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 first quarter 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 the Sequoia Mortgage Banking, Aspire Mortgage Banking and CoreVest Mortgage Banking segments. Revenue for 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 in the sections following.

During the quarter 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 unsecured 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 and six months ended June 30, 2026, the immediate preceding quarter March 31, 2026, and year-to-date period June 30, 2025. For comparability purposes, prior period segment information has been adjusted to reflect the changes discussed above.

Table 3 – Segment Results Summary

The sections that follow provide further detail on our business segments and their results of operations for the three and six months ended June 30, 2026, the immediate preceding quarter ended March 31, 2026, and year-to-date period ended June 30, 2025.

Corporate/Other

Net expenses from Corporate/Other decreased by $3 million to $20 million for the three months ended June 30, 2026 compared to the three months ended March 31, 2026. The decrease primarily reflected lower compensation and corporate costs. Net expenses from Corporate/Other increased by $6 million to $43 million, compared to the six months ended June 30, 2025. The increase primarily reflects higher compensation and related operating costs associated with increased headcount supporting growth of the Mortgage Banking platforms.

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 or into joint ventures. We recently launched a strategic joint venture to acquire prime jumbo residential mortgage loans sourced through our Sequoia platform and provide additional capital to support loan acquisition and securitization activities. 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 “Expanded” or “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. 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, including term and bridge loans, for subsequent securitization, whole loan sale, transfer into our Redwood Investments portfolio, or contribution to joint ventures. Term loans are secured by stabilized residential rental properties and include larger-balance loans and smaller-balance DSCR loans, which are underwritten primarily based on the property’s debt service coverage ratio. Bridge loans generally finance transitional properties or value-add strategies. CoreVest loans are typically distributed through our CAFL® private-label securitization program or through whole loan sales. CoreVest also administers two joint ventures that invest in residential investor loans originated by the platform, for which we earn ongoing fees and may earn performance-based fees.

Our inventory of loans 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 and six months ended June 30, 2026, the immediate preceding quarter March 31, 2026, and year-to-date period through June 30, 2025.

Table 4 – Mortgage Banking Platforms Earnings Summary

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

Activity for the Mortgage Banking platforms 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 $3 million increase in Mortgage Banking contribution during the three months ended June 30, 2026, as compared to the three months ended March 31, 2026, was primarily driven by a $7 million decrease in operating expenses and a $1 million increase in mortgage banking income. These improvements were partially offset by a $4 million change in income taxes, reflecting a shift from an income tax benefit in the prior quarter to an income tax provision in the current quarter.

Mortgage Banking production volumes decreased to $8.0 billion during the second quarter of 2026, compared to $8.5 billion in the first quarter of 2026, but remained the second-highest level of quarterly production in the Company’s history. The decrease primarily reflected a more cautious operating posture during April and May in response to heightened market volatility and elevated interest rates. Production momentum improved meaningfully as market conditions stabilized in June, when more than 40% of quarterly production occurred. Lower Sequoia lock volume and CoreVest funding volume were partially offset by continued growth at Aspire, where lock volume increased 31% to a record $2.1 billion.

Despite the decrease in production volumes, mortgage banking income increased modestly compared to the prior quarter, as contributions from Aspire (volume and margin) offset the impact of lower production of Sequoia. Gain-on-sale margins remained within targeted ranges across the Mortgage Banking platforms despite elevated market volatility. In particular, Aspire benefited from improved gain-on-sale margins and higher production, while Sequoia margins remained at the higher end of the Company’s historical targeted range of 75 to 100 basis points.

Distribution activity remained strong during the quarter, supported by continued execution across securitization, whole loan sale and joint venture channels. Mortgage Banking securitization distributions totaled approximately $6.5 billion 1 2 during the second quarter, slightly lower than the $6.7 billion 2 in the first quarter, and included securitizations across each of the Sequoia, Aspire and CoreVest platforms. In the second quarter, the Company also began distributing Sequoia loans into its joint venture following its launch in April, further diversifying distribution capacity and supporting capital-efficient growth.

Operating expenses decreased to $25 million during the second quarter of 2026 from $31 million in the first quarter of 2026. The decrease primarily reflected severance and organizational restructuring costs incurred in the first quarter within the CoreVest segment of approximately $5 million, as well as lower loan acquisition costs. The change from a tax benefit to a tax provision from the prior quarter was primarily the result of TRS GAAP income earned during three months ended June 30, 2026, as compared to a TRS GAAP loss during the three months ended March 31, 2026.

Overall, Mortgage Banking results for the current quarter reflect resilient mortgage banking income and strong distribution activity despite lower production volumes and a volatile market environment. Results also benefited from lower operating expenses and continued platform diversification, including growth at Aspire and expanded joint venture distribution.

1 Includes $268 million of UPB of joint venture securitizations.

2 Includes securitizations of previously retained investments from Sequoia securitizations as well as securitizations that were issued and called within the reporting period

The $31 million increase in Mortgage Banking contribution during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, was primarily driven by a $23 million increase in mortgage banking income and an $18 million change in income taxes, partially offset by a $9 million increase in operating expenses. Mortgage Banking contribution increased to $77 million during the current-year period from $46 million during the prior-year period.

Mortgage Banking production volumes increased 92% to $16.5 billion during the six months ended June 30, 2026, compared to approximately $8.6 billion during the prior-year period. The increase was primarily driven by continued growth at Sequoia, where loan locks increased 68% to $12.1 billion, and the continued scaling of Aspire, where loan locks increased to $3.6 billion from $441 million during its initial ramp-up period in 2025. Growth across these platforms reflected expansion of the Company’s loan seller network, increased activity from bank and independent mortgage bank counterparties, broader product offerings, and increasing demand for expanded credit products. These increases were partially offset by lower CoreVest funding volume, reflecting a more cautious approach to loan production in response to market volatility, and evolving demand from real estate investors, amid persistently higher interest rates.

Mortgage banking income increased to $132 million during the six months ended June 30, 2026, compared to $109 million during the prior-year period. The increase was primarily attributable to higher production volumes and strong capital markets execution at Sequoia and Aspire, partially offset by lower funding volumes at CoreVest and normalization in Sequoia gain-on-sale margins from elevated prior-year levels. Sequoia’s gain-on-sale margin decreased to 94 basis points from 128 basis points in the prior-year period, but remained within or near the Company’s long-term targeted range during much of the current-year period.

Distribution activity also increased significantly, with $16.8 billion 1 of loans distributed through securitizations, whole loan sales and joint ventures during the six months ended June 30, 2026, compared to $6.8 billion during the prior-year period. The increase was primarily driven by higher Sequoia distributions and the continued development of Aspire’s distribution capabilities. CoreVest distributions remained relatively consistent at approximately $1.1 billion. Increased distribution activity supported capital recycling and enabled the platforms to accommodate higher production volumes while maintaining diversified access to capital markets.

Operating expenses increased to $56 million during the six months ended June 30, 2026, compared to $47 million during the prior-year period, primarily reflecting higher variable and production-related expenses and continued investment in personnel, infrastructure and capital markets capabilities as Sequoia and Aspire scaled. The six-month period also included severance and organizational restructuring costs of approximately $5 million within the CoreVest segment. Operating efficiency improved across the platforms, with Sequoia cost per loan declining to 17 basis points from 20 basis points and CoreVest net cost to originate declining to 87 basis points from 107 basis points. The change from a tax provision to a tax benefit for the six-month periods ended June 30, 2026 and 2025, respectively, was primarily the result of TRS GAAP income earned at this segment in 2025 compared to a TRS GAAP loss in 2026.

The favorable change in income taxes reflected a $2 million benefit during the current-year period compared to a $16 million provision during the prior-year period, primarily attributable to changes in taxable income generated within the Company’s taxable REIT subsidiaries in the prior period. Overall, the current-year results reflect substantially higher production and distribution activity, continued platform diversification and improved operating efficiency, partially offset by normalization in gain-on-sale margins and lower CoreVest funding activity.

Sequoia Mortgage Banking Segment

The following table presents key earnings and operating metrics for our Sequoia Mortgage Banking segment during the three and six months ended June 30, 2026, the immediate preceding quarter ended March 31, 2026, and year-to-date period through June 30, 2025.

Table 5 – Sequoia Mortgage Banking Earnings Summary

The following table summarizes certain operating metrics related to our portfolio of loans included in the Sequoia Mortgage Banking segment during the three and six months ended June 30, 2026, the immediate preceding quarter ended March 31, 2026, and year-to-date period through June 30, 2025.

Table 6 – Sequoia Mortgage Banking Operating Metrics

(1)Number of loans presented in units.

(2)Includes securitizations of previously retained investments from Sequoia securitizations as well as securitizations that were issued and called within the reporting period.

(3)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.

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

Sequoia Mortgage Banking segment contribution was $32 million for the three months ended June 30, 2026, compared to $38 million for the three months ended March 31, 2026. The decrease primarily reflected lower production volumes and a modest decline in gain-on-sale margins, partially offset by continued operating efficiency improvements.

Loan lock volumes totaled $5.6 billion, a 15% decrease from $6.5 billion during the prior quarter, reflecting a deliberately more measured operating posture during April and May amid heightened market volatility and elevated interest rates. Market conditions improved during June, with more than 40% of quarterly lock volume generated during the final month of the quarter. Newer products represented 30% of quarterly lock volume, which includes hybrid adjustable-rate loans, medical professional loans and closed-end second lien loans, and demonstrated continued product diversification despite a subdued refinancing environment.

Mortgage banking income decreased to $40 million from $47 million during the prior quarter, primarily reflecting lower loan purchase commitments and a modest decline in gain-on-sale margins to 92 basis points from 96 basis points. Despite the sequential decline, margins remained near the upper end of the Company's long-term target range of 75 to 100 basis points, notwithstanding elevated market volatility. Operating efficiency modestly improved, with cost per loan declining to 17 basis points from 18 basis points, reflecting lower operating expenses, including reduced variable compensation, together with continued operating leverage.

Distribution activity remained strong, with $6.5 billion 1 of loans distributed during the quarter, including $5.3 billion 1 through securitizations and $1.2 billion through whole loan sales. During the quarter, our Sequoia loan securitizations included transactions backed by a diversified mix of fixed-rate, hybrid adjustable-rate, investor, and medical professional loans. Sequoia also began distributing loans through its joint venture, further expanding its distribution channels and supporting continued capital-efficient loan distribution and balance sheet management.

The tax benefit decreased compared to the prior quarter, primarily due to lower GAAP losses at our TRS during the second quarter of 2026, compared to the first quarter of 2026.

Capital allocated to this segment decreased to $300 million at June 30, 2026, compared to $500 million at March 31, 2026, primarily reflecting the reallocation of capital to retained investments generated from Sequoia securitization activity during the quarter, as well as continued improvements in capital efficiency driven by active loan sales and expanded distribution channels. Loan inventory continues to be financed through a combination of corporate capital and consumer loan warehouse facilities.

Sequoia Mortgage Banking segment contribution increased by $29 million to $69 million during the six months ended June 30, 2026, compared to $40 million in the same period of 2025. The increase was primarily driven by higher mortgage banking income, reflecting increased loan lock, purchase and distribution volumes and improved capital markets execution.

Total loan locks increased 68% to $12.1 billion during the six months ended June 30, 2026, compared to $7.2 billion during the prior-year period. Loan purchase commitments increased to $10.6 billion from $6.5 billion, reflecting growth across flow and bulk production channels and increased adoption of newer loan products.

Distribution activity also increased significantly, with $13.4 billion of loans distributed during the six-month period compared to $5.7 billion during the same period of 2025, supported by continued investor demand across the Company’s securitization and whole loan distribution channels. These improvements were partially offset by the normalization of gain-on-sale margins from elevated prior-year levels.

Segment contribution also benefited from a shift from an income tax provision in the prior-year period to an income tax benefit in the current-year period and was primarily the result of TRS GAAP income earned at this segment in 2025 compared to a TRS GAAP loss in this segment in 2026.

Aspire Mortgage Banking Segment

The following table presents key earnings for our Aspire Mortgage Banking segment during the three and six months ended June 30, 2026, the immediate preceding quarter ended March 31, 2026, and year-to-date period through June 30, 2025.

Table 7 – Aspire Mortgage Banking Earnings Summary

The following table summarizes certain operating metrics related to our portfolio of loans included in the Aspire Mortgage Banking segment during the three and six months ended June 30, 2026, the immediate preceding quarter ended March 31, 2026, and year-to-date period through June 30, 2025.

Table 8 – 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 June 30, 2026, Aspire generated segment contribution of $7 million compared to $2 million during the prior quarter, driven primarily by continued production growth and improved mortgage banking margins. Loan locks increased 31% quarter over quarter to a record $2.1 billion, reflecting continued expansion of our correspondent platform and strong demand for our expanded credit products. Existing loan sellers continued to account for a significant portion of production during the quarter, demonstrating increasing engagement across the platform while the active seller network expanded to over 150 loan sellers.

Mortgage banking income increased to $13 million from $6 million in the prior quarter, reflecting record lock volumes together with higher gain-on-sale margins, which improved to 101 basis points from 73 basis points. Margin expansion reflected improved securitization execution, tighter credit spreads and favorable hedge performance during the quarter. Operating expenses increased modestly as the platform continued investing in growth; however, operating efficiency improved, as cost per loan declined to 27 basis points from 30 basis points, reflecting higher production volumes and operating leverage.

Distribution activity increased to $1.3 billion during the second quarter of 2026, consisting of $920 million of securitizations and $393 million of whole loan sales, as the platform continued to scale alongside production growth. During the quarter, Aspire completed two non-QM securitizations under its SPIRE shelf, demonstrating continued capital markets execution and providing an efficient distribution channel for loan production. Subsequent to quarter-end, Aspire executed definitive documentation for its strategic joint venture, providing an additional long-term distribution channel to support the platform's continued growth.

Capital allocated to this segment was $200 million at June 30, 2026, consistent with March 31, 2026, reflecting the platform's continued focus on scaling production while maintaining disciplined capital deployment. Loan inventory is financed through consumer loan warehouse facilities and corporate capital.

Subsequent to June 30, 2026, we executed definitive documentation for a strategic joint venture with an institutional investment manager, which joint venture will acquire expanded credit loans sourced through the Aspire Mortgage Banking platform. Redwood will administer the assets held by the joint venture and earn loan administration and other related fees pursuant to the terms of the joint venture agreements.

Aspire was launched in January 2025 and, as a result, activity during the six months ended June 30, 2025 reflects the platform's initial ramp-up period, including limited production volumes, early onboarding of loan sellers and the initial development of its capital markets distribution capabilities. Accordingly, results for the six months ended June 30, 2025 are not directly comparable to the current year-to-date period.

During the six months ended June 30, 2026, Aspire generated segment contribution of $10 million compared to a segment loss of $2 million during the prior-year period. Mortgage banking income increased to $19 million from less than $1 million in the prior-year period, driven by continued growth in production volumes and improved mortgage banking execution.

Loan locks increased to $3.6 billion during the six months ended June 30, 2026 compared to $441 million during the prior-year period, reflecting continued expansion of the platform's correspondent network, increased participation from existing loan sellers and growing investor demand for non-QM products. During the first half of 2026, Aspire also expanded its distribution capabilities through three securitizations under its SPIRE shelf and continued development of additional long-term capital partnerships to support future growth.

CoreVest Mortgage Banking Segment

The following table presents an earnings summary for our CoreVest Mortgage Banking segment for the three and six months ended June 30, 2026, the immediate preceding quarter March 31, 2026, and year-to-date period June 30, 2025.

Table 9 – CoreVest Mortgage Banking Earnings Summary

The following table summarizes certain operating metrics related to our portfolio of loans included in the CoreVest Mortgage Banking segment during the three and six months ended June 30, 2026, to the immediate preceding quarter March 31, 2026, and year-to-date period through June 30, 2025.

Table 10 – CoreVest Mortgage Banking Operating Metrics

(1) For the three and six months ended June 30, 2026 includes joint venture securitizations of $268 million of UPB

(2)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 increased by $5 million in the three months ended June 30, 2026 compared to the three months ended March 31, 2026, with segment income of $1 million in the current quarter compared with segment net loss of $3 million in the prior quarter. The increase in segment contribution was primarily attributable to lower operating expenses, reflecting the nonrecurrence of $5 million of severance and organizational restructuring costs incurred in the prior-quarter period. This improvement was partially offset by a $2 million decrease in income tax benefit in the current quarter.

CoreVest funded $410 million of loans during the second quarter of 2026, compared to $432 million in the first quarter of 2026. The modest decline in funding volume reflected a more measured operating posture amid elevated interest rates and market volatility, which primarily affected demand for term loans. Despite the softer funding environment, the platform maintained pipeline quality and a diversified funding mix, with bridge loans representing approximately 55% of quarterly fundings and term loans representing approximately 45% of quarterly fundings. Activity also continued across smaller-balance lending products, RTL loans and DSCR loans.

Distribution activity during the second quarter of 2026 totaled $375 million, with loans distributed through a combination of whole loan sales, securitizations and transfers to joint ventures, compared to $694 million in the first quarter of 2026. The sequential decline primarily reflected the timing of distribution activity, as the first quarter included a CAFL securitization backed by a mix of seasoned performing and non-performing loans and real estate owned. During the second quarter of 2026, one of our joint ventures completed a $268 million term loan securitization, representing the platform's first broadly syndicated term loan securitization since 2022 and supporting continued capital recycling and distribution execution. Investor demand for the transaction was strong, reflecting continued access to diversified distribution channels.

Capital allocated to this segment was $128 million at June 30, 2026, compared to $142 million at March 31, 2026. 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 $10 million during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, with a segment loss of $2 million in the current year to date period compared to segment net income of $7 million in the prior year period. The decrease in segment contribution was primarily attributable a $12 million decline in mortgage banking income, reflecting lower funding volumes in the first half of 2026. CoreVest funded $843 million of loans during the six months ended June 30, 2026, compared to $991 million during the six months ended June 30, 2025. The decline in funding volume reflected a more cautious approach to loan production amid elevated interest rates and market volatility, which reduced demand from residential real estate investors, particularly for term loan products. Despite lower origination volumes, the platform continued to maintain a diversified funding mix across bridge and term loans while utilizing multiple distribution channels, including whole loan sales, joint venture transfers and securitizations, to efficiently recycle capital.

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 and six months ended June 30, 2026, the immediate preceding quarter ended March 31, 2026, and the year-to-date period ended June 30, 2025.

Table 11 – Redwood Investments Earnings Summary

(1) Income from HEI that were originated through our Aspire HEI platform. Third-party originated HEI are included in our Legacy Investments segment.

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 2 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 2 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 $9 million increase in segment contribution for the three months ended June 30, 2026, compared to the three months ended March 31, 2026, was primarily driven by lower investment fair value losses, an increase in Other income, net as a result of increased earnings from equity method investments, and lower Operating expenses. Operating expenses during the first quarter of 2026 included $2 million of nonrecurring organizational restructuring charges as well as $3 million of higher Other expenses related to income allocated to our seasoned servicing investment co-investor, as compared to the three-month period ending June 30, 2026. These increases to segment contribution for the three months ended June 30, 2026 were offset by $6 million lower market valuation gains on our MSRs, as compared to the first quarter of 2026. Net interest income decreased modestly by $2 million, primarily due to increased paydowns in our portfolio of securitized residential investor bridge loans during the three months ended June 30, 2026, as compared to the three months ended March 31, 2026.

Overall, results for the quarter were primarily impacted by market-driven valuation changes and portfolio seasoning, while underlying asset performance improved across most of the portfolio. Delinquencies in CAFL Bridge Securities decreased, with 90 day+ delinquency rates decreasing to 6.3% at June 30, 2026, compared to 8.1% at March 31, 2026. The decrease in 90+ day delinquencies for CAFL Bridge Securities was primarily driven by resolutions on seasoned delinquent loans originated in 2021 and 2022. Sequoia Securities and CAFL Term Securities 90+ day delinquency balances were 0.2% and 8.7% of total unpaid principal balances at June 30, 2026, respectively, compared to 0.2% and 9.8% at March 31, 2026.

As we continue to expand our focus on our operating platforms, we intend to allocate capital accordingly. In line with this strategy, during the second quarter, apart from capital contributions to our joint ventures, most of our investment capital was deployed to support our Mortgage Banking platforms, primarily through securities retained from Sequoia securitizations. For Aspire and CoreVest, we also allocated capital to securities retained from securitizations sponsored by the related joint ventures. We continue to optimize financing through non-recourse structures to enhance capital efficiency and align our investment portfolio with our Mortgage Banking platforms.

The $33 million decrease in segment contribution for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025 is primarily due to the decline in Investment fair value changes, net of $20 million driven by market-related valuation changes on portfolio investments and associated hedges resulting from interest rate volatility and spread movements during the six-month periods. Additionally, Operating expenses for the six-month period ending June 30, 2026 were $8 million higher compared to the same period in 2025 due to $2 million of severance and organizational realignment charges incurred during the first quarter of 2026, as well as higher portfolio management costs and $3 million of higher Other expenses related to income allocated to seasoned servicing investment co-investor due to improved investment performance in 2026.

Redwood Investments Detail

The following table presents a balance sheet summary for our Redwood Investments segment as of June 30, 2026 and March 31, 2026.

Table 12 – Redwood Investments Balance Sheet Summary

(1) Represents our retained economic investment in securities issued by consolidated Sequoia securitization VIEs. For GAAP purposes, we consolidated $20.70 billion of loans and $19.48 billion of ABS issued associated with these investments at June 30, 2026. We consolidated $18.24 billion of loans and $17.24 billion of ABS issued associated with these investments at March 31, 2026. At June 30, 2026 and March 31, 2026, excludes $173 million and $343 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 $1.70 billion of loans and $1.42 billion of ABS issued associated with these investments at June 30, 2026. We consolidated $1.82 billion of loans and $1.53 billion of ABS issued associated with these investments at March 31, 2026.

(3) At June 30, 2026 and March 31, 2026 represents HEI originated and owned by Redwood.

(4) Other investments at both June 30, 2026 and March 31, 2026 includes net risk share investments of $0.6 million, representing $1.1 million of restricted cash and other assets, net of other liabilities of $0.6 million. Also includes mortgage servicing rights of $42 million and $40 million at June 30, 2026 and March 31, 2026, respectively.

(5) Represents our economic investment in consolidated Servicing Investment variable interest entities. At June 30, 2026, for GAAP purposes, we consolidated $244 million of servicing investments and $128 million of non-recourse short-term securitization debt, as well as other assets and liabilities for these entities. At March 31, 2026, for GAAP purposes, we consolidated $257 million of servicing investments and $135 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 increased during the three months ended June 30, 2026 primarily due to the retention of residential consumer securities from our Sequoia securitizations, as well as the transfer of Sequoia securities that had been used as hedges from our Sequoia Mortgage Banking segment to our Redwood Investments portfolio.

The following table summarizes the credit characteristics of Sequoia securities and CAFL term securities at June 30, 2026 and March 31, 2026. 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 13 – Credit Statistics (1)

(1)Underlying loan performance information provided in this table is generally reported on a one-month lag. Accordingly, data as of June 30, 2026 reflects June 2026 reports with a loan performance date of May 2026, and data as of March 31, 2026 reflects March 2026 reports with a loan performance date of February 2026. 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 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 June 30, 2026, 54% of capital in this portfolio was related to legacy bridge loans (inclusive of certain unsecuritized term loans) and 46% 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. Adjusted for activity to date in the third quarter, Legacy Investments is now estimated to represent less than 10% of total capital, down from 15% at March 31, 2026.

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 capital 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 and six months ended June 30, 2026, the immediate preceding quarter ended March 31, 2026, and the year-to-date period ended June 30, 2025.

Table 14 – 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 2 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 2 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 $23 million for the second quarter of 2026, compared to a loss of $13 million in the first quarter of 2026. The decline in segment contribution was primarily driven by increased net interest expense, increased investment fair value losses (including realized losses related to asset dispositions), and lower HEI income, net. The increase in net interest loss primarily reflected higher interest expense in the current quarter as we further optimized capital within the segment via non-marginable and non-recourse financing.

Investment fair value changes, net declined by $5 million compared to the prior quarter. The decrease was primarily driven by changes in the estimated fair value of our AFS real estate security, reflecting the impact of realized resolution outcomes during the second quarter of 2026 and updated discounted cash flow expectations for loans within the Legacy Trust. The decrease also reflected higher REO impairments compared to the prior quarter.

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 $47 million or 19%, 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 $36 million for the six months ended June 30, 2026, compared to a loss of $120 million for the six months ended June 30, 2025, primarily reflecting our progress in resolving legacy bridge exposures and other non-core legacy assets during the six month periods.

Legacy Investments Detail and Activity

The following table presents a balance sheet summary for our Legacy Investments segment as of June 30, 2026 and March 31, 2026.

Table 15 – Legacy Investments Balance Sheet Summary

(1)At June 30, 2026 and March 31, 2026, 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. As of June 30, 2026, we funded $20 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.

Subsequent to June 30, 2026, we completed a secured financing transaction relating to substantially all of our unsecuritized HEI contracts. In connection with the transaction, Redwood guaranteed approximately $90 million of obligations secured by this HEI portfolio. With the completion of this transaction, capital previously held against the HEI portfolio became available for other investment and corporate purposes.

We continued to make progress in resolving legacy bridge exposures, including the resolution of approximately $16 million of 90+ day delinquent loans during the three months ending June 30, 2026.

Loan Composition

The following table provides the composition of legacy term and bridge loans by product type at June 30, 2026.

Table 16 – 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.

(3)Includes $14 million of loans recorded at the lower of cost or market value for which the carrying value approximates the fair value.

At June 30, 2026, the fair value of our legacy bridge and term loans and associated REO represented 88% 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.