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One Atlantic Center

1201 West Peachtree Street

Atlanta, GA 30309-3424

404-881-7000

Fax: 404-253-8758

www.alston.com

    Justin R. Howard
    Direct Dial: 404-881-7758
    Email: justin.howard@alston.com

August 5, 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.

Amendment No. 2 to Registration Statement
on Form S-4

Filed July 19, 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 August 2, 2016 in connection with your review of Amendment No. 2 to the Registration Statement on
Form S-4, File No. 333-211251 and the Form 10-K for the fiscal year ended December 31, 2015 filed by ZAIS Financial on March 10,
2016. 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. 3 to the Form S-4 to reflect these comments and other changes to the Form S-4.

Amendment No. 2 to Registration Statement
on Form S-4 Filed July 19, 2016

Exhibit 5.1

 1. We note the assumption contained in paragraph 6 on page 2 of the opinion. Please confirm that
you will file an appropriately unqualified opinion by post-effective amendment or on Form 8-K or Form 6-K, to the extent such filings
are incorporated by reference into the registration statement, no later than the closing date of the exchange offer. Refer to Staff
Legal Bulletin No. 19.

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

In response to the
Staff’s comment, we hereby confirm that the Company will file an appropriately unqualified opinion by post-effective amendment
or on Form 8-K, to the extent such filings are incorporated by reference into the registration statement, no later than the closing
date.

ZAIS Financial Corp. Form 10-K for the
year ended December 31, 2015

Item 8. Financial Statements and Supplementary
Data, page 80

Note 2. Summary of Significant Accounting
Policies, page 86

Revenue Recognition, page 91

Mortgage Loans Held for Investment,
at Fair Value, page 91

 2. We note your response to comment 14 and your proposed revised disclosure. Please clarify for
us and further revise your disclosure to describe in more detail your methodology for allocating a portion of the change in fair
value to interest income. Please provide us an example of your proposed disclosure.

In response to the
Staff’s comment, the Company uses the effective interest method to calculate the interest to be reclassified to the
interest income line in the consolidated statement of operations. An effective interest rate is calculated based on the
carrying amount of the loan and future expected cash flows over the life of the loan to provide a level-yield. The
level-yield is the discount rate that equates all the cash flows expected to be collected with the carrying amount of the
loan. The interest income amount is calculated by multiplying the level-yield by the carrying amount of the loan. The result
is reclassified from the change in unrealized gain/loss to interest income in the consolidated statement of operations. The
Company updates its cash flow projections for the loans each quarter, and applies this same methodology each reporting
period. Pursuant to the Staff’s oral request, an example calculation is set forth as Exhibit A to this letter.

 	In response
to the Staff’s comment, in future 10-K filings, the Company proposes to include the following disclosure within its Summary
of Significant Accounting Policies footnote (added disclosure is underlined):

Mortgage Loans Held for Investment,
at Fair Value

Pursuant to the Company's
policy for separately presenting interest income on mortgage loans, the Company follows acceptable methods under U.S. GAAP for
reclassifying a portion of the change in fair value of certain mortgage loans held for investment to interest income.

The Company has
elected the fair value option on its mortgage loans held for investment under ASC 825-10. As a result of the fair value option
election, all changes in the fair value of the mortgage loans held for investment are recorded through earnings. The fair value
accounting guidance does not provide guidance on the geography for items measured at fair value under the fair value option, including
how to present interest income. As a result, the Company has applied the guidance for interest income methodologies set out below.
These methodologies result in interest income recognition on these loans that is consistent with the interest income that would
have been recognized had the Company not elected the fair value option. Any remaining change in the fair value of the loans that
has not been reflected in interest income is reflected in the change in unrealized gain/loss in the in the consolidated statement
of operations.

      2

When the Company purchases
mortgage loans which are held for investment and which have shown evidence of credit deterioration since origination and management
determines that it is probable the Company will not collect all contractual cash flows on those loans, the Company applies the
guidance that addresses accounting for differences between contractual cash flows and cash flows expected to be collected if those
differences are attributable to, at least in part, credit quality.

Interest income is
recognized on a level-yield basis over the life of the loan as long as cash flows can be reasonably estimated. The level-yield
is the discount rate that equates all the cash flows expected to be collected with the  carrying amount of the loan.
The level-yield is determined by the excess of the Company's initial estimate of undiscounted expected principal, interest, and
other cash flows (cash flows expected at acquisition to be collected) over the Company's initial investment in the mortgage loan
(accretable yield). The amount of interest income to be recognized cannot result in a carrying amount that exceeds the payoff amount
of the loan. The excess of contractual cash flows over cash flows expected to be collected (nonaccretable difference) will not
be recognized as an adjustment of yield.

On a quarterly basis,
the Company updates its estimate of the cash flows expected to be collected. For purposes of interest income recognition, any subsequent
increases in cash flows expected to be collected are generally recognized as prospective yield adjustments (which establishes a
new level yield) and any subsequent decreases in cash flows expected to be collected are recognized as an impairment to be recorded
through change in unrealized gain or loss in the consolidated statements of operations.

Income recognition
is suspended for a loan when cash flows cannot be reasonably estimated.

Interest income on
newly originated mortgage loans which are purchased by the Company and held for investment, is accrued based on the effective yield
method on the outstanding principal balance and their contractual terms. Premiums and discounts associated with these mortgage
loans at the time of purchase are amortized into interest income over the life of such loan using the effective yield method and
adjusted for actual prepayments.

$XXX and $XXX of
interest income recognized on these loans was  reclassified from change in unrealized gain/loss on loans held for investment
for the twelve months ended December 31, 2016 and the year ended December 31, 2015, respectively.

Thank you for your
consideration of the Company’s responses to the Staff’s comments and we appreciate your review and assistance. If you
have any questions regarding this response, please do not hesitate to call the undersigned at (202) 239-3345.

    Sincerely,

    /s/ Justin R. Howard

    Justin R. Howard

 cc: Becky Chow

  Jennifer Monick

  Rahul K. Patel

  Securities & Exchange Commission

  Michael Szymanski

  ZAIS Financial Corp.

  Scott M. Freeman

  Christopher J. Restad

  Sidley Austin LLP

      3

Exhibit A

    Calculation of Effective Yield

    Par of loan

     $                   100,000

    Simple assumed cash flows of 348 pymts of 536.82

    Term

     30 years

    1/1/2016
          (80,000.00)

    Coupon

    5%

    1/31/2016
                   536.82

    Quarterly P&I Pymts
                         1,610.46

    2/29/2016
                   536.82

    Purchase price of loan
     $                      80,000
     purchased after year 1 of loan being originated

    3/31/2016
                   536.82

    Effective Yield

    7.21%

     ………..

         the effective yield is the discount rate that equates all cash flows expected to be collected with the purchase price of the loan

    10/31/2044
                   536.82

    11/30/2044
                   536.82

    12/31/2044
                   536.82

    Effective Yield
    7.21%

     Calculation of Interest Income Component of the Change in Fair Value

     Cost
     Interest Yield
     Accretion based on Interest Yield
     Actual Payments received
     Amortized Cost

     Fair Value

     Unrealized Gain/Loss (Bal Sheet) after Accretion

     Change in Unrealized Gain/Loss (Income Stmt) after Accretion

     A
     B
     C = A x B
     D
     E = A + C + D

     F

     G = F - E

    Q1
                      80,000.00
    7.21%
                         1,441.77
           (1,610.46)
            79,831.31

         150,000.00

                   70,168.69
     X
                         70,168.69
     X

    Q2
                      79,831.31
    7.21%
                         1,438.73
           (1,610.46)
            79,659.58

         142,000.00

                   62,340.42
     Y
                         (7,828.27)
     X + Y

     Journal Entrries for Q1

     Debit

     Credit

     Unrealized gain/loss

     Bal Sheet
            70,000.00

     Chg in unrealized gain/loss

     Income Stmt

           70,000.00
     a

          To record fair value chg (FV 150,000 - Cost 80,000)

     Cost

     Bal Sheet
               1,441.77

     Unrealized gain/loss

     Bal Sheet

              1,441.77

     Chg in Unrealized gain/loss - income stmt
     Income Stmt
               1,441.77
     b

     Interest Income

     Income Stmt

              1,441.77

     represents interest income component of change in fair value

          To record accretion based on yield

     Cash

     Bal Sheet
               1,610.46

     Cost

     Bal Sheet

              1,610.46

     Unrealized gain/loss

     Bal Sheet
               1,610.46

     Chg in Unrealized gain/loss - income stmt
     Income Stmt

              1,610.46
     c

          To record cash receipt related to loan

     a - b + c = X

                   70,168.69