Dynex Capital Inc was incorporated in the Commonwealth of Virginia on December 18, 1987 and commenced operations in February 1988. The Company is an internally managed mortgage real estate investment trust, or mortgage REIT, which invests in mortgage assets on a leveraged basis. The company invests in type of Agency MBS and investment grade non-Agency MBS, legacy securitized mortgage loans, and legacy whole loans. Its Agency RMBS investments include MBS collateralized by adjustable-rate mortgage loans ("ARMS"), which have interest rates that generally adjust at least annually to an increment over a specified interest rate index, and hybrid adjustable-rate mortgage loans ("hybrid ARMs"), which are loans that have a fixed rate of interest for a specified period and then adjust their interest rate at least annually to an increment over a specified interest rate index. Agency ARMs also include hybrid Agency ARMs that are past their fixed-rate periods or within twelve months of their initial reset period. It also invests in fixed-rate Agency RMBS from time to time. Additionally, it invest in non-Agency RMBS which generally resemble similar types of Agency ARMs, but lack a guaranty of payment by an agency of the U.S. government or a U.S. government-sponsored entity. It's Agency and non-Agency CMBS are collateralized by first mortgage loans and are comprised of substantially fixed-rate securities. The loans collateralizing CMBS are secured by multifamily properties. Its Agency and non-Agency CMBS also include IO securities which represent the right to receive excess interest payments based on the underlying unpaid principal balance of the underlying pool of mortgage loans. CMBS IO securities generally have prepayment protection in the form of lock-outs, prepayment penalties, or yield maintenance associated with the underlying loans similar to CMBS. The Company faces competition with other mortgage REITs, broker dealers and investment banking firms, mutual funds, banks, hedge funds, mortgage bankers, insurance companies, governmental bodies, and other entities. As a REIT, the Company is required to abide by certain requirements for qualification as a REIT under the Internal Revenue Code of 1986, as amended.
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