Servicing Investments

3 Months Ended

Mar. 31, 2025

Investments, All Other Investments [Abstract]

Servicing Investments at March 31, 2025 and December 31, 2024 are summarized in the following table.

Table 11.1 – Components of Servicing Investments


(In Thousands)	March 31, 2025		December 31, 2024
Servicer advance investments, at fair value	$	234,423	$	233,820


Excess MSRs, at fair value	31,084		32,274
MSRs, at fair value	32,783		31,589

Total Servicing Investments	$	298,290	$	297,683

We account for our Servicer advance investments, Excess MSRs and MSRs at fair value. Refer to Note 6 for further information on the inputs into the fair valuation of these components. Refer to Note 11 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2024 for additional information regarding these components and related transactions. For the three months ended March 31, 2025 and 2024, income from Servicing investments included Other interest income of $7 million and $8 million, respectively, Investment fair value changes, net of negative $3 million and negative $2 million, respectively, and Servicing income, net of $3 million and $4 million, respectively.

Strategic Investments

Strategic Investments at March 31, 2025 and December 31, 2024 are summarized in the following table.

Table 12.1 – Components of Strategic Investments


(In Thousands)	March 31, 2025		December 31, 2024

Strategic investments, equity method	$	54,963	$	48,767
Strategic investments, measurement alternative	26,446		25,896
Strategic investments, at fair value	3,460		3,460



Total Strategic Investments	$	84,869	$	78,123

Income from Strategic Investments for the three months ended March 31, 2025 and 2024 are summarized in the following table.

Table 12.2 – Components of Income From Strategic Investments, net


	Three Months Ended		Three Months Ended
(In Thousands)	March 31, 2025		March 31, 2024




Other income (loss), net (1)	$	1,179	$	(944)
Investment fair value changes, net (2)	(80)		650





Total Strategic Investments Income, Net	$	1,099	$	(294)

(1)Represents net equity method earnings from our Strategic investments that are accounted for under the equity method.

(2)Includes Investment fair value changes related to our Strategic investments that are accounted for under the measurement alternative for equity securities without readily determinable fair values. For the three months ended March 31, 2025, includes Investment fair value gains of $0.5 million and investment fair value losses of $0.4 million under the measurement alternative.

Depending on the terms of the strategic investments, we may account for these investments under the fair value option, as non-marketable equity securities under the equity method of accounting or the measurement alternative for equity securities without readily determinable fair values. Refer to Note 6 for further information on the inputs into the fair valuation of these components. Refer to Note 11 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2024 for additional information regarding these components and related transactions.

Joint Ventures

In the second quarter of 2023, we established a joint venture with an institutional investment manager to invest in residential investor bridge loans originated by our CoreVest subsidiary. At March 31, 2025, the carrying value of our investment in the joint venture was $3 million. We account for our investment in the joint venture under the equity method of accounting as we have a 20% non-controlling interest, but are deemed to be able to exert significant influence over the affairs of the joint venture. We adjust the carrying value of our equity method investment for our share of earnings or losses, dividends or return of capital on a quarterly basis. For the three months ended March 31, 2025, we recognized net equity method earnings of $0.1 million through Other income, net in our Consolidated statements of income.

In the first quarter of 2024, we established a joint venture with another institutional investment manager to invest in residential investor bridge and term loans originated by us. At March 31, 2025, the carrying value of our investment in the joint venture was $28 million. We account for our investment in the joint venture under the equity method of accounting as we have a minority non-controlling interest approximating 20% across both Redwood's direct equity capital contribution to joint venture entities and joint venture co-investments, and we are deemed to be able to exert significant influence over the affairs of the joint venture. We adjust the carrying value of our equity method investment for our share of earnings or losses, dividends or return of capital on a quarterly basis. We recognized net equity method earnings of $2 million for the three months ended March 31, 2025, through Other income, net in our Consolidated statements of income.

See Note 8 for further information on residential bridge loans sold to these joint ventures