Ellington Financial LLC (EFC) has disclosed a new risk, in the Debt & Financing category.
Ellington Financial LLC faces a significant business risk due to its obligation to fund servicing advances under its Forward MSR-related investments. These advances may be required when servicing costs surpass the proceeds, potentially leading to substantial outlays for unpaid loan principal, interest, taxes, insurance, and legal expenses. While reimbursement is expected from the Base MSR Contract Counterparty, the right to this is unsecured, increasing the financial strain on Ellington Financial. Economic downturns exacerbate this risk, as borrower defaults could surge, severely impacting the company’s financial stability and its ability to maintain dividend payouts to shareholders.
The average EFC stock price target is $13.81, implying 21.78% upside potential.
To learn more about Ellington Financial LLC’s risk factors, click here.
