REDWOOD TRUST INC

Note 1. Organization

Redwood Trust, Inc., together with its subsidiaries, is a specialty finance company focused on several distinct areas of housing credit, with a mission to make quality housing — whether rented or owned — accessible to all American households. Our operating platforms occupy a unique position in the housing finance value chain by providing liquidity to growing segments of the U.S. housing market that are not well served by government programs. We deliver customized housing credit investments to a diverse mix of investors, through our best-in-class securitization platforms, whole-loan distribution activities, joint ventures and our publicly traded shares. We operate through three residential housing-focused operating platforms — Sequoia, Aspire, and CoreVest — alongside our complementary Redwood Investments portfolio which is primarily composed of assets we source through these platforms. Redwood Investments also includes RWT Horizons®, our unified technology platform spanning internal artificial intelligence ("AI") innovation and strategic investments across the ecosystem, which supports our efforts to develop an AI-first operating model that enables compounding operational leverage and scalable growth. These platforms reflect how we manage and organize our business and may differ from the manner in which our reportable segments are presented for financial reporting purposes. See Note 4 for further discussion on our reportable segments.

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

Redwood Trust, Inc. has elected to be taxed as a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), beginning with its taxable year ended December 31, 1994. We generally refer, collectively, to Redwood Trust, Inc. and those of its subsidiaries that are generally not subject to subsidiary-level corporate income tax as "the REIT" or "our REIT." We generally refer to subsidiaries of Redwood Trust, Inc. that are subject to subsidiary-level corporate income tax as "our taxable REIT subsidiaries" or "TRS." On November 3, 2026, Redwood Trust, inc. announced a plan to transition from REIT status to C-corporation status under the Internal Revenue Code beginning with its taxable year ending December 31, 2027.

Redwood Trust, Inc. was incorporated in the State of Maryland on April 11, 1994, and commenced operations on August 19, 1994. References herein to "Redwood," the "company," "we," "us," and "our" include Redwood Trust, Inc. and its consolidated subsidiaries, unless the context otherwise requires. For a full description of our business, see Part I, Item 1—Businessin our Annual Report on Form 10-K for the year ended December 31, 2025.

Note 2. Basis of Presentation

The consolidated financial statements presented herein are as of September 30, 2026 and December 31, 2025, and for the three and nine months ended September 30, 2026 and 2025. These interim unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC") and generally accepted accounting principles ("GAAP"). Certain disclosures typically included in our annual financial statements have been condensed or omitted from these interim financial statements, as permitted. The disclosures included in these interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. In the opinion of management, all normal and recurring adjustments have been made to present fairly the financial condition of the Company at September 30, 2026 and results of operations for all periods presented. The results of operations for the three and nine months ended September 30, 2026 should not be construed as indicative of the results to be expected for the full year.

During the first quarter of 2026, we established Aspire Mortgage Banking as a new reportable segment to separately disclose financial results for our expanded-credit residential mortgage platform, which was previously included within the Sequoia Mortgage Banking segment. Aspire Mortgage Banking includes our non-QM loan conduit, which focuses on loans and investments originated under expanded underwriting criteria. This change had no impact on the consolidated financial statements and all prior-period amounts were conformed to the current presentation.

During the same period, we began allocating our preferred stock dividend expense as well as our corporate financing costs, comprised of interest expense related to our unsecured promissory notes, trust preferred securities, convertible debt, and senior notes, to our operating or reportable segments for informational purposes. This change had no impact on the consolidated financial statements and all prior-period amounts were conformed to the current presentation.

During the second quarter of 2025, we established Legacy Investments as a new reportable segment to separately disclose financial results for assets that are no longer aligned with our core strategic objectives. These assets include our legacy unsecuritized bridge and term portfolios, residential re-performing loan securities and other non-core legacy assets that are intended for sale, runoff, or other forms of disposition as part of our ongoing strategic realignment.

See Note 4 for further discussion on our reportable segments.

Principles of Consolidation

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

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

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

Note 2. Basis of Presentation - (continued)

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

See Note 16 for further discussion on Principles of consolidation.

Use of Estimates

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

Note 3. Summary of Significant Accounting Policies

Significant Accounting Policies

Included in Note 3 to the Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended December 31, 2025 is a summary of our significant accounting policies.

Recent Accounting Pronouncements

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

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

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

Note 4. Segment Information

We report our results through five reportable segments: Sequoia Mortgage Banking, Aspire Mortgage Banking, CoreVest Mortgage Banking, Redwood Investments and Legacy Investments. This segmentation aligns with the results of operations presented to our Chief Operating Decision Maker ("CODM") in reviewing the Company for performance assessment and resource allocation. Our CODM is a group consisting of the Company's Chief Executive Officer, President and Chief Financial Officer.

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

During the third quarter of 2026, corporate and other activities that are not directly attributable to our operating segments are presented as reconciling items between total reportable segment results and consolidated net income (loss) available (related) to common stockholders, rather than in a separate Corporate/Other column in the business segment financial information presented below. This change had no impact on the consolidated financial statements and all prior-period amounts were conformed to the current presentation.

During the first quarter of 2026, we established Aspire Mortgage Banking as a new reportable segment to separately disclose the financial results of our expanded-credit residential mortgage platform, which was previously included within the Sequoia Mortgage Banking segment. This change reflects the manner in which operations are evaluated by the CODM as well as the increasing scale and distinct operating characteristics of this platform. Aspire Mortgage Banking includes our non-QM loan conduit, which focuses on loans and investments originated under expanded underwriting criteria. This change in segment presentation aligns with how management assesses performance under ASC 280, Segment Reporting, and has been applied retrospectively to all prior periods presented in this Quarterly Report on Form 10-Q. This change had no impact on the consolidated financial statements and all prior-period amounts have been conformed to the current presentation.

The accounting policies applied to the segments are the same as those described in Note 3 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2025. During the first quarter of 2026, we began allocating our preferred stock dividend expense as well as our corporate unsecured financing costs, comprised of interest expense on our unsecured promissory notes, trust preferred securities, convertible debt, and senior notes, to our operating or reportable segments for informational purposes. Corporate and other activities that are not directly attributable to the Company’s operating segments are included in Corporate/Other as a reconciling item. This change had no impact on the consolidated financial statements and all prior period amounts were conformed to the current presentation.

In the normal course of business, loans are originated or acquired within our mortgage banking segments and may subsequently be transferred to our Redwood Investments segment either as whole loans or through the retention of securities from securitizations that we sponsor and consolidate under GAAP. Our loans and trading securities are primarily accounted for under the fair value option, and any transfers of loans or securities between segments are accounted for at fair value at the time of transfer. The segments did not recognize any intersegment revenues during the nine months ended September 30, 2026 or 2025. For a full description of our segments, see Part I, Item 1—Businessin our Annual Report on Form 10-K for the year ended December 31, 2025.

The following tables present financial information by segment for the three and nine months ended September 30, 2026 and 2025.

Table 4.1 – Business Segment Financial Information

(1)Represents market valuation changes of derivatives that were used to manage risks associated with our Mortgage Banking platforms, Redwood Investments and Legacy Investments. Mortgage banking activities, net, also includes other derivative financial instruments such as loan purchase commitments and interest rate locks.

(1)Represents market valuation changes of derivatives that were used to manage risks associated with our mortgage banking operations, Redwood Investments and Legacy Investments. Mortgage banking activities, net, also includes other derivative financial instruments such as loan purchase commitments and interest rate locks.

(1)Represents market valuation changes of derivatives that were used to manage risks associated with our Mortgage Banking platforms, Redwood Investments and Legacy Investments. Mortgage banking activities, net, also includes other derivative financial instruments such as loan purchase commitments and interest rate locks.

(1)Represents market valuation changes of derivatives that were used to manage risks associated with our mortgage banking operations and Legacy Investments. Mortgage banking activities, net, also includes other derivative financial instruments such as loan purchase commitments and interest rate locks.

Note 5. Mortgage Banking Activities, Net

Mortgage banking activities, net includes changes in fair value of loans held-for-sale, loan purchase commitments, interest rate lock commitments and related risk management derivatives held in our Sequoia Mortgage Banking, Aspire Mortgage Banking and CoreVest Mortgage Banking segments. The following table presents the components of Mortgage banking activities, net, recorded in our consolidated statements of (loss) income for the three and nine months ended September 30, 2026 and 2025.

Table 5.1 – Mortgage Banking Activities

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

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

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

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

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

Note 6. Fair Value of Financial Instruments

For financial reporting purposes, we follow a fair value hierarchy established under GAAP that is used to determine the fair value of financial instruments. This hierarchy prioritizes relevant market inputs in order to determine an exit price at the measurement date, or the price at which an asset could be sold or a liability could be transferred in an orderly process that is not a forced liquidation or distressed sale. Level 1 inputs are observable inputs that reflect quoted prices for identical assets or liabilities in active markets. Level 2 inputs are observable inputs other than quoted prices for an asset or liability that are obtained through corroboration with observable market data. Level 3 inputs are unobservable inputs that are used when there is little, if any, relevant market activity for the asset or liability required to be measured at fair value.

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

Determination of Fair Value

Included in Note 6 to the Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended December 31, 2025 is a more detailed description of our financial instruments measured at fair value and their significant inputs, as well as the general classification of such instruments pursuant to the Level 1, Level 2, and Level 3 valuation hierarchy. At September 30, 2026, our valuation policy and processes had not changed from those described in our Annual Report on Form 10-K for the year ended December 31, 2025.

The following table presents the assets and liabilities that are reported at fair value on our consolidated balance sheets on a recurring basis at September 30, 2026 and December 31, 2025, as well as the fair value hierarchy of the valuation inputs used to measure fair value.

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

The following table presents additional information about Level 3 assets and liabilities measured at fair value on a recurring basis for the nine months ended September 30, 2026.

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

(1)For the nine months ended September 30, 2026, we transferred $552 million of residential investor bridge loans to joint ventures sponsored by us in connection with our CAFL bridge securitizations. These joint ventures are consolidated under GAAP as we are the primary beneficiary. For additional information on our principles of consolidation, see Note 16 of the Notes to Consolidated Financial Statements, included in Part I, Item 1 of this 2026 Quarterly Report on Form 10-Q.

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

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

(4)Derivatives, net, consists of loan purchase and interest rate lock commitments, and are presented on a net basis.

The following table provides quantitative information about the significant unobservable inputs used in the valuation of our Level 3 assets and liabilities measured at fair value at September 30, 2026.

Table 6.3 – Fair Value Methodology for Level 3 Financial Instruments

Footnotes to Table 6.3

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

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

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

(4)The fair value of the loans and HEI held by consolidated entities is based on the fair value of the ABS issued by these entities and the securities and other investments we own in those entities, which we determined were more readily observable in accordance with accounting guidance for Collateralized Financing Entities ("CFE"). At September 30, 2026, the fair value of securities we owned at the consolidated Sequoia and CAFL Term was $1.49 billion, and $312 million, respectively. At September 30, 2026, the fair value of our securities in thefour CAFL Bridge loan securitizations accounted for under the CFE election and our HEI securitization entity was $54 million and $24 million, respectively.

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

(6)Of the total $114 million payable to non-controlling interests, $88 million is measured at fair value on a recurring basis.

The following table summarizes the estimated fair values of assets and liabilities that are not measured at fair value at September 30, 2026 and December 31, 2025.

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

(1)Balance consists of residential investor loans reported at the lower of cost or market for which the carrying value approximates fair value at September 30, 2026.

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

During the three and nine months ended September 30, 2026, we elected the fair value option for $46 million and $144 million of securities, $6.42 billion and $19.15 billion (principal balance) of residential consumer loans, and $406 million and $1.25 billion (principal balance) of residential investor loans.

Nonrecurring Fair Values

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

Refer to Note 15 for further information on our REO.

Note 7. Residential Consumer Loans

We acquire residential consumer loans from third-party originators and may sell or securitize these loans and hold a retained portion for investment. Our residential consumer loans consist of jumbo loans acquired through our Sequoia Mortgage Banking platform ("Jumbo") and non-QM loans acquired through our Aspire Mortgage Banking platform ("Non-QM"). Non-QM loans are originated under expanded underwriting criteria and include bank statement and DSCR loans. See Note 4 for additional information on our reportable segments.

The following table summarizes the classifications and fair values of the securitized and unsecuritized residential consumer loans owned at September 30, 2026 and December 31, 2025, by product.

Table 7.1 – Classifications and Fair Values of Residential Consumer Loans

At September 30, 2026, we owned mortgage servicing rights associated with $2.3 billion (principal balance) of residential consumer loans that were purchased from third-party originators, of which $838 million related to Non-QM loans. The value of these MSRs is included in the fair value of the associated loans on our consolidated balance sheets. We contract with licensed sub-servicers that perform servicing functions for these loans. Refer to Note 16 for further information on our consolidated VIEs.

At September 30, 2026, we had $2.6 billion in commitments to acquire residential consumer loans, of which $398 million related to Non-QM loans. See Note 13 for additional information on these commitments.

Note 7. Residential Consumer Loans - (continued)

Residential Consumer Loans Held-for-Sale

The following table summarizes the characteristics of unsecuritized residential consumer loans held-for-sale, by product, at September 30, 2026 and December 31, 2025.

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

During the three months ended September 30, 2026 and 2025, mortgage banking activities for held-for-sale loans, net were $3 million and $29 million, respectively, and during the nine months ended September 30, 2026 and 2025, mortgage banking activities for held-for-sale loans, net were $49 million and $75 million. These amounts included changes in fair value of residential consumer loans held-for-sale, loan purchase commitments, and related risk management derivatives in our Sequoia Mortgage Banking and Aspire Mortgage Banking segment. See Note 5 for additional information.

The following table provides the activity of residential consumer loans held-for-sale ("HFS"), by product, during the three and nine months ended September 30, 2026 and 2025.

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

Note 7. Residential Consumer Loans - (continued)

Footnotes to table 7.3

(1)Includes $1.2 billion of loans sold to our Sequoia Joint Venture during both the three and nine months ended September 30, 2026. See Note 12 for additional information on this joint venture.

(2)These loans were reclassified from HFS to HFI upon transfer to securitization trusts that we consolidate.

Residential Consumer Loans Held-for-Investment at Fair Value

We invest in residential subordinate securities issued by securitization trusts and consolidate the underlying residential consumer loans owned by these entities for financial reporting purposes in accordance with GAAP. The following tables summarize the characteristics of the securitized residential consumer loans held-for-investment at September 30, 2026 and December 31, 2025, all of which are Jumbo loans.

Table 7.4 – Characteristics of Securitized Residential Consumer Loans Held-for-Investment

(1)The fair value of the loans held by consolidated entities was based on the fair value of the ABS issued by these entities, including securities we own, which we determined were more readily observable, in accordance with the accounting guidance for CFEs, and are recorded in Investment fair value changes, net on our consolidated statements of (loss) income.

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

The following table provides the activity of securitized jumbo residential consumer loans held-for-investment during the three and nine months ended September 30, 2026 and 2025.

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

(1)These loans were reclassified from HFS to HFI upon transfer to securitization trusts that we consolidate.

Note 8. Residential Investor Loans

We originate and invest in residential investor loans, including term loans and bridge loans. Residential investor term loans consist of mortgage loans secured by stabilized residential real estate, primarily 1–4 unit and multifamily properties, held as rental investments. Residential investor bridge loans are first‑lien, interest‑only loans secured by residential real estate that is vacant or partially occupied and undergoing renovation, rehabilitation, or construction.

The following table summarizes the classifications and fair values of the securitized and unsecuritized residential investor loans at September 30, 2026 and December 31, 2025.

Table 8.1 – Classifications and Fair Values of Residential Investor Loans

(1)At both September 30, 2026 and December 31, 2025, Residential investor bridge loans held-for-sale include $14 million of loans recorded at the lower of cost or market value for which the carrying value approximates the fair value.

Nearly all of the outstanding residential investor term loans at September 30, 2026 were first-lien, fixed-rate loans with original maturities of 5 to 30 years.

The outstanding residential investor bridge loans held-for-investment at September 30, 2026 were first-lien, interest-only loans with original maturities of 8 to 36 months and were comprised of 46% one-month SOFR-indexed adjustable-rate loans, and 54% fixed-rate loans.

At September 30, 2026, we had $152 million in commitments to fund additional advances on existing residential investor bridge loans, of which $102 million related to loans currently in securitizations sponsored by one of our joint ventures. See Note 19 for additional information on these commitments. During the three and nine months ended September 30, 2026, we sold $168 million and $480 million, respectively, of residential investor bridge loans, net of $32 million and $90 million, respectively, of construction draws, to one of our joint ventures. See Note 12 for additional information on these joint ventures.

During the three months ended September 30, 2026 and 2025, income from mortgage banking activities, net were $6 million and $11 million, respectively, and during the nine months ended September 30, 2026 and 2025, mortgage banking activities, net $24 million and $39 million, respectively, and included changes in fair value of residential investor loans held-for-sale, interest rate lock commitments, and related risk management derivatives in our CoreVest Mortgage Banking segment. See Note 5 for additional information. Fee income, net was $2 million and $5 million for the three months ended September 30, 2026 and 2025, respectively, and $8 million and $9 million for the corresponding nine-month periods. These amounts primarily consisted of portfolio administration fees earned on term and bridge loans.

The following table provides the activity of unsecuritized residential investor loans during the three and nine months ended September 30, 2026 and 2025.

Table 8.2 – Activity of Residential Investor Loans

(1)Represents loans repurchased pursuant to contractual obligations

(2)For the three and nine months ended September 30, 2026 the principal balance of loans sold to our joint ventures and to third parties is net of $32 million and $90 million, respectively and for the three and nine months ended September 30, 2025 the principal balance of loans sold to our joint ventures and to third parties is net of $6 million and $38 million, respectively, related to construction draws on residential investor bridge loans sold to our joint ventures. See Note 12 for additional information on these joint ventures.

(3)These loans were reclassified from HFS to HFI upon transfer to securitization trusts that we consolidate. Bridge loan securitizations generally permit replenishment for a specified period after closing.

Securitized Residential Investor Loans Held-for-Investment

We invest in securities issued by securitizations sponsored by CoreVest and one of our CoreVest joint ventures. We consolidate the underlying residential investor term loans and bridge loans owned by these entities. For loans held at our consolidated securitization entities, market value changes are based on the fair value of the associated ABS issued, including securities we own, pursuant to CFE guidelines, and are recorded through Investment fair value changes, net on our consolidated statements of (loss) income. See further discussion in Note 16.

Residential Investor Loan Characteristics

The following table provides the activity of securitized residential investor loans held-for-investment during the three and nine months ended September 30, 2026 and 2025.

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

(1)These loans were reclassified from HFS to HFI upon transfer to securitization trusts that we consolidate. Bridge loan securitizations generally permit replenishment for a specified period after closing.

The following tables summarize the characteristics of securitized and unsecuritized residential investor loans at September 30, 2026 and December 31, 2025.

Table 8.4 – Characteristics of Residential Investor Loans

(1)The fair value of the Term and Bridge loans held by consolidated entities were based on the fair value of the ABS issued by these entities including securities we own, which we determined were more readily observable, in accordance with the accounting guidance for CFEs.

(2)At September 30, 2026, Residential investor bridge loans held-for-sale include $14 million of loans recorded at the lower of cost or market value for which the carrying value approximates the fair value.

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

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

The following table presents the UPB of residential investor loans recorded on our consolidated balance sheets at September 30, 2026 and December 31, 2025 by collateral / product type.

Table 8.5 – Residential Investor Loans Collateral / Product Type

(1)Includes loans underwritten primarily based on the property’s cash flows rather than the borrower’s personal income.

(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)At September 30, 2026 and December 31, 2025, includes $1 million and$2 million of RTL loans in Unsecuritized Bridge and $37 million and$48 million of RTL loans in Securitized Bridge.

(4)Includes short‑term loans secured primarily by 1–4 unit properties used to acquire, renovate, or reposition properties prior to stabilization or exit.

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

Loan Modifications

Over the past year, our resolution activity for legacy loans has increasingly focused on loan sales, discounted payoffs, structured exits and, where necessary, foreclosure or liquidation. Resolution activity accelerated during 2026, with legacy loan payoffs and REO sales totaling $82 million in UPB during the three months ended September 30, 2026. These resolutions reduced our exposure to legacy assets and advanced the wind-down of the portfolio.

In addition to these legacy asset resolutions, we continued to modify loans or provide forbearance, including for loans outside the legacy portfolio. For the three months ended September 30, 2026, we modified or placed into forbearance loans with aggregate UPB of $90 million. All modifications during the period involved extensions of loan maturities and/or changes to covenant terms (“Simple Modifications”). We completed no modifications involving changes to contractual interest rates or deferrals of interest (“Complex Modifications”) and no subsequent modifications of previously modified loans during the period.

For the three months ended September 30, 2025, we modified or put into forbearance loans with a total aggregate UPB of $130 million. Activity during that period included both Simple Modifications and Complex Modifications. Complex Modifications may also include maturity extensions, and certain loans modified during the prior-year period may have been modified previously.

Our fair value assessments incorporate updated appraisals, collateral performance, estimated sales costs and independent market data, when available, to reflect current conditions and asset-specific risks. Maturity extensions may lengthen the expected repayment period and affect fair value. Actual amounts recovered through loan repayments, asset sales, foreclosure or other resolutions may differ significantly from our estimates and could materially affect future earnings. Further deterioration in borrower performance may also reduce interest income and amounts ultimately recovered.

The following table presents a summary of loan modifications by loan terms type for the three months ended September 30, 2026 and 2025.

Table 8.6 – Summary of Modification by Loan Terms

(1)Included in this population are loans that had been previously modified in a prior period with an aggregate unpaid principal balance of $38 million involving previous Simple modifications and $4 million involving previous Complex modifications.

Non-accrual Loans

Non-accrual loans include both securitized and unsecuritized residential investor loans. At September 30, 2026, residential investor loans with an aggregate UPB of $205 million and an aggregate fair value of $182 million were on non-accrual status. Of this balance, loans with $120 million aggregate UPB were on full non-accrual of the contractual coupon interest and loans with $85 million aggregate UPB were on non-accrual of contractual coupon interest and non-accrual of deferred interest. As of September 30, 2026, loans with an aggregate UPB of $127 million and an aggregate fair value of $107 million were in our Legacy Investments portfolio. Of this balance, loans with $76 million aggregate UPB were on full non-accrual of the contractual coupon interest and loans with $51 million aggregate UPB were on non-accrual of contractual coupon interest and non-accrual of deferred interest.

At December 31, 2025, residential investor loans with an aggregate UPB of $291 million and an aggregate fair value of $255 million were on non-accrual status. Of this balance, loans with $202 million aggregate UPB were on full non-accrual of the contractual coupon interest and loans with $90 million aggregate UPB were on non-accrual of deferred interest. As of December 31, 2025, loans with an aggregate UPB of $243 million and an aggregate fair value of $208 million were in our Legacy Investments portfolio. Of this balance, loans with $153 million aggregate UPB were on full non-accrual of the contractual coupon interest and loans with $90 million aggregate UPB were on non-accrual of deferred interest.

Note 9. Real Estate Securities

We invest in real estate securities that we create and retain from our unconsolidated jumbo loan securitizations or acquire from third parties. The following table presents the fair values of our real estate securities by type at September 30, 2026 and December 31, 2025.

Table 9.1 – Fair Value of Real Estate Securities by Type

Our real estate securities include interest-only and mortgage-backed securities, which are classified in accordance with their general position within a securitization structure based on their rights to cash flows. Interest-only securities entitle holders to a specified portion of the interest payments on the underlying mortgage loans, generally without any right to principal payments. Senior securities are those interests in a securitization that generally have the first right to cash flows and are last in line to absorb losses. Mezzanine securities are interests that are generally subordinate to senior securities in their rights to receive cash flows, and have subordinate securities below them that are first to absorb losses. Subordinate securities are all interests below mezzanine. Nearly all of our residential securities are supported by collateral that was designated as prime at the time of issuance.

Refer to Note 3 to the Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended December 31, 2025 for further information and our accounting policies for our trading and AFS real estate securities.

Trading Securities

We elected the fair value option for certain securities and classify them as trading securities. Our trading securities generally include both residential and multifamily mortgage-backed interest-only and subordinate securities. During the three months ended September 30, 2026, we sold $81 million of trading securities, including $77 million of interest-only securities and $4 million of subordinate securities. Refer to Note 6 for further information on the inputs into the fair valuation of our trading securities.

AFS Securities

During 2025, we sold legacy unsecuritized bridge loans and REO assets with an aggregate fair value of $484 million to a partnership structure created to accelerate the wind-down of the Legacy Investments portfolio (the "Legacy Trust"). In connection with this transaction, we retained a $182 million subordinate beneficial interest in the Legacy Trust. The beneficial interest represents our right to residual cash flows from the Legacy Trust after payment of senior financing and preferred interests and is recorded as an AFS security, measured at fair value and classified as a Level 3 asset. At September 30, 2026, the beneficial interest had a fair value of $183 million. The investment balance includes $24 million of additional funding provided under our capital support commitment to the Legacy Trust and reflects the credit loss allowance discussed below.

The retained beneficial interest is valued using discounted expected cash flows that incorporate assumptions for expected recoveries on the underlying collateral, including the timing and amount of principal repayments, credit losses, and market discount rates. We did not record a separate allowance for credit losses at initial recognition because the fair value measurement already reflected expected credit losses; however, we re-evaluate expected credit losses at each reporting period and record an allowance if updated expectations indicate one is required. During the three and nine months ended September 30, 2026, we recognized a credit loss allowance expense of $13 million and $23 million, respectively, related to this retained beneficial interest.

Subsequent changes in the fair value of the retained beneficial interest are recognized in Other comprehensive income. Interest income is recognized using the cost recovery method, under which cash receipts are first applied to the recovery of the recorded investment balance, with income recognized only after the investment is fully recovered. See Notes 8, 16 and 19 to the Consolidated Financial Statements of our 2025 Annual Report on Form 10-K for further discussion on this transaction.

Note 9. Real Estate Securities - (continued)

The following tables present the detail of our AFS securities, by position and collateral type, at September 30, 2026 and December 31, 2025.

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

Gains and losses from the sale of AFS securities are recorded as Realized gains, net, in our consolidated statements of (loss) income. During the three and nine months ended September 30, 2026, we hadno sales of AFS securities. During both the three and nine months ended September 30, 2025, we recognized net gains ofzero and $1.2 million, respectively, on sales of AFS securities. During the three and nine months ended September 30, 2026 and 2025, we had $17 million and $29 million of net unrealized losses, and $2 million and $6 million of net unrealized gains on AFS securities, respectively.

At September 30, 2026, we had $184 million AFS securities with contractual maturities less than five years, $4 million AFS securities with contractual maturities greater than five years but less than ten years, and the remainder of our AFS securities had contractual maturities greater than ten years.

AFS Securities with Unrealized Losses

The following table presents the total carrying value (fair value) and unrealized losses of residential AFS securities that were in a gross unrealized loss position at September 30, 2026 and December 31, 2025.

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

At September 30, 2026, after giving effect to purchases, sales, and extinguishment due to credit losses, our consolidated balance sheet included 63 AFS securities, of which 12 were in an unrealized loss position and 11 were in a continuous unrealized loss position for 12 consecutive months or longer. At December 31, 2025, our consolidated balance sheet included 63 AFS securities, of which 11 were in an unrealized loss position and 11 were in a continuous unrealized loss position for 12 consecutive months or longer.

Allowance for Credit Losses

Credit impairments on our AFS securities are recorded in earnings using an allowance for credit losses, with the allowance limited to the amount by which the security's fair value is less than its amortized cost basis. We evaluate all securities in an unrealized loss position to determine if the impairment is credit-related (resulting in an allowance for credit losses recorded in earnings) or non-credit-related (resulting in an unrealized loss through other comprehensive income). The allowance for credit losses is calculated using a

Note 9. Real Estate Securities - (continued)

discounted cash flow approach and is measured as the difference between the beneficial interest’s amortized cost and the estimate of cash flows expected to be collected, discounted at the effective interest rate used to accrete the beneficial interest. No allowance is recorded for beneficial interests in an unrealized gain position.

The following table details the activity related to the allowance for credit losses for AFS securities for the three and nine months ended September 30, 2026 and 2025.

Table 9.4 – Rollforward of Allowance for Credit Losses

Note 10. Home Equity Investments (HEI)

In 2025, we began reporting our third-party originated HEI portfolio within the Legacy Investments segment, consistent with how the CODM evaluates financial performance and allocates resources across our reportable segments. We historically invested in HEI contracts acquired from third party originators, however, when we ceased allocating capital to new investments in third-party originated HEI contracts. Between 2023 and early in the second quarter of 2026, we originated HEI directly through our own Aspire HEI platform. During the second quarter of 2026, we discontinued origination of new HEI contracts through Aspire HEI. As a result, we are no longer originating or acquiring new HEI contracts.

Each HEI provides the owner of such HEI the right to purchase a percentage ownership interest in an associated residential property, and the homeowner's obligations under the HEI are secured by a lien (primarily second liens) on the property created by recording a security instrument (e.g., deed of trust) with respect to the property. Our investments in HEI expose us to both home price appreciation and depreciation of the associated property.

At September 30, 2026, our Legacy Investments segment included a co-sponsored HEI securitization which is consolidated in accordance with GAAP, and for which we have elected to account for under the CFE election. As such, market valuation changes for the securitized HEI are based on the fair value of the associated ABS issued by the entity, including the interest we own, and are reported in HEI income, net on our consolidated statements of (loss) income.

During the third quarter of 2026, we financed our unsecuritized HEI contracts through a $90 million non-marginable, recourse secured financing transaction. At September 30, 2026, $140 million of HEI contracts were pledged as collateral under this arrangement and remained on our consolidated balance sheets. The proceeds were used to repay existing HEI financing facilities and provide additional capital for general corporate purposes. See Note 18 for further information on the financing terms.

Note 10. Home Equity Investments (HEI) - (continued)

The following table presents our HEI at September 30, 2026 and December 31, 2025.

Table 10.1 – Home Equity Investments

(1)At September 30, 2026 and December 31, 2025, balance includes $307 million and $314 million, respectively, of third-party originated HEI included in our Legacy Investments segment, including amounts held through our consolidated HEI securitization entity.

The following table details our HEI activity during the three and nine months ended September 30, 2026 and 2025. Changes in the value of HEI during the nine months ended September 30, 2026 are driven by incremental fair value adjustments.

Table 10.2 – Activity of HEI

Note 10. Home Equity Investments (HEI) - (continued)

The following table provides the components of HEI income, net for the three and nine months ended September 30, 2026 and 2025.

Table 10.3 – Components of HEI Income, net

(1)Amount includes interest expense associated with ABS issued, which totaled $2 million and $6 million, for both the three and nine months ended September 30, 2026, respectively. Amount includes interest expense associated with ABS issued, which totaled $3 million and $9 million, for both the three and nine months ended September 30, 2025, respectively.

Note 11. Servicing Investments

Servicing Investments at September 30, 2026 and December 31, 2025 are summarized in the following table.

Table 11.1 – Components of Servicing Investments

We account for our Servicer advance investments, Excess MSRs and MSRs at fair value. These investments may increase in value as higher interest rates reduce expected prepayment speeds. Greater stability in the expected prepayment profile may also support lower discount rates and higher fair values. Refer to Note 6 for further information on the inputs into the fair valuation of these components. Refer to Note 11 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2025 for additional information regarding these components and related transactions.

For the three months ended September 30, 2026 and 2025, income from Servicing investments included Other interest income of $6 million and $7 million, respectively, Investment fair value changes, net of positive $1 million and negative $1 million, respectively, and Servicing income, net of $4 million and $1 million, respectively.

For the nine months ended September 30, 2026 and 2025, income from Servicing investments included Other interest income of $18 million and $21 million, respectively, Investment fair value changes, net of positive $9 million and negative $6 million, respectively, and Servicing income, net of $14 million and $6 million, respectively.

Note 12. Strategic Investments

Strategic Investments at September 30, 2026 and December 31, 2025 are summarized in the following table.

Table 12.1 – Components of Strategic Investments

Income from Strategic Investments for the three and nine months ended September 30, 2026 and 2025 are summarized in the following tables.

Table 12.2 – Components of Income From Strategic Investments, net

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

(2)Includes Investment fair value changes related to our Strategic investments that are accounted for under the measurement alternative for equity securities without readily determinable fair values. Under this approach, investments are carried at cost, adjusted for observable price changes in orderly transactions for identical or similar investments of the same issuer, or for impairment.

Note 12. Strategic Investments - (continued)

For both the three and nine months ended September 30, 2026, Investment fair value changes, net includes fair value gains of $5 million related to strategic investments accounted for under the measurement alternative. For the three and nine months ended September 30, 2025, Investment fair value changes, net includes fair value gains of $0.3 million and $1 million, respectively, related to strategic investments accounted for under the measurement alternative.

Depending on the terms of the strategic investments, we may account for these investments under the fair value option, as non-marketable equity securities under the equity method of accounting or the measurement alternative for equity securities without readily determinable fair values. Refer to Note 6 for further information on the inputs into the fair valuation of these components. Refer to Note 12 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2025 for additional information regarding these components and related transactions.

Joint Ventures

We have established joint ventures with institutional investment managers to invest in residential investor bridge and term loans originated by our CoreVest subsidiary, and first-lien jumbo residential mortgage loans and related assets sourced by our Sequoia subsidiary. We hold non-controlling interest of approximately 20% and 26% in the CoreVest joint ventures and an approximately 5% non-controlling interest in the Sequoia joint venture, which was established in the second quarter of 2026.

We account for these investments under the equity method, reflecting our ability to exert significant influence over the operations of the joint ventures. At both September 30, 2026 and December 31, 2025, the aggregate carrying values of these investments were $24 million. The September 30, 2026 balance included $19 million related to the CoreVest joint ventures and $4 million related to the Sequoia joint venture. The carrying values are adjusted quarterly to reflect our share of earnings or losses, dividends received, or returns of capital.

For the three months ended September 30, 2026 and 2025, we recognized aggregate net equity method earnings of $0.7 million and losses of $1.1 million, respectively. For the nine months ended September 30, 2026 and 2025, we recognized aggregate net equity method earnings of $0.3 million and $1.3 million, respectively. These amounts are recorded within "Other income, net" in our consolidated statements of (loss) income.

We also hold a note receivable from one of the CoreVest joint ventures. At September 30, 2026, the outstanding balance was $3 million and is included in Other Investments in Table 12.1 above. For the three and nine months ended September 30, 2026, we recognized interest income on this note of $0.1 million and $0.9 million, respectively, within "Other income, net" in our consolidated statements of (loss) income.

See Notes 7 and Note 8 for further information on residential consumer loans and residential investor bridge loans, respectively, sold to these joint ventures.

Note 13. Derivative Financial Instruments

To manage, to varying degrees, risks associated with certain assets and liabilities on our consolidated balance sheets, we may enter into derivative contracts. We account for our derivative contracts, including loan purchase commitments ("LPCs") and interest rate lock commitments ("IRLCs") qualifying as derivatives under GAAP, at fair value. As discussed in our Annual Report on Form 10-K for the year ended December 31, 2025, we consider counterparty risk as part of our fair value assessments of all derivative financial instruments at each quarter-end. At September 30, 2026, we assessed this risk as remote and did not record an associated specific valuation adjustment. At September 30, 2026, we were in compliance with our derivative counterparty ISDA agreements.

The following table presents the fair value and notional amount of our derivatives at September 30, 2026 and December 31, 2025.

Table 13.1 – Fair Value and Notional Amount of Derivatives

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

The following table presents the market valuation gains and losses on our derivatives for the three and nine months ended September 30, 2026 and 2025.

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

Note 13. Derivative Financial Instruments - (continued)

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

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

Derivatives Designated as Cash Flow Hedges

For interest rate agreements previously designated as cash flow hedges, our total unrealized loss reported in Accumulated other comprehensive loss was $57 million and $60 million at September 30, 2026 and December 31, 2025, respectively. We are amortizing this loss into interest expense over the remaining term of our trust preferred securities and subordinated notes. For both of the three and nine months ended September 30, 2026 and 2025, we reclassified $1 million and $3 million, of realized net losses from Accumulated other comprehensive loss into Interest expense. As of September 30, 2026, we expect to amortize $3 million of realized losses related to terminated cash flow hedges into interest expense over the next twelve months.

Note 14. Offsetting Assets and Liabilities

Certain of our derivatives and debt obligations are subject to master netting arrangements or similar agreements. Under GAAP, in certain circumstances we may elect to present certain financial assets, liabilities and related collateral subject to master netting arrangements in a net position on our balance sheets. However, we do not elect to report any of these financial assets or liabilities on a net basis, and instead present them on a gross basis on our consolidated balance sheets. Refer to Note 3 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2025 for additional information regarding our master netting arrangements.

The following table presents financial assets and liabilities that are subject to master netting arrangements or similar agreements categorized by financial instrument, together with the corresponding financial instruments and corresponding collateral received or pledged at September 30, 2026 and December 31, 2025.

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

Note 14. Offsetting Assets and Liabilities - (continued)

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

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

Note 15. Other Assets and Liabilities

Other Assets

Other assets at September 30, 2026 and December 31, 2025 are summarized in the following table.

Table 15.1 – Components of Other Assets

(1)Receivables from joint venture partners primarily represent amounts due from joint ventures related to construction draw advances initially funded by the Company, operating expenses paid on behalf of joint ventures, and distributions receivable under contractual waterfall arrangements associated with securitized loans.

(2)Fixed assets and leasehold improvements had a basis of $26 million and accumulated depreciation of $15 million at September 30, 2026.

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

Real Estate Owned (REO)

The Company holds REO at the lower of the current carrying amount or fair value less estimated selling costs. The following table summarizes the activity and carrying values of REO assets held during the three and nine months ended September 30, 2026.

Table 15.2 – REO Activity by Loan Type

Note 15. Other Assets and Liabilities - (continued)

Footnotes to Table 15.2

(1)Includes REO that were previously either legacy unsecuritized bridge loans or bridge loans within consolidated securitization entities.

(2)For the three and nine months ended September 30, 2026, REO market valuation adjustments and liquidations resulted in net valuation losses of $2 million and $16 million, which were recorded in Investment fair value changes, net on our consolidated statements of (loss) income.

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities at September 30, 2026 and December 31, 2025 are summarized in the following table.

Table 15.3 – Components of Accrued Expenses and Other Liabilities

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

Legal and Repurchase Reserves

See Note 19 for additional information on legal and repurchase reserves.

Note 15. Other Assets and Liabilities - (continued)

Payable to Non-Controlling Interests

Redwood and a third-party co-investor, through certain partnership entities consolidated by Redwood, purchased servicer advances and excess MSRs related to a portfolio of residential mortgage loans serviced by the co-investor (see Note 11 and Note 16 for additional information on the partnership entities and associated investments). We account for the co-investor’s interests in the entities as liabilities, and at September 30, 2026, the carrying value of their interests was $26 million, representing their current economic interest in the entities. Earnings from the partnership entities are allocated to the co-investor on a proportional basis and during the three and nine months ended September 30, 2026, we allocated $1 million and $4 million, respectively, of income to the co-investor, respectively, recorded in Other expenses on our consolidated statements of (loss) income.

In 2023, Redwood and a third-party co-sponsored the transfer and securitization of HEI through a HEI securitization entity. Other third-party investors contributed HEI into this securitization through Redwood and retained subordinate beneficial interests issued by the securitization entity alongside Redwood. See Note 10 for a further discussion of the HEI securitization. We account for the co-investor's interest in the HEI securitization entity as a liability, and at September 30, 2026, the carrying value of their interest was $42 million, representing the fair value of their economic interest in the beneficial interest issued by the HEI entity. During the three and nine months ended September 30, 2026, the investors' share of earnings from their retained interests (for which negative earnings are reflected as income to Redwood in our consolidated statements of (loss) income) were negative $5 million and negative $3 million, respectively and were recorded through HEI Income, net on our consolidated statements of (loss) income.

In 2025, we completedtwo CAFL bridge loan securitizations sponsored by one of our joint ventures. These transactions involved the transfer and securitization of bridge loans contributed from the joint venture and from Redwood throughtwo bridge securitization entities. Each of the joint venture and Redwood retained its proportionate share of subordinate beneficial interests issued by the securitization entities. We account for the joint venture's interest in the bridge loan securitization entities as a liability and at September 30, 2026, the carrying value of their interests was $32 million, representing the fair value of their economic interest in the beneficial interest issued. During the three months ended September 30, 2026, the joint venture's share of recognized income was $3 million related to its retained interests in thesetwo securitizations, resulting in a $3 million net expense to Redwood in our consolidated statements of (loss) income. During the nine months ended September 30, 2026, the joint venture's share of recognized income was $5 million related to its retained interests in thesetwo securitizations, resulting in a $5 million net expense to Redwood in our consolidated statements of (loss) income.

In 2024, we completed a CAFL securitization of bridge loans sponsored by one of our joint ventures. This transaction involved the transfer and securitization of bridge loans contributed from the joint venture and from Redwood throughone bridge securitization entity. Each of the joint venture and Redwood retained its proportionate share of subordinate beneficial interests issued by the securitization entity. We account for the joint venture's interest in the bridge loan securitization entity as a liability and at September 30, 2026, the carrying value of their interest was $15 million, representing the fair value of their economic interest in the beneficial interest issued. During the three months ended September 30, 2026, the joint venture recognized income of $1 million related to its retained interest in this securitization, resulting in a $1 million net expense to Redwood in our consolidated statements of (loss) income. During the nine months ended September 30, 2026, the joint venture recognized an expense of $0.5 million related to its retained interest in this securitization, resulting in a $0.5 million net income to Redwood in our consolidated statements of (loss) income.

Note 16. Principles of Consolidation

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

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

Analysis of Consolidated VIEs

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

In addition to our consolidated VIEs for which we made the CFE election, we consolidate certain VIEs for which we did not make the CFE election and elected to account for the ABS issued by these entities at fair value or amortized cost. These include three Sequoia re-securitizations for which the ABS are accounted at fair value at September 30, 2026. See Note 17 for additional information regarding the Sequoia re-securitizations.

The following table presents a summary of the assets and liabilities of our consolidated VIEs for which creditors do not have recourse to Redwood Trust, Inc. or its affiliates at September 30, 2026 and December 31, 2025.

Table 16.1 – Assets and Liabilities of Consolidated VIEs

Note 16. Principles of Consolidation - (continued)

(1)The ABS from three Sequoia re-securitizations at September 30, 2026 and December 31, 2025, respectively, are not accounted for under the CFE election and are accounted for at fair value (included within the Sequoia column at September 30, 2026 and December 31, 2025). At September 30, 2026 and December 31, 2025, the fair value of our interests in consolidated Sequoia securitizations accounted for under the CFE election was $1.49 billion and $722 million, respectively, with the difference in value of our investments in these VIEs reflected in the September 30, 2026 and December 31, 2025 table above representing $171 million and $165 million, respectively, of consolidated Sequoia securities in the Sequoia re-securitizations and $429 million and $417 million, respectively, of ABS issued at fair value.

(2)At both September 30, 2026 and December 31, 2025, our Servicing Investment VIEs are not accounted for under the CFE election and their associated ABS issued are accounted for at amortized historical cost. At December 31, 2025, two CAFL bridge loan securitization VIEs (included within the CAFL column) were not accounted for under the CFE election and their associated ABS issued were accounted for at amortized historical cost. Thesetwo CAFL bridge loan securitization VIEs were called during thenine months ended September 30, 2026 and the associated ABS were paid off.

The fair value of our interests in the CAFL term loan securitizations accounted for under the CFE election was $312 million and $330 million at September 30, 2026 and December 31, 2025, respectively. At September 30, 2026 and December 31, 2025, the fair value of our interest in the CAFL bridge loan securitizations accounted for under the CFE election was $54 million and $50 million, respectively, with the difference from the tables above generally representing ABS issued and carried at amortized historical cost and accrued interest on our economic interests.

Unconsolidated VIEs with Continuing Involvement

We do not consolidate certain VIEs where we have continuing involvement. We determined we are not the primary beneficiary of these VIEs as we lacked the power to direct the activities that will have the most significant economic impact on the entities. Our continuing involvement in these securitizations is limited to customary servicing obligations associated with retaining servicing rights (which are performed by third-party sub-servicers) and the receipt of interest income associated with the securities we retained.

For certain of the transferred loans where we held the servicing rights prior to the transfer and continued to hold the servicing rights following the transfer, we recorded mortgage servicing rights ("MSRs") on our consolidated balance sheets and classified those MSRs as Level 3 assets. We also retained IO, senior and subordinate securities in these transfers that we classified as Level 3 assets.

During the three and nine months ended September 30, 2026, we completed two and five Aspire securitizations through our SPIRE securitization program, respectively, that are not consolidated. Pursuant to these securitizations, $904 million and $2.2 billion in UPB of non-QM loans were sold to securitization trusts during the three and nine months ending September 30, 2026, respectively. We did not retain the subordinate and residual interests in these transactions, which were retained by our securitization co-sponsor together with the related controlling rights. Our retained interests were limited to IO securities, which are classified as Level 3 assets. At September 30, 2026, the value of the IO securities retained from these securitizations was $26 million.

Note 16. Principles of Consolidation - (continued)

During the three months ended September 30, 2026, one of our joint ventures completed a securitization of jumbo loans with a UPB of $639 million that we did not consolidate. Our continuing involvement in this securitization is limited to a retained beneficial interest, which is classified as a Level 3 asset. At September 30, 2026, the value of this retained interest was $4 million.

During the nine months ended September 30, 2026, one of our joint ventures completed a securitization of term loans with a UPB of $268 million that we did not consolidate. Our continuing involvement in this securitization is limited to a retained IO security, which is classified as a Level 3 asset. At September 30, 2026, the value of the interest-only security retained from this securitization was $1 million.

Additionally, in prior years, we have transferred residential consumer loans to certain Sequoia securitization entities sponsored by us that are still outstanding as of September 30, 2026.

The following table presents additional information at September 30, 2026 and December 31, 2025, related to unconsolidated VIEs sponsored by Redwood and accounted for as sales.

Table 16.2 – Unconsolidated VIEs Sponsored by Redwood

(1)Represents Redwood’s agreement, entered into during 2025, to provide up to $35 million of capital support to a trust holding legacy unsecuritized bridge loans. As of September 30, 2026, we funded the entire $35 million. Refer to Notes 8,9, and 19 for additional information.

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

Note 17. Asset-Backed Securities Issued

ABS issued represents securities issued by non-recourse securitization entities we consolidate under GAAP. The majority of our ABS issued is carried at fair value under the CFE election (see Note 16 for additional detail), with the remainder carried at amortized cost. The carrying values of ABS issued by our consolidated securitization entities at September 30, 2026 and December 31, 2025, along with other selected information, are summarized in the following table.

Table 17.1 – Asset-Backed Securities Issued

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

(1)At September 30, 2026, includes three Sequoia re-securitization trusts for which the weighted average interest rate ranges from 6.12% to 6.42%. At December 31, 2025, includes three Sequoia re-securitization trusts for which the weighted average interest rate ranges from 6.38% to 8.38%.

(2)At September 30, 2026 and December 31, 2025, includes ABS issued from three consolidated VIE entities formed in connection with the financing of residential investor bridge loans sponsored by one of our joint ventures.

Generally, unless specified below, the actual maturity of each class of ABS issued is primarily determined by the rate of principal prepayments on the assets of the issuing entity. Each series is also subject to redemption prior to the stated maturity according to the terms of the respective governing documents of each ABS issuing entity. As a result, the actual maturity of ABS issued may occur earlier than the stated maturity. At September 30, 2026, the majority of the ABS issued and outstanding had contractual maturities beyond five years. See Note 16 for detail on the carrying value components of the collateral for ABS issued and outstanding.

During the second quarter of 2026, we transferred subordinate securities we owned in certain consolidated and unconsolidated Sequoia securitization trusts to a Sequoia re-securitization trust that we sponsored, which we determined was a VIE. At issuance, we sold $114 million (principal balance) of ABS issued to third parties and elected to account for the ABS issued under the fair value option, with changes in the fair value of the ABS reported through our consolidated statements of (loss) income in Investment fair value changes, net. The stated weighted average coupon of the ABS issued was approximately 6.4% at issuance, increasing by 3.0% after the payment date occurring in April 2028. The ABS issued are subject to an optional redemption beginning in April 2027 and have a final stated maturity in November 2056. At issuance, we retained 100% of the remaining beneficial ownership interest in the trust through ownership of a subordinate security issued by the trust. We maintained certain discretionary rights associated with the ownership of this investment that we determined reflected a controlling financial interest in the trust and as such, we consolidated the trust. At September 30, 2026, the collateral for this Sequoia re-securitization trust included $153 million of Sequoia securities that we have retained from certain consolidated Sequoia securitization entities. The Sequoia re-securitization ABS are included in "Sequoia" in Table 17.1 above at September 30, 2026. See Note 16 for further information regarding our Principles of consolidation on this trust.

During the first quarter of 2026, we transferred subordinate securities we owned in certain consolidated and unconsolidated Sequoia securitization trusts to a Sequoia re-securitization trust that we sponsored, which we determined was a VIE. At issuance, we sold $136 million (principal balance) of ABS issued to third parties and elected to account for the ABS issued under the fair value option, with changes in the fair value of the ABS reported through our consolidated statements of (loss) income in Investment fair value changes, net. The stated weighted average coupon of the ABS issued was approximately 6.1% at issuance, increasing by 3.0% after the payment date occurring in February 2028. The ABS issued are subject to an optional redemption beginning in February 2027 and have a final stated maturity in September 2056. At issuance, we retained 100% of the remaining beneficial ownership interest in the trust through ownership of a subordinate security issued by the trust. We maintained certain discretionary rights associated with the ownership of this investment that we determined reflected a controlling financial interest in the trust and as such, we consolidated the trust. At September 30, 2026, the collateral for this Sequoia re-securitization trust included $20 million of consolidated Sequoia and third-party securities as well as $178 million of Sequoia securities that we have retained from certain consolidated Sequoia securitization entities. The Sequoia re-securitization ABS are included in "Sequoia" in Table 17.1 above at September 30, 2026. See Note 16 for further information regarding our Principles of consolidation on this trust.

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

During the first quarter of 2026, we completed a $225 million CAFL bridge loan securitization backed by a mix of performing, re-performing and non-performing residential investor loans and REO. In the same period, we exercised our optional redemption rights onthree consolidated CAFL bridge securitization entities and paid off the associated underlying ABS. The securitization collateral included approximately $223 million of loans, $38 million of REO and $16 million of restricted cash, primarily sourced from our called CAFL securitizations issued between 2021 and 2023 and $66 million of loans and $19 million of REO from our Legacy Investments portfolio. We consolidated the issuing entity, which we determined to be a VIE for which we are the primary beneficiary, and elected CFE accounting treatment, carrying the ABS issued at fair value with changes recorded through Investment fair value changes, net on our consolidated statements of (loss) income. At issuance, the ABS had a principal balance and net carrying value of $225 million and a weighted average stated coupon of 7.1%. The ABS are subject to optional redemption beginning in March 2027, with interest rate step-ups of 3.0% beginning in April 2029 and 4.0% beginning in April 2030 through final maturity in March 2036. At September 30, 2026, the collateral for this CAFL bridge loan securitization included $146 million of residential investor loans, $17 million of REO, and $9 million of restricted cash.

For additional information related to certain of our asset-backed securities issued that are presented above, see Note 17 to the Consolidated Financial Statements of our 2025 Annual Report on Form 10-K.

Note 18. Debt Obligations, Net

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

At September 30, 2026, we had outstanding agreements on debt obligations with several counterparties and we were in compliance with all of the related covenants. Refer to Note 3 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2025 for additional information regarding these investments. Refer to Note 18 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2025 for additional information regarding our debt obligations.

The following tables summarize our debt obligations at September 30, 2026 and December 31, 2025.

Table 18.1 – Debt Obligations, Net

Note 18. Debt Obligations, Net - (continued)

(1)Carrying value presented net of total deferred issuance costs of $26 million and $23 million at September 30, 2026 and December 31, 2025, respectively.

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

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

(4)Facility may be extended for one 18-month period at our option.

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

(6)We may settle conversions in cash, shares, or a combination, with the principal amount settled in cash. At September 30, 2026, the conversion rate was 95.6823 shares per $1,000 principal amount of notes (a conversion price of $10.45 per share).

(7)We may settle conversions in cash, shares, or a combination, with the principal amount settled in cash. At September 30, 2026, the conversion rate was 213.4071 shares per $1,000 principal amount of notes (a conversion price of $4.69 per share).

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

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

Note 18. Debt Obligations, Net - (continued)

Long-Term Facilities

Recourse Subordinate Securities Financing

In August 2026, we entered into a recourse subordinate securities financing facility providing non-marginable, recourse debt financing of certain securities retained from our consolidated Sequoia securitizations and other third-party issued interest-only securities. This financing is fully and unconditionally guaranteed by Redwood, with an interest rate of approximately 6.77% through July 2028, increasing to 9.77% from July 2028 through July 2030. This financing facility may be terminated at our option beginning in July 2027, and has a final stated maturity in July 2030. We have elected to account for this debt issuance at fair value, with changes in market value reflected in Investment fair value changes, net on our consolidated statements of (loss) income.

HEI Secured Financing

In the third quarter of 2026, we completed a secured financing transaction providing $90 million of non-marginable, recourse debt financing of substantially all of our then-unsecuritized HEI contracts within our Legacy Investments segment for net proceeds of $88 million. This financing is guaranteed by Redwood, with an interest rate of approximately 7.47% through July 2029, increasing to 10.47% from July 2029 through July 2030. This financing may be terminated at our option, beginning in July 2028, and has a final stated maturity in July 2030. The proceeds of this financing were used to repay our existing HEI financing facilities and provide additional capital for general corporate purposes. At September 30, 2026, this facility is secured by $140 million of HEI contracts.

Corporate Debt

Convertible Notes

In the third quarter of 2026, we issued $205 million principal amount of 7.00% convertible senior notes due 2030. These notes require semi-annual interest payments at a fixed annual coupon rate of 7.00% until maturity or conversion, which will be no later than September 15, 2030. After deducting the offering costs, we received $198 million of net proceeds. We may elect to settle conversions either entirely in cash or in a combination of cash and shares of common stock. Upon conversion, the conversion value will be paid in cash up to at least the principal amount of the notes being converted. At September 30, 2026, the conversion rate of the notes was 213.4071 common shares per $1,000 principal amount of notes (equivalent to a conversion price of $4.69 per common share). The conversion rate of the notes increases each time Redwood pays a dividend on its common shares.

During the three and nine months ended September 30, 2026, we repurchased $124 million par value of the convertible senior notes due in June 2027 and realized a loss of $4 million in connection with the repurchase.

Senior Notes

In the second quarter of 2026, Redwood issued $125 million of 9.75% Senior Notes due in 2031. The Senior Notes are senior unsecured obligations of Redwood and bear interest at a rate equal to 9.75% per year, payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year, beginning on September 1, 2026. The Senior Notes mature on June 1, 2031. We may redeem the Senior Notes, in whole or in part, at any time on or after June 1, 2028 at a redemption price equal to 100% of the principal amount redeemed plus accrued and unpaid interest.

Note 19. Commitments and Contingencies

Lease Commitments

At September 30, 2026, we were obligated underten non-cancelable operating leases with expiration dates through 2032 for $14 million of cumulative lease payments. For both the nine months ended September 30, 2026 and 2025, our operating lease expense was $3 million.

At September 30, 2026, our operating lease liabilities were $12 million, which were a component of Accrued expenses and other liabilities, and our operating lease right-of-use assets were $11 million, which were a component of Other assets.

Commitment to Fund Residential Investor Bridge Loans

As of September 30, 2026, we had commitments to fund up to $152 million of additional advances on existing residential investor bridge loans, of which $102 million related to loans currently in securitizations sponsored by one of our joint ventures. These commitments are generally subject to loan agreements with covenants regarding the financial performance of the borrower and other terms regarding advances that must be met before we fund the commitment. At September 30, 2026, we carried a $0.1 million contingent liability related to these commitments to fund construction advances. During the three and nine months ended September 30, 2026, we recorded net market valuation loss of $0.05 million and income of $0.04 million, respectively, related to this liability through Investment fair value changes, net and on our consolidated statements of (loss) income.

During 2025, in connection with the sale of legacy unsecuritized bridge loans to the Legacy Trust, we entered into an agreement to provide up to $35 million of capital support to the Legacy Trust’s portfolio if loan-to-value ratios exceed specified thresholds. As of September 30, 2026, the $35 million commitment had been fully funded, withno remaining funding commitments. See Notes 8, 9 and 16 for further discussion on this transaction.

Commitment to Fund Joint Ventures

In the second quarter of 2026, we entered into a joint venture with an institutional investment manager pursuant to which we will offer to sell certain first-lien jumbo residential consumer mortgage loans and related assets we source into the joint venture. We have committed approximately $9 million of equity capital to the joint venture, representing our proportionate share of the joint venture's $180 million aggregate committed capital, to be funded through capital calls during a one-year commitment period as the joint venture acquires eligible loan assets. At September 30, 2026, we had contributed $5 million of capital to the joint venture.

In the first quarter of 2024, we entered into a joint venture with an institutional investment manager pursuant to which we will offer to sell certain residential investor bridge and term loans we originate into joint venture entities that meet specified criteria at contractually pre-established prices. We have committed approximately $140 million of equity capital to be allocated to the joint venture entities and joint venture co-investments to be held in Redwood's investment portfolio. At September 30, 2026, we had contributed $59 million of capital to the joint venture.

In the second quarter of 2023, we entered into a joint venture with another institutional investment manager to invest in residential investor bridge loans originated by our CoreVest subsidiary. We have a commitment to contribute up to approximately $19 million to the joint venture to fund the joint venture's purchase of residential investor bridge loans, under the updated terms of the joint venture. At September 30, 2026, we had contributed $6 million of capital to the joint venture.

Loss Contingencies — Litigation, Claims and Demands

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

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

Note 20. Equity

The following table provides a summary of changes to accumulated other comprehensive income (loss) by component for three and nine months ended September 30, 2026 and 2025.

Table 20.1 – Changes in Accumulated Other Comprehensive Income (Loss) by Component

Note 20. Equity - (continued)

The following table provides a summary of reclassifications out of Accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2026 and 2025.

Table 20.2 – Reclassifications Out of Accumulated Other Comprehensive Income (Loss)

Stock Repurchases

In July 2025, our Board of Directors approved an authorization for the repurchase of up to $150 million of our common stock, and also authorized the repurchase of outstanding debt securities, including convertible debt. This authorization replaced our previous $125 million common stock repurchase authorization. In May 2023, our Board of Directors approved an additional authorization for the repurchase of up to $70 million of our preferred stock. These authorizations have no expiration dates and do not obligate us to acquire any specific number of shares or securities. During the three and nine months ended September 30, 2026, we repurchased 9.2 million shares of our common stock for $34 million andno shares of our preferred stock under these programs. At September 30, 2026, $77 million and $70 million of the current authorization remained available for the repurchase of shares of our common and preferred stock, respectively, and we also continued to be authorized to repurchase outstanding debt securities.

Issuance of Common Stock

We have an established program to sell common stock from time to time in at-the-market ("ATM") offerings. During the nine months ended September 30, 2026 and 2025, we did not issue any common shares through ATM offerings. At September 30, 2026, the remaining share issuance capacity under this program was approximately $175 million.

Note 20. Equity - (continued)

Issuance of Preferred Stock

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

During the three and nine months ended September 30, 2026, the Company declared preferred stock dividends of $0.625 and $1.875, respectively, per preferred share. At September 30, 2026, preferred dividends payable totaling $1 million for the third quarter 2026 dividend were included in Accrued expenses and other liabilities and were payable on October 15, 2026 to preferred stockholders of record on October 1, 2026.

Direct Stock Purchase and Dividend Reinvestment Plan

During the three and nine months ended September 30, 2026, we didnot issue shares of common stock through our Direct Stock Purchase and Dividend Reinvestment Plan. At September 30, 2026, approximatelysix million shares remained outstanding for future offerings under this plan.

Common Stock Warrants

In conjunction with establishing the joint venture with an institutional investment manager in the first quarter of 2024, we issued warrants exercisable for 1,974,905 shares of our common stock (the "First Tranche Warrants"); and (ii) warrants exercisable for 4,608,112 shares of our common stock (the "Second Tranche Warrants" and together with the First Tranche Warrants, the "Warrants"). Following an amendment to the terms of the Warrants in October 2025, the First Tranche Warrants are exercisable until September 18, 2030, and the Second Tranche Warrants, which vested upon achievement of specified deployment thresholds related to the joint venture, are also exercisable until September 18, 2030; the strike price of the Warrants is $6.96. The Warrants also contain a mandatory exercise provision, exercisable at Redwood’s option upon satisfaction of specified conditions, including the trading price of Redwood’s common stock exceeding a specified premium to the exercise price. Exercises of any Warrants will be settled on a net basis.

The Warrants met the criteria for equity classification under GAAP and are recorded as a component of Additional paid-in-capital in Equity on our Consolidated Balance Sheets. The Warrants were valued at $0.8 million on the issuance date and following the October 2025 amendment, are not subject to subsequent remeasurement. See Note 21 for discussion on the impact of the Warrants on earnings per common share.

For additional information related to our equity, see Note 20 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Note 21. Net Loss per Common Share

The following table provides the basic and diluted net loss per common share computations for the three and nine months ended September 30, 2026 and 2025.

Table 21.1 – Basic and Diluted Net Loss per Common Share

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

During the three and nine months ended September 30, 2026 and 2025, our convertible senior notes (and, for 2025, our exchangeable senior notes) were not determined to be dilutive and were not included in the calculation of diluted EPS under the "if-converted" method. Under this method, for convertible notes due in 2027 and 2030, if the potential conversion of the debt is dilutive, then the number of shares needed to settle the conversion premium are added to the shares outstanding used to calculate dilutive EPS.

During the three and nine months ended September 30, 2026, none of our Warrants were determined to be dilutive to our calculation of dilutive net loss per common share. The Warrants would have a dilutive effect on net loss per common share to the extent that the Warrants are vested and exercisable, and the average market value per share of our common stock exceeds the strike price of the Warrants.

For both the three and nine months ended September 30, 2026,33,982,388 and 30,303,726 of common shares related to the assumed conversion of our convertible senior notes, were antidilutive and were excluded in the calculation of diluted net loss per share, respectively. For both the three and nine months ended September 30, 2025,32,403,083 and 31,127,434 of common shares related to the assumed conversion of our convertible senior notes and our exchangeable senior notes, were antidilutive and were excluded in the calculation of diluted net loss per share, respectively.

For the three and nine months ended September 30, 2026, the number of outstanding equity awards that were antidilutive totaled 22,145 and 65,213 common shares, respectively. For the three and nine months ended September 30, 2025, the number of outstanding equity awards that were antidilutive totaled 20,938 and 66,185 common shares, respectively.

For additional information regarding EPS, see Note 21 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Note 22. General and Administrative Expenses

Components of our general and administrative expenses for the three and nine months ended September 30, 2026 and 2025 are presented in the following table.

Table 22.1 – Components of General and Administrative Expenses

(1)Includes $5 million of severance and transition-related expenses for the nine months ended September 30, 2026.

(2)For the three months ended September 30, 2026 and 2025, long-term incentive award expense included $5 million and $6 million of expense, respectively, with $4 million and $5 million awards settleable in shares of our common stock, and $1 million awards settleable in cash. For the nine months ended September 30, 2026 and 2025, long-term incentive award expense included $18 million and $17 million of expense, respectively, with $15 million and $14 million awards settleable in shares of our common stock, and $4 million and $3 million awards settleable in cash. For the nine months ended September 30, 2026, includes $2 million of organizational realignment costs.

For additional information related to cash-settled long-term incentive awards, see Note 15 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Note 23. Taxes

The Company's effective income tax rate differs from the federal corporate tax rate of 21.0%, primarily as a result of state taxes and REIT GAAP income not subject to federal income tax.

The Company's effective tax rate was 10.3% and (23.6)% for the nine months ended September 30, 2026 and 2025.

We assessed our tax positions for all open tax years (i.e., Federal, 2022 to 2026, and State, 2021 to 2026) at September 30, 2026 and December 31, 2025, and concluded that we had no uncertain tax positions that resulted in material unrecognized tax benefits.

As of September 30, 2026, the Company has a valuation allowance of $100 million for certain state deferred tax assets, as it is more likely than not that those assets will not be realized. The Company considers all available evidence, both positive and negative, to analyze the realizability of deferred tax assets. After evaluating these sources of taxable income, and considering the jurisdiction and character of the deferred tax assets, the Company continues to recognize its federal and certain state deferred tax assets of $12 million at September 30, 2026, as it believes it is more likely than not that the net deferred tax assets will be realized.

Note 24. Subsequent Events

On November 3, 2026, the Company’s Board of Directors approved a plan to discontinue the Company’s election to be treated as a REIT for U.S. federal income tax purposes, effective for the calendar year ending December 31, 2027. Under the announced plan, beginning with 2027, the Company would be taxed as a C-corporation and would no longer be subject to REIT distribution requirements. As a result, the Company expects to recognize a net deferred tax asset in the fourth quarter of 2026, net of any valuation allowance, along with a corresponding income tax benefit and increase in equity.

In connection with the announcement of the plan to discontinue the Company's election to be treated as a REIT in 2027, on November 3, 2026, the Board adopted a Tax Benefits Preservation Rights Plan designed to protect the Company’s ability to use its net operating losses and other tax attributes to reduce future income tax obligations. Because the Company’s ability to use these net operating losses could be limited under Section 382 of the Internal Revenue Code of 1986, as amended, if the Company experienced an “ownership change” within the meaning of Section 382, the plan is intended to deter any person or group from acquiring ownership of 4.9% or more of the Company’s common stock and certain other Company securities, subject to certain exceptions.

In connection the announcement of the plan to discontinue the Company's election to be treated as a REIT in 2027, on November 3, 2026, the Company's Board of Directors also approved a special authorization for the repurchase of up to $40 million of our Common Stock, which authorization is separate from, and in addition to, the already existing stock repurchase authorization described in Note 20.

In November 2026, the Company agreed to repurchase $53 million in principal of trust preferred securities at a discount to par. The agreement also provides for a waiver of the REIT maintenance covenant set forth in the related junior subordinated notes due 2037. The waiver becomes effective upon payment of the repurchase price, which is due no later than February 15, 2027. In connection with the repurchase, the Company expects to reclassify into earnings the portion of deferred losses on previously terminated cash flow hedges attributable to the debt being retired.

The Company announced plans for a preferred-for-common stock exchange offer in November 2026 for up to $50 million of common stock to be exchanged for newly issued 11.00% Series B preferred stock, with the exchange ratio determined through a modified Dutch auction. As of the issuance date of this Form 10-Q, the exchange offer had not commenced, and final terms remained subject to announcement.

In November 2026, the Company extended the commitment period for one of its CoreVest joint ventures and the maturity of its secured revolving financing facility to March 2030. The facility’s capacity was also increased from $400 million to $500 million. Related warrants to purchase common stock were amended to extend their expiration to March 2032, reset the exercise price to $4.90 per common share, reduce the dividend threshold to zero (such that the exercise price of the warrants will be reduced each time the Company pays a cash dividend on its common shares while the warrants remain outstanding) and provide for additional shares upon certain fundamental changes.

On November 3, 2026, the Board also approved a one-for-five reverse stock split of the Company's common stock, which is scheduled to be effective on January 4, 2027. Proportionate adjustments will be made to outstanding equity awards and other share-based instruments. Share and per-share amounts in these consolidated financial statements have not been adjusted for the reverse stock split.