READY CAPITAL CORP Management’s Discussion and Analysis of Financial Condition

Introduction

Management's Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A") is intended to provide a reader of our financial statements
with a narrative from the perspective of our management on our financial
condition, results of operations, liquidity and certain other factors that may
affect our future results. Our MD&A is presented in five main sections:

 ? Overview


 ? Results of Operations

? Liquidity and Capital Resources

? Contractual Obligations and Off-Balance Sheet Arrangements

? Critical Accounting Estimates

The following discussion should be read in conjunction with our unaudited
interim consolidated financial statements and accompanying Notes included in
Part I, Item 1, "Financial Statements," of this quarterly report on Form 10-Q
and with Items 6, 7, 8, and 9A of our annual report on Form 10-K. See
"Forward-Looking Statements" in this quarterly report on Form 10-Q and in our
annual report on Form 10-K and "Critical Accounting Estimates" in our annual
report on Form 10-K for certain other factors that may cause actual results to
differ, materially, from those anticipated in the forward-looking statements
included in this quarterly report on Form 10-Q.

Overview

Our Business

We are a multi-strategy real estate finance company that originates, acquires,
finances, and services SBC loans, SBA loans, residential mortgage loans,
construction loans, and to a lesser extent, MBS collateralized primarily by SBC
loans, or other real estate-related investments. Our loans generally range in
original principal amounts up to $40 million and are used by businesses to
purchase real estate used in their operations or by investors seeking to acquire
multi-family, office, retail, mixed use or warehouse properties. Our objective
is to provide attractive risk-adjusted returns to our stockholders, primarily
through dividends as well as through capital appreciation. In order to achieve
this objective, we continue to grow our investment portfolio and believe that
the breadth of our full service real estate finance platform will allow us to
adapt to market conditions and deploy capital in our asset classes and segments
with the most attractive risk-adjusted returns. We report our activities in the
following three operating segments:

SBC Lending and Acquisitions. We originate SBC loans across the full life-cycle

of an SBC property including construction, transitional, stabilized and agency

loan origination channels through our wholly-owned subsidiary, ReadyCap

Commercial, LLC (“ReadyCap Commercial”). These originated loans are generally

held-for-investment or placed into securitization structures. As part of this

segment, we originate and service multi-family loan products under the Freddie

Mac SBL program. These originated loans are held for sale, then sold to Freddie

? Mac. We provide construction and permanent financing for the preservation and

construction of affordable housing, primarily utilizing tax-exempt bonds

through Red Stone, a wholly owned subsidiary. In addition, we acquire small

balance commercial loans as part of our business strategy. We hold performing

SBC loans to term and seek to maximize the value of the non-performing SBC

loans acquired by us through borrower-based resolution strategies. We typically

acquire non-performing loans at a discount to their unpaid principal balance

   when we believe that resolution of the loans will provide attractive
   risk-adjusted returns.

Small Business Lending. We acquire, originate and service owner-occupied loans

guaranteed by the SBA under the SBA Section 7(a) Program through our

wholly-owned subsidiary, ReadyCap Lending. We hold an SBA license as one of

? only 14 non-bank SBLCs and have been granted preferred lender status by the

SBA. These originated loans are either held-for-investment, placed into

securitization structures, or sold. We also acquire purchased future

receivables through Knight Capital, which is a technology-driven platform that

provides working capital to small and medium sized businesses across the U.S.

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   Residential Mortgage Banking. We operate our residential mortgage loan

origination segment through our wholly-owned subsidiary, GMFS. GMFS originates

? residential mortgage loans eligible to be purchased, guaranteed or insured by

Fannie Mae, Freddie Mac, FHA, USDA and VA through retail, correspondent and

broker channels. These originated loans are then sold to third parties,

primarily agency lending programs.

We are organized and conduct our operations to qualify as a REIT under the Code.
So long as we qualify as a...