Other Assets and Liabilities

9 Months Ended

Sep. 30, 2024

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

Other Assets

Other assets at September 30, 2024 and December 31, 2023 are summarized in the following table.

Table 14.1 – Components of Other Assets


(In Thousands)	September 30, 2024		December 31, 2023
Accrued interest receivable	$	103,035	$	69,072
Real estate owned	94,598		93,599
Investment receivable	67,576		67,302
Deferred tax asset	40,116		40,115
Margin receivable	27,090		33,414
Goodwill	23,373		23,373
Intangible assets	21,252		28,462
Operating lease right-of-use assets	9,759		12,532
Fixed assets and leasehold improvements (1)	6,140		7,829




Other	34,748		27,246
Total Other Assets	$	427,687	$	402,944

(1)Fixed assets and leasehold improvements had a basis of $18 million and accumulated depreciation of $12 million at September 30, 2024.

Real Estate Owned (REO)

The Company holds REO at the lower of the current carrying amount or fair value less estimated selling costs. The following table summarizes the activity and carrying values of REO assets held at Redwood and at consolidated Freddie Mac SLST, and CAFL entities during the three and nine months ended September 30, 2024.

Table 14.2 – REO Activity


	Three Months Ended September 30, 2024
(In Thousands)	Bridge (1)		Freddie Mac SLST		Term at CAFL		Total
Balance at beginning of period	$	86,092	$	2,527	$	11,266	$	99,885
Transfers to REO	—		967		—		967
Liquidations (2)	(1,606)		(733)		(5)		(2,344)
Changes in fair value, net (2)	(3,992)		82		—		(3,910)
Balance at End of Period	$	80,494	$	2,843	$	11,261	$	94,598


	Nine Months Ended September 30, 2024
(In Thousands)	Bridge (1)		Freddie Mac SLST		Term at CAFL		Total
Balance at beginning of period	$	87,757	$	3,158	$	2,684	$	93,599
Transfers to REO	3,951		2,267		8,582		14,800
Liquidations (2)	(1,733)		(3,067)		(5)		(4,805)
Changes in fair value, net (2)	(9,481)		485		—		(8,996)
Balance at End of Period	$	80,494	$	2,843	$	11,261	$	94,598

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

(2)For the three and nine months ended September 30, 2024, REO market valuation adjustments and liquidations resulted in net valuation losses of $4 million and $9 million, respectively, which were recorded in Investment fair value changes, net on our consolidated statements of income

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities at September 30, 2024 and December 31, 2023 are summarized in the following table.

Table 14.3 – Components of Accrued Expenses and Other Liabilities


(In Thousands)	September 30, 2024		December 31, 2023
Payable to noncontrolling interests	$	104,444	$	81,177
Margin payable	74,378		350
Accrued interest payable	74,097		52,755
Accrued compensation	31,294		28,140
Operating lease liabilities	11,707		14,725
Accrued operating expenses	11,308		5,527
Accrued taxes payable	11,166		—
Current accounts payable	6,504		4,992
Unsettled trades	4,107		—
Guarantee obligations	3,753		5,781
Residential consumer loan and MSR repurchase reserve	3,556		4,700
Bridge loan holdbacks (1)	2,148		2,059
Preferred stock dividends payable	1,478		1,478
Other	35,547		15,119
Total Accrued Expenses and Other Liabilities	$	375,487	$	216,803

(1)Bridge loan holdbacks represent amounts withheld from the initial loan proceeds and are subsequently disbursed to the borrower to be used in the construction, rehabilitation or purchase of the mortgaged property or to fund interest on the bridge loan.

Legal and Repurchase Reserves

See Note 18 for additional information on legal and repurchase reserves.

Payable to Non-Controlling Interests

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 11 and Note 15 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, 2024, the carrying value of their interests was $24 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, 2024, we allocated $26 thousand and $4 million of income to the co-investors, respectively, recorded in Other expenses on our consolidated statements of income.

Additionally, 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 September 30, 2024, the carrying value of their interests was $81 million, representing the fair value of their economic interests in the beneficial interests issued by the HEI entities. During the three and nine months ended September 30, 2024, the investors' share of earnings, net from their retained interests was $9 million and $21 million, respectively, recorded through HEI income, net on our consolidated statements of income.