		—			8,090
Other		1,547		14,108		—			15,655
		32,196		27,678		3,243			63,117
Pre-tax net income	$	8,880	$	50,339	$	(3,284	)	$	55,935
Total assets at period end	$	1,142,774	$	1,829,246	$	(44,860	)	$	2,927,160

(1) Corporate absorption of fulfillment fees for transition adjustment related to the amended and restated management agreement effective February 1, 2013.

Quarter ended March 31, 2012	Correspondent lending			Investment activities		Intersegment eliminations  & other		Total
	(in thousands)
Revenues:
External
Net gain on mortgage loans acquired for sale	$	13,370		$	—	$	—	$	13,370
Net gain on investments		—			11,488		—		11,488
Interest income		2,792			13,638		—		16,430
Other income		1,461			3,900		—		5,361
Intersegment		(16	)		16		—		—
		17,607			29,042		—		46,649
Expenses:
Loan fulfillment fees payable to affiliate		6,124			—		—		6,124
Interest		927			5,747		—		6,674
Other		255			9,021		—		9,276
		7,306			14,768		—		22,074
Pre-tax net income	$	10,301		$	14,274	$	—	$	24,575

The accounting policies of the reportable segments are the same as those described in Note 3—Significant Accounting Policies to the Company’s Annual Report.

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Securities Sold Under Agreements to Repurchase at Fair Value (Tables)

3 Months Ended

Mar. 31, 2013

Summary of Financial Information Relating to Securities Sold Under Agreements to Repurchase at Fair Value

Following is a summary of financial information relating to securities sold under agreements to repurchase at fair value as of and for the quarter ended:

	Quarter ended March 31,  2012
	(dollar amounts in thousands)
Period end:
Balance	$	53,068
Weighted-average interest rate		0.99	%
Fair value of securities securing agreements to repurchase	$	62,425
During the period:
Weighted-average interest rate		0.90	%
Average balance of securities sold under agreements to repurchase	$	69,030
Total interest expense	$	157
Maximum daily amount outstanding	$	115,493

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Mortgage Servicing Rights

3 Months Ended

Mar. 31, 2013

Mortgage Servicing Rights

Note 14—Mortgage Servicing Rights

Carried at Fair Value:

The activity in MSRs carried at fair value is as follows:

	Quarter ended March 31,
	2013			2012
	(in thousands)
Balance at beginning of period	$	1,346		$	749
Additions:
Purchases		—			20
MSRs resulting from loan sales		26			520
Total additions		26			540
Change in fair value:
Due to changes in valuation inputs or assumptions used in valuation model (1)		—			(64	)
Other changes in fair value (2)		(67	)		(37	)
		(67	)		(101	)
Balance at period end	$	1,305		$	1,188

(1) Principally reflects changes in discount rates and prepayment speed assumptions, primarily due to changes in interest rates.

(2) Represents changes due to realization of expected cash flows.

Carried at Lower of Amortized Cost or Fair Value:

The activity in MSRs carried at amortized cost is summarized below:

	Quarter ended March 31,
	2013			2012
	(in thousands)
Mortgage Servicing Rights:
Balance at beginning of period	$	132,977		$	5,282
MSRs received as proceeds from loan sales		56,190			12,409
Purchases		—			9
Sales		—			—
Amortization		(4,970	)		(248	)
Application of valuation allowance to write down MSRs with other-than temporary impairment		—			—
Balance at period end		184,197			17,452
Valuation Allowance for Impairment of Mortgage Servicing Rights:
Balance at beginning of period		(7,547	)		—
Reversals (additions)		2,486			(106	)
Application of valuation allowance to write down MSRs with other-than temporary impairment		—			—
Balance at period end		(5,061	)		(106	)
Mortgage Servicing Rights, net at period end	$	179,136		$	17,346
Estimated Fair Value of MSRs at period end	$	186,209		$	17,396

The following table summarizes the Company’s estimate of amortization of its existing MSRs carried at amortized cost. This projection was developed using the assumptions made by management in its March 31, 2013 valuation of MSRs. The assumptions underlying the following estimate will change as market conditions and portfolio composition and behavior change, causing both actual and projected amortization levels to change over time. Therefore, the following estimates will change in a manner and amount not presently determinable by management.

Twelve month period ending March 31,	Estimated MSR amortization
	(in thousands)
2014	$	20,897
2015		19,373
2016		17,487
2017		15,936
2018		14,669
Thereafter		95,835
Total	$	184,197

Servicing fees relating to MSRs are recorded in Net loan servicing fees on the consolidated statements of income and are summarized below:

	Quarter ended March 31,
	2013		2012
	(in thousands)
Contractual servicing fees	$	8,937	$	646
Late charges		—		—
Ancillary fees		—		—
	$	8,937	$	646

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Mortgage Loans at Fair Value Sold Under Agreements to Repurchase - Summary of Amount of Risk Relating to Company's Mortgage Loans at Fair Value (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013
Citibank, N.A. [Member]
Repurchase Agreement Counterparty [Line Items]
Amount at risk	$ 25,794
Weighted-average repurchase agreement maturity	May 23, 2013
Credit Suisse First Boston Mortgage Capital LLC [Member]
Repurchase Agreement Counterparty [Line Items]
Amount at risk	27,062
Weighted-average repurchase agreement maturity	Oct. 29, 2013
Mortgage Loans At Fair Value Sold Under Agreements To Repurchase [Member] | Citibank, N.A. [Member]
Repurchase Agreement Counterparty [Line Items]
Amount at risk	485,352
Weighted-average repurchase agreement maturity	Apr. 19, 2013
Mortgage Loans At Fair Value Sold Under Agreements To Repurchase [Member] | Credit Suisse First Boston Mortgage Capital LLC [Member]
Repurchase Agreement Counterparty [Line Items]
Amount at risk	$ 149,897
Weighted-average repurchase agreement maturity	Jun. 05, 2013

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Borrowings under Forward Purchase Agreements

3 Months Ended

Mar. 31, 2013

Borrowings under Forward Purchase Agreements

Note 19—Borrowings under Forward Purchase Agreements

Following is a summary of financial information relating to borrowings under forward purchase agreements:

	Quarter ended March 31, 2012
	(dollar amounts in thousands)
Period end:
Balance	$	127,591
Weighted-average interest rate		4.24	%
Fair value of underlying loans and REO	$	127,411
During the period:
Weighted-average interest rate		4.09	%
Average balance	$	146,512
Interest expense	$	1,515
Maximum daily amount outstanding	$	152,428

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Derivative Financial Instruments - Additional Information (Detail) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Derivative Instruments, Gain (Loss) [Line Items]
Net gains on derivative financial instruments used to hedge IRLCs and inventory of mortgage loans	$ 10,900,000	$ 602,000
Net losses on derivative financial instruments used to hedge MSRs	$ 2,000,000

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Real Estate Acquired in Settlement of Loans Under Forward Purchase Agreements (Tables)

3 Months Ended

Mar. 31, 2013

Summary of Activity in REO under Forward Purchase Agreements

There was no REO under forward purchase agreements for the quarter ended March 31, 2013. Following is a summary of the activity in REO under forward purchase agreements for the quarter ended March 31, 2012:

	Quarter ended March  31, 2012
Balance at beginning of period	$	22,979
Purchases		53
Transfers from mortgage loans under forward purchase agreements at fair value and advances		5,696
Results of REO under forward purchase agreements:
Valuation adjustments, net		(381	)
Gain on sale, net		2,101
		1,720
Sale proceeds		(6,787	)
Balance at period end	$	23,661

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Securities Sold Under Agreements to Repurchase at Fair Value - Summary of Financial Information Relating to Securities Sold Under Agreements to Repurchase at Fair Value (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013
Securities Sold Under Agreements To Repurchase And Other Short Term Borrowings [Line Items]
Period end, Balance	$ 53,068
Weighted-average interest rate at end of period	0.99%
Fair value of securities securing agreements to repurchase	62,425
Weighted-average interest rate during the period	0.90%
Average balance of securities sold under agreements to repurchase	69,030
Total interest expense	157
Maximum daily amount outstanding	$ 115,493

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Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2013

Summary of Basic and Diluted Earnings per Share

The following table summarizes the basic and diluted earnings per share calculations:

	Quarter ended March 31,
	2013			2012
	(in thousands, except per share amounts)
Basic earnings per share:
Net income	$	53,296		$	19,058
Effect of participating securities—share-based compensation instruments		(518	)		(213	)
Net income attributable to common shareholders	$	52,778		$	18,845
Weighted-average shares outstanding		58,927			29,076
Basic earnings per share	$	0.90		$	0.65
Diluted earnings per share:
Net income	$	53,296		$	19,058
Weighted-average shares outstanding		58,927			29,076
Dilutive potential common shares—shares issuable under share-based compensation plan		392			279
Diluted weighted-average number of common shares outstanding		59,319			29,355
Diluted earnings per common share	$	0.90		$	0.65

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Mortgage Loans Acquired for Sale Sold Under Agreements to Repurchase - Summary of Financial Information Relating to Mortgage Loans Acquired (Parenthetical) (Detail) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Repurchase Agreement Counterparty [Line Items]
Debt issuance costs	$ 1,700,000	$ 417,000.0

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (USD $) In Thousands, except Share data	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]
Balance, Amount at Dec. 31, 2011	$ 546,017	$ 284	$ 518,272	$ 27,461
Balance, Shares at Dec. 31, 2011		28,404,554
Net income	19,058			19,058
Share-based compensation, Amount	883		883
Share-based compensation, Shares		87,999
Cash dividends	(15,692)			(15,692)
Proceeds from offerings of common, Amount	46,607	26	46,581
Proceeds from offerings of common shares, Shares		2,531,310
Underwriting and offering costs	(917)		(917)
Balance, Amount at Mar. 31, 2012	595,956	310	564,819	30,827
Balance, Shares at Mar. 31, 2012		31,023,863
Balance, Amount at Dec. 31, 2012	1,201,336	589	1,129,858	70,889
Balance, Shares at Dec. 31, 2012		58,904,456
Net income	53,296			53,296
Share-based compensation, Amount	1,452	1	1,451
Share-based compensation, Shares		85,769
Cash dividends	(33,577)			(33,577)
Underwriting and offering costs	(78)		(78)
Balance, Amount at Mar. 31, 2013	$ 1,222,429	$ 590	$ 1,131,231	$ 90,608
Balance, Shares at Mar. 31, 2013		58,990,225

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Fair Value - Quantitative Summary of Key Unobservable Inputs Used in Valuation of Interest Rate Lock Commitments (Detail)	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Pull-through rate	65.00%	44.20%
Servicing fee multiple	0.90%	1.80%
Percentage of unpaid principal balance	0.20%	0.40%
Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Pull-through rate	98.00%	98.00%
Servicing fee multiple	5.20%	4.80%
Percentage of unpaid principal balance	1.30%	1.20%
Weighted average [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Pull-through rate	83.50%	80.60%
Servicing fee multiple	4.50%	4.50%
Percentage of unpaid principal balance	1.10%	1.10%

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Transactions with Related Parties

3 Months Ended

Mar. 31, 2013

Transactions with Related Parties

Note 3—Transactions with Related Parties

Management Fees

Before February 1, 2013, under a management agreement, PMT paid PCM a base management fee payable quarterly and in arrears. The base management fee was calculated at 1.5% per year of shareholders’ equity. The performance incentive fee was calculated at 20% per year of the amount by which “core earnings,” on a rolling four-quarter basis and before the incentive fee, exceeded an 8% “hurdle rate” as defined in the management agreement.

Effective February 1, 2013, the management agreement was amended to provide that:

• The base management fee is equal to the sum of (i) 1.5% per year of shareholders’ equity up to $2 billion, (ii) 1.375% per year of shareholders’ equity in excess of $2 billion and up to $5 billion, and (iii) 1.25% per year of shareholders’ equity in excess of $5 billion.

• The performance incentive fee is calculated at a defined annualized percentage of the amount by which “net income,” on a rolling four-quarter basis and before deducting the incentive fee, exceeds certain levels of return on “equity.”

The performance incentive fee is calculated quarterly and is equal to: (a) 10% of the amount by which net income for the quarter exceeds (i) an 8% return on equity plus the high watermark, up to (ii) a 12% return on equity; plus (b) 15% of the amount by which net income for the quarter exceeds (i) a 12% return on equity plus the high watermark, up to (ii) a 16% return on equity; plus (c) 20% of the amount by which net income for the quarter exceeds a 16% return on equity plus the high watermark.

For the purpose of determining the amount of the performance incentive fee:

“Net income” is defined as net income or loss computed in accordance with U.S. GAAP and certain other non-cash charges determined after discussions between the Company’s Manager and our independent trustees and approval by a majority of our independent trustees.

“Equity” is the weighted average of the issue price per common share of all of our public offerings, multiplied by the weighted average number of common shares outstanding (including restricted share units) in the four-quarter period.

The “high watermark” starts at zero and is adjusted quarterly. The quarterly adjustment reflects the amount by which the net income (stated as a percentage of return on equity) in that quarter exceeds or falls short of the lesser of 8% and the Fannie Mae MBS yield (the target yield) for such quarter. If the net income is lower than the target yield, the high watermark is increased by the difference. If the net income is higher than the target yield, the high watermark is reduced by the difference. Each time a performance incentive fee is earned, the high watermark returns to zero. As a result, the threshold amounts required for our Manager to earn a performance incentive fee are adjusted cumulatively based on the performance of our net income over (or under) the target yield, until the net income in excess of the target yield exceeds the then-current cumulative high watermark amount, and a performance incentive fee is earned.

The base management fee and the performance incentive fee are both payable quarterly in arrears. The performance incentive fee may be paid in cash or in our common shares (subject to a limit of no more than 50% paid in common shares), at the Company’s option.

Following is a summary of the base management and performance incentive fees recorded by the Company for the periods presented:

	Quarter ended March 31,
	2013		2012
	(in thousands)
Base management fee	$	4,364	$	1,804
Performance incentive fee		2,128		—
Total management fee incurred during the period	$	6,492	$	1,804

Mortgage Loan Servicing

The Company, through its Operating Partnership, has a loan servicing agreement with PLS. Before February 1, 2013, the servicing fee rates were based on the risk characteristics of the mortgage loans serviced and total servicing compensation was established at levels that management believed were competitive with those charged by other servicers or specialty servicers, as applicable.

• Servicing fee rates for nonperforming loans ranged between 50 and 100 basis points per year on the unpaid principal balance of the mortgage loans serviced on the Company’s behalf. PLS was also entitled to certain customary market-based fees and charges, including boarding and deboarding fees, liquidation and disposition fees, assumption, modification and origination fees and late charges, as well as interest on funds on deposit in custodial accounts. In the event PLS either effected a refinancing of a loan on the Company’s behalf and not through a third party lender and the resulting loan was readily saleable, or originated a loan to facilitate the disposition of real estate that the Company had acquired in settlement of a loan, PLS was entitled to receive from the Company market-based fees and compensation.

• For mortgage loans serviced by the Company as a result of acquisitions and sales with servicing rights retained in connection with the Company’s correspondent lending business, PLS was entitled to base subservicing fees and other customary market-based fees and charges as described above.

Effective February 1, 2013, the servicing agreement was amended to provide for servicing fees payable to PLS that changed from being based on a percentage of the loan’s unpaid principal balance to fixed per-loan monthly amounts based on the delinquency, bankruptcy and/or foreclosure status of the serviced loan or the REO. PLS also remains entitled to market-based fees and charges relating to boarding, deboarding, liquidation, disposition, assumption, modification and origination fees and late charges relating to loans it services for the Company.

The term of the servicing agreement, as amended, expires on February 1, 2017, subject to automatic renewal for additional 18-month periods, unless terminated earlier in accordance with the terms of the servicing agreement. The base servicing fees for distressed whole loans are calculated based on a monthly per-loan dollar amount, with the actual dollar amount for each loan based on the delinquency, bankruptcy and/or foreclosure status of such loan or the related underlying real estate. Presently, the base servicing fees for distressed whole loans range from $30 per month for current loans up to $125 per month for loans that are severely delinquent and in foreclosure.

The base servicing fees for loans subserviced by PLS on our behalf are also calculated through a monthly per-loan dollar amount, with the actual dollar amount for each loan based on whether the mortgage loan is a fixed-rate or adjustable-rate loan. The base servicing fees for loans subserviced on our behalf are $7.50 per month for fixed-rate loans and $8.50 per month for adjustable rate mortgage loans. To the extent that these loans become delinquent, PLS is entitled to an additional servicing fee per loan falling within a range of $10 to $75 per month and based on the delinquency, bankruptcy and foreclosure status of the loan or the related underlying real estate. PLS is also entitled to customary ancillary income and certain market-based fees and charges, including boarding and deboarding fees, liquidation and disposition fees, and assumption, modification and origination fees.

PLS is required to provide a range of services and activities significantly greater in scope than the services provided in connection with a customary servicing arrangement because the Company does not have any employees or infrastructure. For these services, PLS receives a supplemental fee of $25 per month for each distressed whole loan and $3.25 per month for each other subserviced loan. PLS is entitled to reimbursement for all customary, good faith reasonable and necessary out-of-pocket expenses incurred by the Servicer in connection with the performance of its servicing obligations.

PLS, on behalf of the Company, currently participates in U.S. Department of Housing and Urban Development’s Home Affordable Modification Program (“HAMP”) (and other similar mortgage loan modification programs), which establishes standard loan modification guidelines for “at risk” homeowners and provides incentive payments to certain participants, including loan servicers, for achieving modifications and successfully remaining in the program. The loan servicing agreement entitles PLS to retain any incentive payments made to it and to which it is entitled under HAMP; provided, however, that with respect to any such incentive payments paid to PLS under HAMP in connection with a mortgage loan modification for which the Company previously paid PLS a modification fee, PLS shall reimburse the Company an amount equal to the incentive payments.

Following is a summary of mortgage loan servicing fees payable to PLS for the periods presented:

	Quarter ended March 31,
	2013		2012
	(in thousands)
Loan servicing fees to PLS:
Base	$	4,361	$	3,028
Activity-based		3,729		1,910
	$	8,090	$	4,938

Correspondent Lending

Effective February 1, 2013, the mortgage banking and warehouse services agreement provides for a fulfillment fee paid to PLS based on the type of mortgage loan that the Company acquires. The fulfillment fee is equal to a percentage of the unpaid principal balance of mortgage loans purchased, with the addition of potential fee rate discounts applicable to the Company’s monthly purchase volume in excess of designated thresholds. PLS has also agreed to provide such services exclusively for the Company’s benefit, and PLS and its affiliates are prohibited from providing such services for any other third party. Before February 1, 2013, the Company paid PLS a fulfillment fee of 50 basis points of the unpaid principal balance of mortgage loans sold to non-affiliates where the Company is approved or licensed to sell to such non-affiliate.

PLS is entitled to a fulfillment fee based on the type of mortgage loan that the Company acquires and equal to a percentage of the unpaid principal balance of such mortgage loan. Presently, the applicable percentages are (i) 0.50% for conventional mortgage loans, (ii) 0.88% for loans underwritten in accordance with the Ginnie Mae Mortgage-Backed Securities Guide, (iii) 0.80% for Home Affordable Refinance Program (“HARP”) mortgage loans with a loan-to-value ratio of 105% or less, (iv) 1.20% for HARP mortgage loans with a loan-to-value ratio of greater than 105%, and (v) 0.50% for all other mortgage loans not contemplated above. At this time, the Company does not hold the Ginnie Mae approval required to issue securities guaranteed by Ginnie Mae MBS and act as a servicer. Accordingly, under the mortgage banking and warehouse services agreement, PLS currently purchases loans underwritten in accordance with the Ginnie Mae Mortgage-Backed Securities Guide “as is” and without recourse of any kind from us at our cost less an administrative fee plus accrued interest and a sourcing fee of three basis points.

In the event that the Company purchases mortgage loans with an aggregate unpaid principal balance in any month greater than $2.5 billion and less than $5 billion, PLS has agreed to discount the amount of such fulfillment fees by reimbursing PMT an amount equal to the product of (i) 0.025%, (ii) the amount of unpaid principal balance in excess of $2.5 billion and (iii) the percentage of the aggregate unpaid principal balance relating to mortgage loans for which PLS collected fulfillment fees in such month. In the event the Company purchases mortgage loans with an aggregate unpaid principal balance in any month greater than $5 billion, our PLS has agreed to discount the amount of such fulfillment fees by reimbursing us an amount equal to the product of (i) 0.05%, (ii) the amount of unpaid principal balance in excess of $5 billion and (iii) the percentage of the aggregate unpaid principal balance relating to mortgage loans for which PLS collected fulfillment fees in such month.

In consideration for the mortgage banking services provided by PLS with respect to the Company’s acquisition of mortgage loans under the Servicer’s early purchase program, PLS is entitled to fees accruing (i) at a rate equal to $25,000 per year, and (ii) in the amount of $50 for each mortgage loan the Company acquires. In consideration for the warehouse services provided by PLS with respect to mortgage loans that the Company finances for its warehouse lending clients, with respect to each facility, PLS is entitled to fees accruing (i) at a rate equal to $25,000 per year, and (ii) in the amount of $50 for each mortgage loan that the Company finances thereunder. Where we have entered into both an early purchase agreement and a warehouse lending agreement with the same client, our Servicer shall only be entitled to one $25,000 per annum fee and, with respect to any mortgage loan that becomes subject to both such agreements, only one $50 per loan fee.

The term of our mortgage banking and warehouse services agreement expires on February 1, 2017, subject to automatic renewal for additional 18-month periods, unless terminated earlier in accordance with the terms of the agreement.

Following is a summary of correspondent lending activity between the Company and PLS for the periods presented:

	Quarter ended March 31,
	2013		2012
	(in thousands)
Sourcing fees received	$	1,010	$	244
Fulfillment fees	$	28,136	$	6,124
Fair value of loans sold to PLS	$	3,548,397	$	838,120
Fair value of mortgage loans included in mortgage loans acquired for sale pending sale to PLS at period end	$	542,490	$	41,247

Investment Activities

Pursuant to the terms of a MSR recapture agreement, effective February 1, 2013, if PLS refinances through its retail lending business loans for which PMT previously held the MSRs, PLS is generally required to transfer and convey to one of the Company’s wholly-owned subsidiaries, PennyMac Corp. (“PMC”), without cost to PMC, the MSRs with respect to new mortgage loans originated in those refinancings (or, under certain circumstances, other mortgage loans) that have an aggregate unpaid principal balance that is not less than 30% of the aggregate unpaid principal balance of all the loans so originated. MSR recapture amounts are shown in Note 24—Net loan servicing fees. The MSR recapture agreement expires, unless terminated earlier in accordance with the agreement, on February 1, 2017, subject to automatic renewal for additional 18-month periods, unless terminated in accordance with the terms of the agreement.

Pursuant to the spread acquisition and MSR servicing agreement, PMT may acquire from PLS the rights to receive certain excess servicing spread arising from MSRs acquired by PLS, in which case PLS generally would be required to service or subservice the related mortgage loans. The terms of each transaction under the spread acquisition and MSR servicing 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.

Other Transactions

In connection with the initial public offering of PMT’s common shares (“IPO”) on August 4, 2009, the Company entered into an agreement with PCM pursuant to which the Company agreed to reimburse PCM for the $2.9 million payment that it made to the IPO underwriters (the “Conditional Reimbursement”) if the Company satisfied certain performance measures over a specified period of time. Effective February 1, 2013, the Company amended the terms of the reimbursement agreement to provide for the reimbursement of PCM of the Conditional Reimbursement if the Company is required to pay PCM performance incentive fees under the management agreement at a rate of $10 in reimbursement for every $100 of performance incentive fees earned. The reimbursement of the Conditional Reimbursement is subject to a maximum reimbursement in any particular 12-month period of $1.0 million and the maximum amount that may be reimbursed under the agreement is $2.9 million. The reimbursement agreement also provides for the payment to the IPO underwriters of the payment that the Company agreed to make to them at the time of the IPO if the Company satisfied certain performance measures over a specified period of time. As PCM earns performance incentive fees under the management agreement, the IPO underwriters will be paid at a rate of $20 of payments for every $100 of performance incentive fees earned by PCM. The payment to the underwriters is subject to a maximum reimbursement in any particular 12-month period of $2.0 million and the maximum amount that may be paid under the agreement is $5.9 million.

In the event the termination fee is payable to PCM under the management agreement and PCM and the underwriters have not received the full amount of the reimbursements and payments under the reimbursement agreement, such amount will be paid in full. The term of the reimbursement agreement expires on February 1, 2019.

The Company reimburses PCM and its affiliates for other expenses, including common overhead expenses incurred on its behalf by PCM and its affiliates, in accordance with the terms of its management agreement.

The foregoing expenses are summarized below:

	Quarter ended March 31,
	2013		2012
	(in thousands)
Reimbursement of expenses incurred on PMT’s behalf	$	1,358	$	2,410
Reimbursement of common overhead incurred by PCM and its affiliates		2,606		386
	$	3,964	$	2,796
Payments and settlements during the period (1)	$	33,362	$	5,485

(1) Payments and settlements include payments for correspondent lending activities itemized in the preceding table and netting settlements made pursuant to master netting agreements between the Company and PCM and its affiliates.

Amounts due to affiliates are summarized below as of the dates presented:

	March 31, 2013		December 31, 2012
	(in thousands)
Management fee	$	6,518	$	4,499
Contingent offering costs		2,941		2,941
Other expenses		5,289		4,776
	$	14,748	$	12,216

Amounts due from affiliates totaling $6.0 million and $4.8 million at March 31, 2013 and December 31, 2012, respectively, represent amounts receivable pursuant to loan sales to PLS and reimbursable expenses paid on the affiliates’ behalf by the Company.

PCM’s parent company, Private National Mortgage Acceptance Company, LLC, held 75,000 of the Company’s common shares of beneficial interest at both March 31, 2013 and December 31, 2012.

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Net Gain on Mortgage Loans Acquired For Sale (Tables)

3 Months Ended

Mar. 31, 2013

Summary of Net Gain on Mortgage Loans Acquired for Sale

Net gain on mortgage loans acquired for sale is summarized below:

	Quarter ended March 31,
	2013			2012
	(in thousands)
Cash gain (loss):
Sales proceeds	$	(27,247	)	$	548
Hedging activities		13,614			(803	)
		(13,633	)		(255	)
Non cash gain (loss):
Change in fair value of IRLCs		(8,426	)		(1,464	)
Receipt of MSRs in loan sale transactions		56,216			12,929
Provision for losses relating to representations and warranties provided in loan sales		(1,790	)		(426	)
Change in fair value relating to loans and hedging derivatives held at year-end:
Mortgage loans		(2,422	)		1,181
Hedging derivatives		(666	)		1,405
		(3,088	)		2,586
	$	29,279		$	13,370

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Fair Value - Fair Values and Related Principal Amounts Due upon Maturity of Mortgage Loans Accounted for Under Fair Value Option (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair value option loans held as assets, Total	$ 2,490,270	$ 2,165,155
Mortgage loans on real estate principal amount of delinquent loans less than ninety days	3,431,886	3,055,820
Fair Value, Option, Loans Held as Assets, Aggregate Difference, Total	(941,616)	(890,665)
Mortgage loans acquired for sale [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair value option loans held as assets ninety days or less past due	1,123,348	975,184
Fair Value, Option, Loans Held as Assets, 90 Days or More Past Due
Fair value option loans held as assets, Total	1,123,348	975,184
Mortgage loans on real estate principal amount of delinquent loans less than ninety days	1,078,360	931,787
Mortgage loans on real estate principal amount of delinquent loans
Unpaid principal balance of loans outstanding at period-end	1,078,360	931,787
Fair value option loans held as assets ninety days or less past due aggregate difference	44,988	43,397
Fair Value, Option, Loans Held as Assets, 90 Days or More Past Due, Aggregate Difference
Fair Value, Option, Loans Held as Assets, Aggregate Difference, Total	44,988	43,397
Other mortgage loans at fair value [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair value option loans held as assets ninety days or less past due	448,054	404,016
Fair Value, Option, Loans Held as Assets, 90 Days or More Past Due	918,868	785,955
Fair value option loans held as assets, Total	1,366,922	1,189,971
Mortgage loans on real estate principal amount of delinquent loans less than ninety days	673,684	640,722
Mortgage loans on real estate principal amount of delinquent loans	1,679,842	1,483,311
Unpaid principal balance of loans outstanding at period-end	2,353,526	2,124,033
Fair value option loans held as assets ninety days or less past due aggregate difference	(225,630)	(236,706)
Fair Value, Option, Loans Held as Assets, 90 Days or More Past Due, Aggregate Difference	(760,974)	(697,356)
Fair Value, Option, Loans Held as Assets, Aggregate Difference, Total	$ (986,604)	$ (934,062)

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Mortgage Loans Acquired for Sale Sold Under Agreements to Repurchase - Summary of Financial Information Relating to Mortgage Loans Acquired (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Period end:
Balance	$ 1,035,486	$ 143,819
Unused amount	664,514	246,181
Weighted-average interest rate	2.39%	2.27%
Fair value of mortgage loans acquired for sale securing agreements to repurchase	1,122,940	155,295
During the period:
Weighted-average interest rate during the period	2.30%	2.11%
Average balance of loans sold under agreements to repurchase	774,417	177,864
Total interest expense	6,175	1,364
Maximum daily amount outstanding	$ 1,035,613	$ 263,890

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Transactions with Related Parties - Summary of Mortgage Loan Servicing Fees Payable (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Related Party Transaction Due From To Related Party [Line Items]
Loan servicing fees to PLS	$ 28,136	$ 6,124
PLS [Member]
Related Party Transaction Due From To Related Party [Line Items]
Loan servicing fees to PLS	8,090	4,938
PLS [Member] | Base [Member]
Related Party Transaction Due From To Related Party [Line Items]
Loan servicing fees to PLS	4,361	3,028
PLS [Member] | Activity-based [Member]
Related Party Transaction Due From To Related Party [Line Items]
Loan servicing fees to PLS	$ 3,729	$ 1,910

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Recourse Liability

3 Months Ended

Mar. 31, 2013

Recourse Liability

Note 20—Recourse liability

The Company’s agreements with Fannie Mae and Freddie Mac include representations and warranties related to the loans the Company sells to those Agencies. The representations and warranties require adherence to Agency 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 law.

In the event of a breach of its representations and warranties, the Company may be required to either repurchase the mortgage loans with the identified defects or indemnify the investor or insurer. In such cases, the Company bears any subsequent credit loss on the mortgage loans. The Company’s credit loss may be reduced by any recourse it has to correspondent lenders that, in turn, had sold such mortgage loans to the Company and breached similar or other representations and warranties. In such event, the Company has the right to seek a recovery of related repurchase losses from that originator.

The Company records a provision for losses relating to the representations and warranties it makes as part of its loan sale transactions. The method used to estimate the liability for representations and warranties is a function of the representations and warranties given and considers a combination of factors, including, but not limited to, estimated future defaults and loan repurchase rates and the potential severity of loss in the event of defaults and the probability of reimbursement by the correspondent loan seller. The Company establishes a liability at the time loans are sold and continually updates its liability estimate.

Following is a summary of the Company’s Recourse liability in the consolidated balance sheets:

	Quarter ended March 31,
	2013		2012
	(in thousands)
Balance, beginning of period	$	4,441	$	205
Provisions for losses		1,790		426
Incurred losses		—		—
Balance, end of period	$	6,231	$	631

Following is a summary of the Company’s repurchase activity:

	Quarter ended March 31,
	2013		2012
	(in thousands)
During the period:
Unpaid balance of mortgage loans repurchased	$	648	$	—
Incurred losses on repurchased loans	$	—	$	—
At period end:
Unpaid balance of mortgage loans subject to pending claims for repurchase	$	—	$	—

The Company’s representations and warranties are generally not subject to stated limits of exposure. However, management believes that the current unpaid principal balance of loans sold by the Company to date represents the maximum exposure to repurchases related to representations and warranties. The level of the liability for representations and warranties is difficult to estimate and requires considerable management judgment. The level of mortgage loan repurchase losses is dependent on economic factors, investor demand strategies, and other external conditions that will change over the lives of the underlying loans, However, management believes the amount and range of reasonably possible losses in relation to the recorded liability is not material to the Company’s financial condition or results of operations.

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Real Estate Acquired in Settlement of Loans Financed Under Agreements to Repurchase - Summary of Financial Information Relating to REO Financed Under Agreements to Repurchase (Parenthetical) (Detail) (Real Estate Acquired in Settlement of Loans Financed under Agreements to Repurchase [Member], USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Real Estate Acquired in Settlement of Loans Financed under Agreements to Repurchase [Member]
Repurchase Agreement Counterparty [Line Items]
Debt issuance costs	$ 125,000	$ 125,000

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Income Taxes - Reconciliation of Company's Provision for Income Taxes (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Federal income tax expense at statutory tax rate, Amount	$ 19,577	$ 8,601
Effect of non-taxable REIT income, Amount	(17,491)	(3,990)
State income taxes, net of federal benefit, Amount	446	925
Other, Amount	107	(19)
Valuation allowance, Amount
Provision for income taxes, Amount	$ 2,639	$ 5,517
Federal income tax expense at statutory tax rate, Rate	35.00%	35.00%
Effect of non-taxable REIT income, Rate	(31.30%)	(16.20%)
State income taxes, net of federal benefit, Rate	0.80%	3.80%
Other, Rate	0.20%	(0.10%)
Valuation allowance, Rate	0.00%	0.00%
Provision for income taxes, Rate	4.70%	22.50%

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Net Loan Servicing Fees - Summary of Net Loan Servicing Fees (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Components of Net Servicing Fee Income [Line Items]
Servicing fees	$ 11,104	$ 652
MSR recapture fee from affiliate	133
Effect of MSRs:
Amortization	(4,970)	(248)
Impairment reversal (provision) for MSRs carried at lower of amortized cost or fair value	2,486	(106)
Change in fair value of MSRs carried at fair value	(67)	(101)
Losses on hedging derivatives	(1,988)
Total Effect of MSRs	(4,539)	(455)
Net loan servicing fees	$ 6,698	$ 197

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Loan Sales - Summary of Cash Flows Between Company and Transferees Upon Sale of Loans in Transactions (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Cash flows:
Proceeds from sales	$ 8,683,133	$ 1,931,024
Service fees received	16,965	701
Period-end information:
Unpaid principal balance of loans outstanding at period-end	16,642,130	1,532,615
Delinquencies:
30-89 days	38,272	1,487
90 or more days or in foreclosure or bankruptcy	$ 4,257

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Subsequent Events

3 Months Ended

Mar. 31, 2013

Subsequent Events

Note 31—Subsequent Events

Management has evaluated all events and transactions through the date the Company issued these consolidated financial statements. During this period:

• On April 19, 2013, PCM committed to acquire on the Company’s behalf mortgage loans with purchase prices totaling approximately $294.1 million. The transaction will be recorded as mortgage loans under forward purchase agreements. The pending transaction is subject to continuing due diligence and customary closing conditions. There can be no assurance that the committed amounts will ultimately be acquired or that the transactions will be completed at all.

• On April 23, 2013, the Company’s board of trustees declared a cash dividend of $0.57 per share payable on May 31, 2013 to holders of record of the Company’s common shares as of May 16, 2013.

• On April 30, 2013, PMC issued in a private offering $250 million aggregate principal amount of its Exchangeable Senior Notes due 2020 (the “Notes”). The Notes bear interest at a rate of 5.375% per year, payable semiannually, and the Notes have an approximate 25% conversion premium to the Company’s common share price on the date of the pricing. The Notes will mature May 1, 2020, unless repurchased or exchanged in accordance with their terms prior to such date.

The Notes were offered only to qualified institutional buyers (as defined in the Securities Act of 1933, as amended (the “Securities Act”)) pursuant to Rule 144A under the Securities Act.

The Notes are fully and unconditionally guaranteed by the Company and exchangeable for the Company’s common shares at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.

The net proceeds from the offering are intended to be used to fund the business and investment activities of the Company, which may include the acquisition of distressed mortgage loans or other investments; the funding of the continued growth of its correspondent lending business, including the purchase of jumbo loans; the repayment of other indebtedness; and for general corporate purposes.

• On May 8, 2013, the Company, through two of its wholly-owned subsidiaries, PMC and PMITH, entered into an amendment to its amended and restated master repurchase agreement, dated as of August 25, 2011, by and among Credit Suisse First Boston Mortgage Capital LLC (“CSFB”) and PMC, PMITH and the Company (the “NPL Facility”).

Under the terms of the amendment to the NPL Facility, the Company modified certain of its financial covenants, which now include maintaining the following: (i) a minimum tangible net worth of $860 million at the Company, $250 million at PMITH and $150 million at PMC, (ii) unrestricted cash and cash equivalents, on a consolidated basis, in minimum amounts of $40 million at the Company, $10 million at each of PMITH and PMC, and $25 million at PMITH and PMC in the aggregate, (iii) a maximum ratio of total liabilities to tangible net worth of less than 5:1 at each of the Company and PMITH and 10:1 at PMC; and (iv) profitability at each of PMITH and PMC for at least one (1) of the previous two (2) consecutive fiscal quarters, as of the end of each fiscal quarter.

• On May 8, 2013, the Company, through its wholly-owned subsidiary, the Operating Partnership, entered into an amendment to its master repurchase agreement, dated September 28, 2012, by and among CSFB and the Operating Partnership and the Company (the “Re-warehouse Facility”).

Under the terms of the amendment to the Re-warehouse Facility, the Company modified certain of its financial covenants, which now include maintaining the following: (i) a minimum tangible net worth of $860 million at the Company and $700 million at the Operating Partnership, (ii) unrestricted cash and cash equivalents, on a consolidated basis, in minimum amounts of $40 million at each of the Company and the Operating Partnership, (iii) a maximum ratio of total liabilities to tangible net worth of less than 5:1 at each of the Company and the Operating Partnership; and (iv) profitability at the Operating Partnership for at least one (1) of the previous two (2) consecutive fiscal quarters, as of the end of each fiscal quarter.

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Real Estate Acquired in Settlement of Loans Under Forward Purchase Agreements

3 Months Ended

Mar. 31, 2013

Real Estate Acquired in Settlement of Loans Under Forward Purchase Agreements

Note 13—Real Estate Acquired in Settlement of Loans Under Forward Purchase Agreements

There was no REO under forward purchase agreements for the quarter ended March 31, 2013. Following is a summary of the activity in REO under forward purchase agreements for the quarter ended March 31, 2012:

	Quarter ended March  31, 2012
Balance at beginning of period	$	22,979
Purchases		53
Transfers from mortgage loans under forward purchase agreements at fair value and advances		5,696
Results of REO under forward purchase agreements:
Valuation adjustments, net		(381	)
Gain on sale, net		2,101
		1,720
Sale proceeds		(6,787	)
Balance at period end	$	23,661

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Mortgage Servicing Rights - Summary Activity in MSRs Carried at Fair Value (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Servicing Assets at Fair Value [Line Items]
Balance at beginning of period	$ 1,346	$ 749
Purchases		20
MSRs resulting from loan sales	26	520
Total additions	26	540
Due to changes in valuation inputs or assumptions used in valuation model		(64)
Other changes in fair value	(67)	(37)
Change in fair value, Total	(67)	(101)
Balance at period end	$ 1,305	$ 1,188