Arlington Asset Investment
Arlington Asset Investment was a U.S. mortgage real estate investment trust focused on mortgage-related assets and residential real estate before merging with Ellington Financial in 2023.
Last updated August 25, 2026
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Overview
Arlington Asset Investment was a U.S. investment company organized around mortgage-related assets, residential real estate, and other housing-finance investments. The company was headquartered in McLean, Virginia, and operated for much of its later life as a mortgage real estate investment trust. Its business developed out of Friedman, Billings, Ramsey Group, a financial-services company founded in 1989 by Emmanuel Friedman, Eric Billings, and Russ Ramsey. The group became publicly traded in 1997 through an initial public offering that raised $206 million. The company’s early corporate history was connected to investment banking, capital markets, and mortgage origination. After the recession of the early 2000s, FBR Group expanded substantially into subprime mortgage activities. The deterioration of the U.S. subprime mortgage market produced significant losses, particularly through the company’s underperforming mortgage-origination platform. In 2007, it sold ownership in First NLC Financial Services, its subprime subsidiary. The company also separated FBR Capital Markets through a corporate spin-off in 2007 and sold its remaining interests in that business in two transactions during 2009. From its formation through 2008, the business was taxed as a real estate investment trust. In 2009, it converted to a C corporation, allowing it to use accumulated net operating and net capital loss carry-forwards against substantially all of its income. In the same period, the company changed its name to Arlington Asset Investment Corp., marking a shift away from the FBR identity and toward a more specialized mortgage-investment profile. Arlington’s leadership changed in 2014, when Eric Billings stepped down as chief executive officer and became executive chairman. J. Rock Tonkel Jr. became chief executive officer while continuing as president and chief operating officer. Billings retired in 2019, the same year Arlington converted back to a real estate investment trust after using its tax-loss carry-forwards. Beginning in 2020, Arlington sought to broaden its investment model beyond a predominantly leveraged agency mortgage-backed securities strategy. Its targeted channels included mortgage-servicing-rights-related assets, credit investments, single-family rental properties, and agency mortgage-backed securities. Mortgage-servicing-rights-related investments were designed to obtain economic exposure to the performance of pools of residential mortgage-servicing rights. Credit investments included mortgage loans, non-agency mortgage-backed securities, and asset-backed securities backed by residential solar loans. Its single-family rental strategy involved acquiring, leasing, and operating homes, while agency mortgage-backed securities generally consisted of residential pass-through certificates supported by U.S. government-sponsored enterprises such as Fannie Mae and Freddie Mac. The company also had a public sponsorship role outside financial services: it sponsored the Phoenix Open professional golf tournament in Scottsdale, Arizona, from 2004 through 2009. Arlington Asset Investment ceased operating as an independent corporate entity after completing its merger with NYSE-listed Ellington Financial on December 14, 2023.
History
Arlington Asset Investment originated in 1989 as Friedman, Billings, Ramsey Group, founded by Emmanuel Friedman, Eric Billings, and Russ Ramsey. The company became public in 1997 through an initial public offering that raised $206 million. Its early activities included investment banking, capital markets, and mortgage-related finance. Following the recession of the early 2000s, FBR Group increased its involvement in subprime mortgage lending and mortgage origination. The collapse of the subprime market created severe losses connected with its mortgage-origination platform. In the summer of 2007, the company sold ownership in First NLC Financial Services, its subprime subsidiary. That year it also created FBR Capital Markets through a corporate spin-off. Friedman had left the group in 2005, and Ramsey departed in 2001. FBR Group was taxed as a real estate investment trust until the end of 2008. Starting in 2009, it became a C corporation so that it could apply net operating loss and net capital loss carry-forwards against income. The company sold part of its investment in FBR Capital Markets for $72.5 million in May 2009 and sold the remainder for $84.1 million in October of that year. It changed its name to Arlington Asset Investment Corp. in 2009, moving the corporate identity away from FBR and toward mortgage investment. In 2014, Billings left the chief executive role and became executive chairman. J. Rock Tonkel Jr. assumed the chief executive position while serving as president and chief operating officer. Billings retired in 2019. That year Arlington converted back to REIT status after its available tax-loss carry-forwards had been used. From 2020, Arlington worked to diversify its investment approach. Rather than concentrating mainly on leveraged agency mortgage-backed securities, it pursued several mortgage and housing-related channels. These included economic exposure to mortgage-servicing rights, credit investments, single-family rental homes, and agency mortgage-backed securities. The company’s credit assets could include loans secured by residential or commercial real estate, non-agency mortgage-backed securities, and asset-backed securities backed by residential solar loans. Its agency MBS portfolio consisted of residential pass-through certificates whose principal and interest payments were guaranteed by government-sponsored enterprises including Fannie Mae and Freddie Mac. Arlington also sponsored the Phoenix Open golf tournament in Scottsdale, Arizona, from 2004 through 2009. Its independent corporate history ended on December 14, 2023, when it completed a merger with NYSE-listed Ellington Financial.
- 2023
Merger with Ellington Financial
[1]Arlington completes its merger with Ellington Financial on December 14, 2023.
- 2019
Conversion back to REIT status
[1]Arlington returns to real estate investment trust status after using its tax-loss carry-forwards.
- 2014
Chief executive transition
[1]Eric Billings becomes executive chairman and J. Rock Tonkel Jr. becomes chief executive officer.
- 2009
Corporate name and tax structure change
[1]The company changes its name to Arlington Asset Investment Corp. and operates as a C corporation after previously being taxed as a REIT.
- 2007
Subprime subsidiary ownership is sold
[1]During the subprime mortgage crisis, the company sells ownership in First NLC Financial Services after losses in mortgage origination.
- 2007
FBR Capital Markets is spun off
[1]FBR Capital Markets is formed through a corporate spin-off from FBR Group.
- 1997
Initial public offering
[1]Friedman, Billings, Ramsey Group becomes a public company through an offering that raised $206 million.
- 1989
Friedman, Billings, Ramsey Group is founded
[1]Emmanuel Friedman, Eric Billings, and Russ Ramsey establish the company that would later become Arlington Asset Investment.
Products and positioning
A specialized U.S. mortgage and residential-real-estate investment platform that evolved from a broader financial-services group into a mortgage REIT with exposure to servicing rights, credit, agency mortgage-backed securities, and single-family rentals.
Mortgage investments · 2020
Mortgage-servicing-rights-related assets
Investments whose returns are tied to the economic performance of specified pools of mortgage-servicing rights. A mortgage-servicing right gives a servicer the right to administer residential mortgage loans in exchange for part of the interest payments generated by those loans.
Credit and mortgage assets · 2020
Credit investments
A broad group of mortgage and structured-credit investments, including loans secured by residential or commercial real estate, non-agency mortgage-backed securities, and asset-backed securities collateralized by residential solar-panel loans.
Residential real estate · 2020
Single-family residential properties
A strategy centered on acquiring, leasing, and operating individual residential homes as rental properties. The strategy expanded Arlington’s exposure beyond securities and mortgage-credit instruments into directly operated housing assets.
Mortgage-backed securities
Agency mortgage-backed securities
Residential pass-through mortgage-backed securities for which principal and interest payments are guaranteed by U.S. government-sponsored enterprises such as Fannie Mae or Freddie Mac. These securities formed the core of Arlington’s earlier leveraged investment approach.
Marketing campaigns
- 2004Phoenix Open sponsorship
United States
Arlington sponsored the Phoenix Open professional golf tournament in Scottsdale, Arizona, as part of its public-facing corporate marketing activity.
Outcome. The sponsorship continued through 2009.
Brand decisions
2023
Merger with Ellington FinancialM&ABackground
Arlington pursued a combination with NYSE-listed Ellington Financial.
Action taken
The merger was completed on December 14, 2023.
Aftermath
Arlington ceased to exist as an independent corporate entity.
2020
Diversification beyond leveraged agency MBSStrategyBackground
The company sought to reduce reliance on a primarily leveraged agency mortgage-backed securities strategy.
Action taken
Arlington expanded its targeted channels to mortgage-servicing-rights-related assets, credit investments, single-family rentals, and agency mortgage-backed securities.
Aftermath
The company operated as a multi-channel mortgage and residential investment platform until its merger with Ellington Financial.
2019
Return to REIT structureStrategyBackground
Arlington had used its available tax-loss carry-forwards after operating as a C corporation for a decade.
Action taken
The company converted back to real estate investment trust status.
Aftermath
The conversion accompanied a renewed focus on mortgage and residential real-estate investment strategies.
2009
Conversion to a C corporationStrategyBackground
The company had accumulated net operating and net capital losses following its mortgage-related difficulties.
Action taken
The company converted from REIT taxation to C-corporation taxation to use those loss carry-forwards against income.
Aftermath
The company operated as a C corporation until converting back to REIT status in 2019.
2007
Exit from subprime mortgage subsidiary ownershipStrategyBackground
The company’s subprime mortgage-origination activities suffered during the developing mortgage crisis.
Action taken
FBR Group sold ownership in First NLC Financial Services.
Aftermath
The transaction reduced the company’s direct exposure to its troubled subprime subsidiary.
Recent events
Arlington Asset Investment prices senior notes offering[2]
Reported:
Arlington Asset Investment Corp. announced that it had priced an underwritten public offering of $33.5 million in 6.000% Senior Notes due 2026. The offering was subject to customary closing conditions and was expected to close on July 15, 2021.
Arlington Asset Investment reports third-quarter 2019 results[3]
Reported:
Arlington Asset Investment Corp. reported a third-quarter 2019 net loss attributable to common shareholders of $8.5 million and non-GAAP core operating income of $6.5 million.
Sources4 sources
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