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Residential Consumer Loans

3 Months Ended

Mar. 31, 2025

We acquire residential consumer loans from third-party originators and may sell or securitize these loans or hold them for investment.

The following table summarizes the classifications and carrying values of the securitized and unsecuritized residential consumer loans owned at March 31, 2025 and December 31, 2024.

Table 7.1 – Classifications and Carrying Values of Residential Consumer Loans


March 31, 2025	Unsecuritized Jumbo Loans		Securitized Jumbo Loans		Securitized Re-Performing Loans
(In Thousands)							Total
Held-for-sale at fair value	$	1,294,290	$	—	$	—	$	1,294,290
Held-for-investment at fair value	—		10,176,418		1,281,550		11,457,968
Total Residential Consumer Loans	$	1,294,290	$	10,176,418	$	1,281,550	$	12,752,258


December 31, 2024	Unsecuritized Jumbo Loans		Securitized Jumbo Loans		Securitized Re-Performing Loans
(In Thousands)							Total
Held-for-sale at fair value	$	1,013,547	$	—	$	—	$	1,013,547
Held-for-investment at fair value	—		8,819,554		1,244,722		10,064,276
Total Residential Consumer Loans	$	1,013,547	$	8,819,554	$	1,244,722	$	11,077,823

At March 31, 2025, we owned mortgage servicing rights associated with $1.3 billion (principal balance) of residential consumer loans that were purchased from third-party originators. The value of these MSRs is included in the carrying value of the associated loans on our consolidated balance sheets. We contract with licensed sub-servicers that perform servicing functions for these loans. Refer to Note 16 for further information on our consolidated VIEs.

At March 31, 2025, we had $2.3 billion in commitments to fund residential consumer loans. Included in this balance is a $1 billion loan purchase commitment we executed in the three months ended March 31, 2025 with a large money-center bank to acquire a pool of primarily seasoned jumbo loans. This trade has subsequently settled in the second quarter of 2025. See Note 13 for additional information on these commitments.

Residential Consumer Loans Held-for-Sale

The following table summarizes the characteristics of residential consumer loans held-for-sale at March 31, 2025 and December 31, 2024.

Table 7.2 – Characteristics of Residential Consumer Loans Held-for-Sale


(Dollars in Thousands)	March 31, 2025			December 31, 2024

Unpaid principal balance ("UPB")	$	1,273,940		$	1,000,663
Fair value of loans	$	1,294,290		$	1,013,547
Market value of loans pledged as collateral under short-term borrowing agreements	$	1,289,721		$	1,005,926
Weighted average coupon	6.69		%	6.56		%

At both March 31, 2025 and December 31, 2024, there were no residential consumer loans held-for-sale that were 90 days or more delinquent or in foreclosure.

During the three months ended March 31, 2025 and 2024, mortgage banking activities, net were $22 million and $8 million, respectively, and included changes in fair value of residential consumer loans held-for-sale, loan purchase commitments, and related risk management derivatives in our Sequoia Mortgage Banking segment. See Note 5 for additional information.

The following table provides the activity of residential consumer loans held-for-sale during the three months ended March 31, 2025 and 2024.

Table 7.3 – Activity of Residential Consumer Loans Held-for-Sale


	Three Months Ended March 31,
(In Thousands)	2025		2024
Principal balance of loans acquired	$	2,337,185	$	999,786
Principal balance of loans sold	420,513		201,581
Principal balance of loans transferred from HFS to HFI	1,623,900		1,187,961

Residential Consumer Loans Held-for-Investment at Fair Value

We invest in residential subordinate securities issued by Securitized Jumbo and Securitized Re-Performing Loans securitization trusts and consolidate the underlying residential consumer loans owned by these entities for financial reporting purposes in accordance with GAAP. The following tables summarize the characteristics of the securitized jumbo and re-performing residential consumer loans at March 31, 2025 and December 31, 2024.

Table 7.4 – Characteristics of Residential Consumer Loans Held-for-Investment


March 31, 2025	Securitized Jumbo Loans			Securitized Re-Performing Loans
(Dollars in Thousands)

UPB	$	10,590,674		$	1,493,348
Average loan balance (UPB)	$	871		$	155
Fair value of loans (1)	$	10,176,418		$	1,281,550
Weighted average coupon	5.19		%	4.49		%

Delinquency information

Unpaid principal balance of loans with 90+ day delinquencies (2)	$	25,541		$	93,302


Average 90+ days delinquent balance (UPB)	$	672		$	173
Unpaid principal balance of loans in foreclosure	$	11,329		$	37,180
Average foreclosure balance (UPB)	$	566		$	183


December 31, 2024	Securitized Jumbo Loans			Securitized Re-Performing Loans
(Dollars in Thousands)

UPB	$	9,350,286		$	1,514,432
Average loan balance (UPB)	$	842		$	155
Fair value of loans (1)	$	8,819,554		$	1,244,722
Weighted average coupon	5.35		%	4.49		%

Delinquency information

Unpaid principal balance of loans with 90+ day delinquencies (2)	$	19,480		$	106,910

Average 90+ days delinquent balance (UPB)	$	573		$	172

Unpaid principal balance of loans in foreclosure	$	10,493		$	41,913
Average foreclosure balance (UPB)	$	552		$	185

(1)The fair value of the loans held by consolidated entities was based on the fair value of the ABS issued by these entities, including securities we own, which we determined were more readily observable, in accordance with the accounting guidance for CFEs.

(2)For loans held at consolidated entities, the number and unpaid principal balance of loans 90+ days delinquent includes loans in foreclosure.

For securitized jumbo and re-performing loans, market value changes are based on the fair value of the associated ABS issued, including securities we own, pursuant to the measurement alternative provided for collateralized financing entities, and are recorded in Investment fair value changes, net on our consolidated statements of income (loss).

The following table provides the activity of securitized jumbo and re-performing residential consumer loans held-for-investment during the three months ended March 31, 2025 and 2024.

Table 7.5 – Activity of Residential Consumer Loans Held-for-Investment


	Three Months Ended March 31, 2025			Three Months Ended March 31, 2024
	Securitized Jumbo Loans		Securitized Re-Performing Loans	Securitized Jumbo Loans		Securitized Re-Performing Loans
(In Thousands)
Principal value of loans transferred from HFS to HFI (1)	$	1,623,900	N/A	$	1,187,961	N/A
Net market valuation gains (losses) recorded	81,684		58,594	(54,808)		(4,231)

(1)Represents the transfer of loans from held-for-sale to held-for-investment associated with jumbo securitization.

Residential Investor Loans

We originate and invest in residential investor loans, including term loans and bridge loans. The following table summarizes the classifications and carrying values of the securitized and unsecuritized residential investor loans at March 31, 2025 and December 31, 2024.

Table 8.1 – Classifications and Carrying Values of Residential Investor Loans


March 31, 2025	Residential Investor Term				Residential Investor Bridge
(In Thousands)	Unsecuritized		Securitized		Unsecuritized		Securitized		Total
Held-for-sale at fair value	$	169,372	$	—	$	72,053	$	—	$	241,425
Held-for-investment at fair value	—		2,389,804		1,039,223		769,382		4,198,409
Total Residential Investor Loans	$	169,372	$	2,389,804	$	1,111,276	$	769,382	$	4,439,834


December 31, 2024	Residential Investor Term				Residential Investor Bridge
(In Thousands)	Unsecuritized		Securitized		Unsecuritized		Securitized		Total
Held-for-sale at fair value	$	158,637	$	—	$	78,587	$	—	$	237,224
Held-for-investment at fair value	—		2,485,069		1,041,694		823,103		4,349,866
Total Residential Investor Loans	$	158,637	$	2,485,069	$	1,120,281	$	823,103	$	4,587,090

Nearly all of the outstanding residential investor term loans at March 31, 2025 were first-lien, fixed-rate loans with original maturities of three, five, seven, or ten years.

The outstanding residential investor bridge loans held-for-investment at March 31, 2025 were first-lien, interest-only loans with original maturities of 6 to 36 months and were comprised of 53% one-month SOFR-indexed adjustable-rate loans, and 47% fixed-rate loans.

At March 31, 2025, we had $350 million in commitments to fund additional advances on existing residential investor bridge loans. See Note 19 for additional information on these commitments. During the three months ended March 31, 2025, we sold $150 million of residential investor bridge loans, net of $16 million of construction draws to our joint ventures. See Note 12 for additional information on these joint ventures.

During the three months ended March 31, 2025 and 2024, mortgage banking activities, net were $11 million and $7 million, respectively, and included changes in fair value of residential investor loans held-for-sale, interest rate lock commitments, and related risk management derivatives in our CoreVest Mortgage Banking segment. See Note 5 for additional information. During the three months ended March 31, 2025 and 2024, Fee income, net was $2 million and $1 million, respectively, and primarily included portfolio administration fees earned on term and bridge loans.

The following table provides the activity of unsecuritized residential investor loans during the three months ended March 31, 2025 and 2024.

Table 8.2 – Activity of Unsecuritized Residential Investor Loans


	Three Months Ended March 31, 2025				Three Months Ended March 31, 2024
(In Thousands)	Unsecuritized Term Loans		Unsecuritized Bridge Loans		Unsecuritized Term Loans		Unsecuritized Bridge Loans
Principal balance of loans originated	$	188,218	$	266,144	$	117,090	$	194,029
Principal balance of loans acquired	6,800		—		—		15,677
Principal balance of loans sold to third parties (1)	182,415		156,493		6,032		53,221
Transfer of loans between portfolios (2)	—		(50,619)		—		(98,731)

Footnotes to table 8.2

(1)For the three months ended March 31, 2025 and 2024 the principal balance of loans sold to third parties is net of $16 million and $15 million, respectively, related to construction draws on residential investor bridge loans sold to our joint ventures. See Note 12 for additional information on these joint ventures.

(2)Transfers of unsecuritized residential investor term loans between portfolios represents the transfer of loans from held-for-sale to held-for-investment associated with consolidated term securitizations. Transfers of unsecuritized residential investor bridge loans, represents the transfer of residential investor bridge loans from "Unsecuritized Bridge" to "Securitized Bridge" resulting from their inclusion in one of our bridge loan securitizations, which generally have replenishment features for a set period of time from the closing date.

(3)Represents net market valuation changes from the time a loan is originated to when it is sold, securitized or transferred to our Redwood Investments portfolio. See Table 5.1 for additional detail on Mortgage banking activities income.

Securitized Residential Investor Loans Held-for-Investment

We invest in securities issued by securitizations sponsored by CoreVest and consolidate the underlying residential investor term loans and bridge loans owned by these entities. For loans held at our consolidated securitization entities and two Bridge securitization entities, market value changes are based on the fair value of the associated ABS issued, including securities we own, pursuant to CFE guidelines, and are recorded through Investment fair value changes, net on our consolidated statements of income (loss). We did not elect to account for two of our Bridge securitizations under the CFE guidelines, but have elected to account for the loans in these securitizations at fair value, and changes in fair value for these loans are recorded through Investment fair value changes, net on our consolidated statements of income. See further discussion in Note 16.

The following table provides the activity of securitized residential investor loans held-for-investment during the three months ended March 31, 2025 and 2024.

Table 8.3 – Activity of Securitized Residential Investor Loans Held-for-Investment


	Three Months Ended March 31, 2025				Three Months Ended March 31, 2024
(In Thousands)	Securitized Term		Securitized Bridge		Securitized Term		Securitized Bridge
Net market valuation gains (losses) recorded (1)	$	(69)	$	(3,694)	$	7,583	$	3,690
Fair value of loans transferred to HFI	—		50,619		—		98,731

(1)Net market valuation gains (losses) on securitized residential investor loans held-for-investment are recorded through Investment fair value changes, net on our consolidated statements of income. For loans held at our consolidated Term entities and two Bridge entities, market value changes are based on the estimated fair value of the associated ABS issued, including securities we own, pursuant to CFE guidelines. We did not elect to account for two of our Bridge securitizations under the CFE guidelines but have elected to account for the loans in these securitizations at fair value, and changes in fair value for these loans are recorded through Investment fair value changes, net on our consolidated statements of income.

Residential Investor Loan Characteristics

The following tables summarize the characteristics of securitized and unsecuritized residential investor loans at March 31, 2025 and December 31, 2024.

Table 8.4 – Characteristics of Residential Investor Loans


March 31, 2025	Unsecuritized Term			Securitized Term(1)			Unsecuritized Bridge			Securitized Bridge(1)
(Dollars in Thousands)


Unpaid principal balance	$	187,001		$	2,539,929		$	1,172,533		$	759,903
Average UPB of loans	1,989			3,140			5,479			1,692
Fair value of loans	169,372			2,389,804			1,111,276			769,382
Weighted average coupon	6.77		%	5.35		%	9.14		%	9.55		%
Weighted average remaining loan term (years)	10			4			1			1
Market value of loans pledged as collateral under debt facilities	$	110,136		N/A			$	1,090,743		N/A

Delinquency information


Unpaid principal balance of loans with 90+ day delinquencies (2)	$	39,865		$	212,275		$	243,288		$	29,083
Average UPB of 90+ days delinquent loans (2)	7,973			4,332			13,516			1,531
Fair value of loans with 90+ day delinquencies (2)	18,469			N/A			202,982			N/A


Unpaid principal balance of loans in foreclosure (3)	—			59,449			38,225			9,703
Average UPB of loans in foreclosure (3)	—			4,246			4,247			1,078
Fair value of loans in foreclosure (3)	—			N/A			27,257			N/A


December 31, 2024	Unsecuritized Term			Securitized Term(1)			Unsecuritized Bridge			Securitized Bridge(1)
(Dollars in Thousands)


Unpaid principal balance	$	177,618		$	2,639,485		$	1,166,213		$	810,285
Average UPB of loans	1,759			3,084			5,350			1,605
Fair value of loans	158,637			2,485,069			1,120,281			823,103
Weighted average coupon	6.84		%	5.35		%	9.11		%	9.76		%
Weighted average remaining loan term (years)	9			4			1			1
Market value of loans pledged as collateral under debt facilities	$	120,417		N/A			$	1,070,327		N/A

Delinquency information


Unpaid principal balance of loans with 90+ day delinquencies (2)	$	33,065		$	194,143		$	129,229		$	20,964
Average UPB of 90+ days delinquent loans (2)	8,266			3,734			8,077			1,233
Fair value of loans with 90+ day delinquencies (2)	12,366			N/A			102,321			N/A


Unpaid principal balance of loans in foreclosure (3)	27,529			24,648			86,260			3,663
Average UPB of loans in foreclosure (3)	27,529			2,465			6,635			916
Fair value of loans in foreclosure (3)	8,500			N/A			67,858			N/A

(1)The fair value of the Term and Bridge loans held by consolidated entities were based on the fair value of the ABS issued by these entities, including securities we own, which we determined were more readily observable, in accordance with the accounting guidance for CFEs.

(2)The number of loans 90+ days delinquent includes loans in foreclosure.

(3)May include loans that are less than 90 days delinquent and loans where foreclosure is being pursued as a disposition strategy.

The following table presents the unpaid principal balance of residential investor loans recorded on our consolidated balance sheets at March 31, 2025 by collateral/strategy type.

Table 8.5 – Residential Investor Loans Collateral/Strategy Type


March 31, 2025	Unsecuritized Term		Securitized Term		Unsecuritized Bridge		Securitized Bridge
(Dollars in Thousands)
Term
Single family rental	$	117,294	$	1,957,782	$	—	$	—
Multifamily	69,707		582,147		—		—
Bridge
Renovate / Build for Rent ("BFR") (1)	—		—		439,189		339,864
Single Asset Bridge ("SAB") (2)	—		—		82,258		274,715
Multifamily (3)	—		—		644,838		144,270
Third-Party Originated	—		—		6,248		1,054
Total Residential Investor Loans	$	187,001	$	2,539,929	$	1,172,533	$	759,903

(1)Includes loans to finance acquisition and/or stabilization of existing housing stock or to finance new construction of residential properties for rent.

(2)Includes loans for light to moderate renovation of residential and small multifamily properties (generally less than 20 units).

(3)Includes loans for predominantly light to moderate rehabilitation projects on multifamily properties.

Loan Modifications

We may amend or modify a loan depending on the loan's specific facts and circumstances. These loan modifications typically include amendments and restructuring and include terms such as additional time for the borrower to refinance or sell the collateral property, interest rate reductions and/or deferral of scheduled principal and/or interest payments. In some instances, a loan amendment or restructuring may bring the loan out of delinquent status. In other instances, including in the case of Build for Rent ("BFR") loans, a loan modification may amend the project's underlying budget (including allocation of hard/soft costs, interest reserves and other items) or construction or completion milestones, if warranted, based on progress versus the initial budget. Because they finance the construction of rental housing, many BFR projects do not generate net operating income until the later stages of the loan term. As such, BFR loans are sized to include allocations for interest expense as well as construction costs and other standard budget items. In exchange for a modification, we may receive a partial repayment of principal, a short-term accrual of capitalized interest for a portion of interest due, a capital infusion to replenish interest or capital improvement reserves and/or termination of all or a portion of the remaining unfunded loan commitment.

The fair value of residential investor bridge loans of $1.88 billion at March 31, 2025 declined from $1.94 billion at December 31, 2024. Changes in the value of these loans during the first quarter of 2025 reflect the combination of loan payoffs and incremental negative fair value changes primarily resulting from higher bridge loan delinquencies on certain 2021 and 2022 vintage bridge loans. For the three months ended March 31, 2025 and December 31, 2024, we modified or put into forbearance loans with a total aggregate unpaid principal balance of $206 million and $353 million, respectively. This balance included modifications to the contractual interest rates (including, in certain cases, deferrals of interest) on loans and modifications involving only extensions of loan maturities and/or covenant terms.

Loans with modifications involving reductions in contractual interest rates (including, in certain cases, deferrals of interest) had an aggregate unpaid principal balance of $68 million and $167 million at March 31, 2025 and December 31, 2024, respectively. In the three months ended March 31, 2025, modifications on these loans maintained a contractual interest rate of approximately 5.00% and 8.64%, of which 0% and 5.39% represented deferred interest, respectively. Of this balance, $68 million and $24 million, respectively, included loans that had previously been modified and the further modifications on these loans involved additional amendments to the contractual interest pay rate and deferred interest. We also provided maturity extensions, subject to mandatory partial repayments during the loan term, and established a hard lockbox along with funding interest reserves to cover debt service shortfalls. Of the $68 million in total aggregate unpaid principal balance that was further modified in the three months ended March 31, 2025, we have subsequently resolved in the second quarter of 2025 two of these loans totaling $36 million at the agreed upon modified terms.

Loans with modifications involving extensions in loan maturities and/or covenant terms had an aggregate unpaid principal balance of $138 million and $186 million at March 31, 2025 and December 31, 2024, respectively. While we continue to actively engage with certain borrowers to address the impacts of rising interest rates, elongated project timelines, or other issues, further increases in delinquencies or modifications within our residential investor bridge loan portfolio could ultimately result in further decreases in net interest income and the fair value of our bridge loans held for investment, and further instances of borrower/sponsor stress could lead to realized credit losses. An increase in maturity extensions in the residential investor bridge portfolio would increase the expected time to repayment with a potential impact on fair values and credit losses. However, given the overall short duration nature of our bridge loans, a certain level of maturity extensions are a routine asset management outcome for these loans, irrespective of market conditions. When we provide these types of maturity extensions, our asset management function also seeks to charge a fee. For both the first quarter of 2025 and fourth quarter of 2024, the average length of maturity extensions granted on residential investor bridge loans was under seven months and five months, respectively.

Nonaccrual Loans

Interest income is accrued on loans in the period the coupon interest is contractually earned until such time a loan is placed on non-accrual status.

A loan is generally placed on non-accrual status when it is probable that all principal and interest due under the contractual terms will not be collected and a loan is past due more than 90 days. At the time a loan is placed on non-accrual status, all previously accrued but uncollected interest is reversed against interest income and interest subsequently collected is recognized on a cash basis when it is received. A loan remains on non-accrual status until the loan balance is deemed collectible or until such time the loan qualifies to be placed back on accrual status. Generally, a loan is placed back on accrual status when the loan becomes contractually current or the collection of past due and future payments is reasonably assured either through reinstatement by the borrower, recoverability on the estimated net equity in the underlying real estate property or both.

At March 31, 2025, residential investor loans with an aggregate unpaid principal balance of $342 million and an aggregate fair value of $265 million, respectively, were on non-accrual status. Of this balance, loans with $150 million aggregate unpaid principal balance were on full non-accrual of the contractual coupon interest and loans with $192 million aggregate unpaid principal balance were on non-accrual of deferred interest. Included in the balance of loans on non-accrual status that were less than 90 days past due (including loans that were contractually current) had an aggregate unpaid principal balance of $157 million as of March 31, 2025.

At December 31, 2024, residential investor loans with an aggregate unpaid principal balance of $343 million and an aggregate fair value of $282 million, respectively, were on non-accrual status. Of this balance, loans with $151 million aggregate unpaid principal balance were on full non-accrual of the contractual coupon interest and loans with $192 million aggregate unpaid principal balance were on non-accrual of deferred interest. Included in the balance of loans on non-accrual status that were less than 90 days past due (including loans that were contractually current) had an aggregate unpaid principal balance of $192 million as of December 31, 2024.