Commitments and Contingencies

3 Months Ended

Mar. 31, 2026

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Lease Commitments

At March 31, 2026, we were obligated under eight non-cancelable operating leases with expiration dates through 2031 for $11 million of cumulative lease payments. For both the three months ended March 31, 2026 and 2025, our operating lease expense was $1 million.

At March 31, 2026, our operating lease liabilities were $10 million, which were a component of Accrued expenses and other liabilities, and our operating lease right-of-use assets were $8 million, which were a component of Other assets.

Commitment to Fund Residential Investor Bridge Loans

As of March 31, 2026, we had commitments to fund up to $203 million of 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. These commitments are generally subject to loan agreements with covenants regarding the financial performance of the borrower and other terms regarding advances that must be met before we fund the commitment. At March 31, 2026, we carried a $0.02 million contingent liability related to these commitments to fund construction advances. During the three months ended March 31, 2026, we recorded net market valuation income of $0.1 million related to this liability through Investment of fair value changes, net and on our consolidated statements of income.

During 2025, in connection with the sale of legacy unsecuritized bridge loans to the Legacy Trust, we entered into an agreement to provide up to $35 million of capital support to the Legacy Trust’s portfolio loan-to-value ratios exceed specified thresholds. As of March 31, 2026, we funded $20 million, with $15 million in remaining funding commitments if certain triggers are met. The arrangement was determined to have an initial fair value of zero and had a fair value of $0.2 million at March 31, 2026. The fair value will be re-evaluated each reporting period. See Notes 8 and 9 for further discussion on this transaction.

Commitment to Fund Joint Ventures

In the first quarter of 2024, we entered into a joint venture with an institutional investment manager pursuant to which we will offer to sell certain residential investor bridge and term loans we originate into joint venture entities that meet specified criteria at contractually pre-established prices. We have committed approximately $140 million of equity capital to be allocated to the joint venture entities and joint venture co-investments to be held in Redwood's investment portfolio. At March 31, 2026, we had contributed $50 million of capital to the joint venture.

In the second quarter of 2023, we entered into a joint venture with another institutional investment manager to invest in residential investor bridge loans originated by our CoreVest subsidiary. We have a commitment to contribute up to approximately $19 million to the joint venture to fund the joint venture's purchase of residential investor bridge loans, under the updated terms of the joint venture. At March 31, 2026, we had contributed $6 million of capital to the joint venture.

For additional information related to our commitments and contingencies, see Note 19 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Loss Contingencies — Litigation, Claims and Demands

There is no significant update regarding the litigation matters described in Note 19 within the financial statements included in Redwood’s Annual Report on Form 10-K for the year ended December 31, 2025 under the heading “Loss Contingencies - Litigation, Claims and Demands.”

For additional information related to our commitments and contingencies, see Note 19 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2025.