PennyMac Mortgage Investment Trust (PMT)

Criticisms on file

• Climate risk exposure through mortgage portfolio: Company explicitly discloses that climate change, adverse weather, natural disasters, and insurance availability directly impact residential property values and borrower ability to pay; increasing property tax/insurance burdens reduce housing affordability and increase delinquency risk. No mitigation strategy disclosed.

  Source: PMT 10-K, Item 1A Risk Factors, 'Rising homeownership costs' and 'Climate change, adverse weather conditions' sections

Disclosed initiatives

No disclosed initiatives on file for this pillar.

Criticisms on file

• Regulatory exposure to fair lending and fair housing claims: The company explicitly discloses that federal agencies and advocacy groups have brought disparate-impact claims against lenders and servicers, and that PennyMac and its subsidiaries are subject to anti-discrimination statutes. The 10-K states: 'Regulatory agencies and consumer advocacy groups have brought fair lending, fair housing and other related claims that the practices of lenders and loan servicers can result in a disparate impact on protected classes.' No disclosure of internal audits or remediation efforts.

  Source: PMT 10-K, Item 1A Risk Factors, 'We operate in a highly regulated industry' section
• CFPB enforcement action risk: The company acknowledges CFPB has historically brought aggressive enforcement actions against lenders and servicers for violations of federal consumer financial laws. As of January 2025, the CFPB halted pending rules and in May 2025 rescinded guidance documents, creating uncertainty. The company notes even a decrease in federal regulations could negatively impact loan-partner compliance and credit quality.

  Source: PMT 10-K, Item 1A Risk Factors, 'Existing new rules and regulations by federal and state regulators' section

Disclosed initiatives

No disclosed initiatives on file for this pillar.

Criticisms on file

• Regulatory enforcement and fine exposure: The company extensively discloses that it and PLS are subject to investigations, enforcement actions, monetary penalties, and cease-and-desist orders by federal, state, and Agency regulators. The 10-K states: 'Our or PLS' failure to comply with the laws, rules or regulations to which we and PLS are subject, whether actual or alleged, would expose us and PLS to fines, penalties or potential litigation liabilities, including costs, settlements and judgments.' Specific quantified violations are not provided.

  Source: PMT 10-K, Item 1A Risk Factors, 'We operate in a highly regulated industry' and 'Existing new rules and regulations by federal and state regulators' sections
• Securitization liability and CFPB enforcement expansion: The 10-K discloses that as of March 2024, the U.S. Court of Appeals for the Third Circuit (CFPB v. National Collegiate Master Student Loan Trust) held that securitization trusts can be 'covered persons' under the CFPB's jurisdiction, exposing them to investigative and enforcement actions. PennyMac facilitated private loan securitizations of $8.5 billion as of December 31, 2025, creating potential direct CFPB enforcement exposure.

  Source: PMT 10-K, Item 1A Risk Factors, 'We may engage in mortgage loan securitizations' section
• Litigation risk from LIBOR discontinuation: The company is the defendant in a shareholder class action in U.S. District Court for the Central District of California alleging that replacement of the three-month LIBOR dividend rate for Series A and Series B Preferred Shares with a fixed rate violated California's Unfair Competition Law. Outcome uncertain; loss could adversely impact financial condition and distributions.

  Source: PMT 10-K, Item 1A Risk Factors, 'We are subject to risks associated with the discontinuation of LIBOR' section

Disclosed initiatives

No disclosed initiatives on file for this pillar.