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Residential Investor Loans | 9 Months Ended
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Sep. 30, 2025
Receivables [Abstract] |
Residential Investor Loans | Residential Consumer Loans We acquire residential consumer loans from third-party originators and may sell or securitize these loans and hold a retained portion for investment. The following table summarizes the classifications and fair values of the securitized and unsecuritized residential consumer loans owned at September 30, 2025 and December 31, 2024. Table 7.1 – Classifications and Fair Values of Residential Consumer Loans
September 30, 2025 |  | Unsecuritized Jumbo Loans |  | Securitized Jumbo Loans |  | Securitized Re-Performing Loans |  |
(In Thousands) |  |  |  |  | Total
Held-for-sale at fair value |  | $ | 2,455,559 |  |  | $ | — |  |  | $ | 1,248,236 |  |  | $ | 3,703,795 |
Held-for-investment at fair value |  | — |  |  | 13,079,486 |  |  | — |  |  | 13,079,486 |
Total Residential Consumer Loans |  | $ | 2,455,559 |  |  | $ | 13,079,486 |  |  | $ | 1,248,236 |  |  | $ | 16,783,281 |
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 September 30, 2025, we owned mortgage servicing rights associated with $2.4 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 September 30, 2025, we had $4.0 billion in commitments to fund residential consumer loans. 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 September 30, 2025 and December 31, 2024. Table 7.2 – Characteristics of Residential Consumer Loans Held-for-Sale
September 30, 2025 |  | Unsecuritized Jumbo Loans |  | Securitized Re-Performing Loans (1)
(Dollars in Thousands) |  |
UPB |  | $ | 2,394,909 |  |  | $ | 1,447,610 |
Fair value of loans |  | $ | 2,455,559 |  |  | $ | 1,248,236 |
Market value of loans pledged as collateral under short-term borrowing agreements |  | $ | 2,437,510 |  |  | N/A
Weighted average coupon |  | 6.84 | % |  | 4.49 | %
Delinquency information |  |  |  |
UPB of loans with 90+ day delinquencies |  | $ | 439 |  |  | $ | 97,615 |
Average 90+ days delinquent balance (UPB) |  | 439 |  |  | 167 |
UPB of loans in foreclosure |  | — |  |  | 34,709 |
Average foreclosure balance (UPB) |  | — |  |  | 187 |
December 31, 2024 |  | Unsecuritized Jumbo Loans |  |
(Dollars in Thousands) |  |
UPB |  | $ | 1,000,663 |  |  |
Fair value of loans |  | $ | 1,013,547 |  |  |
Market value of loans pledged as collateral under short-term borrowing agreements |  | $ | 1,005,926 |  |  |
Weighted average coupon |  | 6.56 | % |  |
Delinquency information |  |  |  |
UPB of loans with 90+ day delinquencies |  | $ | — |  |  |
Average UPB of 90+ days delinquent loans |  | — |  |  |
UPB of loans in foreclosure |  | — |  |  |
Average foreclosure balance (UPB) |  | — |  |  |
(1)See Note 24 for further discussion. During the three and nine months ended September 30, 2025 and 2024, mortgage banking activities, net were $29 million and $27 million and $75 million and $41 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 ("HFS") during the three and nine months ended September 30, 2025 and 2024. Table 7.3 – Activity of Residential Consumer Loans Held-for-Sale
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(In Thousands) |  | 2025 |  | 2024 |  | 2025 |  | 2024
Principal balance of loans acquired |  | $ | 3,845,429 |  |  | $ | 1,999,621 |  |  | $ | 9,158,820 |  |  | $ | 4,873,608 |
Principal balance of loans sold |  | 861,850 |  |  | 39,497 |  |  | 2,123,601 |  |  | 246,641 |
Principal balance of loans transferred from HFS to HFI |  | 1,878,024 |  |  | 1,528,163 |  |  | 5,551,389 |  |  | 4,140,150 |
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. During the nine months ended September 30, 2025 we transferred our Securitized Re-Performing Loans to Held-for-Sale. The following tables summarize the characteristics of the securitized residential consumer loans held-for-investment at September 30, 2025 and December 31, 2024. Table 7.4 – Characteristics of Residential Consumer Loans Held-for-Investment
September 30, 2025 |  |  |  |  |  | Securitized Jumbo Loans
(Dollars in Thousands) |  |  |  |  |
UPB |  |  |  |  |  | $ | 13,351,590 |
Average loan balance (UPB) |  |  |  |  |  | $ | 899 |
Fair value of loans (1) |  |  |  |  |  | $ | 13,079,486 |
Weighted average coupon |  |  |  |  |  | 5.67 | %
Delinquency information |  |  |  |  |  |
UPB of loans with 90+ day delinquencies (2) |  |  |  |  |  | $ | 41,396 |
Average 90+ days delinquent balance (UPB) |  |  |  |  |  | 753 |
UPB of loans in foreclosure |  |  |  |  |  | 12,132 |
Average foreclosure balance (UPB) |  |  |  |  |  | 607 |
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 |  |  |  |  |  |  |  |
UPB of loans with 90+ day delinquencies (2) |  |  |  |  |  | $ | 19,480 |  |  | $ | 106,910 |
Average 90+ days delinquent balance (UPB) |  |  |  |  |  | $ | 573 |  |  | $ | 172 |
UPB of loans in foreclosure |  |  |  |  |  | $ | 10,493 |  |  | $ | 41,913 |
Average foreclosure balance (UPB) |  |  |  |  |  | $ | 552 |  |  | $ | 185 |
(1)The fair va lue 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, and are recorded in Investment fair value changes, net on our consolidated statements of income (loss). (2)For loans held at consolidated entities, the number and UPB of loans 90+ days delinquent includes loans in foreclosure. The following table provides the activity of securitized jumbo residential consumer loans held-for-investment during the three and nine months ended September 30, 2025 and 2024. Table 7.5 – Activity of Residential Consumer Loans Held-for-Investment
|  |  |  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(In Thousands) |  |  |  | 2025 |  |  | 2024 |  | 2025 |  | 2024
Principal value of loans transferred from HFS to HFI (1) |  |  |  | $ | 1,878,024 |  |  |  |  |  | $ | 1,528,163 |  |  | $ | 5,551,389 |  |  |  |  | $ | 4,140,150 |
Net market valuation gains (losses) recorded |  |  |  | 102,295 |  |  |  |  |  | 256,034 |  |  | 236,432 |  |  |  |  | 152,635 |
(1)Represents the transfer of loans from held-for-sale to held-for-investment associated with jumbo securitization Note 8. Residential Investor Loans We originate and invest in residential investor loans, including term loans and bridge loans. The following table summarizes the classifications and fair values of the securitized and unsecuritized residential investor loans at September 30, 2025 and December 31, 2024. Table 8.1 – Classifications and Fair Values of Residential Investor Loans
September 30, 2025 |  | Residential Investor Term |  | Residential Investor Bridge |  |
(In Thousands) |  | Unsecuritized |  | Securitized |  | Unsecuritized |  | Securitized |  | Total
Held-for-sale at fair value (1) |  | $ | 157,339 |  |  | $ | — |  |  | $ | 625,932 |  |  | $ | — |  |  | $ | 783,271 |
Held-for-investment at fair value |  | — |  |  | 2,143,226 |  |  | — |  |  | 931,100 |  |  | 3,074,326 |
Total Residential Investor Loans |  | $ | 157,339 |  |  | $ | 2,143,226 |  |  | $ | 625,932 |  |  | $ | 931,100 |  |  | $ | 3,857,597 |
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 |
(1)At September 30, 2025, Residential investor bridge loans held-for-sale include $101 million of loans recorded at the lower of cost or market value for which the carrying value approximates the fair value. Nearly all of the outstanding residential investor term loans at September 30, 2025 were first-lien, fixed-rate loans with original maturities of 5 to 30 years. The outstanding residential investor bridge loans held-for-investment at September 30, 2025 were first-lien, interest-only loans with original maturities of 8 to 36 months and were comprised of 37% one-month SOFR-indexed adjustable-rate loans, and 63% fixed-rate loans. At September 30, 2025, $626 million of our residential investor unsecuritized bridge loans were classified as HFS in connection with our planned disposition strategy for non-core assets or are loans that we intend to sell through securitizations or whole loan sales. During the third quarter of 2025, as part of our plans to accelerate the wind-down of the Legacy Investments portfolio, we transferred a portfolio totaling $484 million in fair value of legacy unsecuritized bridge loans and REO assets to the Legacy Trust. These transfers met the criteria to be accounted for as sales for financial reporting purposes, in accordance with GAAP. We determined that the Legacy Trust is a variable-interest entity ("VIE") but that Redwood is not the primary beneficiary, as we do not have the power to direct the activities that most significantly affect the Legacy Trust’s economic performance. Accordingly, the Legacy Trust is not consolidated in our financial statements. In connection with this transfer, we recognized a negative $6 million investment fair value change within our Consolidated Statements of (Loss) Income, reflecting adjustments associated with completing the transaction. As part of the transaction, we retained a $182 million subordinate beneficial interest in the Legacy Trust, which is recorded as an AFS real estate security on our Consolidated balance sheet, as well as a funding commitment to provide capital support if the Legacy Trust’s portfolio loan-to-value ratios exceed specified thresholds. See Notes 9 and 19 for further discussion on the beneficial interest and the funding commitment, respectively. The change in fair value of residential investor loans from December 31, 2024 to September 30, 2025 reflects both realized and anticipated changes in portfolio performance and composition. The overall decline in fair value was primarily attributable to the unsecuritized residential investor bridge loan portfolio, which decreased to $626 million at September 30, 2025 from $1.1 billion at December 31, 2024. This decline was primarily driven by the sale transaction to the Legacy Trust and other resolutions in the third quarter of 2025. During the nine month period ended September 30, 2025, losses also reflected adverse market developments and the acceleration of resolution activity and further anticipated near-term resolutions on these loans, as well as changes in the underlying performance on certain of these loans, particularly those of the 2021 and 2022 vintage. Fair value changes also reflect the impact of loan modifications during the period, particularly rate changes and interest deferrals, which may have resulted in downward adjustments to loan valuations. These modifications were predominantly related to bridge loans with underlying project delays, borrower financial stress, or market-driven refinancing challenges. The fair value impact of such modifications is incorporated into the Company’s valuation models and contributed to the overall movement in loan values during the period. At September 30, 2025, we had $261 million in commitments to fund additional advances on existing residential investor bridge loans, of which $84 million related to loans currently in securitizations co-sponsored by one of our joint ventures. See Note 19 for additional information on these commitments. During the three and nine months ended September 30, 2025, we sold $114 million and $416 million of residential investor bridge loans, net of $6 million and $38 million of construction draws to one of our joint ventures, respectively. See Note 12 for additional information on these joint ventures. During the three and nine months ended September 30, 2025 and 2024, income from mortgage banking activities, net were $11 million and $39 million, and $13 million and $32 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 and nine months ended September 30, 2025, Fee income, net was $5 million and $9 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 and nine months ended September 30, 2025 and 2024. Table 8.2 – Activity of Unsecuritized Residential Investor Loans
|  | Three Months Ended September 30,
|  | 2025 |  | 2024
(In Thousands) |  | Unsecuritized Term Loans |  | Unsecuritized Bridge Loans |  | Unsecuritized Term Loans |  | Unsecuritized Bridge Loans
Principal balance of loans originated |  | $ | 228,298 |  |  | $ | 258,594 |  |  | $ | 158,584 |  |  | $ | 286,833 |
Principal balance of loans acquired (1) |  | 530 |  |  | 80,223 |  |  | 3,145 |  |  | — |
Principal balance of loans sold to third parties (2) |  | 228,741 |  |  | 625,196 |  |  | 206,380 |  |  | 67,655 |
Transfer of loans between portfolios (3) |  | — |  |  | 38,179 |  |  | — |  |  | (62,386) |
|  | Nine Months Ended September 30,
|  | 2025 |  | 2024
(In Thousands) |  | Unsecuritized Term Loans |  | Unsecuritized Bridge Loans |  | Unsecuritized Term Loans |  | Unsecuritized Bridge Loans
Principal balance of loans originated |  | $ | 645,061 |  |  | $ | 666,494 |  |  | $ | 493,212 |  |  | $ | 714,977 |
Principal balance of loans acquired (1) |  | 43,567 |  |  | 105,456 |  |  | 3,793 |  |  | 15,677 |
Principal balance of loans sold to third parties (2) |  | 661,951 |  |  | 1,007,770 |  |  | 464,836 |  |  | 277,170 |
Transfer of loans between portfolios (3) |  | — |  |  | 63,554 |  |  | — |  |  | (250,319) |
(1)For the three and nine months ended September 30, 2025 and 2024, balance reflects loans acquired from a loan origination partner, with whom we have a strategic investment, and loan repurchases. See Note 12 for further information. (2)For the three and nine months ended September 30, 2025 and 2024 the principal balance of loans sold to third parties is net of $6 million and $13 million, and $38 million and $34 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. (3)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 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. 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, 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 some 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. Residential Investor Loan Characteristics The following table provides the activity of securitized residential investor loans held-for-investment during the three and nine months ended September 30, 2025 and 2024. Table 8.3 – Activity of Securitized Residential Investor Loans Held-for-Investment
|  | Three Months Ended September 30,
|  | 2025 |  | 2024
(In Thousands) |  | Securitized Term |  | Securitized Bridge |  | Securitized Term |  | Securitized Bridge
Net market valuation gains (losses) recorded |  | $ | 20,614 |  |  | $ | 6,384 |  |  | $ | 78,275 |  |  | $ | 1,623 |
Fair value of loans transferred to HFI |  | — |  |  | 38,179 |  |  | — |  |  | 62,386 |
|  | Nine Months Ended September 30,
|  | 2025 |  | 2024
(In Thousands) |  | Securitized Term |  | Securitized Bridge |  | Securitized Term |  | Securitized Bridge
Net market valuation gains (losses) recorded |  | $ | 34,667 |  |  | $ | (1,901) |  |  | $ | 89,388 |  |  | $ | 443 |
Fair value of loans transferred to HFI |  | — |  |  | 164,792 |  |  | — |  |  | 250,319 |
The following tables summarize the characteristics of securitized and unsecuritized residential investor loans at September 30, 2025 and December 31, 2024. Table 8.4 – Characteristics of Residential Investor Loans
September 30, 2025 |  | Unsecuritized Term |  | Securitized Term(1) |  | Unsecuritized Bridge |  | Securitized Bridge(1)
(Dollars in Thousands) |  |  |  |
Unpaid principal balance |  | $ | 163,683 |  |  | $ | 2,251,096 |  |  | $ | 665,040 |  |  | $ | 917,991 |
Average UPB of loans |  | 1,129 |  |  | 3,063 |  |  | 1,945 |  |  | 1,237 |
Fair value of loans |  | 157,339 |  |  | 2,143,226 |  |  | 625,932 |  |  | 931,100 |
Weighted average coupon |  | 6.94 | % |  | 5.28 | % |  | 8.93 | % |  | 9.41 | %
Weighted average remaining loan term (years) |  | 13 |  | 4 |  | 1 |  | 1
Market value of loans pledged as collateral under debt facilities |  | $ | 86,413 |  |  | N/A |  | $ | 400,527 |  |  | N/A
Delinquency information |  |  |  |  |  |  |  |
Unpaid principal balance of loans with 90+ day delinquencies (2) |  | $ | 53,756 |  |  | $ | 171,284 |  |  | $ | 198,858 |  |  | $ | 26,938 |
Average UPB of 90+ days delinquent loans (2) |  | 5,973 |  |  | 4,078 |  |  | 11,048 |  |  | 1,418 |
Fair value of loans with 90+ day delinquencies (2) |  | 44,491 |  |  | N/A |  | 159,437 |  |  | N/A
Unpaid principal balance of loans in foreclosure (3) |  | — |  |  | 37,206 |  |  | 22,838 |  |  | 19,803 |
Average UPB of loans in foreclosure (3) |  | — |  |  | 5,315 |  |  | 22,838 |  |  | 1,238 |
Fair value of loans in foreclosure (3) |  | — |  |  | N/A |  | 17,128 |  |  | 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 UPB of residential investor loans recorded on our consolidated balance sheets at September 30, 2025 by collateral/strategy type. Table 8.5 – Residential Investor Loans Collateral/Strategy Type
September 30, 2025 |  | Unsecuritized Term |  | Securitized Term |  | Unsecuritized Bridge |  | Securitized Bridge
(Dollars in Thousands) |  |  |  |
Term |  |  |  |  |  |  |  |
Single-family rental |  | $ | 106,597 |  |  | $ | 1,751,988 |  |  | $ | — |  |  | $ | — |
Multifamily |  | 57,086 |  |  | 499,108 |  |  | — |  |  | — |
Bridge |  |  |  |  |  |  |  |
Renovate / Build for Rent ("BFR") (1) |  | — |  |  | — |  |  | 196,810 |  |  | 316,490 |
Single Asset Bridge ("SAB") (2) |  | — |  |  | — |  |  | 61,259 |  |  | 488,545 |
Multifamily (3) |  | — |  |  | — |  |  | 300,100 |  |  | 111,901 |
Third-Party Originated |  | — |  |  | — |  |  | 106,871 |  |  | 1,055 |
Total Residential Investor Loans |  | $ | 163,683 |  |  | $ | 2,251,096 |  |  | $ | 665,040 |  |  | $ | 917,991 |
(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 For the three months ended September 30, 2025, consistent with our strategic transition from non-core legacy assets, we have adopted a more accelerated approach to resolving modified and legacy loans, accelerating the wind-down of underperforming or non-core legacy assets to proactively reduce long-term exposure. This includes pursuing loan and REO sales, executing structured exits, and, where necessary, accelerating foreclosure or liquidation processes on assets with limited workout potential. We utilize a rigorous and consistently implemented fair value process when evaluating these loans, which involves management’s review of updated appraisals, collateral performance, sales cost estimates, and independent market data when available. This approach, conducted in accordance with GAAP, is designed to ensure that valuations reflect current conditions and project-specific risks. The actual amounts ultimately recovered—whether through foreclosure, collateral sale, or alternative resolutions, such as discounted payoffs or loan sales—may differ significantly from our estimates and could materially affect future earnings. 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. For the three months ended September 30, 2025 and December 31, 2024, we modified or put into forbearance loans with a total aggregate UPB of $130 million and $353 million, respectively. This balance primarily included modifications involving extensions of loan maturities and/or covenant terms ("Simple Modifications"). An increase in maturity extensions 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. Additionally, modifications also include changes to the contractual interest rates (including, in certain cases, deferrals of interest) on loans ("Complex Modifications"). Certain loans may represent subsequent modifications of loans that had been previously modified in a prior reporting period. These further modifications may include adjustments to pay rates, deferred interest (floating-to-fixed conversions), maturity extensions (with forbearance or partial repayments), and changes to interest reserves or project completion milestones. The following table presents information regarding loan modifications by strategy type for the three months ended September 30, 2025. Table 8.6 – Loan Modifications Characteristics by Strategy Type
September 30, 2025 |  | Unpaid Principal Balance |  | Weighted Average Contractual Interest Rate |  | Weighted Average Deferred Interest Rate |  | Average Month Length of Maturity Extensions
(Dollars in Thousands) |  |  |  |
Simple Modifications (Extensions) |  | $ | 126,254 |  |  | N/A |  | N/A |  | 5
Complex Modifications |  | 3,895 |  |  | 10.73 | % |  | 4.73 | % |  | 5
Total Loan Modifications (1) |  | $ | 130,149 |  |  |  |  |  |  |
(1)Included in this population are loans that had been previously modified in a prior period with an aggregate unpaid principal balance of $38 million involving previous Simple modifications and $4 million involving previous Complex modifications. For the three months ended December 31, 2024, loans with an aggregate UPB of $186 million were Simple Modifications and involved the extension of maturities and/or covenant terms. Of this balance, we further modified loans that had been previously modified in a prior period with an aggregate unpaid principal balance of $103 million. For the three months ended December 31, 2024, loans with an aggregate UPB of $167 million were Complex Modifications and primarily involved adjustments to contractual interest pay rates (including, in certain cases, deferrals of interest). Modifications on these loans maintained a contractual interest rate of approximately 8.64%, of which 5.39% represented deferred interest. Of this population, we further modified loans that had been previously modified in a prior period, with an aggregate unpaid principal balance of $24 million. 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 financial 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. 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 written off 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. The following table presents the characteristics of loans on nonaccrual status by segment and strategy type at September 30, 2025, including the fair value of such loans and the related amounts of non-accrual of contractual coupon and deferred interest. Table 8.7 – Nonaccrual Loans Characteristics by Segment/Strategy Type
September 30, 2025 |  | Non-Accrual of Contractual Coupon Interest |  | Non-Accrual of Deferred Interest Only |  | Total Unpaid Principal Balance |  | Fair Value
(Dollars in Thousands) |  |  |  |
Legacy Investments |  |  |  |  |  |  |  |
Multifamily (1) |  | $ | 193,759 |  |  | $ | 104,216 |  |  | $ | 297,975 |  |  | $ | 257,895 |
Renovate / Build for Rent ("BFR") (2) |  | 15,856 |  |  | 24,917 |  |  | 40,773 |  |  | 32,308 |
Single Asset Bridge ("SAB") (3) |  | 670 |  |  | — |  |  | 670 |  |  | 637 |
Other |  | 6,247 |  |  | — |  |  | 6,247 |  |  | 3,679 |
Redwood Investments |  |  |  |  |  |  |  |
Renovate / Build for Rent ("BFR") (2) |  | 4,817 |  |  | — |  |  | 4,817 |  |  | 4,841 |
Single Asset Bridge ("SAB") (3) |  | 7,787 |  |  | — |  |  | 7,787 |  |  | 7,751 |
Total Non-Accrual Loans |  | $ | 229,136 |  |  | $ | 129,133 |  |  | $ | 358,269 |  |  | $ | 307,111 |
(1)Includes loans for predominantly light to moderate rehabilitation projects on multifamily properties. (2)Includes loans to finance acquisition and/or stabilization of existing housing stock or to finance new construction of residential properties for rent. (3)Includes loans for light to moderate renovation of residential and small multifamily properties (generally less than 20 units). At December 31, 2024, residential investor loans with an aggregate UPB 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 UPB were on full non-accrual of the contractual coupon interest and loans with $192 million aggregate UPB were on non-accrual of deferred interest.

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