Short-Term Debt

9 Months Ended

Sep. 30, 2019

We enter into repurchase agreements, bank warehouse agreements, and other forms of collateralized (and generally uncommitted) short-term borrowings with several banks and major investment banking firms. At September 30, 2019, we had outstanding agreements with several counterparties and we were in compliance with all of the related covenants. For additional information about these financial covenants and our short-term debt, see Part I, Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Quarterly Report on Form 10-Q and Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2018.

The table below summarizes our short-term debt, including the facilities that are available to us, the outstanding balances, the weighted average interest rate, and the maturity information at September 30, 2019 and December 31, 2018.

Table 13.1 – Short-Term Debt



	September 30, 2019
(Dollars in Thousands)	Number of Facilities	Outstanding Balance		Limit		Weighted Average Interest Rate		Maturity	Weighted Average Days Until Maturity
Facilities
Residential loan warehouse ⁽¹⁾	4	$	233,224	$	1,425,000	3.51	%	10/2019-3/2020	96
Real estate securities repo⁽¹⁾	9	1,157,646		—		3.11	%	10/2019-1/2020	28
Single-family rental loan warehouse ⁽²⁾	2	59,204		400,000		4.30	%	6/2020-6/2021	358
Residential bridge loan warehouse ⁽²⁾	4	138,988		330,000		4.54	%	10/2019-5/2022	707
Business purpose loan working capital ⁽²⁾	1	—		15,000		5.00	%	12/2020	N/A
Total Short-Term Debt Facilities	20	1,589,062
Servicer advance financing	1	191,203		350,000		3.89	%	11/2019	46
Convertible notes, net	N/A	200,552		—		5.63	%	11/2019	60
Total Short-Term Debt		$	1,980,817



	December 31, 2018
(Dollars in Thousands)	Number of Facilities	Outstanding Balance		Limit		Weighted Average Interest Rate		Maturity	Weighted Average Days Until Maturity
Facilities
Residential loan warehouse ⁽¹⁾	4	$	860,650	$	1,425,000	4.10	%	2/2019-12/2019	178
Real estate securities repo⁽¹⁾	9	988,890		—		3.47	%	1/2019-3/2019	26
Single-family rental loan warehouse ⁽²⁾	2	22,053		400,000		4.77	%	6/2020-6/2021	560
Residential bridge loan warehouse ⁽²⁾	2	66,327		80,000		5.20	%	11/2019-4/2021	629
Total Short-Term Debt Facilities	17	1,937,920
Servicer advance financing	1	262,740		350,000		4.32	%	11/2019	333
Convertible notes, net	N/A	199,619				5.63	%	11/2019	319
Total Short-Term Debt		$	2,400,279


(1)	Borrowings under our facilities are generally charged interest based on a specified margin over the one-month LIBOR interest rate. At September 30, 2019, all of these borrowings were under uncommitted facilities and were due within 364 days (or less) of the borrowing date.


(2)	Due to the revolving nature of the borrowings under these facilities, we have classified these facilities as short-term debt at September 30, 2019. Borrowings under these facilities will be repaid as the underlying loans mature or are sold to third parties or transferred to securitizations.

At September 30, 2019 and December 31, 2018, the fair value of held-for-sale residential loans pledged as collateral under our short-term debt facilities was $253 million and $935 million, respectively. At September 30, 2019, the fair value of real estate securities pledged as collateral under our short-term debt facilities was $736 million, and also included $113 million of securities retained from our consolidated Sequoia Choice securitizations as well as $385 million and $209 million of securities we owned that were issued by consolidated Freddie Mac SLST and Freddie Mac K-series securitizations, respectively. At December 31, 2018, the fair value of real estate securities pledged as collateral under our short-term debt facilities was $844 million, and also included $130 million of securities retained from our consolidated Sequoia Choice securitizations as well as $229 million and $18 million of securities we owned that were issued by consolidated Freddie Mac SLST and Freddie Mac K-series securitizations, respectively. The fair value of single-family rental and residential bridge loans pledged as collateral under our warehouse facilities was $78 million and $176 million, respectively, at September 30, 2019 and $28 million and $98 million, respectively, at December 31, 2018.

For the three and nine months ended September 30, 2019, the average balances of our short-term debt facilities were $1.97 billion and $1.81 billion, respectively. At September 30, 2019 and December 31, 2018, accrued interest payable on our short-term debt facilities was $3 million and $4 million, respectively.

Servicer advance financing consists of non-recourse short-term securitization debt used to finance servicer advance investments. We consolidate the securitization entity that issued the debt, but the entity is independent of Redwood and the assets and liabilities are not owned by and are not legal obligations of Redwood. At September 30, 2019, the fair value of servicer advances, cash and restricted cash collateralizing the securitization financing was $243 million. At September 30, 2019, the accrued interest payable balance on this financing was $0.2 million and the unamortized capitalized commitment costs were $0.4 million.

During the fourth quarter of 2018, $201 million principal amount of 5.625% exchangeable senior notes and $1 million of unamortized deferred issuance costs were reclassified from long-term debt to short-term debt as the maturity of the notes was less than one year as of November 2018. At September 30, 2019, the accrued interest payable balance on this debt was $4 million. See Note 15 for additional information on our convertible notes.

We also maintain a $10 million committed line of credit with a financial institution that is secured by certain mortgage-backed securities with a fair market value of $3 million at September 30, 2019. At both September 30, 2019 and December 31, 2018, we had no outstanding borrowings on this facility.

Remaining Maturities of Short-Term Debt

The following table presents the remaining maturities of our secured short-term debt by the type of collateral securing the debt as well as our convertible notes at September 30, 2019.

Table 13.2 – Short-Term Debt by Collateral Type and Remaining Maturities



	September 30, 2019
(In Thousands)	Within 30 days		31 to 90 days		Over 90 days		Total
Collateral Type
Held-for-sale residential loans	$	31,031	$	108,316	$	93,877	$	233,224
Real estate securities	834,748		293,108		29,790		1,157,646
Single-family rental loans	—		—		59,204		59,204
Residential bridge loans	—		—		138,988		138,988
Total Secured Short-Term Debt	865,779		401,424		321,859		1,589,062
Servicer advance financing	—		191,203		—		191,203
Convertible notes, net	—		200,552		—		200,552
Total Short-Term Debt	$	865,779	$	793,179	$	321,859	$	1,980,817