Other Assets and Liabilities

12 Months Ended

Dec. 31, 2023

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

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

Table 13.1 – Components of Other Assets


(In Thousands)	December 31, 2023		December 31, 2022
REO	$	93,599	$	6,455
Accrued interest receivable	69,072		60,893
Investment receivable	67,302		36,623
Deferred tax asset	40,115		41,931
Margin receivable	33,414		13,802
Operating lease right-of-use assets	12,532		16,177
Fixed assets and leasehold improvements (1)	7,829		12,616
Income tax receivables	2,082		3,399
Other	25,166		19,344
Total Other Assets	$	351,109	$	211,240

(1)Fixed assets and leasehold improvements had a basis of $17 million and accumulated depreciation of $10 million at December 31, 2023.

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

Table 13.2 – Components of Accrued Expenses and Other Liabilities


(In Thousands)	December 31, 2023		December 31, 2022
Payable to non-controlling interests	$	81,177	$	44,859
Accrued interest payable	52,755		46,612
Accrued compensation	28,140		30,929
Operating lease liabilities	14,725		18,563
Guarantee obligations	5,781		6,344
Accrued operating expenses	5,527		5,740
Current accounts payable	4,992		4,234
Loan repurchase reserves	4,700		7,051
Bridge loan holdbacks	2,059		3,301
Preferred stock dividends payable	1,478		—
Margin payable	350		5,944
Other	15,119		6,627
Total Accrued Expenses and Other Liabilities	$	216,803	$	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. Through December 31, 2023, 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, 2023 and 2022.

Table 13.3 – REO Activity


	Year Ended December 31, 2023
(In Thousands)	BPL Bridge(1)		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	94,022		18		3,556		2,684		100,280
Liquidations(2)	(6,752)		(562)		(3,577)		—		(10,891)
Changes in fair value, net	(2,525)		—		280		—		(2,245)
Balance at End of Period	$	87,757	$	—	$	3,158	$	2,684	$	93,599


	Year Ended December 31, 2022
(In Thousands)	BPL Bridge(1)		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(2)	(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

(1)Includes REO held at Redwood and within consolidated CAFL Bridge securitization entities.

(2)For the years ended December 31, 2023 and 2022, REO liquidations resulted in $2 million of realized losses and $2 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 detail on the numbers of REO assets at Redwood and at consolidated Legacy Sequoia, Freddie Mac SLST, and CAFL entities at December 31, 2023 and 2022.

Table 13.4 – REO Assets


Number of REO assets	Redwood Bridge	Legacy Sequoia	Freddie Mac SLST	BPL Term at CAFL	Total
At December 31, 2023	16	—	28	1	45
At December 31, 2022	2	2	24	—	28

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, 2023, the carrying value of their interests was $21 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, 2023, 2022, and 2021 we allocated $6 million of income, $2 million of income, and $2 million of income, respectively, to the co-investors, which were recorded in Other expenses on our consolidated statements of income (loss).

In 2021 and in the fourth quarter of 2023, Redwood and a third-party investor co-sponsored the transfer and securitization of HEI through two HEI securitization entities. Other third-party investors contributed HEI into these securitizations through Redwood and retained subordinate beneficial interests issued by the securitization entities alongside Redwood. See Note 10 for a further discussion of the HEI securitizations. We account for the co-investors' interests in the HEI securitization entities as liabilities and at December 31, 2023, the carrying value of their interests was $60 million, representing the fair value of their economic interests in the beneficial interests issued by the HEI entities. During the years ended December 31, 2023, 2022 and 2021, the investors' share of earnings from their retained interests (for which positive earnings are reflected as an expense to Redwood in our consolidated statements of income) were positive $8 million, positive $5 million, and positive $0.4 million, respectively, and were recorded through HEI Income, net on our consolidated statements of income (loss).