Commitments and Contingencies

6 Months Ended

Jun. 30, 2026

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Lease Commitments

At June 30, 2026, we were obligated under ten non-cancelable operating leases with expiration dates through 2032 for $15 million of cumulative lease payments. For both the six months ended June 30, 2026 and 2025, our operating lease expense was $2 million.

At June 30, 2026, our operating lease liabilities were $13 million, which were a component of Accrued expenses and other liabilities, and our operating lease right-of-use assets were $12 million, which were a component of Other assets.

Commitment to Fund Residential Investor Bridge Loans

As of June 30, 2026, we had commitments to fund up to $204 million of additional advances on existing residential investor bridge loans, of which $81 million related to loans currently in securitizations 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 June 30, 2026, we carried a $0.02 million contingent liability related to these commitments to fund construction advances. During the three and six months ended June 30, 2026, we recorded net market valuation loss of $0.02 million and income of $0.1 million, respectively, related to this liability through Investment 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 if loan-to-value ratios exceed specified thresholds. As of June 30, 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 $0.3 million at June 30, 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 second quarter of 2026, we entered into a joint venture with an institutional investment manager pursuant to which we will offer to sell certain first-lien jumbo residential consumer mortgage loans and related assets we source into the joint venture. We have committed approximately $9 million of equity capital to the joint venture, representing our proportionate share of the joint venture's $180 million aggregate committed capital, to be funded through capital calls during a one-year commitment period as the joint venture acquires eligible loan assets. At June 30, 2026, we had not contributed any capital to the joint venture.

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 June 30, 2026, we had contributed $56 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 June 30, 2026, we had contributed $6 million of capital to the joint venture.

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.