Other Assets and Liabilities

3 Months Ended

Mar. 31, 2023

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Other assets at March 31, 2023 and December 31, 2022 are summarized in the following table.

Table 13.1 – Components of Other Assets


(In Thousands)	March 31, 2023		December 31, 2022
Accrued interest receivable	$	61,397	$	60,893
Investment receivable	45,372		36,623
Deferred tax asset	41,931		41,931
Margin receivable	17,079		13,802
Operating lease right-of-use assets	15,297		16,177
REO	13,095		6,455
Fixed assets and leasehold improvements (1)	9,292		12,616
Income tax receivables	3,047		3,399





Other	25,711		19,344
Total Other Assets	$	232,221	$	211,240

(1)Fixed assets and leasehold improvements had a basis of $18 million and accumulated depreciation of $9 million at March 31, 2023.

Accrued expenses and other liabilities at March 31, 2023 and December 31, 2022 are summarized in the following table.

Table 13.2 – Components of Accrued Expenses and Other Liabilities


(In Thousands)	March 31, 2023		December 31, 2022
Accrued interest payable	$	51,321	$	46,612
Payable to noncontrolling interests	46,203		44,859
Accrued compensation	20,148		30,929
Operating lease liabilities	17,638		18,563
Guarantee obligations	6,223		6,344
Residential loan and MSR repurchase reserve	5,858		7,051
Accrued operating expenses	5,696		5,740
Current accounts payable	3,162		4,234
Bridge loan holdbacks	2,953		3,301
Margin payable	2,558		5,944
Unsettled trades	1,704		—





Preferred stock dividends payable	1,419		—
Other	11,388		6,626
Total Accrued Expenses and Other Liabilities	$	176,271	$	180,203

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 March 31, 2023, we had met all margin calls due.

Operating Lease Right-of-Use Assets and Operating Lease Liabilities

See Note 17 for additional information on leases.

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 SFR entities during the three months ended March 31, 2023.

Table 13.3 – REO Activity


	Three Months Ended March 31, 2023
(In Thousands)	BPL Bridge		Legacy Sequoia		Freddie Mac SLST		BPL Term at CAFL		Total
Balance at beginning of period	$	3,012	$	544	$	2,899	$	—	$	6,455
Transfers to REO	7,615		18		381		—		8,014
Liquidations (1)	—		(544)		(812)		—		(1,356)
Changes in fair value, net	(192)		—		174		—		(18)
Balance at End of Period	$	10,435	$	18	$	2,642	$	—	$	13,095

(1)For the three months ended March 31, 2023, REO liquidations resulted in less than $0.1 million of realized losses, which were recorded in Investment fair value changes, net on our consolidated statements of income.

The following table provides detail on the numbers of REO assets at Redwood and at consolidated Legacy Sequoia, Freddie Mac SLST, and CAFL entities at March 31, 2023 and December 31, 2022.

Table 13.4 – REO Assets


Number of REO assets	Redwood Bridge	Legacy Sequoia	Freddie Mac SLST	BPL Term at CAFL	Total
At March 31, 2023	4	1	25	—	30
At December 31, 2022	2	2	24	—	28

Legal and Repurchase Reserves

See Note 17 for additional information on legal and repurchase reserves.

Payable to Non-Controlling Interests

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 11 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 March 31, 2023, the carrying value of their interests was $23 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 three months ended March 31, 2023, and 2022 we allocated $1 million of income, and $1 million of income, respectively, to the co-investors, which were recorded in Other expenses on our consolidated statements of income.

In 2021, Redwood and a third-party investor co-sponsored the transfer and securitization of HEI through the HEI securitization entity and other third-party investors retained subordinate securities issued by the securitization entity alongside Redwood. See Note 10 for a further discussion of the HEI securitization. We account for the co-investors' interests in the HEI securitization entity as a liability, and at March 31, 2023, the carrying value of their interests was $23 million, representing the fair value of their economic interests in the HEI entity. During the three months ended March 31, 2023 and 2022, the investors' share of earnings from their retained interests were $1 million and $6 million, respectively, and were recorded through investment fair value changes, net on our consolidated statements of income.