We acquire residential consumer loans from third-party originators and may sell or securitize these loans and hold a retained portion for investment. The following table summarizes the classifications and fair values of the securitized and unsecuritized residential consumer loans owned at December 31, 2025 and 2024.

Table 7.1 – Classifications and Fair Values of Residential Consumer Loans


December 31, 2025	Unsecuritized Loans		Securitized Loans		Securitized Re-Performing Loans
(In Thousands)							Total
Held-for-sale at fair value	$	3,092,014	$	—	$	—	$	3,092,014
Held-for-investment at fair value	—		14,843,747		—		14,843,747
Total Residential Consumer Loans	$	3,092,014	$	14,843,747	$	—	$	17,935,761


December 31, 2024	Unsecuritized Loans		Securitized Loans		Securitized Re-Performing Loans
(In Thousands)							Total
Held-for-sale at fair value	$	1,013,547	$	—	$	—	$	1,013,547
Held-for-investment at fair value	—		8,819,554		1,244,722		10,064,276
Total Residential Consumer Loans	$	1,013,547	$	8,819,554	$	1,244,722	$	11,077,823

At December 31, 2025, we owned mortgage servicing rights associated with $3.0 billion (principal balance) of residential consumer loans that were purchased from third-party originators. The value of these MSRs is included in the fair value of the associated loans on our consolidated balance sheets. We contract with licensed sub-servicers that perform servicing functions for these loans. Refer to Note 16 for further information on our consolidated VIEs.

Table 7.2 – Characteristics of Residential Consumer Loans Held-for-Sale


	December 31, 2025			December 31, 2024
(Dollars in Thousands)	Unsecuritized Loans			Unsecuritized Loans

UPB	$	3,022,360		$	1,000,663
Fair value of loans	$	3,092,014		$	1,013,547
Market value of loans pledged as collateral under short-term borrowing agreements	$	3,066,067		$	1,005,926
Weighted average coupon	6.59		%	6.56		%

During the years ended December 31, 2025 and 2024, mortgage banking activities, net were $116 million and $58 million, respectively, and included changes in fair value of residential consumer loans held-for-sale, loan purchase commitments, and related risk management derivatives in our Sequoia Mortgage Banking segment. See Note 5 for additional information.

Table 7.3 – Activity of Residential Consumer Loans Held-for-Sale


	Year Ended December 31,
(In Thousands)	2025		2024
Principal balance of loans acquired	$	14,616,596	$	7,043,177
Principal balance of loans sold	3,958,825		1,650,357
Principal balance of deconsolidated securitized re-performing loans	1,439,178		—
Principal balance of loans transferred from HFS to HFI	8,504,707		5,208,677

We invest in residential subordinate securities issued by Securitized Loan and Securitized Re-Performing Loan securitization trusts and consolidate the underlying residential consumer loans owned by these entities for financial reporting purposes in accordance with GAAP. During the year ended December 31, 2025 we transferred our Securitized Re-Performing Loans to Held-for-Sale and subsequently deconsolidated these loans and the related ABS in connection with the sale of the securities we had retained from our consolidated Freddie Mac SLST securitization. The following tables summarize the characteristics of the securitized residential consumer loans held-for-investment at December 31, 2025 and 2024.

Table 7.4 – Characteristics of Residential Consumer Loans Held-for-Investment


December 31, 2025	Securitized Loans
(Dollars in Thousands)

UPB	$	15,048,820
Average loan balance (UPB)	$	915
Fair value of loans (1)	$	14,843,747
Weighted average coupon	5.68		%

Delinquency information

UPB of loans with 90+ day delinquencies (2)	$	42,872


Average 90+ days delinquent balance (UPB)	766
UPB of loans in foreclosure	16,709
Average foreclosure balance (UPB)	726


December 31, 2024	Securitized Loans			Securitized Re-Performing Loans
(Dollars in Thousands)

UPB	$	9,350,286		$	1,514,432
Average loan balance (UPB)	$	842		$	155
Fair value of loans (1)	$	8,819,554		$	1,244,722
Weighted average coupon	5.35		%	4.49		%

Delinquency information

UPB of loans with 90+ day delinquencies (2)	$	19,480		$	106,910

Average 90+ days delinquent balance (UPB)	$	573		$	172

UPB of loans in foreclosure	$	10,493		$	41,913
Average foreclosure balance (UPB)	$	552		$	185

(1)The fair value of the loans held by consolidated entities was based on the fair value of the ABS issued by these entities, including securities we own, which we determined were more readily observable, in accordance with the accounting guidance for CFEs, and are recorded in Investment fair value changes, net on our consolidated statements of (loss) income.

Table 7.6 – Geographic Concentration of Residential Consumer Loans


	December 31, 2025
Geographic Concentration (by Principal Balance)	Held-for-Sale		Held-for- Investment		Securitized Re-Performing Loans
California	28	%	29	%	—	%
Florida	8	%	7	%	—	%
Texas	6	%	9	%	—	%
Washington	5	%	8	%	—	%
New York	5	%	2	%	—	%
Colorado	3	%	5	%	—	%
Other states (none greater than 5%)	45	%	40	%	—	%
Total	100	%	100	%	—	%


	December 31, 2024
Geographic Concentration (by Principal Balance)	Held-for-Sale		Held-for- Investment		Securitized Re-Performing Loans
California	26	%	31	%	14	%
Washington	12	%	8	%	2	%
Texas	8	%	10	%	3	%
Colorado	6	%	6	%	1	%
Florida	5	%	7	%	10	%
Illinois	3	%	2	%	6	%
New Jersey	2	%	2	%	7	%
New York	1	%	2	%	11	%
Maryland	—	%	1	%	5	%
Other states (none greater than 5%)	37	%	31	%	41	%
Total	100	%	100	%	100	%

We originate and invest in residential investor loans, including term loans and bridge loans (see Note 3 for a full description of these loans). The following table summarizes the classifications and fair values of the securitized and unsecuritized residential investor loans at December 31, 2025 and 2024.


December 31, 2025	Residential Investor Term				Residential Investor Bridge
(In Thousands)	Unsecuritized		Securitized		Unsecuritized		Securitized		Total
Held-for-sale at fair value (1)	$	202,422	$	—	$	310,931	$	—	$	513,353
Held-for-investment at fair value	—		1,985,910		—		1,117,401		3,103,311
Total Residential Investor Loans	$	202,422	$	1,985,910	$	310,931	$	1,117,401	$	3,616,664


December 31, 2024	Residential Investor Term				Residential Investor Bridge
(In Thousands)	Unsecuritized		Securitized		Unsecuritized		Securitized		Total
Held-for-sale at fair value	$	158,637	$	—	$	78,587	$	—	$	237,224
Held-for-investment at fair value	—		2,485,069		1,041,694		823,103		4,349,866
Total Residential Investor Loans	$	158,637	$	2,485,069	$	1,120,281	$	823,103	$	4,587,090

During 2025, as part of our plans to accelerate the wind-down of the Legacy Investments portfolio, we sold a portfolio totaling $484 million in fair value of legacy unsecuritized bridge loans and REO assets to the Legacy Trust. These transfers met the criteria to be accounted for as sales for financial reporting purposes, in accordance with GAAP. We determined that the Legacy Trust is a variable-interest entity ("VIE") but that Redwood is not the primary beneficiary, as we do not have the power to direct the activities that most significantly affect the Legacy Trust’s economic performance. Economic exposure to variability in the Legacy Trust is shared between the Company and an unaffiliated third-party investor holding the Legacy Trust's preferred interests. Accordingly, the Legacy Trust is not consolidated in our financial statements. In connection with this transfer, we recognized a negative $6 million investment fair value change within our Consolidated Statements of (Loss) Income, reflecting adjustments associated with completing the transaction. As part of the transaction, we retained a $182 million subordinate beneficial interest in the Legacy Trust, which is recorded as an AFS real estate security on our Consolidated balance sheet, as well as a funding commitment to provide capital support if the Legacy Trust’s portfolio loan-to-value ratios exceed specified thresholds. See Notes 9 and 19 for further discussion on the beneficial interest and the funding commitment, respectively.

The change in fair value of residential investor loans from December 31, 2024 to December 31, 2025 reflects both realized and anticipated changes in portfolio performance and composition. The overall decline in fair value was primarily attributable to the unsecuritized residential investor bridge loan portfolio, which decreased to $311 million at December 31, 2025 from $1.1 billion at December 31, 2024. During 2025, the decline was primarily driven by resolutions, sales and the Legacy Trust transaction.

Fair value changes also reflect the impact of loan modifications during the period, particularly interest rate changes and interest deferrals, which may have resulted in downward adjustments to loan valuations. These modifications were predominantly related to bridge loans with underlying project delays, borrower financial stress, or market-driven refinancing challenges. The fair value impact of such modifications is incorporated into the Company’s valuation models and contributed to the overall movement in loan values during the period.

At December 31, 2025, we had $258 million in commitments to fund additional advances on existing residential investor bridge loans, of which $92 million related to loans currently in securitizations co-sponsored by one of our joint ventures. See Note 19 for additional information on these commitments. During the year ended December 31, 2025, we sold $516 million of residential investor bridge loans, net of $88 million of construction draws to our joint ventures, respectively. See Note 12 for additional information on these joint ventures.

During the year ended December 31, 2025 and 2024, income from mortgage banking activities, net were $51 million and $42 million, respectively, and included changes in fair value of residential investor loans held-for-sale, interest rate lock commitments, and related risk management derivatives in our CoreVest Mortgage Banking segment. See Note 5 for additional information. For both the year ended December 31, 2025 and 2024, Fee income, net was $11 million, and primarily included portfolio administration fees earned on term and bridge loans.

Table 8.2 – Activity of Residential Investor Loans at Redwood


	Year Ended December 31, 2025				Year Ended December 31, 2024
(In Thousands)	Unsecuritized Term Loans		Unsecuritized Bridge Loans		Unsecuritized Term Loans		Unsecuritized Bridge Loans
Principal balance of loans originated	$	855,852	$	881,292	$	720,537	$	967,811
Principal balance of loans acquired (1)	43,764		147,102		19,246		15,677
Principal balance of loans sold to third parties (2)	827,982		1,392,602		713,314		516,411
Transfers of loans between portfolios (3)	—		219,322		—		(290,159)
Consolidation of securitized CAFL bridge loans	—		805,008		298,553		—

(1)For the years ended December 31, 2025 and 2024, balance includes loan repurchases. Additionally, this balance includes loans acquired from a residential construction loan originator, with whom we have a strategic equity method investment. During 2025, we acquired $147 million of loans from this company, sold $123 million of these loans and received $24 million of principal repayments. The financing arrangements and loan purchase agreements between the parties were terminated effective December 31, 2025, and there are no ongoing obligations between the parties. See Note 12 for further information.

(2)For the years ended December 31, 2025 and 2024 the principal balance of loans sold to third parties is net of $88 million and $49 million, respectively, related to construction draws on residential investor bridge loans sold to our joint ventures. See Note 12 for additional information on these joint ventures.

(3)Transfers of unsecuritized residential investor term loans between portfolios represents the transfer of loans from held-for-sale to held-for-investment associated with consolidated term securitizations. Transfers of unsecuritized bridge loans represents the transfer of residential investor bridge loans from "Unsecuritized Bridge" to "Securitized Bridge" resulting from their inclusion in one of our bridge loan securitizations, which generally have replenishment features for a set period of time from the closing.

We invest in securities issued by securitizations sponsored by CoreVest and consolidate the underlying residential investor term loans and bridge loans owned by these entities. For loans held at our consolidated securitization entities, market value changes are based on the fair value of the associated ABS issued, including securities we own, pursuant to CFE guidelines, and are recorded through Investment fair value changes, net on our consolidated statements of (loss) income. We did not elect to account for some of our Bridge securitizations under the CFE guidelines, but have elected to account for the loans in these securitizations at fair value, and changes in fair value for these loans are recorded through Investment fair value changes, net on our consolidated statements of (loss) income. See further discussion in Note 16.


December 31, 2025	Unsecuritized Term			Securitized Term(1)			Unsecuritized Bridge			Securitized Bridge(1)
(Dollars in Thousands)


Unpaid principal balance	$	205,584		$	2,083,080		$	339,394		$	1,099,350
Average UPB of loans	1,326			3,041			3,058			1,323
Fair value of loans	202,422			1,985,910			296,518			1,117,401
Loans held at lower of cost or market	—			—			14,414			—
Weighted average coupon	6.72		%	5.26		%	8.96		%	8.95		%
Weighted average remaining loan term (years)	13			4			1			1
Market value of loans pledged as collateral under debt facilities	$	109,652		N/A			$	255,255		N/A

Delinquency information


Unpaid principal balance of loans with 90+ day delinquencies (2)	$	52,380		$	209,560		$	89,504		$	48,438
Average UPB of 90+ days delinquent loans (2)	6,547			4,459			5,967			1,425
Fair value of loans with 90+ day delinquencies (2)	44,680			N/A			64,998			N/A


Unpaid principal balance of loans in foreclosure (3)	—			28,089			22,838			18,882
Average UPB of loans in foreclosure (3)	—			2,554			22,838			1,259
Fair value of loans in foreclosure (3)	—			N/A			16,672			N/A


December 31, 2024	Unsecuritized Term			Securitized Term(1)			Unsecuritized Bridge			Securitized Bridge(1)
(Dollars in Thousands)


Unpaid principal balance	$	177,618		$	2,639,485		$	1,166,213		$	810,285
Average UPB of loans	1,759			3,084			5,350			1,605
Fair value of loans	158,637			2,485,069			1,120,281			823,103
Weighted average coupon	6.84		%	5.35		%	9.11		%	9.76		%
Weighted average remaining loan term (years)	9			4			1			1
Market value of loans pledged as collateral under debt facilities	$	120,417		N/A			$	1,070,327		N/A

Delinquency information


Unpaid principal balance of loans with 90+ day delinquencies (2)	$	33,065		$	194,143		$	129,229		$	20,964
Average UPB of 90+ days delinquent loans (2)	8,266			3,734			8,077			1,233
Fair value of loans with 90+ day delinquencies (2)	12,366			N/A			102,321			N/A


Unpaid principal balance of loans in foreclosure (3)	27,529			24,648			86,260			3,663
Average UPB of loans in foreclosure (3)	27,529			2,465			6,635			916
Fair value of loans in foreclosure (3)	8,500			N/A			67,858			3,715

Table 8.5 – Residential Investor Loans Collateral/Product Type


December 31, 2025	Unsecuritized Term		Securitized Term		Unsecuritized Bridge		Securitized Bridge
(Dollars in Thousands)
Term
Term Loans:
Single-family rental	$	93,605	$	1,620,277	$	—	$	—
Multifamily (1)	55,299		462,803		—		—
DSCR	56,680		—		—		—
Bridge
Bridge Loans:
BFR (2)	—		—		106,748		452,133
SAB (3)	—		—		2,316		48,364
RTL	—		—		42,107		486,352
Multifamily (1)	—		—		181,977		111,446
Other	—		—		6,246		1,055
Total Residential Investor Loans	$	205,584	$	2,083,080	$	339,394	$	1,099,350


December 31, 2024	Unsecuritized Term		Securitized Term		Unsecuritized Bridge		Securitized Bridge
(Dollars in Thousands)
Term
Term Loans:
Single-Family Rental	$	100,411	$	2,042,803	$	—	$	—
Multifamily (1)	77,207		596,682		—		—
Bridge
Bridge Loans:
BFR (2)	—		—		432,363		377,947
SAB (3)	—		—		399		21,645
RTL	—		—		78,232		261,541
Multifamily (1)	—		—		648,972		148,096
Other	—		—		6,247		1,056
Total Residential Investor Loans	$	177,618	$	2,639,485	$	1,166,213	$	810,285

Table 8.6 – Geographic Concentration of Residential Investor Loans


	December 31, 2025
Geographic Concentration (by Principal Balance)	Unsecuritized Term		Securitized Term		Unsecuritized Bridge		Securitized Bridge
Indiana	20	%	4	%	1	%	—	%
Ohio	18	%	5	%	6	%	1	%
Georgia	9	%	5	%	12	%	6	%
New York	7	%	8	%	2	%	1	%
Illinois	5	%	6	%	1	%	3	%
Texas	3	%	19	%	3	%	18	%
California	3	%	5	%	5	%	15	%
New Jersey	3	%	5	%	7	%	4	%
Florida	2	%	7	%	8	%	12	%
Oregon	2	%	—	%	3	%	6	%
Louisiana	1	%	2	%	33	%	—	%
Arizona	—	%	2	%	11	%	4	%
Washington	—	%	1	%	2	%	5	%
Connecticut	—	%	7	%	—	%	—	%
Other states (none greater than 5%)	27	%	24	%	6	%	25	%
Total	100	%	100	%	100	%	100	%


	December 31, 2024
Geographic Concentration (by Principal Balance)	Unsecuritized Term		Securitized Term		Unsecuritized Bridge		Securitized Bridge
Texas	18	%	17	%	3	%	26	%
New Jersey	10	%	6	%	7	%	4	%
California	6	%	4	%	5	%	12	%
Tennessee	4	%	2	%	3	%	3	%
Illinois	2	%	6	%	20	%	6	%
Alabama	2	%	2	%	7	%	1	%
Florida	1	%	7	%	9	%	7	%
New York	1	%	7	%	2	%	2	%
Ohio	1	%	7	%	—	%	6	%
Connecticut	—	%	7	%	—	%	—	%
Georgia	—	%	6	%	19	%	7	%
Other states (none greater than 5%)	55	%	29	%	25	%	26	%
Total	100	%	100	%	100	%	100	%

For the year ended December 31, 2025, consistent with our strategic alignment with our core business strategies, we have adopted a more accelerated approach to resolving modified and legacy loans, accelerating the wind-down of underperforming legacy assets to proactively reduce long-term exposure to our non-core assets. This includes loan and REO sales, structured exits, and, where necessary, accelerating foreclosure or liquidation processes on assets with limited workout potential.

We utilize a rigorous and consistently implemented fair value process when evaluating these loans, which involves management’s review of updated appraisals, collateral performance, sales cost estimates, and independent market data when available. This approach, conducted in accordance with GAAP, is designed to ensure that valuations reflect current conditions and project-specific risks. The actual amounts ultimately recovered—whether through foreclosure, collateral sale, or alternative resolutions, such as discounted payoffs or loan sales—may differ significantly from our estimates and could materially affect future earnings. In exchange for a modification, we may receive a partial repayment of principal, a short-term accrual of capitalized interest for a portion of interest due, a capital infusion to replenish interest or capital improvement reserves, and/or termination of all or a portion of the remaining unfunded loan commitment.

For the year ended December 31, 2025 and December 31, 2024, we modified or put into forbearance loans with a total aggregate UPB of $861 million and $848 million, respectively. This balance primarily included modifications involving extensions of loan maturities and/or covenant terms ("Simple Modifications") and modifications involving changes to the contractual interest rates (including, in certain cases, deferrals of interest) on loans, which may also include maturity extensions ("Complex Modifications"). An increase in maturity extensions would increase the expected time to repayment with a potential impact on fair values and credit losses. Certain loans may represent subsequent modifications of loans that had been previously modified in a prior reporting period. These further modifications may include adjustments to repayment rates, deferral of interest, floating-to-fixed conversions, maturity extensions (with forbearance or partial repayments), and changes to interest reserves or project completion milestones.

Table 8.7 – Summary of Modification by Loan Terms


December 31, 2025	Unpaid Principal Balance		Weighted Average Contractual Interest Rate		Weighted Average Deferred Interest Rate		Average Month Length of Maturity Extensions
(Dollars in Thousands)
Simple Modifications (Extensions)	$	732,687	N/A		N/A		6
Complex Modifications	128,607		9.46	%	3.69	%	6
Total Loan Modifications (1)	$	861,294

For the year ended December 31, 2024, loans with an aggregate UPB of $185 million were Simple Modifications and provided the maturity extensions of 10 months on average (subject to mandatory partial repayments during the loan term). For the year ended December 31, 2024, loans with an aggregate UPB of $663 million were Complex Modifications and primarily involved adjustments to contractual interest pay rates (including, in certain cases, deferrals of interest). Modifications on these loans maintained a contractual interest rate of approximately 9.09%, of which 4.46% represented deferred interest. Of this population, we further modified loans that had been previously modified in a prior period, with an aggregate unpaid principal balance of $142 million.

While we continue to actively engage with certain borrowers to address the impacts of rising interest rates, elongated project timelines, or other issues, further increases in delinquencies or modifications within our residential investor bridge loan portfolio could ultimately result in further decreases in net interest income and the fair value of our bridge loans held for investment, and further instances of borrower/sponsor financial stress could lead to incremental realized credit losses. An increase in maturity extensions in the residential investor bridge portfolio would increase the expected time to repayment with a potential impact on fair values and credit losses. However, given the overall short duration nature of our bridge loans, a certain level of maturity extensions are a routine asset management outcome for these loans, irrespective of market conditions.

At December 31, 2025, residential investor loans with an aggregate UPB of $291 million and an aggregate fair value of $255 million were on non-accrual status. Of this balance, loans with $202 million aggregate UPB were on full non-accrual of the contractual coupon interest and loans with $90 million aggregate UPB were on non-accrual of deferred interest. As of December 31, 2025, the majority of these loans were included within our Legacy Investments portfolio, with an aggregate UPB of $243 million and an aggregate fair value of $208 million were on non-accrual status. Of this balance, loans with $153 million aggregate UPB were on full non-accrual of the contractual coupon interest and loans with $90 million aggregate UPB were on non-accrual of deferred interest.

At December 31, 2024, residential investor loans with an aggregate UPB of $343 million and an aggregate fair value of $282 million were on non-accrual status. Of this balance, loans with $151 million aggregate UPB were on full non-accrual of the contractual coupon interest and loans with $192 million aggregate UPB were on non-accrual of deferred interest.