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Loans Held for Investment and Loans Held for Investment at Fair Value (Tables)

6 Months Ended

Jun. 30, 2021

The following tables summarize loans held for investment as of June 30, 2021 and December 31, 2020 (in thousands):

	June 30, 2021
	Loans held for investment, net			Loans held for investment, at fair value		Total loans held for investment
Unpaid principal balance	$	2,061,008		$	1,354	$	2,062,362
Valuation adjustments on FVO loans		—			16		16
Deferred loan origination costs		26,708			—		26,708
		2,087,716			1,370		2,089,086
Allowance for loan losses		(3,963	)		—		(3,963	)
Total loans held for investment and loans held for investment at fair value, net	$	2,083,753		$	1,370	$	2,085,123

	December 31, 2020
	Loans held for investment, net			Loans held for investment, at fair value			Total loans held for investment
Unpaid principal balance	$	1,930,334		$	1,541		$	1,931,875
Valuation adjustments on FVO loans		—			(2	)		(2	)
Deferred loan origination costs		23,600			—			23,600
		1,953,934			1,539			1,955,473
Allowance for loan losses		(5,845	)		—			(5,845	)
Total loans held for investment and loans held for investment at fair value, net	$	1,948,089		$	1,539		$	1,949,628

Summary of UPB and Amortized Cost Basis of Loans in COVID-19 Forbearance Program

The following table presents the activity in the Unpaid Principal Balance (“UPB”) and amortized cost basis of loans in the Company's COVID-19 forbearance program for the three and six months ended June 30, 2021 ($ in thousands):

	Three Months Ended June 30, 2021								Six Months Ended June 30, 2021
	UPB			%	Amortized Cost			%	UPB			%	Amortized Cost			%
Beginning balance	$	363,739			$	368,230			$	392,073			$	396,918
Additions		—				—				2,616				2,615
Foreclosures		—				—				(253	)			(260	)
Repayments		(21,297	)			(21,533	)			(51,994	)			(52,576	)
Ending balance	$	342,442			$	346,697			$	342,442			$	346,697

Performing/Accruing	$	251,929		73.6%	$	255,284		73.6%	$	251,929		73.6%	$	255,284		73.6%

Nonperforming/Nonaccrual	$	90,513		26.4%	$	91,413		26.4%	$	90,513		26.4%	$	91,413		26.4%

The following table presents the UPB and amortized cost basis of loans in the Company's COVID-19 forbearance program as of December 31, 2020 ($ in thousands):

	December 31, 2020
	UPB		%	Amortized Cost		%
Ending balance	$	392,073		$	396,918

Performing/Accruing	$	327,708	83.6%	$	330,495	83.3%

Nonperforming/Nonaccrual	$	64,365	16.4%	$	66,423	16.7%

Schedule of Loans Held for Investment Pledged as Collateral for Warehouse Facilities and Securitizations Issued

As of June 30, 2021 and December 31, 2020, the gross unpaid principal balance of loans held for investment pledged as collateral for the Company’s warehouse facilities, and securitizations issued were as follows (in thousands):

	June 30, 2021		December 31, 2020
The 2013 repurchase agreement	$	51,819	$	91,074
The 2015 repurchase agreement		118,950		—
The Bank credit agreement		31,022		—
The 2021 term repurchase agreement		2,159		—
Total pledged loans	$	203,950	$	91,074

2014-1 Trust		19,622		22,228
2015-1 Trust		38,829		48,179
2016-1 Trust		61,430		71,271
2016-2 Trust		38,625		47,282
2017-1 Trust		64,463		81,376
2017-2 Trust		112,962		137,970
2018-1 Trust		88,449		112,042
2018-2 Trust		194,078		224,195
2019-1 Trust		175,707		203,144
2019-2 Trust		154,113		175,560
2019-3 Trust		121,069		135,527
2020-1 Trust		216,118		241,664
2020-2 Trust		113,023		123,646
2020-MC1 Trust		174,909		228,470
2021-1 Trust		261,965		—
Total	$	1,835,362	$	1,852,554

Schedule of Nonaccrual With No Allowance for Loan Loss and Total Nonaccrual of Loans Held for Investment

The following tables present the amortized cost basis, or recorded investment, of the Company’s loans held for investment that were nonperforming and on nonaccrual status as of June 30, 2021 and December 31, 2020, and accruing loans that were 90 days or more past due (“DPD”) as of June 30, 2021 and December 31, 2020. These accruing loans that were 90 or more days past due represent loans that were granted a forbearance under the Company’s COVID-19 payment forbearance programs.

	June 30, 2021
	Total Nonaccrual		Nonaccrual with No Allowance for Loan Loss		Nonaccrual with Allowance for Loan Loss		Allowance for Loans Individually Evaluated		% of Allowance to Total Nonaccrual Loans			Loans 90+ DPD Still Accruing COVID-19 Program
	($ in thousands)
Commercial - Purchase	$	19,314	$	18,768	$	546	$	57		0.3	%	$	—
Commercial - Refinance		92,397		82,097		10,300		1,005		4.6			—
Residential 1-4 Unit - Purchase		21,084		20,736		348		120		0.6			—
Residential 1-4 Unit - Refinance		112,294		107,468		4,826		342		1.6			156
Quick Fix 1-4 Unit - Purchase		23,883		23,467		416		56		0.3			—
Quick Fix 1-4 Unit - Refinance		50,002		44,870		5,132		369		1.7			—
Total	$	318,974	$	297,406	$	21,568	$	1,949		9.1	%	$	156

Troubled Debt Restructuring included in nonaccrual loans:	$	169	$	—	$	—	$	25		—		$	—

	December 31, 2020
	Total Nonaccrual		Nonaccrual with No Allowance for Loan Loss		Nonaccrual with Allowance for Loan Loss		Allowance for Loans Individually Evaluated		% of Allowance to Total Nonaccrual Loans			Loans 90+ DPD Still Accruing COVID-19 Program
	($ in thousands)
Commercial - Purchase	$	22,166	$	20,955	$	1,211	$	153		0.7	%	$	—
Commercial - Refinance		101,117		96,804		4,313		519		2.3			1,747
Residential 1-4 Unit - Purchase		26,373		25,839		534		128		0.6			—
Residential 1-4 Unit - Refinance		120,152		113,206		6,946		465		2.1			109
Quick Fix 1-4 Unit - Purchase		6,585		3,808		2,777		525		2.4			—
Quick Fix 1-4 Unit - Refinance		59,843		53,616		6,227		878		4.0			123
Total	$	336,236	$	314,228	$	22,008	$	2,668		12.1	%	$	1,979

Troubled Debt Restructuring included in nonaccrual loans:	$	173	$	—	$	—	$	25		—		$	—

Schedule of Accrued Interest Receivables Written Off by Reversing Interest Income by Portfolio Segment

The following tables present the amortized cost basis in the loans held for investment, excluding loans held for investment at fair value, as of June 30, 2021 and 2020, and the amount of accrued interest receivables written off by reversing interest income by portfolio segment for the three and six months ended June 30, 2021 and 2020 (in thousands):

	Three Months Ended June 30,
	2021				2020
	Amortized Cost		Interest Reversal		Amortized Cost		Interest Reversal
Commercial - Purchase	$	366,737	$	53	$	303,373	$	303
Commercial - Refinance		690,964		225		711,397		1,961
Residential 1-4 Unit - Purchase		276,896		63		245,579		321
Residential 1-4 Unit - Refinance		608,543		281		606,432		1,643
Quick Fix 1-4 Unit - Purchase		40,205		639		—		—
Quick Fix 1-4 Unit - Refinance		104,371		117		—		—
Total	$	2,087,716	$	1,378	$	1,866,781	$	4,228

	Six Months Ended June 30,
	2021				2020
	Amortized Cost		Interest Reversal		Amortized Cost		Interest Reversal
Commercial - Purchase	$	366,737	$	192	$	303,373	$	425
Commercial - Refinance		690,964		693		711,397		2,633
Residential 1-4 Unit - Purchase		276,896		121		245,579		404
Residential 1-4 Unit - Refinance		608,543		801		606,432		2,255
Quick Fix 1-4 Unit - Purchase		40,205		685		—		—
Quick Fix 1-4 Unit - Refinance		104,371		358		—		—
Total	$	2,087,716	$	2,850	$	1,866,781	$	5,717

Schedule of Activity in Allowance for Credit Losses

The following tables present the activity in the allowance for credit losses for the three and six months ended June 30, 2021 and 2020 (in thousands):

	Three Months Ended June 30, 2021
							Residential			Residential			Quick Fix			Quick Fix
	Commercial			Commercial			1-4 Unit			1-4 Unit			1-4 Unit			1-4 Unit
	Purchase			Refinance			Purchase			Refinance			Purchase			Refinance					Total
Allowance for credit losses:
Beginning Balance - April 1,2021	$	328		$	1,990		$	322		$	1,227		$	386		$		1,628			$	5,881
Provision for loan losses (1)		48			28			(41	)		(229	)		(313	)			(493		)		(1,000		)
Charge-offs		(114	)		(95	)		—			(151	)		—				(558		)		(918		)
Ending balance	$	262		$	1,923		$	281		$	847		$	73		$		577			$	3,963

Allowance related to:
Loans individually evaluated	$	57		$	1,005		$	120		$	342		$	56		$		369			$	1,949
Loans collectively evaluated		205			918			161			507			16				207				2,014
Amortized cost related to:
Loans individually evaluated	$	19,314		$	92,397		$	21,084		$	112,294		$	23,883		$		50,002			$	318,974
Loans collectively evaluated		347,423			598,567			255,812			496,249			16,322				54,369				1,768,742
	Three Months Ended June 30, 2020
							Residential			Residential			Quick Fix				Quick Fix
	Commercial			Commercial			1-4 Unit			1-4 Unit			1-4 Unit				1-4 Unit
	Purchase			Refinance			Purchase			Refinance			Purchase				Refinance					Total
Allowance for credit losses:
Beginning Balance - April 1,2021	$	352		$	1,594		$	250		$	1,300		$	—			$		—				3,496
Provision for loan losses (1)		172			1,093			211			324			—					—				1,800
Charge-offs		—			—			(58	)		(18	)		—					—				(76	)
Ending balance	$	524		$	2,687		$	403		$	1,606		$	—			$		—			$	5,220

	Six Months Ended June 30, 2021
							Residential			Residential			Quick Fix			Quick Fix
	Commercial			Commercial			1-4 Unit			1-4 Unit			1-4 Unit			1-4 Unit
	Purchase			Refinance			Purchase			Refinance			Purchase			Refinance			Total
Allowance for credit losses:
Beginning Balance - January 1,2021	$	373		$	2,093		$	333		$	1,216		$	595		$	1,235		$	5,845
Provision for loan losses (1)		3			(76	)		(15	)		(218	)		(508	)		(81	)		(895	)
Charge-offs		(114	)		(94	)		(37	)		(151	)		(14	)		(577	)		(987	)
Ending balance	$	262		$	1,923		$	281		$	847		$	73		$	577		$	3,963

Allowance related to:
Loans individually evaluated	$	57		$	1,005		$	120		$	342		$	56		$	369		$	1,949
Loans collectively evaluated		205			918			161			507			16			207			2,014
Amortized cost related to:
Loans individually evaluated	$	19,314		$	92,397		$	21,084		$	112,294		$	23,883		$	50,002		$	318,974
Loans collectively evaluated		347,423			598,567			255,812			496,249			16,322			54,369			1,768,742

	Six Months Ended June 30, 2020
						Residential			Residential			Quick Fix		Quick Fix
	Commercial			Commercial		1-4 Unit			1-4 Unit			1-4 Unit		1-4 Unit
	Purchase			Refinance		Purchase			Refinance			Purchase		Refinance		Total
Allowance for credit losses:
Beginning balance, prior to adoption of ASC 326	$	304		$	1,016	$	148		$	772		$	—	$	—	$	2,240
Impact of adopting ASC 326		19			62		9			47			—		—		137
Balance - January 1, 2020	$	323		$	1,078	$	157		$	819		$	—	$	—	$	2,377
Provision for loan losses (1)		280			1,609		382			817			—		—		3,088
Charge-offs		(79	)		—		(136	)		(30	)		—		—		(245	)
Ending balance	$	524		$	2,687	$	403		$	1,606		$	—	$	—	$	5,220

Allowance related to:
Loans individually evaluated	$	181		$	592	$	96		$	404		$	—	$	—		1,273
Loans collectively evaluated		342			2,095		307			1,203			—		—		3,947
Amortized cost related to:
Loans individually evaluated	$	20,615		$	113,350	$	22,017		$	114,790		$	—	$	—		270,772
Loans collectively evaluated		282,759			598,046		223,561			491,643			—		—		1,596,009

(1)

The provision for loan losses decreased from approximately $1.8 million and $3.1 million for the three and six months ended June 30,2020 respectively to reversal of $(1.0) and $(0.9) million for the three and six months ended June 30, 2021 respectively due mainly to an improved economic outlook as the economy recovers from the COVID-19 pandemic.

Schedule of Aging Status of Amortized Cost Basis in Loans Held for Investment Portfolio

The following table presents the aging status of the amortized cost basis in the loans held for investment portfolio, excluding loans held for investment at fair value, which includes $346.7 million and $396.9 million loans in the Company’s COVID-19 forbearance program as of June 30, 2021 and December 31, 2020, respectively (in thousands):

	30–59 days		60–89 days		90+days		Total				Total
June 30, 2021	past due		past due		past due⁽¹⁾		past due		Current		loans
Loans individually evaluated
Commercial - Purchase	$	762	$	1,571	$	16,981	$	19,314	$	—	$	19,314
Commercial - Refinance		4,668		7,065		80,664		92,397		—		92,397
Residential 1-4 Unit - Purchase		84		1,099		19,901		21,084		—		21,084
Residential 1-4 Unit - Refinance		1,344		1,566		109,384		112,294		—		112,294
Quick Fix 1-4 Unit - Purchase		—		—		23,883		23,883		—		23,883
Quick Fix 1-4 Unit - Refinance		1,322		1,682		46,998		50,002		—		50,002
Total loans individually evaluated	$	8,180	$	12,983	$	297,811	$	318,974	$	—	$	318,974
Loans collectively evaluated
Commercial - Purchase	$	9,168	$	4,931	$	—	$	14,099	$	333,324	$	347,423
Commercial - Refinance		19,366		12,264		—		31,630		566,937		598,567
Residential 1-4 Unit - Purchase		4,697		1,307		—		6,004		249,808		255,812
Residential 1-4 Unit - Refinance		29,397		8,481		156		38,034		458,215		496,249
Quick Fix 1-4 Unit - Purchase		2,983		1,572		—		4,555		11,767		16,322
Quick Fix 1-4 Unit - Refinance		4,231		4,291		—		8,522		45,847		54,369
Total loans collectively evaluated	$	69,842	$	32,846	$	156	$	102,844	$	1,665,898	$	1,768,742
Ending balance	$	78,022	$	45,829	$	297,967	$	421,818	$	1,665,898	$	2,087,716

	30–59 days		60–89 days		90+days		Total				Total
December 31, 2020	past due		past due		past due⁽¹⁾		past due		Current		loans
Loans individually evaluated
Commercial - Purchase	$	961	$	1,307	$	19,898	$	22,166	$	—	$	22,166
Commercial - Refinance		2,118		7,532		91,467		101,117		—		101,117
Residential 1-4 Unit - Purchase		192		2,915		23,266		26,373		—		26,373
Residential 1-4 Unit - Refinance		1,440		3,010		115,702		120,152		—		120,152
Quick Fix 1-4 Unit - Purchase		—		—		6,585		6,585		—		6,585
Quick Fix 1-4 Unit - Refinance		964		760		58,119		59,843		—		59,843
Total loans individually evaluated	$	5,675	$	15,524	$	315,037	$	336,236	$	—	$	336,236
Loans collectively evaluated
Commercial - Purchase	$	8,000	$	7,081	$	—	$	15,081	$	263,657	$	278,738
Commercial - Refinance		33,725		13,224		1,747		48,696		535,285		583,981
Residential 1-4 Unit - Purchase		5,030		1,261		—		6,291		191,928		198,219
Residential 1-4 Unit - Refinance		33,144		14,567		109		47,820		398,953		446,773
Quick Fix 1-4 Unit - Purchase		1,972		21,780		—		23,752		12,987		36,739
Quick Fix 1-4 Unit - Refinance		8,406		5,383		123		13,912		59,336		73,248
Total loans collectively evaluated	$	90,277	$	63,296	$	1,979	$	155,552	$	1,462,146	$	1,617,698
Ending balance	$	95,952	$	78,820	$	317,016	$	491,788	$	1,462,146	$	1,953,934

Schedule of Amortized Cost in Loans Held for Investment based on Accrual Status and by Loan Origination Year

The following tables present the amortized cost in loans held for investment, excluding loans held for investment at fair value, based on accrual status and by loan origination year as of June 30, 2021 and December 31, 2020 (in thousands).

	Term Loans Amortized Cost Basis by Origination Year
June 30, 2021:	2021		2020		2019		2018		2017		Pre-2017		Total
Commercial - Purchase
Payment performance
Performing	$	95,441	$	55,726	$	91,153	$	59,586	$	25,578	$	19,939	$	347,423
Nonperforming		—		402		4,606		6,396		5,625		2,285		19,314
Total Commercial - Purchase	$	95,441	$	56,128	$	95,759	$	65,982	$	31,203	$	22,224	$	366,737

Commercial - Refinance
Payment performance
Performing	$	87,103	$	67,946	$	157,006	$	137,078	$	70,672	$	78,762	$	598,567
Nonperforming		—		4,046		29,316		29,124		18,856		11,055		92,397
Total Commercial - Refinance	$	87,103	$	71,992	$	186,322	$	166,202	$	89,528	$	89,817	$	690,964

Residential 1-4 Unit - Purchase
Payment performance
Performing	$	101,387	$	13,212	$	60,395	$	34,837	$	17,858	$	28,123	$	255,812
Nonperforming		232		3,668		5,478		3,977		4,398		3,331		21,084
Total Residential 1-4 Unit - Purchase	$	101,619	$	16,880	$	65,873	$	38,814	$	22,256	$	31,454	$	276,896

Residential 1-4 Unit - Refinance
Payment performance
Performing	$	141,385	$	35,589	$	138,095	$	83,511	$	46,183	$	51,486	$	496,249
Nonperforming		1,143		7,714		40,030		32,693		17,267		13,447		112,294
Total Residential 1-4 Unit - Purchase	$	142,528	$	43,303	$	178,125	$	116,204	$	63,450	$	64,933	$	608,543

Quick Fix 1-4 Unit - Purchase
Payment performance
Performing	$	5,222	$	6,578	$	4,336	$	186	$	—	$	—	$	16,322
Nonperforming		—		14,042		9,425		416		—		—		23,883
Total Quick Fix 1-4 Unit - Purchase	$	5,222	$	20,620	$	13,761	$	602	$	—	$	—	$	40,205

Quick Fix 1-4 Unit - Refinance
Payment performance
Performing	$	9,512	$	21,736	$	23,121	$	—	$	—	$	—	$	54,369
Nonperforming		—		17,655		26,679		5,668		—		—		50,002
Total Quick Fix 1-4 Unit - Refinance	$	9,512	$	39,391	$	49,800	$	5,668	$	—	$	—	$	104,371

Total Portfolio	$	441,425	$	248,314	$	589,640	$	393,472	$	206,437	$	208,428	$	2,087,716

	Term Loans Amortized Cost Basis by Origination Year
December 31, 2020	2020		2019		2018		2017		2016		Pre-2016		Total
Commercial - Purchase
Payment performance
Performing	$	56,446	$	99,534	$	64,706	$	34,862	$	9,500	$	13,690	$	278,738
Nonperforming		1,046		4,666		5,799		7,182		1,539		1,934		22,166
Total Commercial - Purchase	$	57,492	$	104,200	$	70,505	$	42,044	$	11,039	$	15,624	$	300,904

Commercial - Refinance
Payment performance
Performing	$	75,376	$	176,854	$	157,499	$	87,476	$	34,858	$	51,918	$	583,981
Nonperforming		4,929		26,776		32,955		18,980		10,392		7,085		101,117
Total Commercial - Refinance	$	80,305	$	203,630	$	190,454	$	106,456	$	45,250	$	59,003	$	685,098

Residential 1-4 Unit - Purchase
Payment performance
Performing	$	26,215	$	69,775	$	42,537	$	25,874	$	7,056	$	26,762	$	198,219
Nonperforming		1,611		5,973		8,949		5,059		1,348		3,433		26,373
Total Residential 1-4 Unit - Purchase	$	27,826	$	75,748	$	51,486	$	30,933	$	8,404	$	30,195	$	224,592

Residential 1-4 Unit - Refinance
Payment performance
Performing	$	57,945	$	168,912	$	96,568	$	61,033	$	22,949	$	39,366	$	446,773
Nonperforming		3,934		42,159		37,451		17,942		7,653		11,013		120,152
Total Residential 1-4 Unit - Purchase	$	61,879	$	211,071	$	134,019	$	78,975	$	30,602	$	50,379	$	566,925

Quick Fix 1-4 Unit - Purchase
Payment performance
Performing	$	20,563	$	15,990	$	186	$	—	$	—	$	—	$	36,739
Nonperforming		3,764		2,217		604		—		—		—		6,585
Total Quick Fix 1-4 Unit - Purchase	$	24,327	$	18,207	$	790	$	—	$	—	$	—	$	43,324

Quick Fix 1-4 Unit - Refinance
Payment performance
Performing	$	35,234	$	37,818	$	196	$	—	$	—	$	—	$	73,248
Nonperforming		17,318		33,711		8,719		95		—		—		59,843
Total Quick Fix 1-4 Unit - Refinance	$	52,552	$	71,529	$	8,915	$	95	$	—	$	—	$	133,091

Total Portfolio	$	304,381	$	684,385	$	456,169	$	258,503	$	95,295	$	155,201	$	1,953,934