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 ( common 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 s primary investment objective is to maximize the value of the mortgage loans that it acquires, a substantial portion of which may be distressed and acquired at discounts to their unpaid principal balances, either through loan modification programs, special servicing and other initiatives focused on keeping borrowers in their homes, or, when necessary, through timely acquisition and liquidation of the property securing the loan. The Company operates two segments: correspondent lending and investment activities. The correspondent lending segment focuses on the purchase for resale of newly originated mortgage loans and the investment activities segment focuses on mortgage assets that are acquired and held for investment purposes. 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 an affiliated company, PennyMac Loan Services, LLC ( PLS ). 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 ). Management seeks to maximize the value of the distressed mortgage loans acquired by the Company through proprietary loan modification programs, special servicing and