New York Mortgage Trust’s REIT Status at Risk: IRS May Challenge TBA Classification

New York Mortgage Trust (NYMT) has disclosed a new risk, in the Accounting & Financial Operations category.

New York Mortgage Trust faces a significant risk concerning the classification of its TBAs (To-Be-Announced securities) under the REIT asset and income tests. The company relies on a legal opinion by Vinson & Elkins LLP, which suggests that TBAs should qualify as real estate assets and that income from these transactions should be considered qualifying income. However, this opinion is not binding on the IRS, and there is no guarantee that the IRS will not challenge these conclusions. If the IRS successfully disputes this classification, the company could incur penalty taxes or lose its REIT status, impacting its financial standing.

The average NYMT stock price target is $7.69, implying 16.87% upside potential.

To learn more about New York Mortgage Trust’s risk factors, click here.