Other Assets and Liabilities

3 Months Ended

Mar. 31, 2024

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

Other assets at March 31, 2024 and December 31, 2023 are summarized in the following table.

Table 13.1 – Components of Other Assets


(In Thousands)	March 31, 2024		December 31, 2023
REO	$	91,313	$	93,599
Accrued interest receivable	79,491		69,072
Investment receivable	50,917		67,302
Deferred tax asset	40,116		40,115
Margin receivable	19,409		33,414
Operating lease right-of-use assets	11,539		12,532
Fixed assets and leasehold improvements (1)	7,225		7,829
Income tax receivables	1,134		2,082




Other	32,487		25,164
Total Other Assets	$	333,631	$	351,109

(1)Fixed assets and leasehold improvements had a basis of $18 million and accumulated depreciation of $10 million at March 31, 2024.

Accrued expenses and other liabilities at March 31, 2024 and December 31, 2023 are summarized in the following table.

Table 13.2 – Components of Accrued Expenses and Other Liabilities


(In Thousands)	March 31, 2024		December 31, 2023
Payable to noncontrolling interests	$	86,860	$	81,177
Accrued interest payable	60,925		52,755
Accrued compensation	18,529		28,140
Operating lease liabilities	13,659		14,725
Unsettled trades	13,404		—
Accrued operating expenses	9,265		5,527
Guarantee obligations	5,650		5,781
Residential consumer loan and MSR repurchase reserve	4,878		4,700
Current accounts payable	4,481		4,992
Bridge loan holdbacks	2,185		2,059
Preferred stock dividends payable	1,478		1,478
Margin payable	—		350
Other	19,877		15,119
Total Accrued Expenses and Other Liabilities	$	241,191	$	216,803

Investment Receivable

Investment receivable primarily consists of amounts receivable from third-party servicers related to principal and interest receivable from residential investor 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 March 31, 2024.

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 entities during the three months ended March 31, 2024.

Table 13.3 – REO Activity


	Three Months Ended March 31, 2024
(In Thousands)	Bridge (1)		Legacy Sequoia		Freddie Mac SLST		Term at CAFL		Total
Balance at beginning of period	$	87,757	$	—	$	3,158	$	2,684	$	93,599
Transfers to REO	803		—		1,043		—		1,846
Liquidations (2)	(126)		—		(1,386)		—		(1,512)
Changes in fair value, net	(2,983)		—		363		—		(2,620)
Balance at End of Period	$	85,451	$	—	$	3,178	$	2,684	$	91,313

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

(2)For the three months ended March 31, 2024, REO market valuation adjustments and liquidations resulted in net valuation losses of $3 million, 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 March 31, 2024 and December 31, 2023.

Table 13.4 – REO Assets


Number of REO assets	Redwood Bridge	Legacy Sequoia	Freddie Mac SLST	Term at CAFL	Total
At March 31, 2024	17	—	24	1	42
At December 31, 2023	16	—	28	1	45

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 March 31, 2024, the carrying value of their interests was $22 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 months ended March 31, 2024, we allocated $1 million of income to the co-investors, recorded in Other expenses on our consolidated statements of income.

In 2021 and in 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 securitization. We account for the co-investors' interests in the HEI securitization entities as liabilities, and at March 31, 2024, the carrying value of their interests was $65 million, representing the fair value of their economic interests in the beneficial interests issued by the HEI entities. During the three months ended March 31, 2024, the investors' share of earnings, net from their retained interests was $5 million, recorded through HEI income, net on our consolidated statements of income.