REDWOOD TRUST INC

Note 1. Organization

Redwood Trust, Inc. was incorporated in the State of Maryland on April 11, 1994, and commenced operations on August 19, 1994. Together with its subsidiaries, the Company is a specialty finance company focused on several distinct areas of housing credit, with a mission to make quality housing—whether rented or owned—accessible to all American households. Our operating platforms occupy a unique position in the housing finance value chain by providing liquidity to growing segments of the U.S. housing market that are not well served by government programs. We deliver customized housing credit investments to a diverse mix of investors through our best‑in‑class securitization platforms, whole‑loan distribution activities, and publicly traded securities. Our aggregation, origination, and investment activities have evolved to incorporate a diverse mix of residential consumer and residential investor housing credit assets. We operate our business across four reportable segments: Sequoia Mortgage Banking, CoreVest Mortgage Banking, Redwood Investments, and Legacy Investments.

Our goal is to provide attractive returns to shareholders through a stable and growing stream of earnings and dividends, capital appreciation, and a continued commitment to technological innovation that supports disciplined, risk‑minded growth. Our primary sources of income are net interest income from our investments and non-interest income from our mortgage banking activities. Net interest income primarily consists of the interest income we earn on investments less the interest expense we incur on borrowed funds and other liabilities. Non-interest income from mortgage banking activities is generated through the origination and acquisition of loans, and their subsequent sale, securitization, or transfer to our investment portfolios.

Redwood Trust, Inc. has elected to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), beginning with its taxable year ended December 31, 1994. We generally refer, collectively, to Redwood Trust, Inc. and those of its subsidiaries that are generally not subject to subsidiary-level corporate income tax as “the REIT” or “our REIT.” We generally refer to subsidiaries of Redwood Trust, Inc. that are subject to subsidiary-level corporate income tax as “our taxable REIT subsidiaries” or “TRS.”

References herein to “Redwood,” the "Company", “we,” “us,” and “our” include Redwood Trust, Inc. and its consolidated subsidiaries, unless the context otherwise requires. In statements regarding qualification as a REIT, such terms refer solely to Redwood Trust, Inc. Refer to Item 1 -Business in this Annual Report on Form 10-K for additional information on our business.

Note 2. Basis of Presentation

The consolidated financial statements presented herein are at December 31, 2025 and 2024, and for the years ended December 31, 2025, 2024 and 2023. These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). In the opinion of management, all normal and recurring adjustments have been made to present fairly the financial condition of the Company at December 31, 2025 and 2024, and results of operations for all periods presented.

In the first quarter of 2025, we updated the presentation of certain line items in our consolidated financial statements. On the consolidated balance sheets, Residential consumer loans, held-for-sale and held-for-investment were combined into Residential consumer loans, and Residential investor loans, held-for-sale and held-for-investment were combined into Residential investor loans. In addition, Other investments was disaggregated into Servicing investments and Strategic investments, and Other income (loss), net was disaggregated into Servicing income, net and Fee income, net. Also in the first quarter of 2025, for segment reporting purposes, interest expense related to our secured revolving financing facility was allocated from Corporate/Other to Redwood Investments and Legacy Investments. These changes had no impact on the consolidated financial statements, and all prior period amounts were conformed to the current presentation.

During the second quarter of 2025, we established Legacy Investments as a new reportable segment to separately disclose financial results for assets that are no longer aligned with our core strategic objectives. These assets, which stem from a change in the manner in which the operations are evaluated by the Chief Operating Decision Maker ("CODM"), include our legacy unsecuritized bridge and term portfolios, residential re-performing loan securities and other non-core legacy assets that are intended for sale, runoff, or other forms of disposition as part of our ongoing strategic realignment. See Note 4 for further discussion on our reportable segments, including the Legacy Investments segment.

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Note 2. Basis of Presentation - (continued)

In the fourth quarter of 2024, we updated the names of our segments: Residential Consumer Mortgage Banking to Sequoia Mortgage Banking, Residential Investor Mortgage Banking to CoreVest Mortgage Banking and our Investment Portfolio to Redwood Investments. There were no changes to the classifications of account balances as a result of these updates. All prior period references in this document were conformed to this presentation. Additionally in 2024, we combined the presentation of Short-term and Long-term debt within Debt obligations, net, as applicable. There was no impact to the consolidated financial statements as a result of this change and all prior periods in this document were conformed to this presentation.

In 2023, we changed the presentation of our Consolidated Statements of (Loss) Income to include a new line item "Home Equity Investments ("HEI") income, net" to include all amounts related to our HEI investments that were previously presented within "Investment fair value changes, net." In 2025, we changed the presentation of our Consolidated Statements of (Loss) Income to include Strategic income and Fee income. These were previously presented within "Other income, net". All applicable prior period amounts presented in the document were conformed to these new presentations.

Principles of Consolidation

Our consolidated financial statements include the accounts of the entities where the Company has a controlling financial interest. The method for determining whether a controlling financial interest exists varies depending on whether the entity is a VIE.

The Company has a controlling financial interest in and consolidates a VIE when the firm has a variable interest or interests that provide it with (i) the power to direct the activities of the VIE that most significantly impact the VIE's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits for the VIE that could potentially be significant to the VIE. See Note 16 for further information about VIEs. For entities that are not VIEs, we have a controlling financial interest in entities where we hold a majority of the voting rights. We use the equity method to account for our interest in entities in which we do not have a controlling financial interest, but over which we have significant influence.

For financial reporting purposes, we consolidate the assets and liabilities of certain entities formed in connection with the securitization of our loans and HEI, which we have determined to be VIEs and in which we have a controlling financial interest. The underlying loans owned at the consolidated securitization entities are shown under residential consumer loans and residential investor loans on our consolidated balance sheets. In our consolidated statements of (loss) income, we record interest income on the loans owned at these entities and interest expense on the Asset-Backed securities (“ABS”) issued by these entities as well as fair value changes, other income and expenses associated with these entities' activities. The ABS issued to third parties by these entities are shown under ABS issued. See Note 17 for further discussion on ABS issued. The underlying HEI at the consolidated HEI securitization entities are shown under Home equity investments on our consolidated balance sheets and the associated fair value changes and interest expense associated with ABS issued are shown under HEI income, net on our consolidated statements of (loss) income. See Note 10 for further discussion on HEI.

We also consolidatetwo partnerships ("Servicing Investment" entities) through which we have invested in servicing-related assets. We maintain an 80% ownership interest in each entity and have determined that we are the primary beneficiary of these partnerships. We account for the co-investors' interests as non-controlling interests, see Note 15 for further discussion.

See Note 16 for further discussion on Principles of consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates and assumptions.

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Note 3. Summary of Significant Accounting Policies

Significant Accounting Policies

Fair Value Measurements

Our consolidated financial statements include assets and liabilities that are measured at their fair values in accordance with GAAP. A fair value measurement represents the price at which an orderly transaction would occur between willing market participants at the measurement date.

We develop fair values for financial assets or liabilities based on available inputs and pricing that is observed in the marketplace. After considering all available indications of the appropriate rate of return that market participants would require, we consider the reasonableness of the range indicated by the results to determine an estimate that is most representative of fair value.

See Note 6 for further discussion on fair value measurements.

Fair Value Option

Under GAAP, we have the option to measure eligible financial assets, financial liabilities, and commitments at fair value on an instrument-by-instrument basis. This option is available when we first recognize a financial asset or financial liability or enter into a firm commitment. Subsequent changes in the fair value of assets, liabilities, and commitments where we have elected the fair value option are recorded in our consolidated statements of (loss) income.

We elect the fair value option for certain residential consumer and investor loans, real estate securities, MSRs, servicer advance investments, HEI, and certain of our other investments. This election is also applied to our IO and certain subordinate securities, and MSRs, for which we may hedge market interest rate risk. In addition, we elect the fair value option for the assets and liabilities of our consolidated securitization entities in accordance with GAAP accounting for collateralized financing entities ("CFEs").

See Note 6 for further discussion on the fair value option.

Loans

We acquire, originate and purchase residential consumer loans and residential investor term and bridge loans from our Mortgage Banking platforms or from third‑party originators for subsequent sale to whole‑loan buyers, securitization, or transfer into our Redwood Investments portfolio.

We classify loans as held-for-sale at fair value when we originate or purchase these loans with the intent to transfer the loans to securitization entities or sell the loans to third parties. Changes in fair value are recurring and reported through our consolidated statements of (loss) income in Mortgage banking activities, net.

We record loans held-for-investment, including loans held at consolidated securitization entities, at fair value. In accordance with accounting guidance for CFEs, we use the fair value of the ABS issued by these entities (which we determined to be more observable) to determine the fair value of the loans held at these entities. Changes in fair value for these loans and related ABS are recurring and are reported through our consolidated statements of (loss) income in Investment fair value changes, net.

See Notes 7 and 8 for further discussion on residential consumer and residential investor loans.

Interest Income

Interest income is accrued on our unsecuritized loans in the period the coupon interest is contractually earned until such time a loan is placed on non-accrual status. A loan is generally placed on non-accrual status when it is probable that all principal and interest due under the contractual terms will not be collected and a loan is past due more than 90 days. Income from non-accrual loans is generally recognized on a cash basis when it is received. At the time a loan is placed on non-accrual status, all accrued but uncollected interest is reversed against interest income and interest subsequently collected is recognized on a cash basis to the extent the loan balance is deemed collectible or until such time the loan qualifies to be placed back on accrual status. Generally, a loan is placed back on accrual status when the loan becomes contractually current or the collection of past due and future payments is reasonably assured either through reinstatement by the borrower, recoverability on the estimated net equity in the underlying real estate property or both.

Coupon interest for our securitized loans is recognized as revenue based on amounts expected to be paid to the securities issued by the securitization entities.

Real Estate Securities, at Fair Value

Our securities primarily consist of a beneficial interest in a trust or mortgage-backed securities (“MBS”) collateralized by residential consumer, re-performing ("RPL") and multifamily mortgage loans. We classify our real estate securities as trading or available-for-sale securities.

Trading Securities

We primarily denote trading securities as those securities where we have adopted the fair value option. Coupon interest is recognized as interest income when earned and deemed collectible. Changes in the fair value of securities designated as trading securities are generally reported in Investment fair value changes, net on our consolidated statements of (loss) income.

Available-for-Sale Securities

AFS securities are carried at their fair value with unrealized gains and losses excluded from earnings (except when an allowance for credit losses is recognized, as discussed below) and reported in Accumulated other comprehensive (loss) income (“AOCI”), a component of stockholders’ equity. Gains and losses from the sale of AFS securities are recorded as Realized gains, net, in our consolidated statements of (loss) income.

Interest income on AFS securities is accrued based on their outstanding principal balance and contractual terms and interest income is recognized based on the security’s effective interest rate. In order to calculate the effective interest rate, we must project cash flows over the remaining life of each security and make assumptions with regards to interest rates, prepayment rates, the timing and amount of credit losses, estimated call dates and other factors. On at least a quarterly basis, we review and, if appropriate, make adjustments to our cash flow projections based on input and analysis received from external sources, internal models, and our own judgments about interest rates, prepayment rates, the timing and amount of credit losses, and other factors. Changes in cash flows from those originally projected, or from those estimated at the last evaluation, may result in a prospective change in the yield and interest income recognized on these securities or in the recognition of an allowance for credit losses as discussed below.

Credit impairments on our available-for-sale securities are recorded in earnings using an allowance for credit losses, with the allowance limited to the amount by which the security's fair value is less than its amortized cost basis. We evaluate all securities in an unrealized loss position to determine if the impairment is credit-related (resulting in an allowance for credit losses recorded in earnings) or non-credit-related (resulting in an unrealized loss through other comprehensive income). The allowance for credit losses is calculated using a discounted cash flow approach and is measured as the difference between the beneficial interest’s amortized cost and the estimate of cash flows expected to be collected, discounted at the effective interest rate used to accrete the beneficial interest. No allowance is recorded for beneficial interests in an unrealized gain position.

See Note 9 for further discussion on real estate securities.

HEI

We invest in HEI contracts, either originated directly or acquired from third parties. HEIs provide investors an option to purchase a percentage of the underlying residential property upon specific events. The homeowner's obligations under the HEI are secured by the recording of a lien (typically junior liens) against the property in the form of a deed of trustor a mortgage. These investments allow us to share in home price appreciation/depreciation of the associated property and are recorded at fair value, with changes reported as HEI income. HEIs held by our consolidated securitization entities are also fair valued. In accordance with accounting guidance for CFEs, we use the fair value of the ABS issued by these entities (which we determined to be more observable) to determine the fair value of the HEI held at these entities. Changes in fair value for both these HEI assets and the associated ABS are recorded as HEI income, net on our consolidated statements of (loss) income.

See Note 10 for further discussion on HEI.

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Servicing Investments

Our servicing investments include Servicer advance investments, Excess MSRs, and MSRs. Servicer advance investments represent our obligations to finance outstanding servicer receivables and, in certain cases, to fund future advances on specific residential mortgage loans, along with the associated servicing fee components. Excess MSRs grant us a portion of mortgage servicing cash flows without requiring a servicing license, duties, or advance obligations. We acquire MSRs by retaining servicing rights from transferred residential mortgage loans that meet GAAP sale accounting criteria, or by directly purchasing MSRs from third parties. We contract with licensed sub-servicers to perform servicing functions for loans associated with our MSRs.

Servicer advance investments and Excess MSRs are recorded at fair value, with interest income recognized when earned and changes in fair value reported in Investment fair value changes, net on our consolidated statements of (loss) income. MSRs are carried at fair value, with servicing fee income recognized on a cash basis and fair value changes reported in Servicing investments, net on our consolidated statements of (loss) income.

See Note 11 for further discussion on servicing investments.

Strategic Investments

We have made and may make additional strategic investments in companies through equity or debt instruments, including those with conversion features. Depending on the terms of the investments, we may account for these investments under the fair value option, as non-marketable equity securities under the equity method of accounting or the measurement alternative for equity securities without readily determinable fair values.

Investments accounted for under the fair value option are carried at fair value, with changes in fair value recognized in Investment fair value changes, net on our consolidated statements of (loss) income.

For non-marketable securities over which we have significant influence but do not have control, we apply the equity method of accounting. Under the equity method, we recognize our share of the investee’s earnings or losses and evaluate such investments for impairment when events or changes in circumstances indicate the carrying amount may not be recoverable. Equity method income or loss is recorded in Other income, net on our consolidated statements of (loss) income.

Investments accounted for under the measurement alternative are carried at cost, less impairment, adjusted for observable price changes in orderly transactions for identical or similar investments of the same issuer. These adjustments are based on observable market transactions and are recorded in Other income, net on our consolidated statements of (loss) income.

See Note 12 for further discussion on our strategic investments.

Cash and Cash Equivalents

Cash and cash equivalents include non-restricted cash and highly liquid investments with original maturities of three months or less and money market fund investments which are generally invested in U.S. government securities and are available to us on a daily basis. The Company maintains its cash and cash equivalents with major financial institutions. The Company monitors the financial stability of these financial institutions and believes it is not exposed to any significant credit risk in its cash and cash equivalents at these institutions.

Restricted Cash

Restricted cash primarily includes cash held at CAFL Bridge entities for the purpose of future bridge loan investments, cash associated with our risk-sharing transactions with Fannie Mae and Freddie Mac ("the Agencies"), and cash held at consolidated Sequoia, HEI and CAFL entities for the purpose of distribution to investors.

Derivative Financial Instruments

Derivative financial instruments we typically utilize include swaps, swaptions, financial futures contracts, and “To Be Announced” (“TBA”) contracts. These derivatives are primarily used to manage interest rate risk associated with our operations. In addition, we enter into certain residential loan purchase commitments (“LPCs”) and interest rate lock commitments ("IRLCs") that are treated as derivatives for financial reporting purposes. All derivative financial instruments are recorded at their fair value on our consolidated balance sheets. Derivatives with positive fair values to us are reported as assets, and derivatives with negative fair values

F- 17 to us are reported as liabilities. We classify each derivative as either (i) a trading instrument (no specific hedging designation for financial reporting purposes) or (ii) a cash flow hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability.

Changes in the fair values of derivatives accounted for as trading instruments, including any associated interest income or expense, are recorded in our consolidated statements of (loss) income through Other income, net if they are used to manage risks associated with our MSR investments, through Mortgage banking activities, net if they are used to manage risks associated with our mortgage banking activities, or through Investment fair value changes, net if they are used to manage risks associated with our investments. Valuation changes related to residential LPCs and IRLCs are included in Mortgage banking activities, net on our consolidated statements of (loss) income.

See Note 13 for further discussion on derivative financial instruments.

Other Assets and Liabilities

Goodwill and Intangible Assets

Significant judgment is required to estimate the fair value of intangible assets and in assigning their estimated useful lives. The fair value estimates are based on available historical information and on future expectations and assumptions we deem reasonable. We generally use an income-based valuation method to estimate the fair value of intangible assets, which discounts expected future cash flows to present value using estimates and assumptions we deem reasonable. Determining the estimated useful lives of intangible assets also requires judgment. Our assessment as to which intangible assets are deemed to have finite or indefinite lives is based on several factors including economic barriers of entry for the acquired business, retention trends, and our operating plans, among other factors. Finite-lived intangible assets are amortized over their estimated useful lives on a straight-line basis and reviewed for impairment if indicators are present. Additionally, useful lives are evaluated each reporting period to determine if revisions to the remaining periods of amortization are warranted.

Goodwill is tested for impairment annually or more frequently if indicators of impairment exist. We have elected to make the first day of our fiscal fourth quarter the annual impairment assessment date for goodwill. We first assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If, based on that assessment, we believe it is more likely than not that the fair value of the reporting unit is less than its carrying value, we measure the fair value of the reporting unit and record a goodwill impairment charge for the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of the goodwill.

See Note 15 for further discussion on intangible assets.

Agency Risk-Sharing - Assets and Liabilities

We established subordinate risk-sharing arrangements in 2014 and 2015 with Fannie Mae and Freddie Mac. In return, we received monthly payments or reduced guarantee fees under these arrangements. We pledged assets as collateral for these commitments, held by a third-party custodian. These arrangements resulted in recording restricted cash, pledged collateral and guarantee obligations on our balance sheets.

The guarantee obligations represent our commitments to assume losses under these arrangements. We amortize the guarantee obligations over the 10-year terms of the arrangements based primarily on changes in the outstanding unpaid principal balance of loans in the reference pools, with a portion of the liabilities treated as a credit reserve that is not amortized into income. In addition, each period we assess the need for a separate loss allowance related to these arrangements, based on our estimate of credit losses inherent in the reference pools of loans.

Income from cash payments received under the first Fannie Mae risk-sharing arrangement and income related to the amortization of the guarantee obligations of all three arrangements are recorded in Other income, net and market valuation changes of the guarantee asset are recorded in Investment fair value changes, net on our consolidated statements of (loss) income.

Our consolidated balance sheets include assets of the special purpose entities ("SPEs") associated with these risk-sharing arrangements (i.e., the "pledged collateral" referred to above) that can only be used to settle obligations of these SPEs and liabilities of these SPEs for which the creditors of these SPEs (the Agencies) do not have recourse to Redwood Trust, Inc. or its affiliates. At

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December 31, 2025 and 2024, assets of such SPEs totaled $19 million and $29 million, respectively, and liabilities of such SPEs totaled $1 million and $3 million, respectively.

Real Estate Owned ("REO")

REO property acquired through, or in lieu of, foreclosure is initially recorded at fair value, and subsequently reported at the lower of its carrying amount or fair value (less estimated cost to sell). Changes in the fair value of an REO property that has a fair value at or below its carrying amount are recorded in Investment fair value changes, net on our consolidated statements of (loss) income.

See Note 15 for further discussion on REO.

Lease - Asset and Liabilities

We record operating lease liabilities and operating lease right-of-use assets on our consolidated balance sheets. 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. As lease payments are made, the operating lease liabilities are reduced to the present value of the remaining lease payments and the operating lease right-of-use assets are reduced by the difference between the lease expense (straight-lined over the lease term) and the theoretical interest expense amount (calculated using the incremental borrowing rate).

See Note 19 for further discussion on leases.

Payable to Non-Controlling Interests

Payable to non-controlling interests includes amounts payable to third parties, representing their interest in our consolidated Servicing investments and our consolidated securitization entities.

See Note 10 for further discussion of HEI and Note 15 for further discussion on other assets and other liabilities.

Asset-Backed Securities Issued ("ABS")

ABS issued represents asset-backed securities issued through our consolidated securitization entities. Assets at these entities are held in the custody of securitization trustees and are not owned by Redwood. These trustees collect principal and interest payments (less servicing and related fees) from the assets in these entities and make corresponding principal and interest payments to the ABS investors. In accordance with accounting guidance for CFEs, we account for the ABS issued under certain of our consolidated entities at fair value, with periodic changes in fair value recorded in Investment fair value changes, net or HEI income, net (for HEI securitizations) on our consolidated statements of (loss) income.

See Note 17 for further discussion on ABS issued.

Debt Obligations

Debt obligations under our financing facilities are secured by residential consumer and investor loans and real estate securities and carried at unpaid principal balance ("UPB") net of any unamortized deferred issuance costs. Interest on these facilities is paid monthly. If the value of the collateral securing those borrowings decreases, we may be subject to margin calls during the period the borrowings are outstanding. In instances where we do not satisfy the margin calls within the required time frame, the counterparty may retain the collateral and pursue any outstanding debt amount from us.

Convertible notes include unsecured convertible and exchangeable debt that are carried at their UPB net of any unamortized deferred issuance costs. Interest on the notes is payable semiannually until such time the notes mature or are converted or exchanged into shares. If converted or exchanged by a holder, the holder of the notes would receive shares of our common stock.

Senior notes and trust preferred securities and subordinated notes are carried at their UPB net of any unamortized deferred issuance costs. This debt is unsecured and interest is paid quarterly until it is redeemed in whole or matures at a future date.

See Note 18 for further discussion on our debt obligations.

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Equity

Accumulated Other Comprehensive (Loss) Income

Net unrealized gains and losses on real estate securities available-for-sale and interest rate agreements designated as cash flow hedges are reported as components of Accumulated other comprehensive (loss) income on our consolidated statements of changes in stockholders' equity and our consolidated balance sheets. Net unrealized gains and losses on securities and interest rate agreements held by our taxable REIT subsidiaries that are reported in other comprehensive (loss) income are adjusted for the effects of taxation and may create deferred tax assets or liabilities.

See Note 20 for further discussion on equity.

Earnings per Common Share

Basic earnings per common share (“EPS”) is computed by dividing net income allocated to common shareholders by the weighted average common shares outstanding. Net income allocated to common shareholders represents net income less income allocated to participating securities (as described herein). Diluted EPS is computed by dividing income allocated to common shareholders by the weighted average common shares outstanding plus amounts representing the dilutive effect of share-based payment awards. If the assumed conversion or exchange of convertible or exchangeable debt into common shares is dilutive, diluted EPS is adjusted by adding back the periodic interest expense (net of any tax effects) associated with dilutive convertible or exchangeable debt to net income and adding the shares issued in an assumed conversion or exchange to the diluted weighted average share count. If the potential conversion of our convertible debt is dilutive, then the number of shares needed to settle the conversion premium are added to the shares outstanding used to calculate dilutive EPS.

The two-class method is an earnings allocation formula under which EPS is calculated for common stock and participating securities according to dividends declared and participating rights in undistributed earnings. Under this method, all earnings (distributed and undistributed) are allocated between participating securities and common shares based on their respective rights to receive dividends or dividend equivalents. GAAP defines vested and unvested share-based payment awards containing non-forfeitable rights to dividends or dividend equivalents as participating securities that are included in computing EPS under the two-class method.

See Note 21 for further discussion on EPS.

Equity Compensation Plans

The Redwood Trust, Inc. Incentive Plan (“Incentive Plan”) for executive officers, employees, and non-employee directors provides for the grant of restricted stock, deferred stock, deferred stock units, performance-based awards (including performance stock units and cash-settled performance stock units), dividend equivalents, stock payments, restricted stock units, cash-settled restricted and deferred stock units, and other types of awards to eligible participants. Long-term incentive awards granted under the Incentive Plan generally vest over athree- orfour-year period. Deferred stock units, restricted stock units, and restricted stock awards (as well as cash-settled restricted and deferred stock units) have attached dividend equivalent rights, resulting in the payment of dividend equivalents each time we pay a common stock dividend. Non-employee directors are also provided annual awards under the Incentive Plan that generally vest immediately. The cost of the awards is generally amortized over the vesting period on a straight-line basis. We have elected to account for forfeitures on employee equity-based awards, including cash-settled awards, as they occur.

The Executive Deferred Compensation Plan (“EDCP”) allows eligible employees and directors to defer portions of their current salary and certain other forms of compensation. The Company matches some deferrals. Compensation deferred under the EDCP is recorded as a liability on our consolidated balance sheets. The EDCP allows for the investment of deferrals in either an interest crediting account or DSUs.

See Note 22 for further discussion on equity compensation plans.

Taxes

We have elected to be taxed as a REIT under the Internal Revenue Code and the corresponding provisions of state law. To qualify as a REIT we must distribute at least 90% of our annual REIT taxable income to shareholders (not including taxable income retained in our taxable REIT subsidiaries) within the time frame set forth in the Internal Revenue Code and also meet certain other requirements related to assets, income, and stock ownership. We assess our tax positions for all open tax years and record tax benefits

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Our deferred tax assets/liabilities are generated by temporary differences in GAAP income and taxable income at our taxable REIT subsidiaries. As a result of these differences, we may recognize taxable income in periods prior to when we recognize income for GAAP purposes. When this occurs, we pay the tax liability as required and establish a deferred tax asset. As the income is subsequently realized in future periods for GAAP purposes, the deferred tax asset is reduced. We may also recognize GAAP income in periods prior to when we recognize income for tax purposes. When this occurs, we establish a deferred tax liability. As the income is subsequently realized in future periods for tax purposes, the deferred tax liability is reduced.

In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We consider historical and projected future taxable income and capital gains as well as tax planning strategies in making this assessment. We determine the extent to which realization of deferred assets is not assured and establish a valuation allowance accordingly. The estimate of net deferred tax assets could change in future periods to the extent that actual or revised estimates of future taxable income during the carryforward periods change from current expectations.

See Note 24 for further discussion on taxes.

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures." This ASU requires incremental disclosures primarily related to the reconciliation of the statutory income tax rate to the effective income tax rate, as well as income taxes paid. This new guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted and upon adoption, the guidance can be adopted on a prospective or retrospective basis. We adopted this guidance, as required, in the year ended 2025, which resulted in additional disclosures and did not have a material effect on our consolidated financial statements. See Note 24 for further information.

In November 2024, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses." This ASU requires additional disclosures on disaggregated information about certain income statement expense line items including employee compensation, depreciation, amortization and depletion. This new guidance is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. We expect that this new guidance will result in additional disclosures in our consolidated financial statements and plan to adopt this new guidance by the required date.

In September 2025, the FASB issued ASU 2025-06, “Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Targeted Improvements.” This ASU replaces the existing stage-based model for internal-use software with a principle-based “probable-to-complete” capitalization threshold and relocates website development guidance into Subtopic 350-40. The new standard is effective for annual periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of this guidance and plan to adopt it by the required effective date.

The Company reviewed other recently issued ASUs and determined that they were not expected to have a significant impact on the Company's consolidated financial statements when adopted or did not have a significant impact on the Company's consolidated financial statements upon adoption.

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Note 4. Segment Information

Redwood operates infour segments: Sequoia Mortgage Banking, CoreVest Mortgage Banking, Redwood Investments and Legacy Investments. For a full description of our segments and factors used to determine each reportable segments, see Item 1—Business in this Annual Report on Form 10-K.

This segmentation aligns with the results of operations presented to our Chief Operating Decision Maker ("CODM") in reviewing the Company for performance assessment and resource allocation. We identify our CODM to be a group consisting of the Company's Chief Executive Officer, President and Chief Financial Officer.

Our CODM evaluates performance and allocates resources on each respective segment primarily based on segment net income (loss), also referred to as segment contribution, which is also used to assess the annual budget and forecasting process and to consider budget-to-actual variances when allocating capital and personnel to the segments throughout the year.

In the first quarter of 2025, we launched an additional mortgage loan conduit under our Aspire brand that acquires mortgage loans under expanded underwriting criteria, commonly referred to as "Expanded" loans. These loans, which primarily include bank statement and DSCR loans, are designed for prime-quality borrowers seeking alternative underwriting solutions, a segment that continues to grow within the U.S. housing market. The results of Aspire are currently included within our Sequoia Mortgage Banking segment.

In the second quarter of 2025, we identified and began reporting Legacy Investments as a new reportable segment, based on how the CODM evaluates performance and allocates resources. Previously included within Redwood Investments, this segment now consists of assets that are no longer strategically aligned with our core business strategies or with how we evaluate operational performance, allocate capital, and measure the success of our investment initiatives, and are primarily associated with our legacy unsecuritized bridge and term loan portfolios, residential re-performing loan securities and other non-core legacy assets. These assets are generally in runoff or other forms of disposition, and the CODM reviews financial results for this segment separately from other investments to inform strategic decisions regarding capital deployment and portfolio realignment. This change in segment presentation aligns with how management assesses performance under ASC 280, Segment Reporting, and has been applied retrospectively to all prior periods presented. This change had no impact on the consolidated financial statements. See Note 8 for further discussion on our legacy unsecuritized bridge and term loan portfolios.

In the third quarter of 2025, as part of our plans to accelerate the wind-down of the Legacy Investments portfolio, we sold a total $484 million in fair value of legacy unsecuritized bridge loans and REO assets to a newly formed partnership structure (the “Legacy Trust”). As part of the transaction, we retained a $182 million subordinate beneficial interest in the Legacy Trust, which is recorded as an available-for-sale ("AFS") real estate security on our consolidated balance sheet and is included in the Legacy Investments segment. See Notes 8 and 9 for further discussion on this transaction.

The accounting policies applied to the segments are the same as those described in the summary of significant accounting policies in Note 3 of the Notes to Consolidated Financial Statements, with the exception of allocations of certain corporate expenses not directly assigned or allocated to one of ourfour segments. These unallocated corporate expenses are included in the Corporate/Other column as reconciling items to our consolidated financial statements and primarily include interest expense related to our senior notes, convertible and exchangeable senior notes, and trust preferred securities, indirect general and administrative expenses and other expense. In the normal course of business, loans are originated and acquired at our mortgage banking segments and may subsequently be transferred to our Redwood Investments segment either as whole loans or through the retention of securities from securitizations we sponsor and consolidate under GAAP. All of our loans are accounted for under the fair value option and amounts transferred between segments are accounted for at fair value at the time of transfer.

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The following tables present financial information by segment for the years ended December 31, 2025, 2024, and 2023.

Table 4.1 – Business Segment Financial Information

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Note 5. Mortgage Banking Activities, Net

Mortgage banking activities, net includes changes in fair value of loans held-for-sale, loan purchase commitments, interest rate lock commitments and related risk management derivatives held in our Sequoia Mortgage Banking and CoreVest Mortgage Banking segments. The following table presents the components of Mortgage banking activities, net, recorded in our consolidated statements of (loss) income for the years ended December 31, 2025, 2024 and 2023.

Table 5.1 – Mortgage Banking Activities

(1)Includes changes in fair value for associated loan purchase commitments for residential consumer loans and associated interest rate lock commitments for residential investor term loans.

(2)Represents fair value changes on trading securities that are being used as hedges to manage the mark-to-market risks associated with our Sequoia mortgage banking operations.

(3)Represents market valuation changes of derivatives that were used to manage risks associated with our mortgage banking operations and other derivative financial instruments such as loan purchase commitments and interest rate locks.

(4)Amounts in this line item include other fee income from loan acquisitions, and provisions for repurchases, presented net.

(5)Amounts in this line item include other fee income from loan originations.

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Note 6. Fair Value of Financial Instruments

We estimate fair values for financial assets or liabilities based on available inputs observed in the marketplace as well as unobservable inputs. We primarily use two pricing valuation techniques: market comparable pricing and discounted cash flow analysis. Market comparable pricing is used to determine the fair value of certain instruments by incorporating known inputs and performance metrics, such as observed prepayment rates, delinquencies, severities, credit support, recent transaction prices, pending transactions, or prices of other similar instruments. Discounted cash flow analysis techniques generally consist of developing an estimate of future cash flows that are expected to occur over the life of an instrument and then discounting those cash flows at a rate of return that results in an estimate of fair value. After considering all available indications of the appropriate rate of return that market participants would require, we consider the reasonableness of the range indicated by the results to determine an estimate that is most representative of fair value. We also consider counterparty credit quality and risk as part of our fair value assessments.

We maintain policies that specify the methodologies we use to value different types of financial instruments. Significant changes to the valuation methodologies are reviewed by members of the Pricing Committee, which is comprised of several members of senior management, to confirm the changes are appropriate and reasonable. Valuations based on information from external sources are generally performed on an instrument-by-instrument basis with the resulting amounts analyzed individually against internal calculations as well as in the aggregate by product type classification. Our Pricing Committee then independently reviews all fair value estimates to ensure they are reasonable.

For financial reporting purposes, we follow a fair value hierarchy established under GAAP that is used to determine the fair value of financial instruments. Level 1 inputs are observable inputs that reflect quoted prices for identical assets or liabilities in active markets. Level 2 inputs are observable inputs other than quoted prices for an asset or liability that are obtained through corroboration with observable market data. Level 3 inputs are unobservable inputs that are used when there is little, if any, relevant market activity for the asset or liability required to be measured at fair value.

In certain cases, inputs used to measure fair value fall into different levels of the fair value hierarchy. In such cases, the level at which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. Our assessment of the significance of a particular input requires judgment and considers factors specific to the asset or liability being measured.

The following describes the valuation methodologies used for the financial instruments measured at fair value on a recurring basis, as well as the general classification of such instruments pursuant to the Level 1, Level 2, and Level 3 valuation hierarchy. We generally use both market comparable information and discounted cash flow modeling techniques to determine the fair value of our Level 3 assets and liabilities. Use of these techniques requires the determination of relevant inputs and assumptions, some of which represent significant unobservable inputs as indicated in the preceding table.

Securitized Residential Consumer loans, Residential Investor loans and HEI

We have elected to account for most of our consolidated securitization entities as CFEs in accordance with GAAP. A CFE is a variable interest entity that holds financial assets and issues beneficial interests in those assets, and these beneficial interests have contractual recourse only to the related assets of the CFE. Accounting guidance for CFEs allows companies to elect to measure both the financial assets and financial liabilities of a CFE using the more observable of the fair value of the financial assets or fair value of the financial liabilities. Pursuant to this guidance, we use the fair value of the ABS issued by the CFEs (which we determined to be more observable) to determine the fair value of the loans or HEI held at these entities, whereby the net assets we consolidate in our financial statements related to these entities represent the fair value of our retained interests in the CFEs. These financial assets and liabilities are classified within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs.

Unsecuritized Residential Consumer Loans

Fair values for our unsecuritized residential consumer loans are determined using models that incorporate various pricing inputs, including information derived from whole loan sales and securitizations that have occurred in the market. Certain significant inputs in certain of which are considered unobservable and are therefore Level 3 in nature. Significant pricing inputs obtained from market whole loan transaction activity include indicative spreads to indexed TBA prices and indexed swap rates. Significant pricing inputs obtained from market securitization activity include indicative spreads to indexed TBA prices and swap rates for senior and subordinate MBS, IO MBS discount rates, senior credit support levels, and assumed future prepayment rates.

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Unsecuritized Residential Investor Loans

Fair values for our unsecuritized residential investor loans are determined using models that incorporate various pricing inputs, certain of which are considered unobservable and are therefore Level 3 in nature. Significant pricing inputs obtained from market whole loan transaction activity include indicative credit spreads to indexed treasury prices and swap rates or absolute yields. Prices for most of our residential investor bridge loans are determined using discounted cash flow modeling, which incorporates a primary significant unobservable input of market discount rates (incorporating indicative credit spreads where applicable). Cash flows for performing loans are generally based on contractual loan terms. Delinquent loans are generally valued at a dollar price that is informed by various market data inputs, including the fair value of the collateral securing the loan.

Real Estate Securities

Real estate securities include residential consumer, multifamily, and other mortgage-backed securities that are generally illiquid in nature and trade infrequently. Significant inputs in the valuation analysis for these assets are predominantly Level 3 in nature, due to the lack of readily available market quotes and related inputs. For real estate securities, we utilize both market comparable pricing and discounted cash flow analysis valuation techniques. Relevant market indicators that are factored into the analysis include bid/ask spreads, the amount and timing of credit losses, interest rates, and collateral prepayment rates. Securities priced using discounted cash flow models use significant unobservable inputs such as a discount rate, prepayment rate, default rate and loss severity.

Derivative Assets and Liabilities

Our derivative instruments may include swaps, swaptions, TBAs, interest rate futures, loan purchase and interest rate lock commitments, and forward sale commitments. Fair values of derivative instruments are determined using quoted prices from active markets, when available, or from valuation models and are supported by valuations provided by dealers active in derivative markets. Fair values of TBAs and interest rate futures are generally obtained using quoted prices from active markets. Our derivative valuation models for swaps and swaptions require a variety of inputs, including contractual terms, market prices, yield curves, credit curves, measures of volatility, prepayment rates, and correlations of certain inputs. Model inputs can generally be verified and model selection does not involve significant management judgment. LPC, and IRLC fair values for residential consumer and residential investor term loans are estimated based on the fair values of the underlying loans (as described in "Residential consumer loans" and "Residential investor loans"above). In addition, fair values for LPCs and IRLCs are estimated based on the probability that the mortgage loan will be purchased or originated (the "Pull-through rate"). Derivative instruments are classified within the fair value hierarchy based on the observability of the significant inputs used in their valuation. TBAs and interest rate futures are generally classified within Level 1, as their fair values are based on quoted prices in active markets. Swaps and swaptions are generally classified within Level 2, as their valuations are based on observable market inputs, including yield curves and volatility assumptions. LPCs and IRLCs are generally classified within Level 3 due to the use of significant unobservable inputs, including pull-through rate assumptions and loan-level valuation inputs.

Servicing Investments

Fair values for servicing investments are determined through internal pricing models that estimate future cash flows and utilize certain significant inputs that are considered unobservable and are therefore Level 3 in nature. Our estimations of cash flows include the combined cash flows of all of the components that comprise the servicing investments: existing advances, the requirement to purchase future advances, the recovery of advances, and the right to a portion of the associated mortgage servicing fee ("mortgage servicing income"). The valuation technique is based on discounted cash flows models that utilize certain significant unobservable inputs including discount rates, assumed future prepayment rates on the serviced loans, and the expected remaining life of mortgage servicing income.

Home Equity Investments (HEI)

Fair values for unsecuritized HEI contracts are determined through internal pricing models that estimate future cash flows and utilize certain significant unobservable inputs such as forecasted home price appreciation, prepayment rates and discount rates, and are therefore Level 3 in nature. The valuation technique is based on discounted cash flows.

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Strategic Investments

Strategic investments are measured at fair value under the fair value option. These investments are in early-stage start-up companies and generally take the form of equity or debt with conversion features and do not have readily determinable fair values. These Level 3 investments are initially recorded at cost and their fair values are adjusted based on observable price changes, such as follow-on capital raises or secondary sales, and will also evaluate impacts to valuation from changing market conditions and underlying business performance. Refer to Note 12 for information on our Strategic investments not measured at fair value under the fair value option.

ABS Issued

ABS issued includes asset-backed securities issued through the Sequoia, CAFL and HEI securitization entities, as well as securities issued by certain third-party Freddie Mac K-Series and SLST securitization entities that we consolidate. Significant inputs in the valuation analysis are predominantly Level 3, due to the nature of these instruments and the lack of readily available market quotes. For ABS issued, we utilize both market comparable pricing and discounted cash flow analysis valuation techniques. Relevant market indicators factored into the analysis include bid/ask spreads, the amount and timing of collateral credit losses, interest rates, and collateral prepayment rates. Fair values incorporate market indicators as well as other significant unobservable inputs to generate discounted cash flows. These cash flow models use significant unobservable inputs such as discount rate, prepayment rate, default rate, and loss severity.

The following table presents the assets and liabilities that are reported at fair value on our consolidated balance sheets on a recurring basis at December 31, 2025 and 2024, as well as the fair value hierarchy of the valuation inputs used to measure fair value.

Table 6.1 – Assets and Liabilities Measured at Fair Value on a Recurring Basis

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The following table presents additional information about Level 3 assets and liabilities measured at fair value on a recurring basis for the year ended December 31, 2025.

Table 6.2 – Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis

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Footnotes to table 6.2

(1)For the purpose of this presentation, derivative assets and liabilities, which consist of loan purchase commitments, are presented on a net basis.

(2)In the fourth quarter of 2024, we completed our first CAFL securitization sponsored by one of our joint ventures that we consolidate under GAAP as we are the primary beneficiary. During the year ended December 31, 2025, we transferred $178 million of residential investor bridge loans to the joint venture under the replenishment feature of this securitization. During the year ended December 31, 2025, we completed our second and third CAFL securitizations sponsored by one of our joint ventures that we consolidate under GAAP as we are the primary beneficiary, and transferred $627 million of residential investor bridge loans to the joint ventures related to these securitizations, of which$294 million were consolidated at the issuance of these securitizations, and $333 million were transferred to the securitizations subsequent to issuance. See Note 16 for additional information on our principles of consolidation.

(3)Other settlements, net: for residential consumer and residential investor loans, primarily represents the transfer of loans to REO; for HEI, represents the share of HEI disposition fees paid to our third party originators for our purchased HEI portfolio; for derivatives, represents the transfer of the fair value of loan purchase and interest rate lock commitments at the time loans are acquired to the basis of residential consumer and investor loans.

(4)All changes in unrealized gains or (losses) are included in net income, with the exception of Real Estate AFS Securities, which are included in comprehensive income.

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The following table provides quantitative information about the significant unobservable inputs used in the valuation of our Level 3 assets and liabilities measured at fair value for the years ended December 31, 2025.

Table 6.3 – Fair Value Methodology for Level 3 Financial Instruments

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(1)The predominant valuation technique used to determine our Level 3 fair value assets and liabilities is based on the discounted cash flow model.

(2)The weighted average input values for all loan types are based on unpaid principal balance ("UPB"). The weighted average input values for all other assets and liabilities are based on relative fair value.

(3)Values represent pricing inputs used in a securitization pricing model. Credit spreads represent spreads to applicable swap rates unless specified otherwise.

(4)The fair value of the loans and HEI held by consolidated entities is based on the fair value of the ABS issued by these entities and the securities and other investments we own in those entities, which we determined were more readily observable in accordance with accounting guidance for Collateralized Financing Entities ("CFE"). At December 31, 2025, the fair value of securities we owned at the consolidated Sequoia and CAFL Term was $722 million and $330 million, respectively. At December 31, 2025, the fair value of our securities in thefour CAFL Bridge loan securitizations accounted for under the CFE election and our HEI securitization entities was $50 million and $25 million, respectively.

(5)For the purpose of this presentation, derivative assets and liabilities, which consist of loan purchase commitments, are presented on a net basis.

(6)Of the total $120 million payable to non-controlling interests, $93 million is measured at fair value on a recurring basis.

Assets and Liabilities Not Measured at Fair Value

The following table summarizes the fair values of assets and liabilities that are not measured at fair value at December 31, 2025 and December 31, 2024.

Table 6.4 – Carrying Values and Estimated Fair Values of Assets and Liabilities

(1)Residential investor loans reported at lower of cost or market for which the carrying value approximates fair value at December 31, 2025

(2)These liabilities are included in Accrued expenses and other liabilities on our consolidated balance sheets.

During the year ended December 31, 2025, we elected the fair value option for $74 million of securities, $14.6 billion (principal balance) of residential consumer loans, and $1.9 billion (principal balance) of residential investor loans. Additionally, during the year ended December 31, 2025, we elected the fair value option for $13 million of newly originated HEI.

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Nonrecurring Fair Values

We measure the fair value of certain assets and liabilities on a nonrecurring basis when events or changes in circumstances indicate that the carrying value may be impaired. Adjustments to fair value generally result from the write-down of asset values due to impairment. REO in Other Assets and Liabilities are classified as Level 3 in the fair value hierarchy based upon fair value determinations using appraisals, broker price opinions, comparable properties or other indications of value, net of expected sales costs.

Refer to Note 15 for further information on our REO.

Note 7. Residential Consumer Loans

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

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.

At December 31, 2025, we had $3.9 billion in commitments to acquire residential consumer loans. See Note 13 for additional information on these commitments.

Residential Consumer Loans Held-for-Sale

The following table summarizes the characteristics of residential consumer loans held-for-sale at December 31, 2025 and 2024.

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

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At December 31, 2025 and 2024, residential consumer loans held for sale that were 90 days or more delinquent had UPB and average balances of $721 thousand andzero, respectively. At both December 31, 2025 and 2024, there wereno residential consumer loans held-for-sale that were in foreclosure.

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.

The following table provides the activity of residential consumer loans held-for-sale ("HFS") during the years ended December 31, 2025 and 2024.

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

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Residential Consumer Loans Held-for-Investment at Fair Value

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

(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.

(2)For loans held at consolidated entities, the number and UPB of loans 90+ days delinquent includes loans in foreclosure.

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The following table provides the activity of residential consumer loans held-for-investment at consolidated entities during the years ended December 31, 2025 and 2024.

Table 7.5 – Activity of Residential Consumer Loans Held-for-Investment

(1)Represents the transfer of loans from held-for-sale to held-for-investment associated with residential consumer loan securitizations.

(2)For the ended December 31, 2025, includes $64 million of net market valuation gains on securitized re-performing loans prior to being transferred to HFS on June 30, 2025.

Residential Consumer Loan Characteristics

The following table presents the geographic concentration of residential consumer loans recorded on our consolidated balance sheets at December 31, 2025 and 2024.

Table 7.6 – Geographic Concentration of Residential Consumer Loans

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Note 8. Residential Investor Loans

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.

Table 8.1 – Classifications and Fair Values of Residential Investor Loans

(1)At December 31, 2025, Residential investor bridge loans held-for-sale include $14 million of loans recorded at the lower of cost or market value for which the carrying value approximates the fair value.

Nearly all of the outstanding residential investor term loans at December 31, 2025 were first-lien, fixed-rate loans with original maturities of 3 years to 30 years.

The outstanding residential investor bridge loans held-for-investment at December 31, 2025 were first-lien, interest-only loans with original maturities of 8 to 36 months and were comprised of 43% one-month SOFR-indexed adjustable-rate loans, and 57% fixed-rate loans.

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.

At December 31, 2025, $286 million of our residential investor unsecuritized bridge and term loans were classified as HFS in connection with our planned disposition strategy for legacy non-core assets.

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.

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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.

The following table provides the activity of unsecuritized residential investor loans during the years ended December 31, 2025 and 2024.

Table 8.2 – Activity of Residential Investor Loans at Redwood

(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 inone of our bridge loan securitizations, which generally have replenishment features for a set period of time from the closing.

Securitized Residential Investor Loans Held-for-Investment

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.

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Residential Investor Loan Characteristics

The following table provides the activity of securitized residential investor loans held-for-investment during the years ended December 31, 2025 and 2024.

Table 8.3 – Activity of Securitized Residential Investor Loans Held-for-Investment

The following tables summarize the characteristics of securitized and unsecuritized residential investor loans at December 31, 2025 and 2024.

Table 8.4 – Characteristics of Residential Investor Loans

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(1)The fair value of the Term and Bridge loans held by consolidated entities were 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.

(2)The number of loans 90+ days delinquent includes loans in foreclosure.

(3)May include loans that are less than 90 days delinquent and loans where foreclosure is being pursued as a disposition strategy.

The following table presents the UPB of residential investor loans recorded on our consolidated balance sheets at December 31, 2025 and 2024 by collateral/product type.

Table 8.5 – Residential Investor Loans Collateral/Product Type

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(1)Includes loans for predominantly light to moderate rehabilitation projects on multifamily properties.

(2)Includes loans to finance acquisition and/or stabilization of existing housing stock for light to moderate renovation or to finance new construction of residential properties for rent.

(3)Includes loans for light to moderate renovation of residential and small multifamily properties (generally less than 20 units).

The following table presents the geographic concentration of residential investor loans recorded on our consolidated balance sheets at December 31, 2025 and 2024.

Table 8.6 – Geographic Concentration of Residential Investor Loans

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Loan Modifications

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.

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The following table presents a summary of loan modifications by loan terms for the year ended December 31, 2025.

Table 8.7 – Summary of Modification by Loan Terms

(1)Included in this population are loans that had been previously modified in a prior period with an aggregate unpaid principal balance of $323 million involving previous Simple Modifications and $93 million involving previous Complex Modifications.

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.

Nonaccrual Loans

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.

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Note 9. Real Estate Securities

We invest in real estate securities that we create and retain from our unconsolidated loan securitizations or acquire from third parties. The following table presents the fair values of our real estate securities by type at December 31, 2025 and 2024.

Table 9.1 – Fair Value of Real Estate Securities by Type

Our real estate securities include mortgage-backed securities, which are classified in accordance with their general position within a securitization structure based on their rights to cash flows. Senior securities are those interests in a securitization that generally have the first right to cash flows and are last in line to absorb losses. Mezzanine securities are interests that are generally subordinate to senior securities in their rights to receive cash flows, and have subordinate securities below them that are first to absorb losses. Subordinate securities are all interests below mezzanine. Exclusive of our re-performing loan securities, nearly all of our residential securities are supported by collateral that was designated as prime at the time of issuance.

Trading Securities

We elected the fair value option for certain securities and classify them as trading securities. Our trading securities generally include both residential and multifamily mortgage-backed interest-only and subordinate securities. Refer to Note 6 for further information on the inputs into the fair valuation of our real estate trading securities.

AFS Securities

In the third quarter of 2025, as part of the sale of a $484 million in fair value of legacy unsecuritized bridge loans and REO assets to the Legacy Trust, we retained a $182 million subordinate beneficial interest in the Legacy Trust. The beneficial interest represents our right to residual cash flows from the Legacy Trust after payment of senior financing and preferred interests and is recorded as an AFS security, measured at fair value and classified as a Level 3 asset.

The retained beneficial interest is valued using discounted expected cash flows that incorporate assumptions for expected recoveries on the underlying collateral, including the timing and amount of principal repayments, credit losses and market discount rates. We did not record a separate allowance for credit losses at initial recognition because the fair value measurement already reflected expected credit losses; however, we will re-evaluate expected credit losses at each reporting period and record an allowance if updated expectations indicate one is required. During the fourth quarter of 2025, we recognized a credit loss allowance of $0.3 million related to this retained beneficial interest.

Subsequent changes in fair value of the retained beneficial interest are recognized in Other comprehensive income (loss). Interest income is recognized using the cost recovery method, under which cash receipts are first applied to the recovery of the recorded investment balance, with income recognized only after the investment is fully recovered. See Note 8 for further discussion on this transaction.

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Note 9. Real Estate Securities - (continued)

The following tables present the detail of our AFS securities, by position and collateral type, at December 31, 2025 and 2024.

Table 9.2 – Carrying Value and Fair Value of AFS Securities by Type

Gains and losses from the sale of AFS securities are recorded as Realized gains, net, in our consolidated statements of (loss) income. During the year ended December 31, 2025, we recognized net gains of $1 million on sales of AFS securities. During the year ended December 31, 2024, we did not sell any AFS securities. During the year ended December 31, 2025 and 2024 we had $9 million and $12 million of net unrealized gains on AFS securities.

During the years ended December 31, 2025, 2024 and 2023 we had accretion income on AFS securities of $3 million, $2 million, and $1 million, respectively.

At December 31, 2025, we had $183 million AFS securities with contractual maturities less than five years, $4 million AFS securities with contractual maturities greater than five years but less than ten years, and the remainder of our AFS securities had contractual maturities greater than ten years.

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Note 9. Real Estate Securities - (continued)

AFS Securities with Unrealized Losses

The following table presents the total carrying value (fair value) and unrealized losses of residential AFS securities that were in a gross unrealized loss position at December 31, 2025 and 2024.

Table 9.3 – AFS Securities in Gross Unrealized Loss Position by Holding Periods

At December 31, 2025, after giving effect to purchases, sales, and extinguishment due to credit losses, our consolidated balance sheets included 63 AFS securities, of which 11 were in an unrealized loss position, including 11 in a continuous unrealized loss position for 12 consecutive months or longer. At December 31, 2024, our consolidated balance sheet included 90 AFS securities, of which 20 were in an unrealized loss position including 11 that were in a continuous unrealized loss position for 12 consecutive months or longer.

Allowance for Credit Losses

Credit impairments on our AFS securities are recorded in earnings using an allowance for credit losses, with the allowance limited to the amount by which the security's fair value is less than its amortized cost basis. We evaluate all securities in an unrealized loss position to determine if the impairment is credit-related (resulting in an allowance for credit losses recorded in earnings) or non-credit-related (resulting in an unrealized loss through other comprehensive income). The allowance for credit losses is calculated using a discounted cash flow approach and is measured as the difference between the beneficial interest’s amortized cost and the estimate of cash flows expected to be collected, discounted at the effective interest rate used to accrete the beneficial interest. No allowance is recorded for beneficial interests in an unrealized gain position.

The following table details the activity related to the allowance for credit losses for AFS securities for the years ended December 31, 2025 and 2024.

Table 9.4 – Rollforward of Allowance for Credit Losses

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Note 10. Home Equity Investments (HEI)

We have historically invested in HEI contracts acquired from third party originators, however, we ceased new investments in third-party originated HEI contracts and began originating HEI directly in 2023 through our own Aspire HEI platform. Each HEI provides the owner of such HEI the right to purchase a percentage ownership interest in an associated residential property, and the homeowner's obligations under the HEI are secured by a lien (primarily second liens) on the property created by recording a security instrument (e.g., deed of trust) with respect to the property. Our investments in HEI expose us to both home price appreciation and depreciation of the associated property. In 2025, we began reporting our third-party originated HEI portfolio within the Legacy Investments segment, consistent with how the CODM evaluates financial performance and allocates resources across our reportable segments.

At December 31, 2025 and 2024, within our Legacy Investments segment, we consolidatedone andtwo HEI securitization entities, respectively, in accordance with GAAP, and have elected to account for these securitizations under the CFE election. As such, market valuation changes for the securitized HEI are based on the fair value of the associated ABS issued by the entity, including the interest we own, and are reported in HEI income, net on our Consolidated statements of (loss) income.

During the year ended December 31, 2025, we calledone of our HEI securitization entities and paid off the related outstanding ABS issued. Subsequent to the call of this securitization, we sold previously securitized and unsecuritized third-party originated HEI from our Legacy Investments segment totaling $262 million to a third party.

The following table presents our HEI at December 31, 2025 and 2024.

Table 10.1 – Home Equity Investments

(1)As of December 31, 2025, balance includes $314 million of third-party originated HEI included in our Legacy Investments segment.

The following table details our HEI activity during the years ended December 31, 2025 and 2024. Changes in the value of HEI during the year ended December 31, 2025 are driven by incremental fair value adjustments, reflecting the sales on HEI held in our Legacy Investments segment during 2025.

Table 10.2 – Activity of HEI

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Note 10. Home Equity Investments - (continued)

The following table provides the components of HEI income, net for the years ended December 31, 2025, 2024 and 2023.

Table 10.3 – Components of HEI Income, net

(1)Amount includes interest expense associated with ABS issued, which totaled $11 million, $12 million and $6 million for 2025, 2024 and 2023, respectively.

The following tables present the geographic concentration of HEI recorded on our consolidated balance sheets at December 31, 2025 and 2024.

Table 10.4 – Geographic Concentration of HEI

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Note 11. Servicing Investments

Servicing Investments at December 31, 2025 and 2024 are summarized in the following table.

Table 11.1 – Components of Servicing Investments

We account for our Servicer advance investments, Excess MSRs and MSRs at fair value. See Note 3 for additional information on the accounting policies on these investments. Refer to Note 6 for further information on the inputs into the fair valuation of these investments.

For the years ended December 31, 2025, 2024 and 2023 income from Servicing investments included Other interest income of $27 million, $31 million and $35 million, respectively, Investment fair value changes, net of positive $9 million, $4 million and $10 million, respectively, and Servicing income, net of $10 million, $14 million and $7 million, respectively.

Note 12. Strategic Investments

Strategic Investments at December 31, 2025 and 2024 are summarized in the following table.

Table 12.1 – Components of Strategic Investments

Income from Strategic Investments for the years ended December 31, 2025 and 2024 are summarized in the following tables.

Table 12.2 – Components of Income From Strategic Investments, net

(1)Represents net equity method earnings from our Strategic investments that are accounted for under the equity method.

(2)Includes Investment fair value changes related to our Strategic investments that are accounted for under the measurement alternative for equity securities without readily determinable fair values. For the years ended December 31, 2025, includes Investment fair value gains of $0.7 million and investment fair value losses of $1 million under the measurement alternative. For the year ended December 31, 2024, includes Investment fair value gains of $4 million and investment fair value losses of $5 million under the measurement alternative. For the year ended December 31, 2023, includes Investment fair value gains of $1 million and investment fair value losses of $3 million under the measurement alternative.

Depending on the terms of the strategic investments, we may account for these investments under the fair value option, as non-marketable equity securities under the equity method of accounting or the measurement alternative for equity securities without readily determinable fair values. Refer to Note 6 for further information on the inputs into the fair valuation of investments measured at fair value under the fair value option.

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Note 12. Strategic Investments - (continued)

Joint Ventures

We have established joint ventures with institutional investment managers to invest in residential investor bridge loans and term loans originated by our CoreVest subsidiary. As of December 31, 2025 and 2024, the carrying values of our investments in these joint ventures were $24 million and $30 million, respectively. We account for these investments under the equity method of accounting, reflecting our approximately 25% non-controlling interests and our ability to exert significant influence over the operations of the joint ventures. The carrying values are adjusted quarterly to reflect our share of earnings or losses, dividends received, or returns of capital. For the years ended December 31, 2025 and 2024, we recognized net equity method earnings of $3 million and $1 million, respectively, for one joint venture, and net equity method earnings of $0.1 million and $0.3 million, respectively, for the other. These amounts are recorded within “Other income, net” in our consolidated statements of (loss) income.

In connection with one of these joint ventures, we also invest via a note receivable. At December 31, 2025, the outstanding balance on this note receivable was $10 million and is included in Other Investments in Table 12.1 above. For the year ended December 31, 2025, we recognized $0.4 million in interest on this note.

See Note 8 for further information on residential bridge loans sold to these joint ventures.

During 2025, we made a minority equity investment in a newly formed residential construction loan originator. In connection with our investment, we entered into an agreement to provide financing for the sale of loans this company originates to Redwood and future capital partners. At December 31, 2025, the carrying value of our 30% equity method investment was $3 million. As this company is continuing to ramp up operations, we did not recognize any net equity method earnings during the year. During 2025, we acquired $147 million of residential construction 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.

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Note 13. Derivative Financial Instruments

The following table presents the fair value and notional amount of our derivatives at December 31, 2025 and 2024.

Table 13.1 – Fair Value and Notional Amount of Derivatives

(1) For the purpose of this presentation, derivative assets and liabilities are presented on a gross and a net basis.

The following table presents the market valuation gains and losses on our derivatives for the years ended December 31, 2025 and 2024.

Table 13.2 – Market Valuation Gains (Losses) on Derivatives, net

(1)Market valuation (losses) gains on risk management derivatives used to manage the mark-to-market risks associated with our Mortgage Banking operations are recorded in Mortgage banking activities, net and market valuation gains (losses) on all other derivatives are recorded in Investment fair value changes, net on our consolidated statements of (loss) income.

(2)Market valuation gains (losses) on LPCs and IRLCs are recorded in Mortgage banking activities, net on our consolidated statements of (loss) income.

Risk Management Derivatives

To manage, to varying degrees, risks associated with certain assets and liabilities on our consolidated balance sheets, we may enter into derivative contracts. At December 31, 2025, we were party to swaptions with an aggregate notional amount of $9.85 billion, TBA agreements with an aggregate notional amount of $23.44 billion, and interest rate futures contracts with an aggregate notional amount of $4.40 billion. At December 31, 2024, we were party to swaptions with an aggregate notional amount of $8.25 billion, TBA agreements with an aggregate notional amount of $1.35 billion, and interest rate futures contracts with an aggregate notional amount of $1.54 billion.

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Note 13. Derivative Financial Instruments - (continued)

For the years ended December 31, 2025, 2024, and 2023, risk management derivatives had net market valuation gains of $106 million, net market valuation losses of $30 million, and net market valuation losses of $20 million, respectively. These market valuation gains and losses are recorded in Mortgage banking activities, net and Investment fair value changes, net on our consolidated statements of (loss) income.

Loan Purchase and Interest Rate Lock Commitments

Loan purchase commitments ("LPCs") and interest rate lock commitments ("IRLCs") that qualify as derivatives are recorded at their fair values. For the years ended December 31, 2025, 2024, and 2023, LPCs and IRLCs had net market valuation gains of $130 million, net market valuation gains of $10 million, and net market valuation gains of $23 million, respectively, that were recorded in Mortgage banking activities, net on our consolidated statements of (loss) income.

Derivatives Designated as Cash Flow Hedges

For interest rate agreements previously designated as cash flow hedges, our total unrealized loss reported in Accumulated other comprehe nsive (loss) income was$60 million and $64 million at December 31, 2025 and 2024, respectively. We are amortizing this loss into interest expense over the remaining term of our trust preferred securities and subordinated notes. For both the years ended December 31, 2025 and 2024, we reclassified$4 million of realized net losses from Accumulated other comprehensive loss into Interest expense. As of December 31, 2025, we expect to amortize $4 million of realized losses related to terminated cash flow hedges into interest expense over the next twelve months.

Derivative Counterparty Credit Risk

We incur credit risk to the extent that counterparties to our derivative financial instruments do not perform their obligations under specified contractual agreements. If a derivative counterparty does not perform, we may not receive amounts due under these agreements and could incur a loss to the extent of any uncollateralized exposure.

Each derivative counterparty that is not a clearinghouse must maintain compliance with International Swaps and Derivatives Association (“ISDA”) master agreements or similar arrangements, unless a documented review determines that such noncompliance does not materially increase our credit exposure. Derivative transactions with non-clearinghouse counterparties are executed under ISDA master agreements that provide for net settlement of exposures in the event of default. We review non-clearinghouse derivative counterparty credit standings on an ongoing basis and, in the event of deterioration in creditworthiness, may require additional collateral, limit further transactions, or terminate existing positions.

Our bilateral derivative agreements generally require daily collateralization of net unrealized loss exposures, subject to customary minimum transfer thresholds. Through a daily valuation margin process, derivative positions are revalued each business day, and collateral is exchanged based on changes in fair value. Accordingly, substantially all net derivative exposures are collateralized. We seek to manage concentration risk by transacting with multiple counterparties and monitoring our aggregate counterparty exposures.

Certain derivative instruments are cleared through central clearinghouses. Margin is posted in accordance with clearinghouse rules. While clearing reduces bilateral counterparty exposure, we remain subject to the risk of non-performance by the clearing member or clearinghouse.

We consider counterparty credit risk in determining the fair value of derivative financial instruments at each reporting date, including evaluating the need for credit valuation adjustments. At December 31, 2025, management concluded that any credit valuation adjustment would not be material, and no separate adjustment was recorded. At December 31, 2025, we were in compliance with our ISDA and related derivative agreements in all material respects.

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Note 14. Offsetting Assets and Liabilities

Certain of our derivatives and debt obligations are subject to master netting arrangements or similar agreements. Under GAAP, in certain circumstances we may elect to present certain financial assets, liabilities and related collateral subject to master netting arrangements in a net position on our balance sheets. However, we do not elect to report any of these financial assets or liabilities on a net basis, and instead present them on a gross basis on our consolidated balance sheets.

The following table presents financial assets and liabilities that are subject to master netting arrangements or similar agreements categorized by financial instrument, together with the corresponding financial instruments and corresponding collateral received or pledged at December 31, 2025 and 2024.

Table 14.1 - Offsetting of Financial Assets, Liabilities, and Collateral

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Note 14. Offsetting Assets and Liabilities - (continued)

(1)Amounts presented in these columns are limited in total to the net amount of assets or liabilities presented in the prior column by instrument. In certain cases, we have pledged excess cash collateral or financial assets to a counterparty (which, in certain circumstances, may be a clearinghouse) that exceed the financial liabilities subject to a master netting arrangement or similar agreement. Additionally, in certain cases, counterparties may have pledged excess cash collateral to us that exceeds our corresponding financial assets. In each case, these excess amounts are excluded from the table; they are separately reported in our consolidated balance sheets as assets or liabilities, respectively.

(2)Interest rate agreements, TBAs and futures are components of derivative instruments on our consolidated balance sheets. Loan warehouse debt, which is secured by certain Residential consumer and Residential investor loans, is a component of Debt obligations on our consolidated balance sheets.

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Note 15. Other Assets and Liabilities

Other Assets

Other assets at December 31, 2025 and 2024 are summarized in the following table.

Table 15.1 – Components of Other Assets

(1)Fixed assets and leasehold improvements had a basis of $21 million and $17 million and accumulated depreciation of $14 million and $12 million at December 31, 2025 and 2024, respectively.

(2)Consists primarily of receivables related to escrow advances, prepaid assets and other receivables.

Real Estate Owned (REO)

The Company holds REO at the lower of the current carrying amount or fair value less estimated selling costs. The following table summarizes the activity and carrying values of REO assets held during the years ended December 31, 2025 and 2024.

Table 15.2 – REO Activity by Loan Type

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(1)Includes REO held at Redwood and within consolidated CAFL Bridge securitization entities.

(2)REO market valuation adjustments are recorded in Investment fair value changes, net on our consolidated statements of (loss) income.

Intangible Assets

The table below presents the amortization period and carrying value of our intangible assets, net of accumulated amortization at December 31, 2025 and 2024.

Table 15.3 – Intangible Assets – Activity

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All of our intangible assets are amortized on a straight-line basis. For the years ended December 31, 2025 and 2024, we recorded intangible asset amortization expense of $8 million and $9 million, respectively. Estimated future amortization expense is summarized in the table below.

Table 15.4 – Intangible Asset Amortization Expense by Year

On at least an annual basis, we evaluate our finite-lived intangible assets for impairment indicators and additionally evaluate the useful lives of our intangible assets to determine if revisions to the remaining periods of amortization are warranted. We reviewed our finite-lived intangible assets and determined that the estimated lives were appropriate and that there were no indicators of impairment at December 31, 2025.

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities at December 31, 2025 and 2024 are summarized in the following table.

Table 15.5 – Components of Accrued Expenses and Other Liabilities

(1)Bridge loan holdbacks represent amounts withheld from the initial loan proceeds and are subsequently disbursed to the borrower to be used in the construction, rehabilitation or purchase of the mortgaged property or to fund interest on the bridge loan.

Payable to Non-Controlling Interests

Redwood and a third-party co-investor, throughtwo 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 11 and Note 16 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, 2025, the carrying value of their interests was $28 million, representing their current economic interest in the entities. Earnings from the partnership entities are allocated to the co-investor on a proportional basis and during the

F- 59 years ended December 31, 2025, 2024, and 2023 we allocated $5 million of income, $5 million of income, and $6 million of income, respectively, to the co-investor, which were recorded in Other expenses on our consolidated statements of (loss) income.

In 2021 and 2023, Redwood and a third-party investor co-sponsored the transfer and securitization of HEI throughtwo HEI securitization entities. Other third-party investors contributed HEI into these securitizations through Redwood and retained subordinate beneficial interests issued by the securitization entities alongside Redwood. See Note 10 for a further discussion of the HEI securitizations, including the call ofone of the HEI securitization entities in 2025. We account for the co-investor's interest in the one remaining HEI securitization entity as a liability, and at December 31, 2025, the carrying value of their interest was $44 million, representing the fair value of their economic interest in the beneficial interest issued by the HEI entity. During the years ended December 31, 2025, 2024 and 2023, the investors' share of earnings from their retained interests (for which positive earnings are reflected as an expense to Redwood in our consolidated statements of (loss) income) were negative $8 million, positive $23 million, and positive $8 million, respectively, and were recorded through HEI Income, net on our consolidated statements of (loss) income. During the third quarter of 2025, we called one of our HEI securitization transactions and paid off the related outstanding ABS issued.

During the year ended December 31, 2025, we completedtwo CAFL bridge loan securitizations sponsored by one of our joint ventures. These transactions involved the transfer and securitization of bridge loans contributed from the joint venture and from Redwood throughtwo bridge securitization entities. Each of the joint venture and Redwood retained its proportionate share of subordinate beneficial interests issued by the securitization entities. We account for the joint venture's interest in the bridge loan securitization entities as a liability and at December 31, 2025, the carrying value of their interests were $32 million, representing the fair value of their economic interest in the beneficial interest issued. During the year ended December 31, 2025, the joint venture's share of recognized income was $12 million related to its retained interests in thesetwo securitizations, resulting in a $12 million net expense to Redwood in our consolidated statements of (loss) income.

In 2024, we completed a CAFL securitization of bridge loans sponsored by one of our joint ventures. This transaction involved the transfer and securitization of bridge loans contributed from the joint venture and from Redwood throughone bridge securitization entity. Each of the joint venture and Redwood retained its proportionate share of subordinate beneficial interests issued by the securitization entity. We account for the joint venture's interest in the bridge loan securitization entity as a liability and at December 31, 2025, the carrying value of their interest was $17 million, representing the fair value of their economic interest in the beneficial interest issued. During the year ended December 31, 2025, the joint venture recognized income of $2 million related to its retained interest in this securitization, resulting in a $2 million net expense to Redwood in our consolidated statements of (loss) income.

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

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 19 for additional information on leases.

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, 2025, we had met all margin calls due.

Legal and Repurchase Reserves

See Note 19 for additional information on repurchase reserves and loss contingencies regarding litigation, claims and demands.

Accrued Compensation

Accrued compensation includes costs related to our cash-settled awards, bonuses, deferred compensation, vacation and commissions. Our cash-settled awards were granted to certain executive officers and non-executive employees. These awards will be payable in cash with a vested award value based on the closing market price of our common stock on their respective final vesting dates. These awards are classified as liabilities in Accrued expenses and other liabilities on our consolidated balance sheets, and are being amortized over their respective vesting periods on a straight-line basis, adjusted for changes in the value of our common stock at the end of each reporting period.

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The following table presents our cash-settled awards by type of award at December 31, 2025.

Table 15.6 – Activities of Cash Settled Awards by Award Type

Cash-Settled Restricted Stock Units ("csRSUs")

During the year ended December 31, 2025, $5 million of csRSUs were granted to certain executive officers that will vest over the next four years through December 2029. On each vesting date over thefour-year vesting period, cash in an amount equal to the value of the common stock underlying the csRSUs that vest on such vesting date will be distributed to the recipients. At December 31, 2025 the unamortized compensation cost of csRSUs granted in 2025 and prior years was $9 million.

Cash-Settled Deferred Stock Units ("csDSUs")

During the year ended December 31, 2025, there were no grants of csDSUs. At December 31, 2025 the unamortized compensation cost of csDSUs granted in prior years was $0.5 million.

Cash Settled Performance Stock Units ("csPSUs")

In connection with the December 2025 PSU grant as described in Note 22, one half of the PSUs granted to certain executive officers are cash settled. The cash settled portion of these awards totaled $3 million and vest over three years through January 1, 2029, subject to meeting certain performance criteria. At December 31, 2025 the unamortized compensation cost of the cash settled portion of these PSUs was $3 million. See Note 22 for the performance vesting criteria of these awards.

The end of the vesting period for 663,499 csPSU awards that were granted in 2023 was January 1, 2026, and based upon the performance-based vesting criteria of these awards, approximately 152,191 reference shares of our common stock underlying these PSUs qualified for vesting and cash settlement, subject to approval by our Board of Directors during the first quarter of 2026.

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Note 16. Principles of Consolidation

In the normal course of business, we enter into certain types of transactions with entities that are considered to be VIEs. The Company's primary involvement with VIEs has been related to its securitization transactions in which it transfers assets to securitization vehicles. We primarily securitize our acquired and originated loans, which provides a source of funding and has enabled us to transfer a certain portion of economic risk on loans or related debt securities to third parties. The entity that has a controlling financial interest in a VIE is referred to as the primary beneficiary and is required to consolidate the VIE. See Note 2 for further information on our accounting policies regarding our Principles of consolidation.

The GAAP principles we apply require us to reassess our requirement to consolidate VIEs each quarter and therefore our determination may change based upon new facts and circumstances pertaining to each VIE. This could result in a material impact to our consolidated financial statements during subsequent reporting periods.

Analysis of Consolidated VIEs

For certain of our consolidated VIEs, we have elected to account for the assets and liabilities of these entities pursuant to the measurement alternative available to CFEs. A CFE is a VIE that holds financial assets and issues beneficial interests in those assets, and these beneficial interests have contractual recourse only to the related assets of the CFE. GAAP allows companies to elect to measure both the financial assets and financial liabilities of a CFE using the more observable of the fair value of the financial assets or fair value of the financial liabilities. Most of our VIEs are accounted for under the CFE election, under which net equity generally represents the fair value of our retained interests and related accrued interest receivable.

In addition to our consolidated VIEs for which we made the CFE election, we consolidate certain VIEs for which we did not make the CFE election and elected to account for the ABS issued by these entities at fair value or amortized cost. These includetwo CAFL bridge loan securitizations andthree Sequoia re-securitizations for which the ABS are accounted at fair value at December 31, 2025. See Note 17 for additional information regarding the Sequoia re-securitization.

The following table presents a summary of the assets and liabilities of our consolidated VIEs at December 31, 2025 and 2024.

Table 16.1 – Assets and Liabilities of Consolidated VIEs

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Note 16. Principles of Consolidation - (continued)

(1)The ABS from three andone Sequoia re-securitizations at December 31, 2025 and December 31, 2024, respectively, are not accounted for under the CFE election and are accounted for at fair value (included within the Sequoia column at December 31, 2025 and December 31, 2024). At December 31, 2025 and December 31, 2024, the fair value of our interests in consolidated Sequoia securitizations accounted for under the CFE election was $722 million and $418 million, respectively, with the difference in value of our investments in these VIEs reflected in the December 31, 2025 and December 31, 2024 table above representing $165 million and $79 million, respectively, of consolidated Sequoia securities in the Sequoia re-securitizations and $417 million and $184 million, respectively, of ABS issued at fair value.

(2)Certain entities, includingtwo CAFL bridge loan securitizations (included within the CAFL column), our SLST re-securitization (included within the Freddie Mac SLST column at December 31, 2024), and our Servicing Investment VIEs are not accounted for under the CFE election and their associated ABS issued are accounted for at amortized historical cost. At December 31, 2025 and December 31, 2024, the fair value of our interests in the CAFL term loan securitizations accounted for under the CFE election were $330 million and $326 million, respectively. At December 31, 2025 and December 31, 2024, the fair value of our interest in the CAFL bridge loan securitizations accounted for under the CFE election was $50 million and $29 million, respectively, with the difference from the tables above generally representing ABS issued and carried at amortized historical cost and accrued interest on our economic interests.

(3)During the fourth quarter of 2025, we sold the retained securities from our consolidated Freddie Mac SLST securitization entities and deconsolidated the related securitized re‑performing loans and related ABS issued. We also exercised our call option on the Freddie Mac SLST re‑securitization and repaid the underlying ABS issued. See Note 17 for further information. At December 31, 2024, the fair value of our interests in the Freddie Mac SLST securitizations accounted for under the CFE election was $242 million, with the difference from the December 31, 2024 table above representing ABS issued and carried at amortized historical cost.

(4)During the year ended December 31, 2025, the Freddie Mac K-Series securitization was called and the securities that we had retained from this VIE were paid off at par.

(5)During the year ended December 31, 2025, we exercised our call right onone of our HEI securitizations. See additional information related to the call of this VIE in Note 10.

Unconsolidated VIEs with Continuing Involvement

We have transferred residential consumer loans to certain Sequoia securitization entities sponsored by us that are still outstanding as of December 31, 2025. We determined we were not the primary beneficiary of these VIEs as we lacked the power to direct the activities that will have the most significant economic impact on the entities. For certain of the transferred loans where we held the servicing rights prior to the transfer and continued to hold the servicing rights following the transfer, we recorded mortgage servicing rights ("MSRs") on our consolidated balance sheets and classified those MSRs as Level 3 assets. We also retained senior and

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Note 16. Principles of Consolidation - (continued)

subordinate securities in these transfers that we classified as Level 3 assets. Our continuing involvement in these securitizations is limited to customary servicing obligations associated with retaining servicing rights (which we retain a third-party sub-servicers to perform) and the receipt of interest income associated with the securities we retained.

Additionally, during the year ended December 31, 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 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. Accordingly, the Legacy Trust is not consolidated in our financial statements. 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 $35 million funding commitment to provide capital support if the Legacy Trust’s portfolio loan-to-value ratios exceed specified thresholds. See Notes 8, 9 and 19 for further discussion on this transaction.

The following table presents additional information at December 31, 2025 and 2024, related to unconsolidated VIEs sponsored by Redwood and accounted for as sales.

Table 16.2 – Unconsolidated VIEs Sponsored by Redwood

(1)Represents Redwood’s agreement, entered into during the year ended December 31, 2025, to provide up to $35 million of capital support to a trust holding legacy unsecuritized bridge loans. We funded $10 million at closing, with up to $25 million remaining subject to specified portfolio triggers. Refer to Notes 8,9, and 19 for additional information.

(2)Maximum loss exposure from our involvement with unconsolidated VIEs pertains to the carrying value of our securities and MSRs retained from these VIEs and represents estimated losses that would be incurred under severe, hypothetical circumstances, such as if the value of our interests and any associated collateral declines to zero. This does not include, for example, any potential exposure to representation and warranty claims associated with our initial transfer of loans into a securitization.

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Note 17. Asset-Backed Securities Issued

ABS issued represents securities issued by non-recourse securitization entities we consolidate under GAAP. The majority of our ABS issued is carried at fair value under the CFE election (see Note 16 for additional detail), with the remainder carried at amortized cost. The carrying values of ABS issued by our consolidated securitization entities at December 31, 2025 and 2024 along with other selected information, are summarized in the following table.

Table 17.1 – Asset-Backed Securities Issued

(1)At December 31, 2025, includes ABS issued from three consolidated VIE entities formed in connection with the financing of residential investor bridge loans sponsored by one of our joint ventures. At December 31, 2024 includes ABS issued fromone consolidated VIE entity formed in connection with the financing of residential investor bridge loans sponsored by one of our joint ventures.

Generally, unless specified below, the actual maturity of each class of ABS issued is primarily determined by the rate of principal prepayments on the assets of the issuing entity. Each series is also subject to redemption prior to the stated maturity according to the terms of the respective governing documents of each ABS issuing entity. As a result, the actual maturity of ABS issued may occur earlier than the stated maturity. At December 31, 2025, the majority of the ABS issued and outstanding had contractual maturities beyond five years. See Note 16 for detail on the carrying value components of the collateral for ABS issued and outstanding.

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Note 17. Asset-Backed Securities Issued - (continued)

During the third quarter of 2025, we transferred subordinate securities we owned in certain consolidated and unconsolidated Sequoia securitization trusts to a Sequoia re-securitization trust that we sponsored, which we determined was a VIE. At issuance, we sold $250 million (principal balance) of ABS issued to third parties and elected to account for the ABS issued under the fair value option, with changes in the fair value of the ABS reported through our consolidated statements of (loss) income in Investment fair value changes, net. The stated weighted average coupon of the ABS issued was approximately 6.4% at issuance, increasing by 3.0% after the payment date occurring in August 2027. The ABS issued are subject to an optional redemption beginning in August 2027 and have a final stated maturity in December 2056. At issuance, we retained 100% of the remaining beneficial ownership interest in the trust through ownership of a subordinate security issued by the trust. We maintained certain discretionary rights associated with the ownership of this investment that we determined reflected a controlling financial interest in the trust and as such, we consolidated the trust. At December 31, 2025, the collateral for the Sequoia re-securitization trust included $144 million of third-party securities as well as $154 million of Sequoia securities that we have retained from certain consolidated Sequoia securitization entities. The Sequoia re-securitization ABS are included in "Sequoia" in Table 17.1 above at December 31, 2025. See Note 16 for further information regarding our Principles of consolidation on this trust.

During the second quarter of 2025, we transferred subordinate securities we owned in certain consolidated and unconsolidated Sequoia securitization trusts to a Sequoia re-securitization trust that we sponsored, which we determined was a VIE. At issuance, we sold $109 million (principal balance) of ABS issued to third parties at a discount and elected to account for the ABS issued under the fair value option, with changes in the fair value of the ABS reported through our consolidated statements of (loss) income in Investment fair value changes, net. The stated weighted average coupon of the ABS issued was approximately 8.0% at issuance, increasing to 11.0% after the payment date occurring in April 2027. The ABS issued are subject to an optional redemption beginning in April 2027 and have a final stated maturity in October 2055. At issuance, we retained 100% of the remaining beneficial ownership interest in the trust through ownership of a subordinate security issued by the trust. We maintained certain discretionary rights associated with the ownership of this investment that we determined reflected a controlling financial interest in the trust and as such, we consolidated the trust. At December 31, 2025, the collateral for the Sequoia re-securitization trust included $1 million of third-party securities as well as $144 million of Sequoia securities that we have retained from certain consolidated Sequoia securitization entities. The Sequoia re-securitization ABS are included in "Sequoia" in Table 17.1 above at December 31, 2025. See Note 16 for further information regarding our Principles of consolidation on this trust.

In the first quarter of 2025, we transferred subordinate securities we owned in certain consolidated and unconsolidated Sequoia securitization trusts to a Sequoia re-securitization trust that we sponsored, which we determined was a VIE. At issuance, we sold $100 million (principal balance) of ABS issued to third parties at a discount and elected to account for the ABS issued under the fair value option, with changes in the fair value of the ABS reported through our consolidated statements of (loss) income in Investment fair value changes, net. The stated weighted average coupon of the ABS issued was approximately 8.5% at issuance, increasing to 11.5% after the payment date occurring in January 2027. The ABS issued are subject to an optional redemption beginning in January 2026 and have a final stated maturity in May 2055. At issuance, we retained 100% of the remaining beneficial ownership interest in the trust through ownership of a subordinate security issued by the trust. We maintained certain discretionary rights associated with the ownership of this investment that we determined reflected a controlling financial interest in the trust and as such, we consolidated the trust. At December 31, 2025, the collateral for the Sequoia re-securitization trust included $20 million of Sequoia securities we owned from unconsolidated Sequoia securitization trusts as well as $83 million of Sequoia securities that we have retained from certain consolidated Sequoia securitization entities. The Sequoia re-securitization ABS are included in "Sequoia" in Table 17.1 above at December 31, 2025. See Note 16 for further information regarding our Principles of consolidation on this trust.

During the third quarter of 2025, we called a Sequoia re-securitization trust that was issued in 2024 with a stated coupon of 8.5% at issuance and repaid $190 million of the associated outstanding ABS.

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Note 17. Asset-Backed Securities Issued - (continued)

During the fourth quarter of 2025, we consolidated the assets and liabilities of an entity formed in connection with a rated bridge loan securitization (presented within CAFL in Table 17.1 above at December 31, 2025) and sponsored by one of our joint ventures. We determined the entity was a VIE for which we determined we are the primary beneficiary. We elected to account for the entity under the CFE election and account for the ABS issued at fair value, with the entire change in fair value of the ABS issued recorded through Investment fair value changes, net on our consolidated statements of (loss) income. At December 31, 2025, the principal balance of the ABS issued was $285 million, and the net carrying value was $285 million. The weighted average stated coupon of the ABS issued was 5.5% at issuance. The ABS issued by the CAFL bridge entity are subject to an optional redemption in May 2028 and beginning in June 2028, the interest rate on the ABS issued increases byone percentage point through final maturity in November 2040. The ABS issued by this securitization were collateralized by $223 million of residential investor bridge loans, $87 million of restricted cash and $3 million of other assets at December 31, 2025. The securitization is structured with $300 million of total funding capacity and a feature to allow reinvestment of loan payoffs for the first 24 months of the transaction (through November 2027), unless an amortization event occurs prior to the expiration of the 24 months reinvestment period. Amortization trigger events include, among other events, delinquency rates or default rates exceeding specified thresholds for three consecutive periods, or the effective advance rate exceeding a specified threshold.

During the second quarter of 2025, we consolidated the assets and liabilities of an entity formed in connection with a rated bridge loan securitization (presented within CAFL in Table 17.1 above at December 31, 2025) and sponsored by one of our joint ventures. We determined the entity was a VIE for which we determined we are the primary beneficiary. We elected to account for the entity under the CFE election and account for the ABS issued at fair value, with the entire change in fair value of the ABS issued recorded through Investment fair value changes, net on our consolidated statements of (loss) income. At December 31, 2025, the principal balance of the ABS issued was $284 million, and the net carrying value was $286 million. The weighted average stated coupon of the ABS issued was 6.2% at issuance. The ABS issued by the CAFL bridge entity are subject to an optional redemption in November 2027 and beginning in December 2027, the interest rate on the ABS issued increases byone percentage point through final maturity in May 2040. The ABS issued by this securitization were collateralized by $283 million of residential investor bridge loans, $20 million of restricted cash and $8 million of other assets at December 31, 2025. The securitization is structured with $300 million of total funding capacity and a feature to allow reinvestment of loan payoffs for the first 24 months of the transaction (through May 2027), unless an amortization event occurs prior to the expiration of the 24 months reinvestment period. Amortization trigger events include, among other events, delinquency rates or default rates exceeding specified thresholds for three consecutive periods, or the effective advance rate exceeding a specified threshold.

During the fourth quarter of 2023, we consolidated the assets and liabilities of a HEI securitization entity formed in connection with the securitization of HEI, which we determined was a VIE and for which we determined we are the primary beneficiary. At issuance, we sold $139 million (principal balance) of ABS issued to third parties and retained a portion of the remaining beneficial ownership interest in the trust. We elected to account for the entity under the CFE election and account for the ABS issued at fair value, with the entire change in fair value of the ABS issued (including accrued interest) recorded through HEI income, net on our consolidated statements of (loss) income. The ABS issued by the HEI securitization entity were subject to an optional redemption in October 2025, and beginning in October 2026, the interest rate on the ABS issued increases by 3% through final maturity in 2053.

During the third quarter of 2025, we called one of our HEI securitization transactions and paid off the related outstanding ABS issued.

During the fourth quarter of 2023, we transferred all of the subordinate securities we owned fromtwo consolidated re-performing loan securitization VIEs sponsored by Freddie Mac SLST to a re-securitization trust, which we determined was a VIE and for which we determined we are the primary beneficiary. At issuance, we sold $184 million (principal balance) of ABS issued to third parties and retained 100% of the remaining beneficial ownership interest in the trust through ownership of a subordinate security issued by the trust. The ABS was issued at a discount and we elected to account for the ABS issued at amortized cost. During the fourth quarter of 2025, from our Legacy Investments segment, we sold all $254 million of securities that we had retained from our consolidated Freddie Mac SLST securitization entities and deconsolidated our securitized re-performing loans and related ABS issued. In addition, we exercised our call of the Freddie Mac SLST re-securitization entity and paid off the underlying $125 million of ABS issued.

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Note 18. Debt Obligations, Net

We enter into loan warehouse facilities, repurchase agreements ("repo"), recourse subordinate securities financings, and other forms of collateralized (and generally uncommitted) borrowings with several banks and major investment banking firms. We use debt to finance the acquisition and/or origination of residential consumer and residential investor mortgage loans (including those we acquire or originate in anticipation of sale or securitization), and to finance investments in securities and other investments. Additionally, we use corporate debt obligations to fund other aspects of our business and operations, including the repurchase of shares of our capital stock.

At December 31, 2025, we had outstanding agreements on debt obligations with several counterparties and we were in compliance with all of the related covenants.

The following tables summarize our debt obligations at December 31, 2025 and 2024.

Table 18.1 – Debt Obligations, Net

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Note 18. Debt Obligations, net - (continued)

(1)Carrying value presented net of total deferred issuance costs of $23 million and $20 million at December 31, 2025 and 2024, respectively.

(2)Variable rate borrowings are based on 1- or 3-month SOFR, plus an applicable spread.

(3)Borrowing has a fixed interest rate at period end.

(4)Facility may be extended forone year at our option.

(5)Promissory notes payable on demand to lender with 90-day notice.

(a) Outstanding principal balance represents facility capacity at period end.

(b) Unsecured corporate debt; no related collateral at period end.

Recourse Subordinate Securities Financing

In June 2025, we entered into a recourse subordinate securities financing facility providing non-marginable debt financing of certain securities retained from our consolidated Sequoia securitizations and other third-party issued interest-only securities. This financing is guaranteed by Redwood, with an interest rate of approximately 7.27% through June 2027, increasing to 10.27% from June 2027 through July 2028. This financing facility may be terminated at our option, beginning in June 2026, and has a final stated maturity in June 2027.

Corporate Debt

Corporate Secured Revolving Financing Facility

In March 2024, we entered into a corporate secured revolving financing facility to provide non-marginable recourse debt financing secured by previously unencumbered assets, such as retained residential consumer and residential investor subordinate

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Note 18. Debt Obligations, net - (continued)

securities and other investments, as well as equity in certain operating subsidiaries. In October 2025, we increased our borrowing capacity on this facility from $250 million to $400 million and extended the maturity date to March 2027.

Senior Notes

In January 2025, Redwood issued $90 million of 9.125% Senior Notes due in 2030. The Senior Notes are senior unsecured obligations of Redwood and bear interest at a rate equal to 9.125% per year, payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year, beginning on June 1, 2025. The Senior Notes mature on March 1, 2030. We may redeem the Senior Notes, in whole or in part, at any time on or after March 1, 2027 at a redemption price equal to 100% of the principal amount redeemed plus accrued and unpaid interest.

In November 2025, Redwood issued $100 million of 9.5% Senior Notes due in 2030. The Senior Notes are senior unsecured obligations of Redwood and bear interest at a rate equal to 9.5% per year, payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year, beginning on March 1, 2026. The Senior Notes mature on December 1, 2030. We may redeem the Senior Notes, in whole or in part, at any time on or after December 1, 2027 at a redemption price equal to 100% of the principal amount redeemed plus accrued and unpaid interest.

Convertible Notes

During the year ended December 31, 2025, we repaid in full $124 million of exchangeable senior notes upon maturity in October 2025.

In June 2022, we issued $215 million principal amount of 7.75% convertible senior notes due 2027. These notes require semi-annual interest payments at a fixed annual coupon rate of 7.75% until maturity or conversion, which will be no later than June 15, 2027. After deducting the underwriting discount and offering costs, we received $208 million of net proceeds. In October 2024, we issued an additional $40 million of these 7.75% senior notes due 2027 in a private offering, resulting in net proceeds of approximately $39 million. In August 2025, we issued an additional $50 million of these 7.75% senior notes due 2027, resulting in net proceeds of approximately $49 million. We may elect to settle conversions either entirely in cash or in a combination of cash and shares of common stock. Upon conversion, the conversion value will be paid in cash up to at least the principal amount of the notes being converted. At December 31, 2025, the conversion rate of the notes was 95.6823 common shares per $1,000 principal amount of notes (equivalent to a conversion price of $10.45 per common share). During 2025 and 2024, we repurchased zero and $4 million par value of these notes, respectively.

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Note 19. Commitments and Contingencies

Lease Commitments

At December 31, 2025, we were obligated under 8 non-cancelable operating leases with expiration dates through 2031 for $12 million of cumulative lease payments. Our operating lease expense was $4 million, $5 million, and $5 million for the years ended December 31, 2025, 2024 and 2023, respectively.

The following table presents our future lease commitments at December 31, 2025.

Table 19.1 – Future Lease Commitments by Year

Leasehold improvements for our offices are amortized into expense over the lease term. There were $1 million of unamortized leasehold improvements at December 31, 2025. For each of the years ended December 31, 2025, 2024, and 2023, we recognized $0.5 million of leasehold amortization expense.

During the year ended December 31, 2025, we entered into three new office leases with a term greater thanone year. At December 31, 2025, our operating lease liabilities were $11 million, which were a component of Accrued expenses and other liabilities, and our operating lease right-of-use assets were $9 million, which were a component of Other assets.

We determined that none of our leases contained an implicit interest rate and used a discount rate equal to our incremental borrowing rate on a collateralized basis to determine the present value of our total lease payments. As such, we determined the applicable discount rate for each of our leases using a swap rate plus an applicable spread for borrowing arrangements secured by our real estate loans and securities for a length of time equal to the remaining lease term on the lease commencement date. At December 31, 2025, the weighted-average remaining lease term and weighted-average discount rate for our leases was 3 years and 5.8%, respectively.

Commitment to Fund Residential Investor Bridge Loans

As of December 31, 2025, we had commitments to fund up to $258 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 December 31, 2025, we carried a $0.1 million contingent liability related to these commitments to fund construction advances. During the year ended December 31, 2025, we recorded net market valuation income of $0.8 million related to this liability through Investment of fair value changes, net and on our consolidated statements of (loss) income.

In the third quarter of 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 if the Legacy Trust’s portfolio loan-to-value ratios exceed specified thresholds. We funded $10 million at closing, with up to $25 million in additional funding commitments if certain triggers are met. The arrangement was determined to have a fair value of zero initially and at December 31, 2025. The fair value of this funding commitment will be re-evaluated each reporting period. See Notes 8 and 9 for further discussion on this transaction.

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Note 19. Commitments and Contingencies - (continued)

Commitment to Fund 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 December 31, 2025, we had contributed $42 million of capital, net 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 CoreVest. 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 December 31, 2025, we had contributed $5 million of capital to the joint venture.

Loss Contingencies — Repurchase Reserves

We maintain a repurchase reserve for potential obligations arising from representation and warranty violations related to residential consumer and residential investor loans we have sold to securitization trusts or third parties and for conforming residential consumer loans associated with MSRs that we have purchased from third parties. We do not originate residential consumer loans and we believe the initial risk of loss due to loan repurchases (i.e., due to a breach of representations and warranties) would generally be a contingency to the companies from whom we acquired the loans. However, in some cases, for example, where loans were acquired from companies that have since become insolvent, repurchase claims may result in our being liable for a repurchase obligation.

Loss Contingencies — Litigation, Claims and Demands

The Company may be involved in litigation, claims and demands in the ordinary course of the business. As of December 31, 2025, the Company was not involved in any legal proceedings that are expected to have a material effect on the Company’s results of operations, financial position, or liquidity.

Note 20. Equity

The following table provides a summary of changes to accumulated other comprehensive income by component for the years ended December 31, 2025 and 2024.

Table 20.1 – Changes in Accumulated Other Comprehensive Income by Component

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Note 20. Equity - (continued)

The following table provides a summary of reclassifications out of accumulated other comprehensive income for the years ended December 31, 2025 and 2024.

Table 20.2 – Reclassifications Out of Accumulated Other Comprehensive Income

Issuance of Common Stock

We have an established program to sell common stock from time to time in at-the-market ("ATM") offerings. During the years ended December 31, 2025 and December 31, 2024, we didnot issue any common shares through ATM offerings. $175 million of equity issuance capacity remained outstanding for future offerings at December 31, 2025.

Issuance of Preferred Stock

In January 2023, we issued 2.8 million shares of 10.00% Series A Fixed-Rate Reset Cumulative Redeemable Preferred Stock ("Series A Preferred Stock") for gross proceeds of $70 million and net proceeds of approximately $67 million, after deducting the underwriting discount and other estimated expenses. The Series A Preferred Stock pays quarterly cumulative cash dividends through January 15, 2028 at a fixed annual rate of 10%, based on the stated liquidation preference of $25.00 per share, in arrears, when authorized by Redwood's Board of Directors and declared by the Company. Starting April 15, 2028, the annual dividend rate will reset to the five-year U.S. Treasury Rate plus a spread of 6.278%. The Series A Preferred Stock ranks senior to Redwood's common stock with respect to rights to the payment of dividends and the distribution of assets upon any liquidation, dissolution or winding up of the Company. During the year ended December 31, 2025, the Company declared preferred stock dividends of $2.50 per share. At December 31, 2025, preferred dividends payable totaling $1 million for the fourth quarter 2025 were included in Accrued expenses and other liabilities. These dividends are payable on January 15, 2026 to preferred stockholders of record on January 1, 2026.

Direct Stock Purchase and Dividend Reinvestment Plan

During the years ended December 31, 2025 and 2024, we didnot issue shares of common stock through our Direct Stock Purchase and Dividend Reinvestment Plan. At December 31, 2025, approximately 6 million shares remained outstanding for future offerings under this plan.

Common Stock Warrants

In conjunction with establishing the joint venture with an institutional investment manager in the first quarter of 2024, we issued warrants exercisable for 1,974,905 shares of our common stock (the “First Tranche Warrants”); and (ii) warrants exercisable for 4,608,112 shares of our common stock (the “Second Tranche Warrants” and together with the First Tranche Warrants, the “Warrants”). The First Tranche Warrants are exercisable from March 18, 2025 to March 18, 2029. The Second Tranche Warrants will vest upon achievement of specified deployment thresholds related to the joint venture and, if vested, will be exercisable from the date the Second Tranche Warrants vest to March 18, 2029. The initial strike price of the Warrants was $7.76. The Warrants also contain a

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Note 20. Equity - (continued)

mandatory exercise provision, exercisable at Redwood’s option upon satisfaction of specified conditions, including the trading price of Redwood’s common stock exceeding a specified premium to the exercise price. Exercises of any Warrants will be settled on a net basis.

The Warrants met the criteria for equity classification under GAAP and are recorded as a component of Additional paid-in-capital in Equity on our Consolidated Balance Sheets. The Warrants were valued at $0.8 million on the issuance date.

In October 2025, we extended the exercise date for the Second Tranche Warrants to September 18, 2030 and revised the strike price of the Warrants to $6.96 per share. The revised warrant valuation as a result of these changes was $0.8 million and these warrants are not subject to subsequent remeasurement. See Note 21 for discussion on the impact of the Warrants on earnings per common share.

Stock Repurchases

In July 2025, our Board of Directors approved an authorization for the repurchase of up to $150 million of our common stock, and also authorized the repurchase of outstanding debt securities, including convertible and exchangeable debt. This authorization replaced our previous $125 million common stock repurchase authorization. In May 2023, our Board of Directors approved an authorization for the repurchase of up to $70 million of our preferred stock. These authorizations have no expiration dates and do not obligate us to acquire any specific number of shares or securities. During the year ended December 31, 2025, we repurchased 9.2 million shares of our common stock for a total cost of $53 million and did not repurchase any shares of our preferred stock or of our convertible and exchangeable debt. During the year ended December 31, 2024 we didnot repurchase any shares of our common stock or preferred stock and repurchased $72 million of our convertible and exchangeable debt. At December 31, 2025, $111 million of the current authorization remained available for the repurchase of shares of our common stock, $70 million remained available for repurchases of shares of our preferred stock, and we also continued to be authorized to repurchase outstanding debt securities.

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Note 21. Earnings per Common Share

The following table provides the basic and diluted earnings per common share computations for the years ended December 31, 2025, 2024, and 2023.

Table 21.1 – Basic and Diluted Earnings per Common Share

We included participating securities, which are certain equity awards that have non-forfeitable dividend participation rights, in the calculations of basic and diluted earnings per common share as we determined that the two-class method was more dilutive than the alternative treasury stock method for these shares. Dividends and undistributed earnings allocated to participating securities under the basic and diluted earnings per share calculations require specific shares to be included that may differ in certain circumstances.

During the years ended December 31, 2025, 2024 and 2023, none of our convertible or exchangeable senior notes were determined to be dilutive and were not included in the calculation of diluted EPS under the "if-converted" method. Under this method, for the exchangeable senior notes due in 2025, and previously for the repaid convertible senior notes due in 2024 and 2023, the periodic interest expense (net of applicable taxes) for dilutive notes is added back to the numerator and the weighted average number of shares that the notes are entitled to (if converted, regardless of whether they are in or out of the money) are included in the denominator. For convertible notes due in 2027, if the potential conversion of the debt is dilutive, then the number of shares needed to settle the conversion premium are added to the shares outstanding used to calculate dilutive EPS.

During the year ended December 31, 2025, none of our Warrants were determined to be dilutive to our calculation of dilutive earnings per common share. The Warrants would have a dilutive effect on earnings per common share to the extent that the Warrants are vested and exercisable, and the average market value per share of our common stock exceeds the strike price of the Warrants.

For the years ended December 31, 2025, 2024 and 2023,30,448,518,32,422,712, and 42,229,598 of common shares, respectively, related to the assumed conversion of our convertible and exchangeable senior notes, were antidilutive and were excluded in the calculation of diluted earnings per share. For the years ended December 31, 2025, 2024 and 2023, the number of outstanding equity awards that were antidilutive totaled 89,565,81,779 and 105,592, respectively.

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Note 22. Equity Compensation Plans

At December 31, 2025 and 2024,4,808,078 and 7,027,251 shares of common stock, respectively, were available for grant under our Incentive Plan. The unamortized compensation cost of awards issued under the Incentive Plan, which are settled by delivery of shares of common stock, and purchases under the Employee Stock Purchase Plan, totaled $34 million at December 31, 2025, as shown in the following table.

Table 22.1 – Activities of Equity Compensation Costs by Award Type

At December 31, 2025, the weighted average amortization period remaining for all of our equity awards was less thantwo years.

Restricted Stock Units ("RSUs")

The following table summarizes the activities related to RSUs for the years ended December 31, 2025, 2024, and 2023.

Table 22.2 – Restricted Stock Units Activities

We generally grant RSUs annually, as part of our compensation process. In addition, RSUs are granted from time to time in connection with hiring and promotions. RSUs generally vest over the course of afour-year vesting period, and are distributed annually, at the end of each vesting milestone.

The expenses recorded for RSUs were $4 million, $2 million, and $3 million for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, there was $7 million of unrecognized compensation cost related to unvested RSUs. This cost will be recognized over a weighted average period of less than 2 years. Restrictions on shares underlying RSUs outstanding lapse through 2029.

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Deferred Stock Units (“DSUs”)

The following table summarizes the activities related to DSUs for the years ended December 31, 2025, 2024, and 2023.

Table 22.3 – Deferred Stock Units Activities

We generally grant DSUs annually, as part of our compensation process. In addition, DSUs are granted from time to time in connection with hiring and promotions. DSUs generally vest over the course of afour-year vesting period, and are distributed after the end of the final vesting period or if sooner, to the extent vested, after the DSU grant recipient's employment terminates. At December 31, 2025 and 2024, the number of outstanding DSUs that were unvested was 3,403,676 and 3,011,071, respectively, and the weighted average grant-date fair value of these unvested DSUs was $6.76 and $7.71 at December 31, 2025 and 2024, respectively. Unvested DSUs at December 31, 2025 will vest through 2029.

Expenses related to DSUs were $11 million, $11 million, and $11 million for the years ended December 31, 2025, 2024, and 2023, respectively. At December 31, 2025, there was $19 million of unrecognized compensation cost related to unvested DSUs. This cost will be recognized over a weighted average period of less than 2 years.

Performance Stock Units (“PSUs”)

During the years ended December 31, 2025, 2024, and 2023, the Company granted PSUs to executive officers and certain employees that had been approved by the Compensation Committee as part of the annual compensation process. PSU grants are denominated as a number of "Target PSUs" and generally have performance-based vesting over the course of athree-year vesting/performance period and, subject to meeting certain performance criteria, will vest and be distributed after the end of the vesting period.

The grant date fair value of the PSUs was determined through a Monte-Carlo simulation using the following assumptions: (i) the common stock closing price at the grant date for Redwood and each member of the comparator group, (ii) the average closing price of the common stock price for the 60 trading days at the beginning of each calendar year for Redwood and each member of the comparator group, (iii) the range of performance-based vesting based on absolute total shareholder return (“TSR”) over three years from the grant date, (iv) an implied volatility assumption based on historical volatility, (v) a risk-free rate for the period interpolated from the U.S. Treasury yield curve on grant date and (vi) a dividend yield equivalent to reinvesting the dividends over thethree-year performance period.

With respect to the vesting of the 2025 PSU awards granted in December 2025:

•First, vesting would range from 0% -250% of half of the Target PSUs granted based on the level of non-GAAP Core Segments EAD ROE (“Core Segments EAD ROE" is defined in the form of PSU award agreements attached hereto as Exhibit 10.1) attained over thethree-year vesting period, with 100% of this half of the Target PSUs vesting if thethree-year cumulative Core Segments EAD ROE is 25%. Any PSUs vesting for this portion of the PSU award will be settled in common shares.

•Second, vesting would range from 0% -250% of half of the Target PSUs granted based on Redwood’s relative total stockholder return (“rTSR”) against a comparator group of companies measured over thethree-year vesting period, with

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100% of this half of the Target PSUs vesting if thethree-year rTSR corresponds to 55th percentile rTSR. Any PSUs vesting for this portion of the PSU award will be settled in cash. See Note 15 for further discussion of these cash-settled liability awards.

•Third, if the vesting level after steps one and two is greater than 100% of the Target PSUs, but absolute total shareholder return (“TSR”) is negative over thethree-year performance period, vesting would be capped at 100% of Target PSUs.

With respect to the vesting of the February 2025, December 2024, and December 2023 PSU awards:

•First, vesting would range from 0% -250% of two-thirds of the Target PSUs granted based on the level of book value total shareholder return ("bvTSR") attained over thethree-year vesting period, with 100% of this two-thirds of the Target PSUs vesting if thethree-year cumulative bvTSR is 25%. Any PSUs vesting for this portion of the PSU award will be settled in common shares.

•Second, vesting would range from 0% -250% of one-third of the Target PSUs granted based on Redwood’s relative total shareholder return (“rTSR”) against a comparator group of companies measured over thethree-year vesting period, with 100% of this one-third of the Target PSUs vesting if thethree-year rTSR corresponds to 55th percentile rTSR. Any PSUs vesting for this portion of the PSU award will be settled in common shares.

•Third, if the aggregate vesting level after steps one and two is greater than 100% of the Target PSUs, but the Company's absolute total shareholder return ("TSR") is negative over thethree-year performance period, vesting would be capped at 100% of Target PSUs.

The following table summarizes the activities related to PSUs for the years ended December 31, 2025, 2024, and 2023.

Table 22.4 – Performance Stock Unit Activities

(1) Vested performance stock units reflects Target PSUs whose vesting period concluded during the period presented, regardless of the extent to which performance-based vesting criteria were met.

Expenses related to PSUs were $1 million, $6 million, and $4 million for the years ended December 31, 2025, 2024, and 2023, respectively. As of December 31, 2025, there was $9 million of unrecognized compensation cost related to unvested PSUs. During 2025, for PSUs granted in 2024, 2023 and 2022, we adjusted the cumulative expected amortization expense down by $11 million to reflect our revised vesting estimates.

The end of the vesting period for 1,086,153 Target PSU awards that were granted in 2022 was January 1, 2026, and based upon the performance-based vesting criteria of these awards, approximately 275,000 shares of our common stock underlying these PSUs qualified for vesting, subject to approval by our Board of Directors during the first quarter of 2026. For 518,173 Target PSU awards that were granted in December 2021, the performance vesting period ended on January 1, 2025. Based upon the performance-based vesting criteria of these awards,183,057 shares of our common stock underlying these PSU vested and were distributed during the second quarter of 2025.

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Executive Deferred Compensation Plan

The following table summarizes the outstanding liability and activities related to the EDCP for the years ended December 31, 2025, 2024, and 2023.

Table 22.5 – EDCP Payable and Activities

In 2025, our Board of Directors approved an amendment to the EDCP to increase by 200,000 shares the shares available to allow non-employee directors to defer certain cash payments and dividends into DSUs. At December 31, 2025, there were 165,903 shares available for grant under this plan.

Note 23. General and Administrative Expenses

Components of our general and administrative expenses for the years ended December 31, 2025, 2024 and 2023 are presented in the following table.

Table 23.1 – Components of General and Administrative Expenses

(1)Includes $2 million of severance and transition-related expenses for the years ended December 31, 2024 and 2023, respectively.

(2)For the years ended December 31, 2025, 2024, and 2023, long-term incentive award expense includes $16 million, $19 million and $18 million, respectively, of expense for awards settleable in shares of our common stock and $3 million, $6 million and $6 million, respectively, of expense for awards settleable in cash.

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Note 24. Taxes

Components of our net deferred tax assets at December 31, 2025 and 2024 are presented in the following table.

Table 24.1 – Deferred Tax Assets and (Liabilities)

The deferred tax assets and liabilities reported above, with the exception of the state net operating loss ("NOL") and capital loss carryforwards, relate solely to our TRS. For state purposes, the REIT files a unitary combined return with its TRS. Because the REIT may have state taxable income apportioned to it from the activity of its TRS, we report the entire combined unitary state NOL and capital loss carryforwards as deferred tax assets, including the carryforwards allocated to the REIT.

Realization of our deferred tax assets ("DTAs") at December 31, 2025, is dependent on many factors, including generating sufficient taxable income prior to the expiration of NOL carryforwards (where applicable) and generating sufficient capital gains in future periods prior to the expiration of capital loss carryforwards. We determine the extent to which realization of the deferred assets is not assured and establish a valuation allowance accordingly. We closely analyzed our estimate of the realizability of our net deferred tax assets in whole and in part at December 31, 2025 and 2024. The Company evaluates its deferred tax assets each period to determine if a valuation allowance is required based on whether it is "more likely than not" that some portion of the deferred tax assets would not be realized. This evaluation requires significant judgment and changes to our assumptions could result in a material change in the valuation allowance. The ultimate realization of these deferred tax assets is dependent upon the generation of sufficient taxable income during future periods. The Company conducts its evaluation by considering, among other things, all available positive and negative evidence, historical operating results and cumulative earnings analysis, forecasts of future profitability, and the duration of statutory carryforward periods. Based on this analysis, we continue to believe it is more likely than not that we will realize our federal deferred tax assets in future periods as income is earned at our TRS; therefore, there continues to be no material valuation allowance recorded against our net federal DTAs. Consistent with prior periods, we continued to maintain a valuation allowance against the majority of our net state DTAs as we remained uncertain about our ability to generate sufficient income in future periods needed to utilize net state DTAs beyond the reversal of our state DTLs. The net decrease in the total valuation allowance was $18 million in 2025.

Our estimate of net deferred tax assets could change in future periods to the extent that actual or revised estimates of future taxable income during the carryforward periods change from current expectations. We assessed our tax positions for all open tax years (i.e., Federal, 2022 to 2025, and State, 2021 to 2025) and, at December 31, 2025 and 2024, concluded that we had no uncertain tax positions that resulted in material unrecognized tax benefits.

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Note 24. Taxes (continued)

At December 31, 2025, our federal NOL carryforward at the REIT was $68 million, of which $29 million will expire in 2029 and $39 million will carry forward indefinitely. In order to utilize NOLs at the REIT, taxable income must exceed dividend distributions. At December 31, 2025, our taxable REIT subsidiaries had no federal NOLs. Redwood and its taxable REIT subsidiaries accumulated estimated state NOLs of $1.1 billion at December 31, 2025. These NOLs expire beginning in 2031. If certain substantial changes in the Company’s ownership occur, there could be an annual limitation on the amount of the carryforwards that can be utilized.

The following table summarizes the provision for income taxes for the years ended December 31, 2025, 2024, and 2023.

Table 24.2 – Provision for Income Taxes

The following is a reconciliation of the statutory federal and state tax rates to our effective tax rate at December 31, 2025, 2024, and 2023.

Table 24.3 – Reconciliation of Statutory Tax Rate to Effective Tax Rate

(1)State taxes in California made up the majority (greater than 50%) of the tax effect in this category.

The December 31, 2023 effective tax rate is negative and appears outsized due to a relatively small consolidated GAAP loss and a provision for income taxes recorded against TRS GAAP income well in excess of the consolidated loss.

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Note 24. Taxes (continued)

During the year ended December 31, 2025, the Company adopted ASU 2023-09, Income Taxes (Topic 740): "Improvements to Income Tax Disclosures". This guidance requires enhanced disclosures related to income taxes paid by jurisdiction. Accordingly, the Company has included the following table to comply with the new disclosure requirements. The adoption of this ASU did not have a material effect on the Company’s consolidated financial statements.

The following table presents the income taxes paid for the years ended December 31, 2025, 2024, and 2023.

Table 24.4 – Income Taxes Paid by Federal, State and Local Jurisdictions

• The amount of income taxes paid during the year does not meet the 5% disaggregation threshold.

We believe that we have met all requirements for qualification as a REIT for federal income tax purposes. Many requirements for qualification as a REIT are complex and require analysis of particular facts and circumstances. Often there is only limited judicial or administrative interpretive guidance and as such there can be no assurance that the Internal Revenue Service or courts would agree with our various tax positions. If we were to fail to meet all the requirements for qualification as a REIT and the requirements for statutory relief, we would be subject to federal corporate income tax on our taxable income and we would not be able to elect to be taxed as a REIT for four years thereafter. Such an outcome could have a material adverse impact on our consolidated financial statements.

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