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Other Assets and Liabilities
 12 Months Ended
Dec. 31, 2020
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
Other Assets and Liabilities Other Assets and Liabilities
Other assets at December 31, 2020 and December 31, 2019 are summarized in the following table.
Table 12.1 – Components of Other Assets
(In Thousands)December 31, 2020December 31, 2019
Investment receivable$43,176 $23,330 
Accrued interest receivable39,445 71,058 
Operating lease right-of-use assets15,012 11,866 
REO8,413 9,462 
FHLBC stock5,000 43,393 
Margin receivable4,758 209,776 
Fixed assets and leasehold improvements (1)
4,203 4,901 
Pledged collateral1,177 32,945 
Other9,404 12,590 
Total Other Assets$130,588 $419,321 
(1)Fixed assets and leasehold improvements had a basis of $11 million and accumulated depreciation of $6 million at December 31, 2020.
Accrued expenses and other liabilities at December 31, 2020 and December 31, 2019 are summarized in the following table.
Table 12.2 – Components of Accrued Expenses and Other Liabilities
(In Thousands)December 31, 2020December 31, 2019
Accrued interest payable$34,858 $60,655 
Accrued compensation24,393 33,888 
Payable to minority partner16,941 13,189 
Operating lease liabilities16,687 13,443 
Margin payable14,728 1,700 
Deferred consideration14,579 — 
Guarantee obligations10,039 14,009 
Residential loan and MSR repurchase reserve8,631 4,268 
Current accounts payable6,455 5,468 
Bridge loan holdbacks5,708 10,682 
Accrued taxes payable5,614 5,268 
Accrued operating expenses5,509 4,358 
Contingent consideration— 28,484 
Other15,198 11,481 
Total Accrued Expenses and Other Liabilities$179,340 $206,893 
Investment Receivable
Investment receivable primarily consists of amounts receivable from third-party servicers related to principal and interest receivable from business purpose loans and fees receivable from servicer advance investments.
Margin Receivable and Payable
Margin receivable and payable resulted from margin calls between us and our counterparties under derivatives, master repurchase agreements, and warehouse facilities, whereby we or the counterparty posted collateral. Through December 31, 2020, we had met all margin calls due.
Operating Lease Right-of-Use Assets and Operating Lease Liabilities
The operating lease right-of-use assets and operating lease liabilities presented in the tables above resulted from our adoption of ASU 2016-02, "Leases," in the first quarter of 2019. The operating lease liabilities are equal to the present value of our remaining lease payments discounted at our incremental borrowing rate and the operating lease right-of-use assets are equal to the operating lease liabilities adjusted for our deferred rent liabilities. These balances are reduced as lease payments are made. See Note 16 for additional information on leases.
FHLBC Stock
In accordance with our FHLB-member subsidiary's borrowing agreement with the FHLBC, our subsidiary is required to purchase and hold stock in the FHLBC. See Note 3 and Note 15 for additional information on this borrowing agreement.
Pledged Collateral and Guarantee Obligations
The pledged collateral and guarantee obligations presented in the tables above are related to our risk-sharing arrangements with Fannie Mae and Freddie Mac, as well as collateral pledged for certain interest rate agreements. In accordance with these arrangements, we are required to pledge collateral to secure our guarantee obligations and to meet margin requirements for our interest rate agreements. See Note 3 and Note 16 for additional information on our risk-sharing arrangements.
Deferred Consideration
The deferred consideration presented in the table above is related to our acquisition of 5 Arches in 2019. Prior to March 31, 2020, these earn-out payments were classified as a contingent consideration liability. As a result of an amendment to the agreement, we reclassified the contingent liability to a deferred liability, as the remaining payments became payable on a set timetable without any remaining contingencies.
Bridge Loan Holdbacks
Bridge loan holdbacks represent loan amounts payable to bridge loan borrowers subject to the completion of various phases of property rehabilitation.
REO
The following table summarizes the activity and carrying values of REO assets held at Redwood and at consolidated Legacy Sequoia, Freddie Mac SLST, and CAFL entities during the year ended December 31, 2020.
Table 12.3 – REO Activity
Year Ended December 31, 2020
(In Thousands)Redwood Bridge Legacy SequoiaFreddie Mac SLSTCAFLTotal
Balance at beginning of period $6,887 $460 $445 $1,670 $9,462 
Transfers to REO6,111 532 1,319 6,157 14,119 
Liquidations (1)
(8,830)(243)(1,178)(4,371)(14,622)
Changes in fair value, net432 (111)60 (927)(546)
Balance at End of Period$4,600 $638 $646 $2,529 $8,413 
(1)For the year ended December 31, 2020, REO liquidations resulted in $1 million of realized losses, which were recorded in Investment fair value changes, net on our consolidated statements of income (loss).
The following table provides the detail of REO assets at Redwood and at consolidated Legacy Sequoia, Freddie Mac SLST, and CAFL entities at December 31, 2020 and December 31, 2019.
Table 12.4 – REO Assets
Number of REO assetsRedwood Bridge Legacy SequoiaFreddie Mac SLSTCAFLTotal
At December 31, 20203 3 9 2 17 
At December 31, 20194 4 3 2 13 
Legal and Repurchase Reserves
See Note 16 for additional information on the legal and residential repurchase reserves.
Payable to Minority Partner
In 2018, Redwood and a third-party co-investor, through two partnership entities consolidated by Redwood, purchased servicer advances and excess MSRs related to a portfolio of residential mortgage loans serviced by the co-investor (see Note 4 and Note 10 for additional information on the partnership entities and associated investments). We account for the co-investor’s interests in the entities as liabilities and at December 31, 2020, the carrying value of their interests was $17 million, representing their current economic interest in the entities. Earnings from the partnership entities are allocated to the co-investors on a proportional basis and during the years ended December 31, 2020 and 2019, we allocated $0.2 million of losses and $1 million of gains, respectively, to the co-investors, which were recorded in Other expenses on our consolidated statements of income.