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Commitments and Contingencies | 3 Months Ended
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Mar. 31, 2025
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | Commitments and Contingencies Lease Commitments At March 31, 2025, we were obligated under nine non-cancelable operating leases with expiration dates through 2031 for $15 million of cumulative lease payments. For both the three-months ended March 31, 2025 and 2024, our operating lease expense was $1 million and $1 million, respectively. During the three months ended March 31, 2025, we entered into two new office leases with a lease term of greater than one year. At March 31, 2025, our operating lease liabilities were $13 million, which were a component of Accrued expenses and other liabilities, and our operating lease right-of-use assets were $11 million, which were a component of Other assets. Commitment to Fund Residential Investor Bridge Loans As of March 31, 2025, we had commitments to fund up to $350 million of additional advances on existing residential investor bridge loans. These commitments are generally subject to loan agreements with covenants regarding the financial performance of the borrower and other terms regarding advances that must be met before we fund the commitment. At March 31, 2025, we carried a $1 million contingent liability related to these commitments to fund construction advances. During the three months ended March 31, 2025, we recorded net market valuation income of $0.4 million, related to this liability through Investment of fair value changes, net and on our consolidated statements of income. Commitment to Fund Joint Ventures In the first quarter of 2024, we entered into a joint venture with an institutional investment manager pursuant to which we will offer to sell certain residential investor bridge and term loans we originate into joint venture entities that meet specified criteria at contractually pre-established prices. We have committed approximately $100 million of equity capital to be allocated to the joint venture entities and joint venture co-investments to be held in Redwood's investment portfolio. At March 31, 2025, we had contributed $25 million of capital to the joint venture. In the second quarter of 2023, we entered into a joint venture with another institutional investment manager to invest in residential investor bridge loans originated by our CoreVest subsidiary. We have a commitment to contribute up to approximately $19 million to the joint venture to fund the joint venture's purchase of residential investor bridge loans, under the updated terms of the joint venture. At March 31, 2025, we had contributed $5 million of capital to the joint venture. For additional information related to our commitments and contingencies, see Note 18 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2024. Loss Contingencies — Repurchase Reserves We maintain a repurchase reserve for potential obligations arising from representation and warranty violations related to residential consumer loans we have sold to securitization trusts or third parties, residential investor loans we have sold to third parties, and conforming residential consumer loans that we have purchased from third parties. We do not originate residential consumer loans and we believe the initial risk of loss due to loan repurchases (i.e., due to a breach of representations and warranties) would generally be a contingency to the companies from whom we acquired the loans, as applicable. However, in some cases, for example, where loans were acquired from companies that have since become insolvent, repurchase claims may result in our being liable for a repurchase obligation. As of March 31, 2025, we were not aware of any material unsettled repurchase claims for these groups of sold loans. For residential investor loans sold to securitization trusts, we record estimated losses on loans we are required to repurchase through Investment fair value changes, net as a component of the loan fair value for the corresponding CFE. As of March 31, 2025, there was one outstanding repurchase claim on two residential investor loans we expect to repurchase from a securitization trust and for which we had recorded an estimated $4 million of valuation losses through Investment fair value changes, net on our consolidated statements of income as of March 31, 2025. Loss Contingencies — Litigation, Claims and Demands There is no significant update regarding the litigation matters described in Note 18 within the financial statements included in Redwood’s Annual Report on Form 10-K for the year ended December 31, 2024 under the heading “Loss Contingencies - Litigation, Claims and Demands.” For additional information related to our commitments and contingencies, see Note 18 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2024.

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