Other Assets and Liabilities

9 Months Ended

Sep. 30, 2023

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

Other assets at September 30, 2023 and December 31, 2022 are summarized in the following table.

Table 13.1 – Components of Other Assets


(In Thousands)	September 30, 2023		December 31, 2022
Accrued interest receivable	$	60,762	$	60,893
REO	54,123		6,455
Deferred tax asset	41,931		41,931
Investment receivable	36,816		36,623
Operating lease right-of-use assets	13,367		16,177
Margin receivable	10,536		13,802
Fixed assets and leasehold improvements (1)	8,453		12,616
Income tax receivables	1,654		3,399




Other	22,845		19,344
Total Other Assets	$	250,487	$	211,240

(1)Fixed assets and leasehold improvements had a basis of $17 million and accumulated depreciation of $9 million at September 30, 2023.

Accrued expenses and other liabilities at September 30, 2023 and December 31, 2022 are summarized in the following table.

Table 13.2 – Components of Accrued Expenses and Other Liabilities


(In Thousands)	September 30, 2023		December 31, 2022
Accrued interest payable	$	51,849	$	46,612
Payable to noncontrolling interests	48,496		44,859
Margin payable	25,210		5,944
Accrued compensation	23,249		30,929
Operating lease liabilities	15,630		18,563
Unsettled trades	6,110		—
Accrued operating expenses	6,063		5,740
Guarantee obligations	5,913		6,344
Residential loan and MSR repurchase reserve	4,611		7,051
Current accounts payable	4,588		4,234
Bridge loan holdbacks	1,973		3,301
Preferred stock dividends payable	1,478		—
Other	13,124		6,626
Total Accrued Expenses and Other Liabilities	$	208,294	$	180,203

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. We met all margin calls due through September 30, 2023.

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

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 SFR entities during the nine months ended September 30, 2023.

Table 13.3 – REO Activity


	Nine Months Ended September 30, 2023
(In Thousands)	BPL Bridge		Legacy Sequoia		Freddie Mac SLST		BPL Term at CAFL		Total
Balance at beginning of period	$	3,012	$	544	$	2,899	$	—	$	6,455
Transfers to REO	48,864		18		2,340		2,684		53,906
Liquidations (1)	(2,310)		(562)		(2,754)		—		(5,626)
Changes in fair value, net	(992)		—		380		—		(612)
Balance at End of Period	$	48,574	$	—	$	2,865	$	2,684	$	54,123

(1)For the nine months ended September 30, 2023, REO liquidations resulted in $0.6 million of realized losses, which were recorded in Investment fair value changes, net on our consolidated statements of income.

The following table provides detail on the numbers of REO assets at Redwood and at consolidated Legacy Sequoia, Freddie Mac SLST, and CAFL entities at September 30, 2023 and December 31, 2022.

Table 13.4 – REO Assets


Number of REO assets	Redwood Bridge	Legacy Sequoia	Freddie Mac SLST	BPL Term at CAFL	Total
At September 30, 2023	9	—	25	1	35
At December 31, 2022	2	2	24	—	28

Legal and Repurchase Reserves

See Note 17 for additional information on 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 September 30, 2023, 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 three and nine months ended September 30, 2023, we allocated $2 million and $4 million, respectively, of income to the co-investors, recorded in Other expenses on our consolidated statements of income.

In 2021, Redwood and a third-party investor co-sponsored the transfer and securitization of HEI 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 September 30, 2023, the carrying value of their interests was $26 million, representing the fair value of their economic interests in the HEI entity. During the three and nine months ended September 30, 2023, the investors' share of earnings (loss), net from their retained interests was $2 million and $3 million, respectively, recorded through Investment fair value changes, net on our consolidated statements of income.