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Loans and Allowance for Credit Losses | 9 Months Ended
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Sep. 30, 2025
Receivables [Abstract] |
Loans and Allowance for Credit Losses | Loans and Allowance for Credit Losses Loans include loans held for investment that are accounted for at amortized cost net of allowance for credit losses and loans held for sale that are accounted for at the lower of cost or market net of a valuation allowance. The classification for a loan is based on management’s strategy for the loan. Loans held for investment As of September 30, 2025 and December 31, 2024, the Company had 119 and 157 loans held for investment, respectively. As of September 30, 2025 and December 31, 2024, the Company had direct reserves on outstanding principal for loans held for investment of $5.5 million and $13.3 million, respectively. Loans held for sale The Company offers mortgage notes receivable to be sold in real estate capital markets. The Company does not originate loans with the intent to designate them as loans held for sale. Nevertheless, as of September 30, 2025, the Company had designated seven loans as held for sale. These seven loans had a gross outstanding principal balance of $9.4 million and an aggregate valuation allowance of $0.6 million based on the lower of cost or market value. As of December 31, 2024, the Company had designated 11 loans as held for sale. These loans had a gross outstanding principal balance of $15.9 million and an aggregate valuation allowance of $4.9 million based on the lower of cost or market value. As of both September 30, 2025 and December 31, 2024, such loans were on non-accrual status and pending foreclosure. The following table presents relevant data relating to the Company's loans held for sale as of September 30, 2025:
| Balance as of December 31, 2024 |  | Transfers in |  | Change in valuation allowance |  | Transfers out, net |  | Balance as of September 30, 2025
| (in thousands)
Loans held for sale, net | $ | 10,970 |  |  | $ | — |  |  | $ | 1,014 |  |  | $ | (3,187) |  |  | $ | 8,797 |
Total loans held for sale, net | $ | 10,970 |  |  | $ | — |  |  | $ | 1,014 |  |  | $ | (3,187) |  |  | $ | 8,797 |
Loan portfolio As of September 30, 2025 and December 31, 2024, loans held for investment on non-accrual status had an outstanding principal balance of $104.1 million and $87.1 million, respectively. The non-accrual loans are inclusive of loans pending foreclosure. The following table summarizes the Company’s loan portfolio by past due status:
|  | Loans held for investment
(in thousands) |  | Current |  | 30-59 days past due |  | 60-89 days past due |  | Greater than 90 days |  | Total
As of September 30, 2025 |  | $ | 261,595 |  |  | $ | 9,559 |  |  | $ | — |  |  | $ | 104,066 |  |  | $ | 375,220 |
As of June 30, 2025 |  | $ | 257,780 |  |  | $ | 6,065 |  |  | $ | 1,295 |  |  | $ | 119,599 |  |  | $ | 384,739 |
As of March 31, 2025 |  | $ | 220,538 |  |  | $ | 37,617 |  |  | $ | 2,114 |  |  | $ | 107,591 |  |  | $ | 367,860 |
As of December 31, 2024 |  | $ | 223,513 |  |  | $ | 49,460 |  |  | $ | 16,936 |  |  | $ | 87,082 |  |  | $ | 376,991 |
As of September 30, 2025, the Company’s mortgage loan portfolio includes loans with stated interest rates ranging from 7.0% to 15.0%. The default interest rate is generally 18.0%, but could be more or less depending on state usury laws and other considerations deemed relevant by the Company. As of September 30, 2025 and December 31, 2024, the Company had one borrower representing 13.4% and 14.0% of the outstanding mortgage loan portfolio, or $50.4 million and $55.0 million, respectively. These loans are included in our nonperforming loan portfolio. The following table presents the Company’s loans held for investment portfolio by geographical location as of September 30, 2025 and December 31, 2024:
|  | September 30, 2025 |  | December 31, 2024 |
(in thousands) |  | Carrying Value |  | % of Portfolio |  | Carrying Value |  | % of Portfolio |
New England |  | $ | 158,731 |  |  | 42.3 | % |  | $ | 179,421 |  |  | 47.6 | % |
Mid-Atlantic |  | 40,096 |  |  | 10.7 | % |  | 42,304 |  |  | 11.2 | % |
South |  | 176,393 |  |  | 47.0 | % |  | 151,165 |  |  | 40.1 | % |
West |  | — |  |  | — | % |  | 4,101 |  |  | 1.1 | % |
Total |  | $ | 375,220 |  |  | 100.0 | % |  | $ | 376,991 |  |  | 100.0 | % |
The following tables present the carrying value of the Company’s loans held for investment portfolio based on credit quality indicators in assessing estimated credit losses and vintage of origination at the dates indicated:
|  | September 30, 2025 |  | Year Originated (1)
FICO Score (2)(in thousands) |  | Carrying Value |  | 2025 |  | 2024 |  | 2023 |  | 2022 |  | 2021 |  | Prior
Loans held for investment: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Under 500 |  | $ | 142 |  |  | $ | — |  |  | $ | 142 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
501-550 |  | 1,072 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 944 |  |  | 128 |
551-600 |  | 286 |  |  | 286 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
601-650 |  | 19,005 |  |  | 2,743 |  |  | 6,840 |  |  | 1,052 |  |  | 1,795 |  |  | — |  |  | 6,575 |
651-700 |  | 85,601 |  |  | 17,851 |  |  | 4,755 |  |  | 6,777 |  |  | 9,961 |  |  | 44,866 |  |  | 1,391 |
701-750 |  | 117,296 |  |  | 19,278 |  |  | 7,089 |  |  | 27,134 |  |  | 756 |  |  | 62,088 |  |  | 951 |
751-800 |  | 134,194 |  |  | 35,268 |  |  | 22,943 |  |  | 42,869 |  |  | 13,355 |  |  | 19,759 |  |  | — |
801-850 |  | 17,624 |  |  | 3,285 |  |  | — |  |  | 1,700 |  |  | 12,639 |  |  | — |  |  | — |
Total |  | $ | 375,220 |  |  | $ | 78,711 |  |  | $ | 41,769 |  |  | $ | 79,532 |  |  | $ | 38,506 |  |  | $ | 127,657 |  |  | $ | 9,045 |
|  | December 31, 2024 |  | Year Originated (1)
FICO Score (2)(in thousands) |  | Carrying Value |  | 2024 |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | Prior
Loans held for investment: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Under 500 |  | $ | 140 |  |  | $ | 140 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
501-550 |  | 2,860 |  |  | — |  |  | — |  |  | — |  |  | 1,060 |  |  | — |  |  | 1,800 |
551-600 |  | 7,094 |  |  | 1,222 |  |  | 290 |  |  | 2,170 |  |  | 1,816 |  |  | 636 |  |  | 960 |
601-650 |  | 28,779 |  |  | 8,432 |  |  | 3,347 |  |  | 1,798 |  |  | 7,411 |  |  | 6,149 |  |  | 1,642 |
651-700 |  | 35,711 |  |  | 4,250 |  |  | 7,177 |  |  | 10,302 |  |  | 12,079 |  |  | 660 |  |  | 1,243 |
701-750 |  | 159,575 |  |  | 6,275 |  |  | 40,459 |  |  | 11,982 |  |  | 97,980 |  |  | 1,023 |  |  | 1,856 |
751-800 |  | 124,599 |  |  | 26,465 |  |  | 32,016 |  |  | 36,280 |  |  | 28,427 |  |  | 1,411 |  |  | — |
801-850 |  | 18,233 |  |  | — |  |  | 415 |  |  | 17,818 |  |  | — |  |  | — |  |  | — |
Total |  | $ | 376,991 |  |  | $ | 46,784 |  |  | $ | 83,704 |  |  | $ | 80,350 |  |  | $ | 148,773 |  |  | $ | 9,879 |  |  | $ | 7,501 |
_______________________________________________________________ (1)Represents the year of origination or amendment where the loan was subject to a full re-underwriting. (2)The FICO Scores are calculated at the inception of the loan and are updated if the loan is modified or on an as needed basis. Loan modifications made to borrowers experiencing financial difficulty The following tables present loan modifications during the periods indicated made to borrowers experiencing financial difficulty:
(in thousands) |  | Three Months Ended September 30, 2025
| Carrying Value |  | % of Total Carrying Value of Loans held for investment, net |  | Financial Effect
Principal modification, with no term extension |  | $ | — |  |  | — | % |  | Unpaid interest/taxes/charges added to principal balance
Term extension |  | $ | 28,952 |  |  | 8.0 | % |  | A weighted average of 9.9 months were added to the life of the loans
(in thousands) |  | Three Months Ended September 30, 2024
| Carrying Value |  | % of Total Carrying Value of Loans held for investment, net |  | Financial Effect
Principal modification, with no term extension |  | $ | 11,835 |  |  | 2.6 | % |  | Unpaid interest/taxes/charges added to principal balance
Term extension |  | $ | 16,113 |  |  | 3.5 | % |  | A weighted average of 5.0 months were added to the life of the loans
(in thousands) |  | Nine Months Ended September 30, 2025
| Carrying Value |  | % of Total Carrying Value of Loans held for investment, net |  | Financial Effect
Principal modification, with no term extension |  | $ | 15,130 |  |  | 4.2 | % |  | Unpaid interest/taxes/charges added to principal balance
Term extension |  | $ | 75,269 |  |  | 20.8 | % |  | A weighted average of 7.9 months were added to the life of the loans
(in thousands) |  | Nine Months Ended September 30, 2024
| Carrying Value |  | % of Total Carrying Value of Loans held for investment, net |  | Financial Effect
Principal modification, with no term extension |  | $ | 33,500 |  |  | 7.3 | % |  | Unpaid interest/taxes/charges added to principal balance
Term extension |  | $ | 132,602 |  |  | 29.0 | % |  | A weighted average of 8.4 months were added to the life of the loans
As of September 30, 2025, the Company had commitments to lend additional amounts totaling approximately $6.8 million to borrowers experiencing financial difficulty. During the nine months ended September 30, 2025, the Company modified the interest rate on thirteen loans with an outstanding principal balance of $30.4 million. The change in the rate was due to taking the loan off default rate. The following table presents the performance of loans that have been modified in the last 12 months to borrowers experiencing financial difficulty. Of the loans that were modified in the last 12 months to borrowers experiencing financial difficulty, one loan defaulted during the period.
|  | As of September 30, 2025
(in thousands) |  | Current |  | 90-119 days past due |  | 120+ days past due |  | Total
Principal modification, with no term extension |  | $ | 15,130 |  |  | $ | — |  |  | $ | — |  |  | $ | 15,130 |
Term extension |  | $ | 70,767 |  |  | $ | 4,502 |  |  | $ | — |  |  | $ | 75,269 |
Deferred loan fees As of September 30, 2025 and December 31, 2024, the Company had $2.4 million and $2.0 million, respectively, of deferred loan fee revenue relating to loans held for investment. There were no such deferred fees for loans held for sale as of September 30, 2025 and December 31, 2024. Allowance for credit losses The following table presents the financial statement line items that are impacted by the allowance for credit losses for the three months ended September 30, 2025:
| Balance as of June 30, 2025 |  | Provision for (recovery of) credit losses related to loans |  | Reclassification of loans held for sale to loans held for investment |  | Charge-offs |  | Balance as of September 30, 2025
| (in thousands)
Loans held for investment | $ | 17,645 |  |  | $ | (3,923) |  |  | $ | — |  |  | $ | (2,639) |  |  | $ | 11,083 |
Interest and fees receivable | 3,074 |  |  | (159) |  |  | — |  |  | — |  |  | 2,915 |
Due from borrower | 1,676 |  |  | 674 |  |  | — |  |  | (1,444) |  |  | 906 |
Unfunded commitments | 1,029 |  |  | (146) |  |  | — |  |  | — |  |  | 883 |
Real estate owned | — |  |  | 4,366 |  |  | — |  |  | (4,366) |  |  | — |
Total allowance for credit losses | $ | 23,424 |  |  | $ | 812 |  |  | $ | — |  |  | $ | (8,449) |  |  | $ | 15,787 |
The following table presents the financial statement line items that are impacted by the allowance for credit losses for the nine months ended September 30, 2025:
| Balance as of December 31, 2024 |  | Provision for (recovery of) credit losses related to loans |  | Reclassification of loans held for sale to loans held for investment |  | Charge-offs |  | Balance as of September 30, 2025
| (in thousands)
Loans held for investment | $ | 18,470 |  |  | $ | (6,905) |  |  | $ | 3,292 |  |  | $ | (3,774) |  |  | $ | 11,083 |
Interest and fees receivable | 3,133 |  |  | (218) |  |  | — |  |  | — |  |  | 2,915 |
Due from borrower | 1,135 |  |  | 1,608 |  |  | — |  |  | (1,837) |  |  | 906 |
Unfunded commitments | 924 |  |  | (41) |  |  | — |  |  | — |  |  | 883 |
Real estate owned | — |  |  | 8,344 |  |  | — |  |  | (8,344) |  |  | — |
Total allowance for credit losses | $ | 23,662 |  |  | $ | 2,788 |  |  | $ | 3,292 |  |  | $ | (13,955) |  |  | $ | 15,787 |
The following table presents activity in the allowance for credit losses by geographic location with respect to loans held for investment for the three months ended September 30, 2025:
|  | Allowance for credit losses as of June 30, 2025 |  | Provision for (recovery of) credit losses related to loans |  | Reclassification of loans held for sale to loans held for investment |  | Charge-offs |  | Allowance for credit losses as of September 30, 2025
|  | (in thousands)
New England |  | $ | 10,466 |  |  | $ | (4,162) |  |  | $ | — |  |  | $ | — |  |  | $ | 6,304 |
Mid-Atlantic |  | 4,056 |  |  | (255) |  |  | — |  |  | (2,639) |  |  | 1,162 |
South |  | 1,290 |  |  | 449 |  |  | — |  |  | — |  |  | 1,739 |
West |  | 1,833 |  |  | 45 |  |  | — |  |  | — |  |  | 1,878 |
Total |  | $ | 17,645 |  |  | $ | (3,923) |  |  | $ | — |  |  | $ | (2,639) |  |  | $ | 11,083 |
The following table presents activity in the allowance for credit losses by geographic location with respect to loans held for investment for the nine months ended September 30, 2025:
|  | Allowance for credit losses as of December 31, 2024 |  | Provision for (recovery of) credit losses related to loans |  | Reclassification of loans held for sale to loans held for investment |  | Charge-offs |  | Allowance for credit losses as of September 30, 2025
|  | (in thousands)
New England |  | $ | 12,844 |  |  | $ | (9,832) |  |  | $ | 3,292 |  |  | $ | — |  |  | $ | 6,304 |
Mid-Atlantic |  | 1,857 |  |  | 2,411 |  |  | — |  |  | (3,106) |  |  | 1,162 |
South |  | 1,802 |  |  | 605 |  |  | — |  |  | (668) |  |  | 1,739 |
West |  | 1,967 |  |  | (89) |  |  | — |  |  | — |  |  | 1,878 |
Total |  | $ | 18,470 |  |  | $ | (6,905) |  |  | $ | 3,292 |  |  | $ | (3,774) |  |  | $ | 11,083 |
The following table presents charge-offs on loan principal related to loans held for investment by fiscal year of origination for the three months ended September 30, 2025:
|  | 2025 |  | 2024 |  | 2023 |  | 2022 |  | 2021 |  | Prior |  | Total
|  | (in thousands)
Current period charge-offs |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 158 |  |  | $ | 2,481 |  |  | $ | — |  |  | $ | 2,639 |
Total |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 158 |  |  | $ | 2,481 |  |  | $ | — |  |  | $ | 2,639 |
The following table presents charge-offs on loan principal related to loans held for investment by fiscal year of origination for the nine months ended September 30, 2025:
|  | 2025 |  | 2024 |  | 2023 |  | 2022 |  | 2021 |  | Prior |  | Total
|  | (in thousands)
Current period charge-offs |  | $ | — |  |  | $ | 134 |  |  | $ | — |  |  | $ | 645 |  |  | $ | 2,995 |  |  | $ | — |  |  | $ | 3,774 |
Total |  | $ | — |  |  | $ | 134 |  |  | $ | — |  |  | $ | 645 |  |  | $ | 2,995 |  |  | $ | — |  |  | $ | 3,774 |

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- Definition The entire disclosure for investment in mortgage loan on real estate by entity with substantial portion of business acquiring and holding investment real estate or interest in real estate. Includes, but is not limited to, information for each mortgage loan receivable equaling or exceeding 3 percent of carrying amount of mortgage. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Name Regulation S-X (SX) -Number 210 -Section 12 -Subsection 29 -Paragraph Column G -Footnote 8 -Publisher SEC Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Name Regulation S-X (SX) -Number 210 -Section 12 -Subsection 29 -Paragraph Column G -Footnote 6 -Publisher SEC Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Name Regulation S-X (SX) -Number 210 -Section 12 -Subsection 29 -Publisher SEC Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 948 -SubTopic 310 -Name Accounting Standards Codification -Section S50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org/1943274/2147478322/948-310-S50-2 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 948 -SubTopic 310 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.12-29(Column G)(Footnote 6)) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479628/948-310-S99-1 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 948 -SubTopic 310 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.12-29(Column G)(Footnote 8)) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479628/948-310-S99-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 948 -SubTopic 310 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.12-29) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479628/948-310-S99-1 + Details
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