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The Atlantic Building

950 F Street, NW

Washington, DC 20004-1404

202-239-3300

Fax: 202-654-4951

www.alston.com

    David E. Brown, Jr.
    Direct Dial: 202-239-3345
    Email: david.brown@alston.com

June 20, 2016

VIA EDGAR

Ms. Kim McManus

Senior Attorney – Office of Real Estate and Commodities

Division of Corporation Finance

United States Securities and Exchange Commission

Washington, DC 20549

    Re:
    ZAIS Financial Corp.

    Registration Statement on Form S-4

    Filed May 10, 2016

    File No. 333-211251

    Form 10-K for Fiscal Year Ended December 31, 2015

    File No. 001-35808

Dear Ms. McManus:

On behalf of our client,
ZAIS Financial Corp., a Maryland corporation (“ZAIS Financial” or the “Company”), we are writing to respond
to the comments of the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”)
contained in your letter dated June 7, 2016 (the “June 7 Letter”) in connection with your review of the Registration
Statement on Form S-4, File No. 333-211251 (the “Form S-4”) and the Form 10-K for the fiscal year ended December 31,
2015 filed by ZAIS Financial on March 10, 2016 (the “Form 10-K”). For ease of reference, the text of each of the Staff’s
comments is set forth in this letter in bold with our response immediately following each bolded comment. Concurrently with the
submission of this letter, the Company has filed with the Commission Amendment No. 1 to the Form S-4 (“Amendment No. 1”)
to reflect these comments and other changes to the Form S-4.

Registration Statement on Form S-4 Filed
May 10, 2016

General

 1. We note that upon completion of the mergers, the combined company will focus on small balance
commercial lending with approximately 10% target equity allocation to residential mortgages. We further note that you intend to
operate your business in a manner that will permit you to maintain an exemption from registration under the 1940 Act. Please provide
us with a detailed analysis of the exemption that you and your subsidiaries intend to rely on and how your investment strategy
will support the exemption. Please note that we will refer your response to the Division of Investment Management for further review.

Atlanta • Beijing • Brussels • Charlotte • Dallas • Los Angeles • New York • Research Triangle • Silicon Valley • Washington, D.C.

As disclosed on page
70 in the section of the joint proxy statement/prospectus entitled “Risk Factors” under the heading “Maintenance
of the combined company’s 1940 Act exception imposes limits on its operations”, and on page 281 in the section entitled
“Business of Sutherland” under the heading “Operating and Regulatory Structure – 1940 Act Exception”,
Section 3(a)(1)(A) of the Investment Company Act of 1940, as amended (the “1940 Act”), defines an investment company
as any issuer that is or holds itself out as being engaged primarily in the business of investing, reinvesting or trading in securities.
Section 3(a)(1)(C) of the 1940 Act defines an investment company as any issuer that is engaged or proposes to engage in the business
of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire investment securities having
a value exceeding 40% of the value of the issuer’s total assets (exclusive of U.S. Government securities and cash items)
on an unconsolidated basis. Excluded from the term “investment securities,” among other things, are U.S. Government
securities and securities issued by majority-owned subsidiaries that are not themselves investment companies and are not relying
on the exception from the definition of investment company set forth in Section 3(c)(1) or Section 3(c)(7) of the 1940 Act.

The combined company
intends to conduct its operations so that it does not come within the definition of an investment company under Section 3(a)(1)(C)
of the 1940 Act because fewer than 40% of its total assets on an unconsolidated basis will consist of “investment securities.”
The securities issued to the combined company by any wholly-owned or majority-owned subsidiary that is exempted from the definition
of “investment company” by Section 3(c)(1) or 3(c)(7) of the 1940 Act, together with any other investment securities
the combined company may own, may not have a value in excess of 40% of the value of the combined company’s total assets on
an unconsolidated basis. The combined company will monitor its holdings to ensure continuing and ongoing compliance with this test.
In addition, the combined company believes that it will not be considered an investment company under Section 3(a)(1)(A) of the
1940 Act because it will not engage primarily or hold itself out as being engaged primarily in the business of investing, reinvesting
or trading in securities. Rather, the combined company will be primarily engaged in the non-investment company businesses of its
subsidiaries.

ZAIS Financial and
Sutherland each believes that certain of its subsidiaries qualify to be excluded from the definition of investment company under
the 1940 Act pursuant to Section 3(c)(5)(C) of the 1940 Act, which is available for entities “primarily engaged in the business
of purchasing or otherwise acquiring mortgages and other liens on and interests in real estate.” This exception generally
requires that at least 55% of such subsidiaries’ assets must be comprised of qualifying assets and at least 80% of their
total assets must be comprised of qualifying assets and real estate related assets under the 1940 Act. The combined company will
treat as qualifying assets for this purpose small-balance commercial loans (“SBC loans”) and other interests in real
estate, in each case meeting certain other qualifications based upon SEC staff no-action letters. The combined company will also
treat as qualifying assets for this purpose bridge loans wholly secured by first priority liens on real estate that provide interim
financing to borrowers seeking short-term capital (with terms of generally up to three years), MBS representing ownership of an
entire pool of mortgage loans, and real estate owned properties. The combined company expects that each of its subsidiaries relying
on Section 3(c)(5)(C) may invest an additional 25% of its assets in either qualifying assets or in other types of mortgages, MBS,
securities of real estate investment trusts (“REIT”) and other real estate-related assets. The combined company expects
each of its subsidiaries relying on Section 3(c)(5)(C) to rely on guidance published by the SEC, or its staff, or on its analyses
of guidance published with respect to other types of assets to determine which assets are qualifying real estate assets and real
estate-related assets.

    2

Certain of the combined
company’s subsidiaries may rely on the exclusion from the definition of investment company provided by Section 3(c)(6) to
the extent that they hold mortgage assets through majority-owned subsidiaries that rely on Section 3(c)(5)(C). The combined company
believes that its subsidiaries may rely on Section 3(c)(6) if, among other things, 55% of the assets of such subsidiaries consist
of, and at least 55% of the income of such subsidiaries are derived from, qualifying real estate investment assets owned by wholly
owned or majority-owned subsidiaries of such subsidiaries.

 2. Please tell us what consideration you gave to including a discussion and corresponding risk
factor related to the material weaknesses identified by Sutherland’s independent public registered public accounting firm
in connection with the audit of its financial statements for the year ended December 31, 2014.

As disclosed in Amendment
No. 5 to the Registration Statement on Form S-11 as filed by Sutherland on December 14, 2015, a material weakness had been identified
in Sutherland’s internal control over financial reporting in connection with the audit of Sutherland’s financial statements
as of and for the year ended December 31, 2014 by its independent registered public accounting firm. The identified material weakness
arose because Sutherland had classified certain loans for which it did not expect to receive all required cash payments on or prior
to the original maturity dates as credit impaired, whereas a subset of these loans (those for which Sutherland ultimately expected
to receive all required cash payments, regardless of the timing of such payments) should have been classified as non-credit impaired.
This change in classification required a revision to a Note to Sutherland’s Consolidated Financial Statements moving certain
loans from the credit impaired to the non-credit impaired category and led its independent registered public accounting firm to
identify as a material weakness management’s failure to design controls to document whether loans should be accounted for
as credit impaired or non-credit impaired. Also as disclosed in said Amendment No. 5, Sutherland believes that it has designed
appropriate controls and established appropriate review procedures relating to the accounting treatment of loans as credit impaired
or non-credit impaired and that the identified material weakness has been corrected. Sutherland continues to believe that such
identified weakness has been corrected, and no such weakness was identified in connection with the audit of Sutherland’s
financial statements as of and for the year ended December 31, 2015 by its independent registered public accounting firm. Therefore
Sutherland believed that no further discussion or any corresponding risk factor related to this material weakness was necessary
for the joint proxy statement/prospectus.

 3. With respect to each person who will serve as a director or executive officer of the surviving
company, please provide the disclosure required by Item 402 of Regulation S-K or advise. We note that Mr. Herbst served as CFO
of Sutherland and dedicated his time exclusively to its affairs.

In Amendment No. 1,
we have added disclosure on page 148 in the section of the joint proxy statement/prospectus entitled “The Mergers”
under the heading “Directors and Executive Officers of the Combined Company After the Mergers—Director and Executive
Compensation” regarding director and executive compensation of the combined company, and on page 148 in the section of
the joint proxy statement/prospectus entitled “The Mergers” under the heading “Directors and Executive Officers
of the Combined Company After the Mergers—2013 Equity Incentive Plan” regarding the equity incentive plan of the combined
company. Although Mr. Herbst has served as CFO of Sutherland and dedicated his time exclusively to its affairs, we note that he
is an employee of Waterfall and all his cash compensation is provided directly by Waterfall, not Sutherland, and the combined company
intends to continue this practice.

    3

 4. Please revise to include the disclosure required by Item 407(a) of Regulation S-K or advise.
Refer to Item 18(a)(7)(iii) of Form S-4.

In Amendment No. 1,
we have added disclosure on page 147 in the section of the joint proxy statement/prospectus entitled “The Mergers”
under the heading “Directors and Executive Officers of the Combined Company—After the Mergers—Corporate Governance—Board
of Directors and Committees” regarding the audit committee, compensation committee and nominating and corporate governance
committee of the combined company.

Joint Letter to Stockholders

 5. Please revise the joint letter to stockholders to clarify, if true, that the tender offer price
will be at a discount to the merger consideration and/or market capitalization of the combined company. Please also tell us what
consideration you gave to presenting ownership percentages of the combined company assuming the tender offer is not fully subscribed.

In Amendment No. 1,
we have revised the relevant disclosure in the joint letter to stockholders to disclose that the tender offer price will be at
a discount to the adjusted book values used to determine the exchange ratio and to disclose a range of potential ownership percentages
for each group of stockholders, depending on whether the tender offer is fully subscribed.

Questions and Answers, page 1

 6. On page 3 you discuss how ZAIS Financial stockholders will be affected by the mergers and the
issuance of shares to Sutherland. The answer presents an assumed exchange ratio as of December 31, 2015, assuming the tender offer
is fully subscribed. Please balance to present the exchange ratio as of December 31, 2015 assuming the tender offer is not fully
subscribed or advise.

In Amendment No. 1,
we have revised the relevant disclosure on page 3 of the joint proxy statement/prospectus to reflect a range of potential ownership
percentages for each group of stockholders, depending on whether the tender offer to ZAIS Financial stockholders is fully subscribed.
Substantially identical disclosure is replicated elsewhere in the joint proxy statement/prospectus where the prior version of this
disclosure appeared.

Risk Factors, page 30

 7. “We anticipate that a significant portion of the combined company’s investments
will be in the form of SBC loans which are subject to increased risks, page 35.” Please quantify the aggregate dollar
carrying value of Sutherland’s sub-performing and non-performing loans.

As of March 31, 2016,
Sutherland’s 619 sub-performing and non-performing loans had a current unpaid principal balance of $104.9 million and a carrying
value of $49.4 million. In Amendment No. 1, we have added this disclosure on page 35 of the joint proxy statement/prospectus.

 8. “The combined company and GMFS are subject to risks and can be exposed to significant
losses relating to inaccurate representations made in connection with loan sales to third parties, page 59.” Please quantify
the loan indemnification reserve to provide context to your statement that losses in excess of the loan indemnification reserve,
total contingent consideration and the escrow account could have a material adverse impact on ZAIS Financial’s and the combined
company’s results of operations, financial position or cash flows.

In Amendment No. 1,
we have revised the risk factor on page 59 of the joint proxy statement/prospectus to include disclosure about the March 31,
2016 balance of the loan indemnification reserve.

    4

 9. “Sutherland is a seller/servicer approved to sell mortgage loans to Freddie Mac and
failure to maintain the combined company’s status as an approved seller/servicer could harm the combined company’s
business, page 65.” We understand that the combined company could be required to re-purchase loans previously sold to
Freddie Mac if it fails to maintain status as an approved seller/servicer. Please quantify the amount of loans that may be required
to be re-purchased to provide additional context to this risk factor.

In Amendment No. 1,
we have amended the risk factor on page 65 of the joint proxy statement/prospectus to quantify the amount of loans sold to Freddie
Mac that may be required to be re-purchased, which as of March 31, 2016 included 44 loans with a combined unpaid principal balance
of $88.8 million.

 10. “Counterparties to certain significant agreements with Sutherland and ZAIS Financial
may have consent rights in connection with the mergers, page 73.” Please expand to discuss, with greater specificity,
those agreements with consent rights that may result in default or termination rights, to the extent material.

In Amendment No. 1,
we have added disclosure on page 73 of the joint proxy statement/prospectus under the heading “Counterparties to certain
significant agreements with Sutherland and ZAIS Financial may have consent rights in connection with the mergers,” regarding
financing agreements, including master and mortgage loan repurchase agreements, loan agreements and related guaranties, and office
leases with consent rights that may result in default or termination rights.

The Mergers, page