Note 6 — Loans Held for Investment at Amortized Cost and Loans Held for Investment at Fair Value

The following tables summarize loans held for investment as of September 30, 2025 and December 31, 2024:


	September 30, 2025
	Loans Held for Investment, at Amortized Cost			Loans Held for Investment, at Fair Value		Total Loans Held for Investment
	(In thousands)
Unpaid principal balance	$	2,111,569		$	4,161,729	$	6,273,298
Valuation adjustments on FVO loans		—			209,588		209,588
Deferred loan origination costs		20,187			—		20,187
		2,131,756			4,371,317		6,503,073
Allowance for credit losses		(4,586	)		—		(4,586	)
Total loans held for investment	$	2,127,170		$	4,371,317	$	6,498,487


	December 31, 2024
	Loans Held for Investment, at Amortized Cost			Loans Held for Investment, at Fair Value		Total Loans Held for Investment
	(In thousands)
Unpaid principal balance	$	2,400,720		$	2,655,217	$	5,055,937
Valuation adjustments on FVO loans		—			111,734		111,734
Deferred loan origination costs		23,570			—		23,570
		2,424,290			2,766,951		5,191,241
Allowance for credit losses		(4,174	)		—		(4,174	)
Total loans held for investment	$	2,420,116		$	2,766,951	$	5,187,067

The following tables summarize the Unpaid Principal Balance (“UPB”) and amortized cost basis of loans in the Company's COVID-19 forbearance program for the three and nine months ended September 30, 2025 and the year ended December 31, 2024:


	Three Months Ended September 30, 2025								Nine Months Ended September 30, 2025
	UPB			%	Amortized Cost			%	UPB			%	Amortized Cost			%
	($ in thousands)
Beginning balance	$	130,539			$	131,790			$	142,827			$	144,247
Foreclosures		(120	)			(120	)			(1,980	)			(1,996	)
Repayments		(1,076	)			(1,111	)			(11,504	)			(11,692	)
Ending balance	$	129,343			$	130,559			$	129,343			$	130,559

Performing/Accruing	$	97,771		75.6%	$	98,691		75.6%	$	97,771		75.6%	$	98,691		75.6%

Nonperforming/Nonaccrual	$	31,572		24.4%	$	31,868		24.4%	$	31,572		24.4%	$	31,868		24.4%

Since April 1, 2020, the inception of the COVID-19 forbearance program, the Company has modified $414.4 million in UPB of loans, which includes capitalized interest of $16.3 million. As of September 30, 2025, $280.6 million in UPB of modified loans has been paid down, which includes $6.6 million of capitalized interest received.

Approximately 75.6% and 72.0% of the COVID forbearance loans in UPB were performing, and 24.4% and 28.0% were on nonaccrual status as of September 30, 2025 and December 31, 2024, respectively.

As of September 30, 2025 and December 31, 2024, the gross unpaid principal balances of loans held for investment pledged as collateral for the Company’s warehouse facilities and securitized debt issued were as follows:


	September 30, 2025		December 31, 2024
	(In thousands)
The 2013 repurchase agreement	$	158,669	$	133,577
The 2021/2024 repurchase agreements		139,782		148,676
The 2021 term repurchase agreement		39,352		74,324
The 2023 repurchase agreement		61,995		42,613
The 2024 bank credit agreement		33,436		23,330
Total pledged loans	$	433,234	$	422,520

2017-2 Trust	$	31,456	$	39,231
2018-1 Trust		24,509		28,564
2018-2 Trust		53,125		62,845
2019-1 Trust		61,184		71,521
2019-2 Trust		44,888		52,417
2019-3 Trust		43,353		52,177
2020-1 Trust		85,580		98,858
2021-1 Trust		143,331		162,750
2021-2 Trust		116,833		130,363
2021-3 Trust		122,492		136,891
2021-4 Trust		201,422		219,907
2022-1 Trust		204,536		222,909
2022-2 Trust		182,871		201,363
2022-MC1 Trust		—		58,133
2022-3 Trust		228,666		253,621
2022-4 Trust		225,441		254,668
2022-5 Trust		153,400		187,078
2023-1 Trust		154,982		180,941
2023-2 Trust		124,396		165,155
2023-3 Trust		158,810		200,943
2023-RTL1 Trust		—		85,530
2023-4 Trust		147,461		185,013
2024-1 Trust		146,038		188,638
2024-2 Trust		218,822		271,542
2024-3 Trust		172,420		198,640
2024-4 Trust		206,506		248,788
2024-5 Trust		262,032		293,881
2024-6 Trust		275,686		299,216
2025-1 Trust		336,439		—
2025-RTL1 Trust		118,498		—
2025-2 Trust		374,790		—
2025-MC1 Trust		96,786		—
2025-3 Trust		386,034		—
2025-P1 Trust		192,424		—
2025-4 Trust		467,759		—
Total	$	5,762,970	$	4,551,583

The following tables present the amortized cost basis, or recorded investment, of the Company’s loans held for investment, excluding loans carried at fair value, that were nonperforming and on nonaccrual status as of September 30, 2025 and December 31, 2024.


	September 30, 2025
	Total Nonaccrual		Nonaccrual with No Allowance for Credit Losses		Nonaccrual with Allowance for Credit Losses		Allowance for Loans Individually Evaluated
	(In thousands)
Commercial - Purchase	$	29,995	$	29,239	$	756	$	79
Commercial - Refinance		86,132		80,186		5,946		1,578
Residential 1-4 Unit - Purchase		31,094		30,779		315		6
Residential 1-4 Unit - Refinance		99,419		93,782		5,637		327
Short Term 1-4 Unit - Purchase		1,562		1,562		—		—
Short Term 1-4 Unit - Refinance		14,373		14,235		138		46
Total	$	262,575	$	249,783	$	12,792	$	2,036


	December 31, 2024
	Total Nonaccrual		Nonaccrual with No Allowance for Credit Losses		Nonaccrual with Allowance for Credit Losses		Allowance for Loans Individually Evaluated
	(In thousands)
Commercial - Purchase	$	33,290	$	32,294	$	996	$	85
Commercial - Refinance		99,683		96,155		3,528		421
Residential 1-4 Unit - Purchase		29,573		29,573		—		—
Residential 1-4 Unit - Refinance		122,439		114,265		8,174		450
Short Term 1-4 Unit - Purchase		4,754		4,754		—		—
Short Term 1-4 Unit - Refinance		23,556		23,341		215		73
Total	$	313,295	$	300,382	$	12,913	$	1,029

The Company has made the accounting policy election not to measure an allowance for accrued interest receivables. The Company has also made the accounting policy election to write off accrued interest receivables by reversing interest income when loans are placed on nonaccrual status, or 90 days or more past due. Any future payments received for these loans will be recognized on a cash basis.

The cash basis interest income recognized on nonaccrual loans, including loans held for investment at fair value, was $12.2 million and $9.8 million for the three months ended September 30, 2025 and 2024, respectively. The cash basis interest income recognized on nonaccrual loans, including loans held for investment at fair value, was $34.7 million and $25.5 million for the nine months ended September 30, 2025 and 2024, respectively. No accrued interest income was recognized on nonaccrual loans for the nine months ended September 30, 2025 and 2024. The average recorded investment of individually evaluated loans, computed using month-end balances, was $270.2 million and $323.4 million for the three months ended September 30, 2025 and 2024, respectively, and $286.6 million and $323.7 million for the nine months ended September 30, 2025 and 2024, respectively. There were no commitments to lend additional funds to debtors whose loans have been modified as of September 30, 2025 and 2024.

The following tables present the activity in the allowance for credit losses for the three and nine months ended September 30, 2025 and 2024:


	Three Months Ended September 30, 2025
	Commercial Purchase			Commercial Refinance			Residential 1-4 Unit Purchase			Residential 1-4 Unit Refinance			Short Term 1-4 Unit Purchase			Short Term 1-4 Unit Refinance			Total
	(In thousands)
Allowance for credit losses:
Beginning balance - July 1, 2025	$	679		$	2,085		$	787		$	1,258		$	27		$	46		$	4,882
Provision for (reversal of) credit losses		(129	)		3			(86	)		544			(18	)		67			381
Charge-offs		—			(49	)		(57	)		(520	)		—			(51	)		(677	)
Ending balance	$	550		$	2,039		$	644		$	1,282		$	9		$	62		$	4,586

Allowance related to:
Loans individually evaluated	$	79		$	1,578		$	6		$	327		$	—		$	46		$	2,036
Loans collectively evaluated	$	471		$	460		$	638		$	955		$	10		$	16		$	2,550
Amortized cost related to:
Loans individually evaluated	$	29,995		$	86,132		$	31,094		$	99,419		$	1,562		$	14,373		$	262,575
Loans collectively evaluated	$	479,406		$	548,283		$	338,319		$	470,210		$	28,414		$	4,549		$	1,869,181


	Three Months Ended September 30, 2024
	Commercial Purchase			Commercial Refinance			Residential 1-4 Unit Purchase			Residential 1-4 Unit Refinance			Short Term 1-4 Unit Purchase			Short Term 1-4 Unit Refinance			Total
	(In thousands)
Allowance for credit losses:
Beginning balance - July 1, 2024	$	810		$	1,752		$	934		$	1,208		$	29		$	507		$	5,240
Provision for (reversal of) credit losses		(158	)		(181	)		15			251			47			(43	)		(69	)
Charge-offs		—			(32	)		(225	)		(10	)		(53	)		—			(320	)
Ending balance	$	652		$	1,539		$	724		$	1,449		$	23		$	464		$	4,851

Allowance related to:
Loans individually evaluated	$	100		$	547		$	4		$	679		$	—		$	460		$	1,790
Loans collectively evaluated	$	552		$	992		$	720		$	770		$	23		$	4		$	3,061
Amortized cost related to:
Loans individually evaluated	$	30,872		$	101,933		$	30,576		$	126,114		$	4,038		$	24,115		$	317,648
Loans collectively evaluated	$	550,988		$	637,954		$	415,317		$	577,539		$	26,738		$	4,987		$	2,213,523


	Nine Months Ended September 30, 2025
	Commercial Purchase			Commercial Refinance			Residential 1-4 Unit Purchase			Residential 1-4 Unit Refinance			Short Term 1-4 Unit Purchase			Short Term 1-4 Unit Refinance			Total
	(In thousands)
Allowance for credit losses:
Beginning balance - January 1, 2025	$	662		$	1,399		$	746		$	1,281		$	12		$	74		$	4,174
Provision for (reversal of) credit losses		(9	)		880			131			1,208			4			1,637			3,851
Charge-offs		(103	)		(240	)		(233	)		(1,207	)		(7	)		(1,649	)		(3,439	)
Ending balance	$	550		$	2,039		$	644		$	1,282		$	9		$	62		$	4,586

Allowance related to:
Loans individually evaluated	$	79		$	1,578		$	6		$	327		$	—		$	46		$	2,036
Loans collectively evaluated	$	471		$	460		$	638		$	955		$	10		$	16		$	2,550
Amortized cost related to:
Loans individually evaluated	$	29,995		$	86,132		$	31,094		$	99,419		$	1,562		$	14,373		$	262,575
Loans collectively evaluated	$	479,406		$	548,283		$	338,319		$	470,210		$	28,414		$	4,549		$	1,869,181


	Nine Months Ended September 30, 2024
	Commercial Purchase			Commercial Refinance			Residential 1-4 Unit Purchase			Residential 1-4 Unit Refinance			Short Term 1-4 Unit Purchase			Short Term 1-4 Unit Refinance			Total
	(In thousands)
Allowance for credit losses:
Beginning balance - January 1, 2024	$	935		$	1,805		$	585		$	1,256		$	23		$	165		$	4,769
Provision for (reversal of) credit losses		(283	)		(233	)		662			310			151			544			1,151
Charge-offs		—			(33	)		(523	)		(117	)		(151	)		(245	)		(1,069	)
Ending balance	$	652		$	1,539		$	724		$	1,449		$	23		$	464		$	4,851

Allowance related to:
Loans individually evaluated	$	100		$	547		$	4		$	679		$	—		$	460		$	1,790
Loans collectively evaluated	$	552		$	992		$	720		$	770		$	23		$	4		$	3,061
Amortized cost related to:
Loans individually evaluated	$	30,872		$	101,933		$	30,576		$	126,114		$	4,038		$	24,115		$	317,648
Loans collectively evaluated	$	550,988		$	637,954		$	415,317		$	577,539		$	26,738		$	4,987		$	2,213,523

A credit quality indicator is a statistic used by the Company to monitor and assess the credit quality of loans held for investment, excluding loans held for investment at fair value. The Company monitors its charge-offs rate in relation to its nonperforming loans as a credit quality indicator. The annualized charge-offs rates were 1.62% and 0.44% of average nonperforming loans at amortized cost for the nine months ended September 30, 2025 and 2024, respectively.

Other credit quality indicators include aging status and accrual status. Nonperforming loans are loans that are 90 or more days past due, in bankruptcy, in foreclosure, or not accruing interest. Past due status is based on the contractual terms of the loan. The following tables present the aging status of the amortized cost basis in the loans held for investment portfolio, which include $130.6 million and $144.2 million loans in the Company’s COVID-19 forbearance program, excluding loans held for investment at fair value, as of September 30, 2025 and December 31, 2024, respectively:



September 30, 2025	30–59 Days Past Due		60–89 Days Past Due		90+ Days Past Due(1)		Total Past Due		Current		Total Loans
	(In thousands)
Loans individually evaluated
Commercial - Purchase	$	197	$	642	$	29,156	$	29,995	$	—	$	29,995
Commercial - Refinance		2,864		1,788		81,357		86,009		123		86,132
Residential 1-4 Unit - Purchase		1,700		853		28,541		31,094		—		31,094
Residential 1-4 Unit - Refinance		1,990		2,428		95,001		99,419		—		99,419
Short Term 1-4 Unit - Purchase		—		—		1,562		1,562		—		1,562
Short Term 1-4 Unit - Refinance		—		—		14,373		14,373		—		14,373
Total loans individually evaluated	$	6,751	$	5,711	$	249,990	$	262,452	$	123	$	262,575
Loans collectively evaluated
Commercial - Purchase	$	16,021	$	10,035	$	—	$	26,056	$	453,350	$	479,406
Commercial - Refinance		30,842		10,622		—		41,464		506,819		548,283
Residential 1-4 Unit - Purchase		14,218		3,091		—		17,309		321,010		338,319
Residential 1-4 Unit - Refinance		25,588		13,240		—		38,828		431,382		470,210
Short Term 1-4 Unit - Purchase		—		—		—		—		28,414		28,414
Short Term 1-4 Unit - Refinance		—		—		—		—		4,549		4,549
Total loans collectively evaluated	$	86,669	$	36,988	$	—	$	123,657	$	1,745,524	$	1,869,181
Ending balance	$	93,420	$	42,699	$	249,990	$	386,109	$	1,745,647	$	2,131,756

(1)

Includes loans in bankruptcy and foreclosure less than 90 days past due.



December 31, 2024	30–59 Days Past Due		60–89 Days Past Due		90+ Days Past Due(1)		Total Past Due		Current		Total Loans
	(In thousands)
Loans individually evaluated
Commercial - Purchase	$	387	$	555	$	32,348	$	33,290	$	—	$	33,290
Commercial - Refinance		3,903		3,326		92,454		99,683		—		99,683
Residential 1-4 Unit - Purchase		606		957		28,010		29,573		—		29,573
Residential 1-4 Unit - Refinance		4,784		708		116,947		122,439		—		122,439
Short Term 1-4 Unit - Purchase		—		—		4,754		4,754		—		4,754
Short Term 1-4 Unit - Refinance		—		203		23,353		23,556		—		23,556
Total loans individually evaluated	$	9,680	$	5,749	$	297,866	$	313,295	$	—	$	313,295
Loans collectively evaluated
Commercial - Purchase	$	19,633	$	12,027	$	—	$	31,660	$	500,865	$	532,525
Commercial - Refinance		37,480		12,132		—		49,612		565,675		615,287
Residential 1-4 Unit - Purchase		16,040		7,479		—		23,519		367,015		390,534
Residential 1-4 Unit - Refinance		32,398		14,302		—		46,700		499,730		546,430
Short Term 1-4 Unit - Purchase		10,073		—		—		10,073		15,989		26,062
Short Term 1-4 Unit - Refinance		—		—		—		—		157		157
Total loans collectively evaluated	$	115,624	$	45,940	$	—	$	161,564	$	1,949,431	$	2,110,995
Ending balance	$	125,304	$	51,689	$	297,866	$	474,859	$	1,949,431	$	2,424,290

(1)

Includes loans in bankruptcy and foreclosure less than 90 days past due.

In addition to the aging status, the Company also evaluates credit quality by accrual status. 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 September 30, 2025 and December 31, 2024.


	Term Loans Amortized Cost Basis by Origination Year
September 30, 2025:	2022		2021		2020		2019		Prior		Total
	(In thousands)
Commercial - Purchase
Payment performance
Performing	$	202,085	$	190,177	$	22,250	$	29,670	$	35,224	$	479,406
Nonperforming		10,520		11,195		3,435		3,477		1,368		29,995
Total Commercial - Purchase	$	212,605	$	201,372	$	25,685	$	33,147	$	36,592	$	509,401

Commercial - Refinance
Payment performance
Performing		189,091	$	154,822	$	34,322	$	66,485	$	103,563	$	548,283
Nonperforming		25,144		16,673		3,600		15,311		25,404		86,132
Total Commercial - Refinance	$	214,235	$	171,495	$	37,922	$	81,796	$	128,967	$	634,415

Residential 1-4 Unit - Purchase
Payment performance
Performing		150,726	$	147,630	$	4,789	$	14,901	$	20,273	$	338,319
Nonperforming		12,374		10,569		1,394		1,052		5,705		31,094
Total Residential 1-4 Unit - Purchase	$	163,100	$	158,199	$	6,183	$	15,953	$	25,978	$	369,413

Residential 1-4 Unit - Refinance
Payment performance
Performing	$	193,038	$	177,253	$	14,534	$	40,118	$	45,267	$	470,210
Nonperforming		30,319		38,334		3,409		12,570		14,787		99,419
Total Residential 1-4 Unit - Refinance	$	223,357	$	215,587	$	17,943	$	52,688	$	60,054	$	569,629

Short Term 1-4 Unit - Purchase
Payment performance
Performing	$	—	$	—	$	21,228	$	7,186	$	—	$	28,414
Nonperforming		979		—		583		—		—		1,562
Total Short Term 1-4 Unit - Purchase	$	979	$	—	$	21,811	$	7,186	$	—	$	29,976

Short Term 1-4 Unit - Refinance
Payment performance
Performing	$	4,549	$	—	$	—	$	—	$	—	$	4,549
Nonperforming		1,216		—		1,845		8,207		3,105		14,373
Total Short Term 1-4 Unit - Refinance	$	5,765	$	—	$	1,845	$	8,207	$	3,105	$	18,922

Total Portfolio	$	820,041	$	746,653	$	111,389	$	198,977	$	254,696	$	2,131,756

Gross charge-offs - quarter-ended September 30, 2025	$	597	$	63	$	17	$	—	$	—	$	677

Gross charge-offs - year-to-date September 30, 2025	$	2,799	$	329	$	45	$	75	$	191	$	3,439


	Term Loans Amortized Cost Basis by Origination Year
December 31, 2024	2022		2021		2020		2019		Prior		Total
	(In thousands)
Commercial - Purchase
Payment performance
Performing	$	223,564	$	210,742	$	24,253	$	33,505	$	40,461	$	532,525
Nonperforming		13,046		6,524		4,994		5,758		2,968		33,290
Total Commercial - Purchase	$	236,610	$	217,266	$	29,247	$	39,263	$	43,429	$	565,815

Commercial - Refinance
Payment performance
Performing	$	207,766	$	167,568	$	40,772	$	76,886	$	122,295	$	615,287
Nonperforming		26,624		19,172		4,305		18,708		30,874		99,683
Total Commercial - Refinance	$	234,390	$	186,740	$	45,077	$	95,594	$	153,169	$	714,970

Residential 1-4 Unit - Purchase
Payment performance
Performing	$	173,252	$	167,804	$	8,166	$	17,740	$	23,572	$	390,534
Nonperforming		9,724		12,384		1,704		657		5,104		29,573
Total Residential 1-4 Unit - Purchase	$	182,976	$	180,188	$	9,870	$	18,397	$	28,676	$	420,107

Residential 1-4 Unit - Refinance
Payment performance
Performing	$	226,187	$	201,247	$	16,116	$	46,487	$	56,393	$	546,430
Nonperforming		46,873		34,974		7,560		15,176		17,856		122,439
Total Residential 1-4 Unit - Refinance	$	273,060	$	236,221	$	23,676	$	61,663	$	74,249	$	668,869

Short Term 1-4 Unit - Purchase
Payment performance
Performing	$	2,044	$	—	$	17,985	$	6,033	$	—	$	26,062
Nonperforming		4,170		—		584		—		—		4,754
Total Short Term 1-4 Unit - Purchase	$	6,214	$	—	$	18,569	$	6,033	$	—	$	30,816

Short Term 1-4 Unit - Refinance
Payment performance
Performing	$	157	$	—	$	—	$	—	$	—	$	157
Nonperforming		8,293		—		2,186		9,042		4,035		23,556
Total Short Term 1-4 Unit - Refinance	$	8,450	$	—	$	2,186	$	9,042	$	4,035	$	23,713

Total Portfolio	$	941,700	$	820,415	$	128,625	$	229,992	$	303,558	$	2,424,290

Gross charge-offs - quarter-ended December 31, 2024	$	111	$	184	$	—	$	265	$	139	$	699

Gross charge-offs - year-ended December 31, 2024	$	1,132	$	219	$	—	$	265	$	152	$	1,768

The following tables present the aggregate fair value of loans held for investment at fair value that are 90 days or more past due and/or in nonaccrual status, and the difference between the aggregate fair value and the aggregate unpaid principal balance as of September 30, 2025 and December 31, 2024 by loan segments:


	Fair Value						Unpaid Principal Balance						Difference
	Current–89 Days		90+ Days Past Due				Current–89 Days		90+ Days Past Due				90+ Days Past Due
September 30, 2025	Past Due		or Nonaccrual		Total		Past Due		or Nonaccrual		Total		or Nonaccrual
	(In thousands)
Commercial - Purchase	$	840,108	$	31,815	$	871,923	$	774,279	$	37,771	$	812,050	$	(5,956	)
Commercial - Refinance		1,271,431		62,131		1,333,562		1,164,681		74,428		1,239,109		(12,297	)
Residential 1-4 Unit - Purchase		477,334		33,860		511,194		456,303		40,200		496,503		(6,340	)
Residential 1-4 Unit - Refinance		1,320,197		149,338		1,469,535		1,249,718		177,693		1,427,411		(28,355	)
Short Term 1-4 Unit - Purchase		74,743		8,106		82,849		74,076		9,767		83,843		(1,661	)
Short Term 1-4 Unit - Refinance		89,932		12,322		102,254		87,996		14,817		102,813		(2,495	)
Ending balance	$	4,073,745	$	297,572	$	4,371,317	$	3,807,053	$	354,676	$	4,161,729	$	(57,104	)


	Fair Value						Unpaid Principal Balance						Difference
	Current–89 Days		90+ Days Past Due				Current–89 Days		90+ Days Past Due				90+ Days Past Due
December 31, 2024	Past Due		or Nonaccrual		Total		Past Due		or Nonaccrual		Total		or Nonaccrual
	(In thousands)
Commercial - Purchase	$	505,244	$	15,636	$	520,880	$	466,526	$	18,586	$	485,112	$	(2,950	)
Commercial - Refinance		672,504		24,129		696,633		620,332		29,195		649,527		(5,066	)
Residential 1-4 Unit - Purchase		381,660		28,352		410,012		366,431		34,457		400,888		(6,105	)
Residential 1-4 Unit - Refinance		862,971		103,985		966,956		819,633		126,340		945,973		(22,355	)
Short Term 1-4 Unit - Purchase		78,863		3,981		82,844		78,207		4,854		83,061		(873	)
Short Term 1-4 Unit - Refinance		76,277		13,349		89,626		74,620		16,036		90,656		(2,687	)
Ending balance	$	2,577,519	$	189,432	$	2,766,951	$	2,425,749	$	229,468	$	2,655,217	$	(40,036	)