Other Assets and Liabilities

12 Months Ended

Dec. 31, 2022

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Other assets at December 31, 2022 and 2021 are summarized in the following table.

Table 13.1 – Components of Other Assets


(In Thousands)	December 31, 2022		December 31, 2021
Accrued interest receivable	$	60,893	$	47,515
Deferred tax asset	41,931		20,867
Investment receivable	36,623		82,781
Operating lease right-of-use assets	16,177		18,772
Margin receivable	13,802		7,269
Fixed assets and leasehold improvements (1)	12,616		9,019
REO	6,455		36,126
Income tax receivables	3,399		22
Other	19,346		8,746
Total Other Assets	$	211,240	$	231,117

(1)Fixed assets and leasehold improvements had a basis of $21 million and accumulated depreciation of $8 million at December 31, 2022.

Accrued expenses and other liabilities at December 31, 2022 and 2021 are summarized in the following table.

Table 13.2 – Components of Accrued Expenses and Other Liabilities


(In Thousands)	December 31, 2022		December 31, 2021
Accrued interest payable	$	46,612	$	39,297
Accrued compensation	30,929		74,636
Payable to non-controlling interests	44,859		42,670
Operating lease liabilities	18,563		20,960
Loan and MSR repurchase reserve	7,051		9,306
Guarantee obligations	6,344		7,459
Margin payable	5,944		24,368
Accrued operating expenses	5,740		4,377
Bridge loan holdbacks	3,301		3,109
Current accounts payable	4,234		8,273
Other	6,627		11,333
Total Accrued Expenses and Other Liabilities	$	180,203	$	245,788

Investment Receivable

Investment receivable primarily consists of amounts receivable from third-party servicers related to principal and interest receivable from business purpose loans and fees receivable from servicer advance investments.

Margin Receivable and Payable

Margin receivable and payable resulted from margin calls between us and our counterparties under derivatives, master repurchase agreements, and warehouse facilities, whereby we or the counterparty posted collateral. Through December 31, 2022, we had met all margin calls due.

Operating Lease Right-of-Use Assets and Operating Lease Liabilities

Operating lease liabilities are equal to the present value of our remaining lease payments discounted at our incremental borrowing rate and the operating lease right-of-use assets are equal to the operating lease liabilities adjusted for our deferred rent liabilities. These balances are reduced as lease payments are made. See Note 17 for additional information on leases.

REO

The following table summarizes the activity and carrying values of REO assets held at Redwood and at consolidated Legacy Sequoia, Freddie Mac SLST, and CAFL entities during the years ended December 31, 2022 and 2021.

Table 13.3 – REO Activity


	Year Ended December 31, 2022
(In Thousands)	BPL Bridge		Legacy Sequoia		Freddie Mac SLST		BPL Term at CAFL		Total
Balance at beginning of period	$	13,068	$	61	$	2,028	$	20,969	$	36,126
Transfers to REO	3,974		544		3,976		—		8,494
Liquidations (1)	(15,060)		(505)		(3,139)		(20,969)		(39,673)
Changes in fair value, net	1,030		443		34		—		1,507
Balance at End of Period	$	3,012	$	544	$	2,899	$	—	$	6,455


	Year Ended December 31, 2021
(In Thousands)	BPL Bridge		Legacy Sequoia		Freddie Mac SLST		BPL Term at CAFL		Total
Balance at beginning of period	$	4,600	$	638	$	646	$	2,529	$	8,413
Transfers to REO	15,424		217		3,268		21,129		40,038
Liquidations (1)	(7,515)		(956)		(2,137)		(2,034)		(12,642)
Changes in fair value, net	559		162		251		(655)		317
Balance at End of Period	$	13,068	$	61	$	2,028	$	20,969	$	36,126

(1)For the years ended December 31, 2022 and 2021, REO liquidations resulted in $2 million and $0.3 million of realized gains, respectively, which were recorded in Investment fair value changes, net on our consolidated statements of income (loss).

The following table provides the detail of REO assets at Redwood and at consolidated Legacy Sequoia, Freddie Mac SLST, and CAFL entities at December 31, 2022 and 2021.

Table 13.4 – REO Assets


Number of REO assets	Redwood Bridge	Legacy Sequoia	Freddie Mac SLST	BPL Term at CAFL	Total
At December 31, 2022	2	2	24	—	28
At December 31, 2021	5	2	24	3	34

Legal and Repurchase Reserves

See Note 17 for additional information on the legal and repurchase reserves.

Payable to Non-Controlling Interests

In 2018, Redwood and a third-party co-investor, through two partnership entities consolidated by Redwood, purchased servicer advances and excess MSRs related to a portfolio of residential mortgage loans serviced by the co-investor (see Note 4 and Note 11 for additional information on the partnership entities and associated investments). We account for the co-investor’s interests in the entities as liabilities and at December 31, 2022, the carrying value of their interests was $23 million, representing their current economic interest in the entities. Earnings from the partnership entities are allocated to the co-investors on a proportional basis and during the years ended December 31, 2022, 2021, and 2020 we allocated $2 million of income, $2 million of income, and $0.2 million of losses, respectively, to the co-investors, which were recorded in Other expenses on our consolidated statements of income (loss).

In 2021, Redwood and a third-party investor co-sponsored the transfer and securitization of HEIs through the HEI securitization entity and other third-party investors retained subordinate securities issued by the securitization entity alongside Redwood. See Note 10 for a further discussion of the HEI securitization. We account for the co-investors' interests in the HEI securitization entity as a liability and at December 31, 2022, the carrying value of their interests was $22 million, representing the fair value of their economic interests in the HEI entity. During the years ended December 31, 2022 and 2021, the investors' share of earnings from their retained interests were positive $5 million and positive $0.4 million, respectively, and were recorded through investment fair value changes, net on our consolidated statements of income (loss).