XML 30 R15.htm IDEA: XBRL DOCUMENT v3.10.0.1
Business Purpose Residential Loans
 12 Months Ended
Dec. 31, 2018
Business purpose residential loans  
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Business Purpose Residential Loans
Business Purpose Residential Loans
Our business purpose residential loans include single-family rental loans and residential bridge loans. At December 31, 2018, all of our outstanding business purpose residential loans were acquired from a related party, 5 Arches LLC ("5 Arches"). See Note 10 for information on our equity investment in 5 Arches. The following table summarizes the classifications and carrying values of the business purpose residential loans owned at Redwood at December 31, 2018 and December 31, 2017.
Table 7.1 – Classifications and Carrying Values of Business Purpose Residential Loans
(In Thousands)
 
December 31, 2018
 
December 31, 2017
Single-family rental loans, held-for-sale at fair value
 
$
28,460

 
$
—

Residential bridge loans, held-for-investment at fair value
 
112,798

 
—

Total Business Purpose Residential Loans
 
$
141,258

 
$
—


Single-Family Rental Loans Held-for-Sale at Fair Value
At December 31, 2018, we owned 11 single-family rental loans purchased from 5 Arches with an aggregate unpaid principal balance of $28 million and a fair value of $28 million. At December 31, 2018, none of these loans were greater than 90 days delinquent or in foreclosure. During the year ended December 31, 2018, we purchased $28 million (principal balance) of loans, for which we elected the fair value option, and we did not sell any loans. During the year ended December 31, 2018, we recorded a net market valuation gain of $0.3 million on single-family rental loans held-for-sale at fair value through Mortgage banking activities, net on our consolidated statements of income. At December 31, 2018, loans held-for-sale with a market value of $28 million were pledged as collateral under short-term borrowing agreements.
The outstanding single-family rental loans held-for-sale at December 31, 2018 were first-lien, fixed-rate loans with maturities of five, seven, or ten years. At December 31, 2018, the weighted average coupon of our single-family rental loans was 5.90% and the weighted average loan term was seven years. At origination, the weighted average LTV ratio of these loans was 64% and the weighted average debt service coverage ratio ("DSCR") was 1.29.
Residential Bridge Loans Held-for-Investment at Fair Value
At December 31, 2018, we owned 157 residential bridge loans held-for-investment with an aggregate unpaid principal balance of $112 million and a fair value of $113 million. At December 31, 2018, seven of these loans with an aggregate unpaid principal balance of $12 million were greater than 90 days delinquent and none of these loans were in foreclosure. During the year ended December 31, 2018, we purchased $140 million (principal balance) of loans, and we did not sell any loans. During the year ended December 31, 2018, we recorded a net market valuation loss of less than $0.1 million on residential bridge loans held-for-investment at fair value through Investment fair value changes, net on our consolidated statements of income. At December 31, 2018, loans with a market value of $98 million were pledged as collateral under short-term borrowing agreements.
The outstanding residential bridge loans held-for-investment at December 31, 2018 were first-lien, fixed-rate, interest-only loans with a weighted average coupon of 9.16% and original maturities of 6 to 24 months. At origination, the weighted average FICO score of borrowers backing these loans was 698, the weighted average LTV ratio of these loans was 76%, and the estimated rehabilitated LTV ratio was 59%.
Business Purpose Residential Loan Characteristics
The following table presents the geographic concentration of business purpose residential loans recorded on our consolidated balance sheets at December 31, 2018.
Table 7.2 – Geographic Concentration of Business Purpose Residential Loans
 
 
December 31, 2018
Geographic Concentration
(by Principal)
 
Single-Family Rental
 
Residential Bridge
Florida
 
69
%
 
7
%
Texas
 
14
%
 
—
%
California
 
—
%
 
79
%
Utah
 
—
%
 
5
%
Other states (none greater than 5%)
 
17
%
 
9
%
Total
 
100
%
 
100
%

The following table displays the loan product type and accompanying loan characteristics of business purpose residential loans recorded on our consolidated balance sheets at December 31, 2018.
Table 7.3 – Product Types and Characteristics of Business Purpose Residential Loans
December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In Thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loan Balance
 
 
Number of
Loans
 
Interest
 Rate
 
Maturity
Date
 
Total
Principal
 
30-89
Days
DQ
 
90+
Days
DQ
Single-Family Rental:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
251

to
$500
 
 
2

 
6.79
%
to
7.47%
 
2028-08
-
2028-12
 
$
787

 
$
—

 
$
—

 
$
501

to
$750
 
 
2

 
6.12
%
to
7.25%
 
2023-09
-
2028-11
 
1,252

 
—

 
—

 
$
751

to
$1,000
 
 
3

 
5.91
%
to
6.58%
 
2023-11
-
2028-12
 
2,488

 
—

 
—

 
 
over
$1,000
 
 
4

 
5.62
%
to
6.94%
 
2023-10
-
2025-12
 
23,039

 
—

 
—

Total Single-Family Rental:
 
11

 
 
 
 
 
 
 
 
 
$
27,566

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential Bridge:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

to
$250
 
 
50

 
8.00
%
to
12.00%
 
2018-07
-
2020-05
 
$
7,941

 
$
262

 
$
695

 
$
251

to
$500
 
 
38

 
8.00
%
to
10.00%
 
2018-09
-
2019-12
 
13,297

 
636

 
469

 
$
501

to
$750
 
 
21

 
7.50
%
to
10.00%
 
2019-01
-
2019-12
 
12,410

 
1,769

 
—

 
$
751

to
$1,000
 
 
19

 
7.50
%
to
10.00%
 
2019-04
-
2019-12
 
16,937

 
840

 
—

 
 
over
$1,000
 
 
29

 
8.00
%
to
10.00%
 
2018-09
-
2019-12
 
61,775

 
1,484

 
10,970

Total Residential Bridge:
 
157

 
 
 
 
 
 
 
 
 
$
112,360

 
$
4,991

 
$
12,134