REDWOOD TRUST INC

We operate our business across five reportable segments: Sequoia Mortgage Banking, Aspire Mortgage Banking, CoreVest Mortgage Banking, Redwood Investments and Legacy Investments. For additional information on our segments, refer to Note 4 of our Notes to Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

During the three months ended March 31, 2026, we began discussing our Mortgage Banking platforms ("Mortgage Banking") on a combined basis to reflect the manner in which management evaluates the performance of its mortgage origination and distribution activities. Our Mortgage Banking platforms consist of Sequoia Mortgage Banking, Aspire Mortgage Banking and CoreVest Mortgage Banking segments. These platforms are primarily driven by loan production volumes, gain-on-sale margins, and execution across distribution channels. While each segment is reported separately, a combined discussion provides useful context for understanding the key drivers of changes in results of operations, with additional segment-level detail provided below.

During the three months ended March 31, 2026, we also began allocating corporate financing costs, comprised of interest expense on our promissory notes, trust preferred securities, convertible debt, and senior notes, as well as our preferred stock dividend expense and corporate capital to our operating or reportable segments for informational purposes. Corporate and other activities that are not directly allocated to the Company’s operating segments are included in Corporate/Other. For comparability purposes, prior period segment information has been adjusted to reflect this allocation.

The following table presents the segment contribution from our operations, reconciled to our consolidated net income for the three months ended March 31, 2026, the immediate preceding quarter December 31, 2025, and year-to-date period March 31, 2025. For comparability purposes, prior period segment information has been adjusted to reflect the changes discussed above.

Table 4 – Segment Results Summary

The sections that follow provide further detail on our business segments and their results of operations for the three months ended March 31, 2026, the immediate preceding quarter ended December 31, 2025, and year-to-date period ended March 31, 2025.

Corporate/Other

Net expenses from Corporate/Other increased by $5 million to $23 million for the three months ended March 31, 2026 compared to the three months ended December 31, 2025 and March 31, 2025. The increase primarily reflects higher compensation and related costs associated with increased headcount supporting growth of the Mortgage Banking platforms and higher portfolio management expenses related to legacy loan resolutions incurred during the first quarter of 2026. The quarter also included certain restructuring

expenses, including performance-based compensation costs and restructuring-related severance and organizational realignment costs.

Mortgage Banking Platforms

Our Mortgage Banking platforms, consisting of the Sequoia Mortgage Banking, Aspire Mortgage Banking and CoreVest Mortgage Banking segments, generate income from the origination or acquisition of loans and the subsequent sale or securitization of those loans.

Sequoia Mortgage Banking consists of a mortgage loan conduit that acquires residential consumer loans from third-party originators for subsequent sale to whole loan buyers, securitization through our SEMT® (Sequoia) private-label securitization program, or transfer into our Redwood Investments portfolio. Subordinate securities that we retain from our Sequoia securitizations (many of which we consolidate for GAAP purposes) are transferred to and held in our Redwood Investments segment. We typically acquire residential consumer mortgages and the related mortgage servicing rights on a flow or bulk basis from our extensive network of loan sellers. Refer to the Sequoia Mortgage Banking Segment below for further discussion and additional details.

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, which we also refer to as “non-QM.” These loan programs, primarily 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. In the first quarter of 2026, due to the continued scaling and distinct operating characteristics of this platform, we began reporting Aspire as a separate reportable segment, Aspire Mortgage Banking. Aspire offers a differentiated product set relative to our Sequoia prime jumbo platform and has meaningfully scaled operations since its launch. As a result, Aspire activity is no longer included within our Sequoia Mortgage Banking segment. This change had no impact on the consolidated financial statements and all prior period amounts were conformed to the current presentation. Refer to the Aspire Mortgage Banking Segment below for further discussion and additional details.

CoreVest Mortgage Banking consists of a platform that originates residential investor loans for subsequent securitization, sale, or transfer into our Redwood Investments portfolio or into joint ventures. Residential investor loans are loans to investors in single-family rental and multifamily properties, which we classify as either "term" loans (which include loans with maturities that generally range from 3 to 30 years) or "bridge" loans (fixed and floating-rate loans with maturities that generally range between 12 and 36 months, typically used to finance transitional properties or value-add strategies). Residential investor term loans include both larger balance and smaller balance mortgage loans secured by stabilized residential real estate (primarily 1-4 units detached or multifamily) that the borrower owns as an investment property and rents to residential tenants. Our smaller balance term loans are referred to as DSCR loans, which are fixed or floating-rate loans underwritten primarily on the basis of the property's debt service coverage ratio, rather than the borrower's personal income, and designed for stabilized rental properties.

CoreVest loans are typically distributed through our CAFL® private-label securitization program, through whole loan sales, transfers into our Redwood Investments portfolio or into sales into one of our joint ventures. We have established joint ventures with two separate institutional investment managers, one to invest in residential investor bridge loans originated by CoreVest and another to invest in residential investor bridge and term loans originated by CoreVest. We administer the joint ventures for ongoing fees and are entitled to earn additional performance fees upon realization of specified return hurdles.

Our inventory of loans originated by CoreVest is managed with a combination of our capital and loan warehouse facilities. All of these facilities are non-marginable (i.e., not subject to margin calls based solely on the lender's determination, in its discretion, of the market value of the underlying collateral that is non-delinquent).

The main sources of mortgage banking income across our segments are net interest income from our inventory of loans held-for-sale (including interest expense on secured financings and allocated corporate financing costs), securities utilized for interest rate hedging purposes, as well as mortgage banking activities, net which includes origination and other fees on loans, mark-to-market adjustments on loans from the time loans are originated or purchased to when they are sold, securitized or transferred into our Redwood Investments portfolio, as well as loan purchase commitments, interest rate lock commitments and the hedges used to manage risks associated with these activities. See Note 5 of our Notes to Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further detail on the composition of mortgage banking activities. Fee income associated with our administration of joint ventures and other loan-related administrative functions is also included in this segment. Direct operating expenses and tax expenses associated with these activities are also included in each mortgage banking segment.

The following table presents key earnings for our Mortgage Banking platforms during the three months ended March 31, 2026, the immediate preceding quarter December 31, 2025, and year-to-date period through March 31, 2025.

Table 5 – Mortgage Banking Platforms Earnings Summary

The $7 million decrease in Mortgage Banking contribution during the three months ended March 31, 2026, as compared to the three months ended December 31, 2025, is primarily driven by a $14 million decline in mortgage banking income resulting from normalization of gain-on-sale margins driven in part by market volatility later in the first quarter, and changes in execution mix, partially offset by continued growth in production volumes and distribution activity.

Mortgage Banking production volumes increased to approximately $8.5 billion during the first quarter of 2026, compared to approximately $7.3 billion in the fourth quarter of 2025, reflecting substantial growth across all three platforms and marking a record level of quarterly production. Production volumes also increased 17% compared to the fourth quarter of 2025, representing the third consecutive quarter of record production. The increase in production volumes was driven by expansion of the Company’s loan seller network, increased activity from both bank and independent mortgage bank counterparties, and the continued scaling of newer platforms, including Aspire, which was launched in January 2025, and CoreVest’s small-balance, including DSCR and RTL products.

This growth was achieved despite a more volatile and uncertain macroeconomic backdrop and a decline in overall industry origination volumes versus the fourth quarter of 2025, reflecting continued market share gains across the Company’s Mortgage Banking platforms. Distribution activity also increased meaningfully, supported by continued execution across securitization and whole loan sale channels, including record securitization activity during the quarter, which facilitated efficient risk transfer and consistent access to capital markets.

Despite the increase in production volumes, mortgage banking income was partially impacted by lower gain-on-sale margins compared to elevated levels in the prior quarter, which benefited from favorable market conditions, including interest rate volatility, hedge outperformance, and spread tightening. Margins in the current period reflect a more normalized market environment as well as less favorable capital markets conditions, including changes in interest rates and mortgage spreads. Notwithstanding these dynamics, gross margins remained at the higher end of the Company’s targeted ranges during the quarter, despite increased market volatility late in the quarter driven by changes in interest rates and mortgage spreads.

Operating expenses increased compared to the prior quarter, primarily reflecting higher production-related compensation, increased loan acquisition costs, and continued investment in platform capabilities, including personnel, infrastructure, and capital markets execution across all three platforms. However, expense growth remained more moderate relative to the increase in production volumes, resulting in improved operating leverage. In particular, production growth outpaced expense growth during the quarter, and total operating expenses as a percentage of volume declined by 7% compared to the prior quarter, reflecting continued efficiency gains as scale increased.

Overall, Mortgage Banking results for the current quarter reflect strong growth in production and distribution activity across all platforms, supported by continued market share gains, platform expansion, and capital markets execution, partially offset by normalization in margins relative to elevated prior-year levels. The Mortgage Banking platforms continue to benefit from an originate-to-distribute model, which supports capital efficiency through securitizations, whole loan sales, and joint venture activity, and enables production to scale while maintaining disciplined capital deployment.

The $14 million increase in Mortgage Banking contribution during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, is primarily driven by higher mortgage banking income attributable to increased production volumes and strong distribution activity in the first quarter of 2026.

Sequoia Mortgage Banking Segment

The following table presents key earnings and operating metrics for our Sequoia Mortgage Banking segment during the three months ended March 31, 2026, the immediate preceding quarter ended December 31, 2025, and year-to-date period through March 31, 2025.

Table 6 – Sequoia Mortgage Banking Earnings Summary

Operating expenses presented in the table above include general and administrative expenses and loan acquisition costs for this segment.

Activity at this segment performed within our taxable REIT subsidiary is subject to federal and state income taxes. The provision for income taxes or income tax benefit for the periods presented above reflects GAAP income or loss from these operations at our TRS during the respective periods.

The following table summarizes certain operating metrics related to our portfolio of loans included in the Sequoia Mortgage Banking segment during the three months ended March 31, 2026, the immediate preceding quarter ended December 31, 2025, and year-to-date period through March 31, 2025.

Table 7 – Sequoia Mortgage Banking Operating Metrics

(1)Number of loans presented in units

(2)Cost per loan for the Sequoia Mortgage Banking segment is calculated as operating expenses of this segment divided by loan purchase commitments of this segment

(3)Gain on Sale margins reflect net revenue divided by loan purchase commitments

Sequoia Mortgage Banking segment results remained stable compared to the prior quarter, with segment contribution of $38 million in the current quarter compared to $33 million in the prior quarter.

Production volumes increased during the quarter, with loan lock volume of $6.5 billion, up from $5.3 billion in the fourth quarter of 2025. These increases were driven by increased activity across both bank and non-bank sellers and continued expansion in sourcing channels and product offerings, including ARM, closed-end second lien (“CES”), and other specialized loan programs.

Higher production volumes were partially offset by lower gain-on-sale margins, which declined to 96 basis points from elevated levels in the prior quarter, reflecting changes in execution mix and market conditions. Margins remained within the Company’s historical target range of 75 to 100 basis points. Operating efficiency improved, with cost per loan declining to 18 basis points compared to 26 basis points in the prior quarter, primarily driven by lower operating expenses, including a decrease in variable compensation of approximately $4 million.

Distribution activity remained robust, with $5.5 billion of loans sold during the quarter, including $4.6 billion through securitizations and $915 million through whole loan sales. Sequoia also completed a record level of securitization activity during the quarter, including its inaugural securitization backed by medical professional loans, reflecting elevated capital markets activity and continued product innovation.

The change from a tax provision in the fourth quarter of 2025 to a tax benefit in the first quarter of 2026 was primarily the result of GAAP income earned at our TRS in the fourth quarter of 2025, compared to a GAAP loss at our TRS in the first quarter of 2026.

Capital allocated to this segment was $500 million at March 31, 2026, compared to $450 million at December 31, 2025, reflecting higher working capital requirements associated with increased loan inventory and securitization activity. The Sequoia platform remains focused on capital-efficient growth through active loan sales and securitizations, supporting our ability to turn capital over quickly. Loan inventory is financed through a combination of corporate capital and consumer loan warehouse facilities.

Sequoia segment contribution increased by $15 million to $38 million during the three months ended March 31, 2026, compared to $22 million in the same period of 2025. The increase was driven by higher mortgage banking income resulting from increased loan lock and purchase volumes, strong distribution activity, and improved capital markets execution, partially offset by normalization in gain-on-sale margins. The change from a tax provision in the first quarter of 2025 to a tax benefit in the first quarter of 2026 for this segment was primarily the result of GAAP income earned at our TRS in the first quarter of 2025, compared to a GAAP loss at our TRS in the first quarter of 2026.

Total loan locks increased 67% year over year to $6.5 billion, reflecting broad-based growth across both flow and bulk channels, supported by deeper engagement with bank sellers and increased activity from independent mortgage banks. Loan acquisition volumes increased to $5.7 billion from $2.4 billion in the prior-year period, reflecting higher lock volumes and improved pull-through. Distribution activity remained robust, with approximately $5.5 billion of loans sold and securitized during the quarter, compared to approximately $2.0 billion in the prior-year period, including $4.6 billion of securitizations and $915 million of whole loan sales. Gain-on-sale margins were 96 basis points, within the Company’s long-term target range of 75 to 100 basis points, compared to elevated levels in the prior-year period driven by favorable market conditions.

Aspire Mortgage Banking Segment

The following table presents key earnings for our Aspire Mortgage Banking segment during the three months ended March 31, 2026, the immediate preceding quarter ended December 31, 2025, and year-to-date period through March 31, 2025.

Table 8 – Aspire Mortgage Banking Earnings Summary

Operating expenses presented in the table above include general and administrative expenses and loan acquisition costs for this segment.

Activity at this segment performed within our taxable REIT subsidiary is subject to federal and state income taxes. The provision for income taxes for the periods presented above resulted from GAAP income from these operations at our TRS during that period.

The following table summarizes certain operating metrics related to our portfolio of loans included in the Aspire Mortgage Banking segment during the three months ended March 31, 2026, the immediate preceding quarter ended December 31, 2025, and year-to-date period through March 31, 2025.

Table 9 – Aspire Mortgage Banking Operating Metrics

(1)Number of loans presented in units

(2)Cost per loan for the Aspire Mortgage Banking segment is calculated as operating expenses of this segment divided by loan purchase commitments of this segment

(3)Gain on Sale margins reflect net revenue divided by loan purchase commitments

Aspire Mortgage Banking is presented as a separate reportable segment beginning in the first quarter of 2026, reflecting the continued growth and distinct operating characteristics of our expanded-credit residential platform. This change had no impact on the consolidated financial statements and all prior period amounts were conformed to the current presentation.

During the three months ended March 31, 2026, Aspire generated segment contribution of $2 million and continued to scale its origination platform, with lock volume of $1.6 billion. Growth was supported by increasing demand for non-QM loan products and expansion of the platform’s loan seller network, which included approximately 140 active sellers. Existing sellers accounted for approximately 70% of production during the period, reflecting a strong base of counterparties, including those actively selling loans to our Sequoia platform.

Mortgage banking income was impacted by lower gain-on-sale margins, which declined to 73 basis points from 92 basis points in the prior quarter, reflecting changes in execution mix and market conditions partially driven by volatility at the end of the first quarter. Operating expenses increased modestly during the period, reflecting continued investment in the platform’s growth. Despite this increase, operating efficiency improved, with cost per loan declining compared to the prior quarter as a result of higher production volumes and operating leverage.

Distribution activity increased during the quarter, with $1.0 billion of loans sold through a combination of securitizations and whole loan sales, representing a 44% increase compared to the prior quarter. Aspire completed its inaugural $391 million non-QM securitization during the quarter, representing an important milestone in establishing its capital markets execution and funding diversification capabilities. The transaction was supported by strong investor demand and included a co-sponsorship structure through which we syndicated the risk retention and subordinate securities issued out of the transaction.

Results for the quarter reflect continued growth in production volumes and platform scale, partially offset by normalization in margins and ongoing investment in personnel, infrastructure, and distribution capabilities.

Capital allocated to this segment was $200 million at March 31, 2026, consistent with December 31, 2025. The Aspire platform remains focused on scaling its origination capabilities while maintaining a disciplined approach to capital deployment and expenses. Loan inventory is financed through consumer loan warehouse facilities and corporate capital.

Aspire was launched in January 2025, and as a result, activity during the three months ended March 31, 2025 reflects an initial ramp-up period, including limited production, early onboarding of loan sellers, and is not directly comparable to the current quarter. During the three months ended March 31, 2026 Aspire locked $1.6 billion of loans compared to $111 million in the prior-year period. The increase in volume in the three month periods primarily reflect the continued scaling of the platform, driven by expansion of its loan seller network and increasing investor demand for non-QM products.

CoreVest Mortgage Banking Segment

The following table presents an earnings summary for our CoreVest Mortgage Banking segment for the three months ended March 31, 2026, the immediate preceding quarter December 31, 2025, and year-to-date period March 31, 2025.

Table 10 – CoreVest Mortgage Banking Earnings Summary

Operating expenses presented in the table above include general and administrative expenses, loan acquisition costs and other expenses (including amortization of purchase intangibles) for this segment.

Activity at this segment performed within our TRS is subject to federal and state income taxes. The benefit from income taxes was primarily due to GAAP losses generated by this segment’s operations at our TRS in those periods presented above.

The following table summarizes certain operating metrics related to our portfolio of loans included in the CoreVest Mortgage Banking segment during the three months ended March 31, 2026, to the immediate preceding quarter December 31, 2025, and year-to-date period through March 31, 2025.

Table 11 – CoreVest Mortgage Banking Operating Metrics

(1)Net Cost to Originate is calculated as operating expenses, adjusted for organizational restructuring charges associated with employee severance and related transition expenses, less origination fees and other fees attributable to this segment, divided by this segment’s funding volume.

CoreVest Mortgage Banking segment contribution decreased by $10 million during the three months ended March 31, 2026 compared to the three months ended December 31, 2025, with segment loss of $3 million in the current quarter compared with segment net income of $7 million in the prior quarter. The decrease in segment contribution was primarily attributable to lower gain-on-sale margins, reduced funding volumes and approximately $5 million of severance and organizational restructuring costs.

CoreVest funded $432 million of loans during the first quarter of 2026, compared to $460 million in the fourth quarter of 2025. The decline in funding volume reflects a more cautious approach to loan origination late in the quarter in response to market volatility and evolving demand from real estate investors. Funding activity remained diversified, composed of approximately 61% bridge loans and 39% term loans, and continued contribution from small-balance lending products, including RTL loans and DSCR loans.

Mortgage banking income was impacted by lower gain-on-sale margins compared to the prior quarter, reflecting normalization in market conditions and changes in execution mix. Operating efficiency improved during the quarter, with net cost to originate improving to 0.79% in the first quarter compared to 0.95% in the prior quarter. This improvement reflects continued operating leverage and expense discipline.

Distribution activity increased during the first quarter of 2026, with $694 million of loans distributed through a combination of whole loan sales, securitizations and sales to joint ventures, compared to $582 million in the fourth quarter of 2025, representing a 19% increase. CoreVest also completed a CAFL securitization during the quarter backed by a mix of seasoned performing and non-performing loans and real estate owned, supporting continued capital recycling and distribution execution.

Capital allocated to this segment was $142 million at March 31, 2026, compared to $145 million at December 31, 2025. The platform continues to utilize joint venture structures and non-recourse financing arrangements to support loan inventory and facilitate capital-efficient growth.

CoreVest Mortgage Banking segment contribution decreased by $5 million during the three months ended March 31, 2026 compared to the three months ended March 31, 2025, with a segment loss of $3 million in the current quarter compared to segment net income of $1 million in the prior year period. The decrease in segment contribution was primarily attributable a $3 million decline in mortgage banking income, reflecting lower funding volumes in the first quarter of 2026. CoreVest funded $432 million of loans during the first quarter of 2026, compared to $482 million in the first quarter of 2025. The decline in funding volume reflects lower origination activity relative to the first quarter of 2025. The lower funding volume was attributable to reduced origination activity, driven by a more cautious approach to loan production late in the quarter in response to market volatility and evolving demand from real estate investors, whereas the prior‑year period benefited from stronger borrower demand for term and bridge loans.

Redwood Investments Segment

This segment consists of investments comprising retained operating investments sourced through our Mortgage Banking securitizations and third-party securities, some of which we consolidate for GAAP purposes. We directly finance our holdings of real estate securities with a combination of recourse, non-marginable term debt financing, non-recourse, non-marginable re-securitization debt, and recourse, marginable securities repurchase financing.

In the second quarter of 2025, as a part of the Company's accelerated shift towards a scalable and simplified operating model, the non-core legacy assets historically held in this segment were formally reclassified to the newly established Legacy Investments segment. This reclassification did not impact our consolidated financial results but served to better align Redwood’s disclosure with its strategic focus. All relevant prior period amounts and disclosures have been conformed to reflect the current segment structure.

We primarily target investments with sensitivity to housing credit risk, sourced through our operating platforms where we control the underwriting and collateral review. The Redwood Investments portfolio is increasingly focused on retained interests from the Company’s own securitizations and other internally sourced investment vehicles, as we continue to scale our mortgage banking platforms and allocate capital to investments generated through those activities. This shift has resulted in a portfolio increasingly concentrated in investments sourced through our Mortgage Banking platforms and is consistent with our strategy to enhance capital efficiency and align our investment portfolio with our core operating businesses.

This segment’s main sources of income are net interest income (including interest expense on secured financings and allocated corporate financing costs) and other income from investments, changes in fair value of investments and associated hedges, and realized gains and losses upon the sale of securities. Direct operating expenses and tax provisions associated with these activities are also included in this segment.

The following table presents an earnings summary for our Redwood Investments segment for the three months ended March 31, 2026, the immediate preceding quarter ended December 31, 2025, and the year-to-date period ended March 31, 2025.

Table 12 – Redwood Investments Earnings Summary

Investment fair value changes, net is primarily comprised of the change in fair value (both realized and unrealized) of our portfolio investments accounted for under the fair value option and interest rate hedges associated with these investments. See Table 3 inthe Consolidated Results of Operations in Part I, Item 2 of this Quarterly Report on Form 10-Q for further detail on the composition of investment fair value changes (the difference in amounts in the table above and in Table 3 relates to fair value changes for investments held at corporate/other).

We hold certain of our investments, primarily our MSRs, at our TRS. Activity at this segment performed within our TRS is subject to federal and state income taxes. The benefit from income taxes was primarily due to GAAP losses generated by this segment’s operations at our TRS and our provision for income taxes at this segment is primarily driven by the amount of income earned from portfolio assets at our TRS.

The $23 million decrease in segment contribution for the three months ended March 31, 2026, compared to the three months ended December 31, 2025, was primarily driven by $15 million of negative investment fair value changes in the current quarter, compared to $8 million of positive fair value changes in the prior quarter. The current‑quarter valuation changes primarily reflected unrealized market‑driven changes (including widening of credit spreads) on portfolio investments and related hedges, driven by interest rate volatility and spread movements.

Overall, results for the quarter were primarily impacted by market-driven valuation changes and portfolio seasoning, while underlying asset performance remained generally stable across most of the portfolio. Delinquencies in CAFL Bridge Securities increased, with 90 day+ delinquency rates rising to 8.1% in the first quarter of 2026 from 4.3% in the fourth quarter of 2025. The increase in 90+ day delinquencies for CAFL Bridge Securities was primarily driven by seasoned loans originated in 2021 and 2022, which accounted for 58% of the rise. The higher delinquency rate was further amplified by a lower total outstanding balance in the first quarter of 2026. In contrast, 90 day + delinquency balances for Sequoia Securities and CAFL Term Securities improved modestly to 0.2% and 9.8% of total unpaid principal balances, respectively, compared to 0.3% and 10.1% in the prior quarter.

Net interest income decreased modestly by $2 million, primarily reflecting lower balances of third-party securities due to portfolio repositioning and paydowns, partially offset by income generated from retained operating investments sourced through our mortgage banking platforms.

Servicing income increased by $4 million compared to the prior quarter, reflecting valuation benefits from higher interest rates observed in the first quarter of 2026, while other income streams remained relatively stable.

As we continue to expand our focus on our operating platforms, we intend to allocate capital accordingly. In line with this strategy, during the first quarter we deployed approximately $50 million of capital into retained investments created from our Mortgage Banking securitization activity. We also continue to optimize financing through non-recourse structures, consistent with our strategy to enhance capital efficiency and align the investment portfolio with our mortgage banking platforms.

The $27 million decrease in segment contribution for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025 is primarily due to the decline in Investment fair value changes, net of $19 million driven by market-related valuation changes on portfolio investments and associated hedges resulting from interest rate volatility and spread movements during the three month periods.

Redwood Investments Detail

The following table presents a balance sheet summary for our Redwood Investments segment as of March 31, 2026 and December 31, 2025.

Table 13 – Redwood Investments Balance Sheet Summary

(1) Represents our retained economic investment in securities issued by consolidated Sequoia securitization VIEs. For GAAP purposes, we consolidated $18.24 billion of loans and $17.24 billion of ABS issued associated with these investments at March 31, 2026. We consolidated $14.84 billion of loans and $14.12 billion of ABS issued associated with these investments at December 31, 2025. At March 31, 2026 and December 31, 2025, excludes $343 million and $134 million, respectively, of retained Sequoia securities that were used as hedges for our Sequoia Mortgage Banking segment.

(2) Represents our retained economic investments in securities issued by consolidated CAFL Term securitization VIEs. For GAAP purposes, we consolidated $1.82 billion of loans and $1.53 billion of ABS issued associated with these investments at March 31, 2026. We consolidated $1.99 billion of loans and $1.68 billion of ABS issued associated with these investments at December 31, 2025.

(3) At March 31, 2026 and December 31, 2025 represents HEI originated and owned by Redwood.

(4) Other investments at both March 31, 2026 and December 31, 2025 includes net risk share investments of $15 million, representing $16 million of restricted cash and other assets, net of other liabilities of $1 million. Also includes mortgage servicing rights of $40 million and $33 million at March 31, 2026 and December 31, 2025, respectively.

(5) Represents our economic investment in consolidated Servicing Investment variable interest entities. At March 31, 2026, for GAAP purposes, we consolidated $257 million of servicing investments and $135 million of non-recourse short-term securitization debt, as well as other assets and liabilities for these entities. At December 31, 2025, for GAAP purposes, we consolidated $266 million of servicing investments and $152 million of non-recourse securitization debt, as well as other assets and liabilities for these entities.

The size of our Redwood Investments portfolio on an economic basis declined slightly for the three months ended March 31, 2026. The retention of residential consumer securities from our eight Sequoia securitizations during the three months ended March 31, 2026, was offset by a decline in our securitized and unsecuritized residential investor bridge loans due to sales and principal payments exceeding new bridge loan originations.

The following table summarizes the credit characteristics of Sequoia securities and CAFL term securities at March 31, 2026 and December 31, 2025. This table includes both our securities held on balance sheet and our economic interest in securities we own in securitizations we consolidate in accordance with GAAP.

Table 14 – Credit Statistics (1)

(1)Underlying loan performance information provided in this table is generally reported on a one-month lag. Accordingly, data as of March 31, 2026 reflects March 2026 reports with a loan performance date of February 2026, and data as of December 31, 2025 reflects December 2025 reports with a loan performance date of November 2025. The methodology for calculating weighted average values for securities investments presented in the tables above, including delinquency rates, is based on notional balances of loans collateralizing each of our securities investments.

(2)Sequoia Securities presented in this table include subordinate and interest only or certificated servicing securities.

(3)Delinquency percentages at underlying securitizations are calculated using unpaid principal balance ("UPB"). Aggregate delinquency amounts by security type are weighted using the notional value of the loans collateralizing each of our securities investments.

(4)Includes loans over 90 days delinquent and all loans in foreclosure (regardless of delinquency status).

Legacy Investments Segment

The Legacy Investments segment primarily consists of assets no longer aligned with our core strategic objectives, including legacy unsecuritized bridge and term loans, residential re-performing loan securities and other non-core Legacy assets, that are in the active process of sale, runoff, or other disposition as part of an accelerated strategic repositioning of our business model. These assets were previously included within the Redwood Investments segment. We finance our assets in this segment with a combination of recourse and non-recourse, non-marginable warehouse facilities, and a portion of a secured, revolving financing facility. All relevant prior period amounts and disclosures have been conformed to reflect the current segment structure. At March 31, 2026, 55% of capital in this portfolio was related to Legacy Bridge Loans (inclusive of certain unsecuritized term loans) and 45% was related to Legacy HEI. During the first quarter of 2026, we continued to execute on our plan to accelerate the wind down of the Legacy Investments portfolio to support capital redeployment and a reduction in portfolio exposure. Segment capital allocation decreased to 15% of total invested capital, compared to 19% at December 31, 2025.

The continued wind-down of our Legacy Investments portfolio is expected to continue to free up investment capital as we progress with further disposition activity. Asset sales and other accretive financings have enabled the repayment of higher cost secured debt and more efficient utilization of flexible funding sources, including our secured revolving financing facility with one of our joint venture partners. We remain focused on further reducing the legacy portfolio in 2026 while prioritizing maximum recovery through both outright sales and partnership structures that recycle capital while preserving upside where we believe it makes economic sense.

This segment’s earnings are primarily driven by net interest income (including interest expense on secured financings and allocated corporate financing costs) and other income from investments, changes in the fair value of investments and associated hedges, and realized gains and losses upon the sale or disposition of assets. Direct operating expenses and tax provisions associated with these activities are also included in this segment.

The following table presents an earnings summary for our Legacy Investments segment for the three months ended March 31, 2026, the immediate preceding quarter ended December 31, 2025, and the year-to-date period ended March 31, 2025.

Table 15 – Legacy Investments Earnings Summary

Investment fair value changes, net is primarily comprised of the change in fair value (both realized and unrealized) of our loans and portfolio investments accounted for under the fair value option and related interest rate hedges. See Table 3 inthe Consolidated Results of Operations in Part I, Item 2 of this Quarterly Report on Form 10-Q for further detail on the composition of investment fair value changes (the difference in amounts in the table above and in Table 3 relates to fair value changes for investments held at corporate/other).

We hold certain of our investments at our TRS. Activity of this segment that is performed within our TRS is subject to federal and state income taxes. The benefit from income taxes was primarily due to GAAP losses generated by this segment’s operations at our TRS and our provision for income taxes at this segment is primarily driven by the amount of income earned from portfolio assets at our TRS.

Legacy Investments reported a segment loss of $13 million for the first quarter of 2026, compared to a loss of $23 million in the fourth quarter of 2025, representing an improvement of $10 million. The improvement in segment loss was primarily driven by higher HEI income, net and lower net interest expense.

Net interest (loss) income improved by $4 million, primarily reflecting the continued runoff of legacy assets which reduced our allocation of corporate financing costs, and lower secured financing costs on our legacy bridge loans, a portion of which were included in an accretive secured financing structure during the quarter. These benefits were partially offset by a higher balance of loans on non‑accrual status in the first quarter of 2026 compared to the fourth quarter of 2025.

Investment fair value changes, net improved modestly compared to the prior quarter, as valuation impacts stabilized. HEI income, net increased by $4 million, driven by improved liquidity in the asset class, including through securitization.

Operating expenses associated with ongoing asset management, resolution activities, and disposition efforts increased $3 million during the first quarter of 2026. The increase is primarily related to asset specific costs on REO that were largely offset by associated rental income included in other income in this segment.

Results for the quarter continue to reflect the active wind-down of the Legacy Investments portfolio, including asset sales, structured transactions, and financing optimization. Capital allocated to Legacy Investments declined by $64 million or 21%, reflecting continued execution on our strategy to reduce legacy exposure and redeploy capital to Mortgage Banking platforms to simplify the balance sheet and enhance returns. While subject to market conditions and execution timing, we are targeting reducing the capital allocated to Legacy Investments segment down to below $100 million by the end of 2026. As we execute on this reallocation strategy, we believe there is an opportunity for consolidated returns to improve.

Legacy Investments reported a segment loss of $13 million for the first quarter of 2026, compared to a loss of $9 million in the first quarter of 2025, primarily due to a $4 million decline in net interest income. The decrease in net interest income was driven by a reduced investment balance resulting from asset sales and dispositions over the past 12 months, combined with higher financing costs stemming from increased secured debt and a greater proportion of loans on non-accrual status.

Legacy Investments Detail and Activity

The following table presents a balance sheet summary for our Legacy Investments segment as of March 31, 2026 and December 31, 2025.

Table 16 – Legacy Investments Balance Sheet Summary

(1)At March 31, 2026 and December 31, 2025, represents third-party originated HEI, as well as our net investment in a HEI securitization entity.

(2)During the year ended December 31, 2025 we sold a portfolio totaling $484 million in fair value of legacy unsecuritized bridge loans and REO assets to the Legacy Trust and 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. During three months ended March 31, 2026, we funded an additional $10 million of our total $35 million capital support commitment related to maintaining specified loan-to-value ratio thresholds of the Legacy Trust.

During the first quarter of 2026, we completed a $225 million CAFL securitization backed by a mix of performing, re-performing and non-performing bridge loans and REO. The collateral included $223 million of loans and $38 million of REO, primarily sourced from our called CAFL securitizations issued between 2021 and 2023. The securitization also included $66 million of loans and $19 million of REO from our Legacy Investments portfolio. This transaction contributed to the financing efficiency of legacy assets, facilitated the redeployment of capital into our core operating platforms and, through its securitization structure, provides the flexibility to sell loans and further reduce legacy exposures over time. See further discussion of this securitization in Note 17 in Part 1, Item 1 - Financial Statements.

We also continued to make progress in resolving legacy bridge exposures, including the resolution of approximately $4 million of 90+ day delinquent loans and the sale of approximately $34 million of REO during the quarter.

Loan Composition

The following table provides the composition of legacy term and bridge loans by product type at March 31, 2026.

Table 17 – Legacy Loans By Product Type at Legacy Investments at Fair Value

(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.

At March 31, 2026, the fair value of our legacy bridge and term loans and associated REO represented 91.5% of the combined unpaid principal balance of these loans and the unpaid principal balance of the loans at the time the REO were foreclosed. As part of our plans to accelerate the wind-down of the Legacy Investments portfolio, we have revised our underwriting practices to discontinue the active origination of large multifamily loans. Consequently, we expect our exposure to multifamily loans and REO to decline over time as we proactively reduce long-term exposure to the legacy bridge loan portfolio.