We invest in HEI contracts from third party originators and in the third quarter of 2023, we began to originate HEI directly. Each HEI provides the owner of such HEI the right to purchase a percentage ownership interest in an associated residential property, and the homeowner's obligations under the HEI are secured by a lien (primarily second liens) on the property created by recording a security instrument (e.g., deed of trust) with respect to the property. Our investments in HEI expose us to both home price appreciation and depreciation of the associated property.

At June 30, 2024, we co-sponsored two HEI securitization entities that we consolidated in accordance with GAAP, and have elected to account for them under the CFE election. As such, market valuation changes for the securitized HEI are based on the estimated fair value of the associated ABS issued by the entity, including the interest we own, and are reported in HEI income, net on our Consolidated statements of income.


(In Thousands)	June 30, 2024		December 31, 2023
HEI at Redwood	$	253,303	$	244,719
HEI held at consolidated HEI securitization entities	320,816		305,717
Total Home Equity Investments	$	574,119	$	550,436


	Three Months Ended June 30, 2024				Three Months Ended June 30, 2023
(In Thousands)	HEI at Redwood		Securitized HEI		HEI at Redwood		Securitized HEI
Fair value of HEI purchased and originated	$	299	$	—	$	8,954	$	—
Net market valuation gains (losses) recorded	11,663		17,029		8,468		3,138


	Six Months Ended June 30, 2024				Six Months Ended June 30, 2023
(In Thousands)	HEI at Redwood		Securitized HEI		HEI at Redwood		Securitized HEI
Fair value of HEI purchased and originated	$	606	$	—	$	25,513	$	—
Net market valuation gains (losses) recorded	17,806		32,453		12,308		4,206

The following table provides the components of HEI income, net for the three and six months ended June 30, 2024 and 2023, and reflect net market valuation gains (losses) recorded on HEI at Redwood and on securitized HEI, net of the third party and non-controlling interests in the HEI securitizations that are not owned by Redwood.


(In Thousands)	Three Months Ended June 30, 2024		Three Months Ended June 30, 2023
Net market valuation gains recorded on HEI at Redwood	$	11,663	$	8,468
Net market valuation gains recorded on Securitized HEI	17,029		3,138
Net market valuation (losses) recorded on ABS Issued from HEI securitizations(1)	(5,472)		(1,888)
Net market valuation (losses) recorded on non-controlling interests in HEI securitizations	(7,381)		(797)
Total HEI income, net	$	15,839	$	8,921


(In Thousands)	Six Months Ended June 30, 2024		Six Months Ended June 30, 2023
Net market valuation gains recorded on HEI at Redwood	$	17,806	$	12,308
Net market valuation gains recorded on Securitized HEI	32,453		4,206
Net market valuation (losses) recorded on ABS Issued from HEI securitizations(1)	(12,881)		(1,762)
Net market valuation (losses) recorded on non-controlling interests in HEI securitizations	(12,508)		(1,566)
Total HEI income, net	$	24,870	$	13,186

(1)Amount includes interest expense associated with ABS issued, which totaled $3 million and $1 million for the three and six months ended June 30, 2024 and 2023, respectively.


	June 30, 2024				December 31, 2023
(Dollars in Thousands)	HEI at Redwood		Securitized HEI		HEI at Redwood		Securitized HEI
Number of HEI contracts	1,959		2,317		2,034		2,434
Average initial amount of contract	$	105	$	95	$	105	$	96