Q3 2025 Redwood Trust Inc Earnings Call

Kaitlyn Mauritz Redwoods head Investor of relations. Please go ahead ma'am.

Thank you operator, Hello, everyone and thank you for joining us safer Redwoods third quarter 2025 earnings Conference call with me on today's call are Chris <unk>, Chief Executive Officer Dash Robinson, <unk>, President and <unk> Chief Financial Officer before we begin today I want to remind you that certain statements made during management's presentation today with respect to future financial and.

Business performance May constitute forward looking statements.

We're looking statements are based on current expectations forecasts and assumptions include risks and uncertainties that could cause actual results to differ materially. We encourage you to read the company's annual report on Form 10-K, which provide a description of some of the factors that could have a material impact on the company's performance and cause actual results to differ from those that may be expressed in forward looking statements.

On this call. We may also refer to both GAAP and non-GAAP financial measures. The non-GAAP financial measures provided should not be utilized in isolation or considered as a substitute for measures of financial performance prepared in accordance with GAAP a reconciliation between GAAP and non-GAAP financial measures are provided in our third quarter Redwood review, which is available on our website Redwood Trust Dot Com also note that the content.

<unk> of todays conference call contains time sensitive information that are accurate only as of today, we do not intend and undertake no obligation to update this information to reflect subsequent events or circumstances. Finally, today's call is being recorded won't be available on our website later today and with that I'll turn the call over to Chris for opening remarks.

Speaker #3: Good afternoon , and welcome to the Redwood Trust . Third quarter 2020 financial results conference call . Today's conference is being recorded . I will now turn the call over to Kaitlyn Mauritz Redwoods head investor Relations .

Operator: Good afternoon and welcome to the Redwood Trust Inc. Third Quarter 2025 Financial Results Conference call. Today's conference is being recorded. I will now turn the call over to Kaitlyn Moritz, Redwood's Head of Investor Relations. Please go ahead, ma'am.

Speaker #3: Please go ahead , ma'am .

Dashiell Robinson: Am.

Thanks, Kate and thank you everyone for joining us today.

Speaker #4: Thank you . Operator . Hello , everyone , and thank you for joining us today for redwoods third quarter 2020 Earnings Conference Call .

Kaitlyn Mauritz: Thank you.

Brooke E. Carillo: Operator.

Kaitlyn Mauritz: Hello everyone and thank you for joining us today for Redwood Trust Inc.'s third quarter 2025 earnings conference call. With me on today's call are Christopher Abate, Chief Executive Officer, Dashiell Robinson, President, and Brooke E. Carillo, Chief Financial Officer. Before we begin today, I want to remind you that certain statements made during management's presentation today with respect to future financial and business performance may constitute forward-looking statements. Forward-looking statements are based on current expectations, forecasts, and assumptions and include risks and uncertainties that could cause actual results to differ materially. We encourage you to read the company's annual report on Form 10-K, which provides a description of some of the factors that could have a material impact on the company's performance and cause actual results to differ from those that may be expressed in forward-looking statements.

On our last earnings call, we announced the acceleration of our strategic transition to a more scalable simplified operating model.

Speaker #4: With me on today's call are Christopher Abate Chief Executive Officer , Dashiell Robinson president and Brooke Carillo chief Financial Officer . Before we begin today , I want to remind you that certain statements made during management's presentation today , with respect to future financial and business performance may constitute forward looking statements .

One designed to capitalize on the transformative opportunities, we see emerging for our business.

We committed to proactively repositioning our balance sheet, freeing up capital from legacy assets and redeploying it into a highly profitable operating platforms. We.

Speaker #4: Forward looking statements are based on current expectations , forecasts and assumptions include risks and uncertainties that could cause actual results to differ materially .

<unk> set a target of reducing our legacy exposure from 33% of our capital at July 30th% to 20% by year end and in support of this transition repurchase common shares.

Speaker #4: We encourage you to read the company's annual report on Form 10-K, which provides a description of some of the factors that could have a material impact on the company's performance and cause actual results to differ from those that may be expressed in forward-looking statements on this call.

We can look back now in the third quarter. It was one of our most productive today.

Across our businesses, we locked originated nearly 7 billion of loans, a new quarterly record for Redwood.

Kaitlyn Mauritz: On this call, we may also refer to both GAAP and non-GAAP financial measures. The non-GAAP financial measures provided should not be utilized in isolation or considered as a substitute for measures of financial performance prepared in accordance with GAAP. A reconciliation between GAAP and non-GAAP financial measures is provided in our third quarter Redwood Review, which is available on our website redwoodtrust.com. Also note that the contents of today's conference call contain time-sensitive information that is accurate only as of today. We do not intend and undertake no obligation to update this information to reflect subsequent events or circumstances. Finally, today's call is being recorded and will be available on our website later today. With that, I'll turn the call over to Chris for opening remarks.

Speaker #4: We may also refer to both GAAP and non-GAAP financial measures. The non-GAAP financial measures provided should not be utilized in isolation or considered as a substitute for measures of financial performance prepared in accordance with GAAP.

This was despite an otherwise subdued housing market, where industry volumes are roughly flat quarter over quarter.

Speaker #4: A reconciliation between GAAP and non-GAAP financial measures are provided in our third quarter . Redwood review , which is available on our website , REDWOOD TRUST INC .

Our production included a record $5 1 billion of loans locked at Sequoia $1 2 billion of loans locked at aspire, which is rapidly ascended to become a market leading non QM loan aggregator.

Speaker #4: Also note that the contents of today's conference call contain time sensitive information that are accurate only as of today . We do not intend and undertake no obligation to update this information to subsequent events or circumstances .

$521 million of loans funded a core of us across residential investor products.

Speaker #4: Finally, today's call is being recorded and will be available on our website later today. And with that, I'll turn the call over to Chris for opening remarks.

Volume drivers for the quarter included record contributions from bank sellers and a host of new distribution partners that have enabled us to turn our capital quickly and speak for more production.

Speaker #5: Thanks , Kate , and thank you , everyone for joining us today . On our last earnings call , we announced the acceleration of our strategic transition to a more scalable , simplified operating model .

Christopher Abate: Thanks Kate. Thank you everyone for joining us today. On our last earnings call, we announced the acceleration of our strategic transition to a more scalable, simplified operating model, one designed to capitalize on the transformative opportunities we see emerging for our business. We committed to proactively repositioning our balance sheet, freeing up capital from legacy assets and redeploying it into our highly profitable operating platforms. We set a target of reducing our legacy exposure from 33% of our capital at July 30 to 20% by year end, and in support of this transition, repurchase common shares. We can look back now in the third quarter as one of our most productive to date. Across our businesses, we locked or originated nearly $7 billion of loans, a new quarterly record for Redwood Trust Inc.

In step with the growing opportunity across our mortgage banking platforms. We've continued to scale them profitably generating a core segments of.

Speaker #5: One designed to capitalize on the transformative opportunities we see emerging for our business . We committed to proactively repositioning our balance sheet , freeing up capital from legacy assets , and redeploying it into our highly profitable operating platforms .

Of <unk> 20 per share for the third quarter.

We've now maintained mortgage banking segment Roe.

Above 20% for five consecutive quarters, while boosting capital allocated to these businesses by 80% over that time.

Speaker #5: We set a target of reducing our legacy exposure from 33% of our capital at July 30th to 20% by year end , and in support of this transition , we purchased common shares .

Importantly, this growth hasnt come at the expense of efficiency, we continue to build out an AI infrastructure and core in house capabilities owning our data models and workflows, while leveraging AI driven document intelligence to extract data at scale and accelerate turn times.

Speaker #5: We can look back now in the third quarter as one of our most productive to date across our businesses . We locked originated nearly 7 billion of loans , a new quarterly record for Redwood .

We're also partnering with leading Silicon Valley Tech firms to stay ahead of the curve.

Speaker #5: This was despite an otherwise subdued housing market where industry volumes were roughly flat quarter over quarter . Our production included a record 5.1 billion of loans locked at Sequoia , 1.2 billion of loans locked at aspire , which is rapidly ascended to become a market leading non-qm loan aggregator .

Christopher Abate: This was despite an otherwise subdued housing market where industry volumes are roughly flat quarter over quarter. Our production included a record $5.1 billion of loans locked at Sequoia Mortgage Banking, $1.2 billion of loans locked at Aspire, which has rapidly ascended to become a market leading non-QM aggregator, and $521 million of loans funded at CoreVest Mortgage Banking across residential investor products. Volume drivers for the quarter included record contributions from bank sellers and a host of new distribution partners that have enabled us to turn our capital quickly and speak for more production. In step with the growing opportunity across our mortgage banking platforms, we've continued to scale them profitably, generating a core segment's EAD of $0.20 per share for the third quarter. We've now maintained mortgage banking segment ROEs above 20% for five consecutive quarters while boosting capital allocated to these businesses by 80% over that time.

Our AI tools aren't just operational upgrades, we expect them to become strategic assets that will help us drive scale and manage risks as volumes reached new heights, just as they did this past quarter.

On the heels of such a productive period and a recognition of the ongoing success of our existing partnership we announced today that we have expanded our relationship with CPP investments by extending the investment period of our joint venture and significantly increasing our corporate secured borrowing facility to $400 million.

Speaker #5: And 521 million of loans funded at Corvisart across residential investor products volume . Drivers for the quarter included record contributions from bank sellers and a host of new distribution partners that have enabled us to turn our capital quickly and speak for more production in step with the growing opportunity across our mortgage banking platforms .

From $250 million.

We look forward to building on this foundational momentum with CPP investments and will now turn our attention to fundraising for our flagship Sequoia platform, where growth prospects underscore the opportunity for additional institutional capital.

Speaker #5: We've continued to scale and profitably generating a core segments eed of $0.20 per share for the third quarter . We've now maintained mortgage banking segment rose above 20% for five consecutive quarters , while boosting capital allocated to these businesses by 80% over that time .

Turning to our legacy portfolio, we significantly reduced our capital allocated to this segment in the third quarter with a now representing 25% of our total capital.

Speaker #5: Importantly , this growth hasn't come at the expense of efficiency . We continue to build out an AI infrastructure and core in-house capabilities , owning our data models and workflows while leveraging AI driven document intelligence to extract data at scale and accelerate turn times .

Christopher Abate: Importantly, this growth hasn't come at the expense of efficiency. We continue to build out an AI infrastructure and core in-house capabilities, owning our data models and workflows while leveraging AI-driven document intelligence to extract data at scale and accelerate turn times. We're also partnering with leading Silicon Valley tech firms to stay ahead of the curve. Our AI tools aren't just operational upgrades. We expect them to become strategic assets that will help us drive scale and manage risk as volumes reach new heights, just as they did this past quarter. On the heels of such a productive period and in recognition of the ongoing success of our existing partnership, we announced today that we have expanded our relationship with CPP Investments by extending the investment period of our joint venture and significantly increasing our corporate secured borrowing facility to $400 million from $250 million.

<unk> of the legacy transition continues to play a part in our consolidated results, which dash in Brookville cover contributing to a small decline in GAAP book value to $7 34 per share at September 30th.

Book value also included the effect of our <unk> 18 per share dividend paid to stockholders and 5 million shares of stock repurchased during the quarter.

Speaker #5: We're also partnering with leading Silicon Valley tech firms to stay ahead of the curve . Our AI tools aren't just operational upgrades . We expect them to become strategic assets that will help us drive , scale and manage risk as volumes reach new heights .

Zooming out in the broader markets, we are closely watching developments across the credit landscape and U S economy recent.

Speaker #5: Just as they did this past quarter . On the heels of such a productive period , and in recognition of the ongoing success of our existing partnership , we announced today that we have expanded our relationship with CPP investments by extending the investment period of our joint venture and significantly increasing our corporate secured borrowing facility to $400 million from $250 million .

Recent bankruptcies affecting clients of several large banks underscore growing pressure in certain consumer asset backed sectors.

While these events may appear isolated to echo earlier chapters of the credit cycle reminiscent of conditions that preceded the mortgage reforms implemented after the global financial crisis.

Contrast, todays residential mortgage market benefits for more rigorous underwriting standards enhanced transparency and stronger data integrity principles deeply embedded in redwoods credit culture and capital markets practices.

Speaker #5: We look forward to building on this foundational momentum with CPP investments , and will now turn our attention to fundraising for our flagship Sequoia platform , where growth prospects underscore the opportunity for additional institutional capital .

Christopher Abate: We look forward to building on this foundational momentum with CPP Investments and will now turn our attention to fundraising for our flagship Sequoia platform, where growth prospects underscore the opportunity for additional institutional capital. Turning to our legacy portfolio, we significantly reduced our capital allocated to this segment in the third quarter, with it now representing 25% of our total capital. The noise of the legacy transition continues to play a part in our consolidated results, which Dashiell and Brooke will cover, contributing to a small decline in GAAP book value to $7.34 per share at September 30. Book value also included the effect of our $0.18 per share dividend paid to stockholders and 5 million shares of stock repurchased during the quarter. Zooming out on the broader markets, we are closely watching developments across the credit landscape and U.S. economy.

And as we continue to see strong growth in the private label securitization market.

Our advocacy in Washington to make capital flows into securitization more efficient is bearing fruit.

Speaker #5: Turning to our legacy portfolio , we significantly reduced our allocated to this segment in the third quarter with a now representing 25% of our total capital .

In the midst of a very ambitious agenda FCC chair Atkins launched a concept release in late September and how to streamline non agency MBS disclosures, which we think has the potential to crowd significant new capital into the sector and deepen demand for the assets we create as.

Speaker #5: The noise of the transition continues to play a part in our consolidated results , which Dash and Brooke will cover , contributing to a small decline in GAAP book value to share at September 30th .

As we progress through the final quarter of the year, we continue to capture market share and what has been a very subdued housing market. However, with mortgage rates on the decline and with the prospect of further monetary easing ahead, we're optimistic that the housing finance sector will once again resumed strong growth in the year ahead.

Speaker #5: Book value also included the effect of our 18 cent per share dividend paid to stockholders and 5 million shares of stock repurchased during the quarter .

Speaker #5: Zooming out on the broader markets , we are closely watching developments across the credit legacy in US economy . Recent bankruptcies affecting clients of several large banks underscore growing pressure in certain consumer asset backed sectors .

With that I'll turn the call over to dash to discuss our operating results in more detail.

Christopher Abate: Recent bankruptcies affecting clients of several large banks underscore growing pressure in certain consumer asset-backed sectors. While these events may appear isolated, they echo earlier chapters of the credit cycle, reminiscent of conditions that preceded the mortgage reforms implemented after the global financial crisis. By contrast, today's residential mortgage market benefits from more rigorous underwriting standards, enhanced transparency, and stronger data integrity principles deeply embedded in Redwood's credit culture and capital markets practices. As we continue to see strong growth in the private label securitization market, our advocacy in Washington to make capital flows into securitization more efficient is bearing fruit. Amidst a very ambitious agenda, SEC Chair Atkins launched a concept release in late September on how to streamline non-agency RMBS disclosures, which we think has the potential to crowd significant new capital into the sector and deepen demand for the assets we create.

Thank you Chris.

Speaker #5: While these events may appear isolated , they echo earlier chapters of the credit cycle reminiscent of conditions that preceded the mortgage reforms implemented after the global financial crisis .

<unk> third quarter witnessed our strongest operating performance in the company's history with ample progress and further reallocating capital to continue profitably scaling our core activities.

Speaker #5: By contrast , today's residential mortgage market benefits from more rigorous underwriting standards , enhanced transparency , and stronger data integrity principles . Deeply embedded in Redwood's credit culture and capital markets practices .

To start.

Quite a lot $5 1 billion of loans in the third quarter, a 53% increase from Q2 and a record for the platform.

Against the more muted market backdrop in which many other large players reported minimal to no production growth or volumes with both bank and nonbank sellers grew by over 50%.

Speaker #5: And as we continue to see strong growth in the private label securitization market , our advocacy in Washington to make capital flows into securitization more efficient is bearing fruit amidst a very ambitious agenda .

We estimate that our seller network now covers approximately 80% of market share for jumbo production up from 20% to 30% as recently as 2023.

Speaker #5: SEC Chair Atkins launched a concept release in late September on how to streamline non-agency R&B disclosures, which we think has the potential to crowd significant new capital into the sector and deepen demand for the assets we create.

Step our estimated jumbo market share is now 7% up from 1% to 2% over the same time period.

This deeper access must be complemented by crisp execution, a continued strength of our platform across a deepening set of products.

Speaker #5: As we progress through the final quarter of the year, we continue to capture market share in what has been a very subdued housing market.

Christopher Abate: As we progress through the final quarter of the year, we continue to capture market share in what has been a very subdued housing market. However, with mortgage rates on the decline and with the prospect of further monetary easing ahead, we're optimistic that the housing finance sector will once again resume strong growth in the year ahead. With that, I'll turn the call over to Dashiell Robinson to discuss our operating results in more detail.

<unk> third quarter activity was split between traditional 30 year fixed hybrid arms closed on second liens in a number of other products underscoring our role as a one stop provider of timely and flexible liquidity for a loan origination partners of.

Speaker #5: However , with mortgage rates on the decline and with the prospect of further monetary easing ahead , we're optimistic that the housing finance sector will once again resume strong growth in the year ahead .

Of note, 48% of our third quarter volumes were bank collateral and 25% was tied to season loans.

Speaker #5: With that , I'll turn the call over to Dash to discuss our operating results in more detail .

Collective of trends, we have anticipated for some time, namely.

Speaker #6: Thank you . Chris . The third quarter witnessed our strongest operating performance in the company's history , with ample progress in further reallocating capital to continue profitably scaling our core activities .

Dashiell Robinson: Thank you Chris. The third quarter witnessed our strongest operating performance in the company's history, with ample progress in further reallocating capital to continue profitably scaling our core activities. To start, Sequoia locked $5.1 billion of loans in the third quarter, a 53% increase from Q2 and a record for the platform against a more muted market backdrop in which many other large players reported minimal to no production growth. Our volumes with both bank and non-bank sellers grew by over 50%. We estimate that our seller network now covers approximately 80% of market share for jumbo production, up from 20% to 30% as recently as 2023. In step, our estimated jumbo market share is now 7%, up from 1% to 2% over the same time period. This deeper access must be complemented by crisp execution, a continued strength of our platform across a deepening set of products.

Namely a resurgence in bank M&A activity and increased rigor within bank C suites and evaluating the true return profile of funding loan duration mortgages with deposits irrespective of where the final Basel and game Roseland.

Speaker #6: To start , Sequoia locked $5.1 billion of loans in the third quarter . A 53% increase from Q2 and a record for the platform against a more muted market backdrop in which many other large players reported minimal to no production growth .

By design, our operating progress has been coupled with continued momentum in distribution year to date, we have distributed nearly $9 billion of collateral tops in the market across 13, Securitizations and whole loan sales to a variety of partners, including $2 6 billion in the third quarter.

Speaker #6: Our volumes with both bank and non-bank sellers grew by over 50% . We estimate that our seller network now covers approximately 80% of market share for jumbo production , up from 20 to 30% as recently as 2023 .

This already eclipses full year 2020 for activity and with demand for securitization is still elevated notwithstanding a modest recent backup and overall execution, we expect activity to continue a pace heading into year end.

Speaker #6: In step , our estimated jumbo market share is now 7% , up from 1 to 2% over the same time period . This deeper access must be complemented by crisp execution , a continued strength of our platform across a deepening set of products .

Complementing Sequoia is growth as our emergent aspire platform, whose expanded loan program. We launched in January of this year. This business primarily focuses on loans for prime quality borrowers who require an alternative underwriting approach, including evaluation of personal bank statements or rental income tied to the property.

Speaker #6: Sequoia's third quarter activity was split between traditional 30 year fixed hybrid arms , closed end second liens and a number of other products .

Dashiell Robinson: Sequoia's third quarter activity was split between traditional 30-year fixed, hybrid ARMs, closed-end second liens, and a number of other products, underscoring our role as a one-stop provider of timely and flexible liquidity for our loan origination partners. Of note, 48% of our third quarter volumes were bank collateral and 25% was tied to seasoned loans, reflective of trends we have anticipated for some time, namely a resurgence in bank M&A activity and increased rigor within bank C-suites in evaluating the true return profile of funding long duration mortgages with deposits irrespective of where the final Basel endgame rules land. By design, our operating progress has been coupled with continued momentum in distribution. Year to date we have distributed nearly $9 billion of collateral into the market across 13 securitizations and whole loan sales to a variety of partners including $2.6 billion in the third quarter.

Speaker #6: Underscoring our role as a one stop provider of timely and flexible liquidity for our loan origination partners . Of note , 48% of our third quarter volumes were bank collateral and 25% was tied to season loans .

As far as $1 $2 billion of third quarter locks were nearly four times second quarter volume.

The business closed the quarter with a record month $550 million in September alone profitably, establishing a run rate we expect to build upon in the quarters ahead.

Speaker #6: Reflective of trends we have anticipated for some time , namely , a resurgence in bank M&A activity and increased rigor within bank C-suites in evaluating the true return profile of funding .

The pipeline continues to reflect our focus on well underwritten loans to high quality borrowers with third quarter production carrying an average credit score of 749.

Speaker #6: Long duration mortgages with deposits , irrespective of where the final Basel end game rules land by design , our operating progress has been coupled with continued momentum in distribution .

Average LTV of 71%.

Buyers emergence as a top five aggregator of non QM loans underscores both the institutional strengths of our platform and sellers growing preference to consolidate relationships as they expand their own product offerings.

Speaker #6: Year to date , we have distributed nearly $9 billion of collateral tops in the market across 13 securitizations and whole loan sales to a variety of partners , including $2.6 billion in the third quarter .

A key element of our spires business plan has already played out the existing sellers are meaningfully broadening the range of products they deliver through the platform.

Speaker #6: This already eclipses full year 2020 for activity , and with demand for securitization still elevated notwithstanding a modest recent backup in overall execution , we expect activity to continue apace heading into year end , complementing Sequoia's growth is our emergent aspire platform , whose expanded loan program we launched in January of this year .

Dashiell Robinson: This already eclipses full year 2024 activity and with demand for securitization still elevated, notwithstanding a modest recent backup in overall execution, we expect activity to continue apace heading into year end. Complementing Sequoia's growth is our emergent Aspire platform whose expanded loan program we launched in January of this year. This business primarily focuses on loans for prime quality borrowers who require an alternative underwriting approach including evaluation of personal bank statements or rental income tied to the property. Aspire's $1.2 billion of third quarter locks were nearly four times second quarter volume. The business closed the quarter with a record month, $550 million in September alone, profitably establishing a run rate we expect to build upon in the quarters ahead.

As recently as 18 to 24 months ago, many of our core seller relationships, we're brokering out or otherwise not directly addressing the expanded credit market, which market observers estimate could be up 40% from a year ago and top 125 billion in size in 2025.

The shift has been noticeable and bodes well for the expanded credit market overall and aspires growth prospects in particular.

Speaker #6: This business , primarily focuses on loans for prime quality borrowers who require an alternative underwriting approach , including evaluation of personal bank statements or rental income tied to the property .

Sellers seeking seamless and one stop solutions for their products can now come to redwood for their entire suite of non agency offerings.

Speaker #6: Aspires. $1.2 billion of third quarter locks were nearly four times second quarter volume. The business closed the quarter with a record month of $550 million.

Concurrently the spire continues to make important inroads with relationships new to our platform critical progress to grow the platform responsibly diversifying our seller base and thereby driving reliable margins. The platform grew its loan originator partner base by nearly 50% in the third quarter with plans to continue growing further including with several top.

Speaker #6: In September alone , profitably establishing a run rate we expect to build upon in the quarters ahead . The pipeline continues to reflect a focus on , well , underwritten loans to high quality borrowers , with third quarter production carrying an average credit score of 7.49 , an average LTV of 71% .

Dashiell Robinson: The pipeline continues to reflect a focus on well underwritten loans to high quality borrowers, with third quarter production carrying an average credit score of 749, an average LTV of 71%. Aspire's emergence as a top five aggregator of non-QM loans underscores both the institutional strengths of our platform and sellers' growing preference to consolidate relationships as they expand their own product offerings. A key element of Aspire's business plan has already played out. Existing sellers are meaningfully broadening the range of products they deliver through the platform. As recently as 18 to 24 months ago, many of our core seller relationships were brokering out or otherwise not directly addressing the expanded credit market, which market observers estimate could be up 40% from a year ago and top $125 billion in size in 2025.

Originators in the coming quarters.

Aspires distribution, thus far has been focused on whole loan sales. We are in process to expand our distribution efforts further through securitization in joint ventures outlets, where we have had success in other channels of our business.

Speaker #6: Fires . Emergence is a top five aggregator of Non-qm loans . Underscores both the institutional strengths of our platform and sellers growing preference to consolidate relationships as they expand their own product offerings .

Our residential industrial loan platform <unk> continued to evolve its production mix, while achieving its highest quarterly volume since mid 2022.

Speaker #6: A key element of Aspire's business plan has already played out the existing sellers are meaningfully broadening the range of products they deliver through the platform .

Notably originations within core vest are increasingly driven by smaller balanced products originations of residential transition loans or Rtl's and D. C are comprised 40% of Q3 volume and are up 45% versus the same period last year.

Speaker #6: As recently as 18 to 24 months ago , many of our core seller relationships were brokering out or otherwise not directly addressing the expanded credit market .

Speaker #6: Which market observers estimate could be up 40% from a year ago , and top $125 billion in size in 2025 . The shift has been noticeable and bodes well for the expanded credit market overall , and Aspire's growth prospects in particular , sellers seeking seamless and one stop solutions for their products can now come to Redwood for their entire suite of Non-agency offerings .

The smaller balanced market remains a significant opportunity for <unk>, given we have been relatively underpenetrated in a space that continues to grow and remains in demand with our capital partners.

Dashiell Robinson: The shift has been noticeable and bodes well for the expanded credit market overall and Aspire's growth prospects in particular. Sellers seeking seamless and one stop solutions for their products can now come to Redwood for their entire suite of non-agency offerings. Concurrently, Aspire continues to make important inroads with relationships new to our platform. Critical progress to grow the platform responsibly, diversifying our seller base and thereby driving reliable margins. The platform grew its loan originator partner base by nearly 50% in the third quarter with plans to continue growing further, including with several top originators in the coming quarters. While Aspire's distribution thus far has been focused on whole loan sales, we are in process to expand our distribution efforts further through securitization and joint venture outlets where we have had success in other channels of our business.

The broader origination landscape for investor loans remains robust, but uneven as many platforms competitive posture is always ebbs and flows in step with their access to capital depth of distribution remains a competitive advantage for our core values, which is distributed nearly $1 5 billion of loans year to date via joint ventures and whole loan sales.

Speaker #6: Concurrently , aspire continues to make important inroads with relationships new to our platform . Critical progress to grow the platform responsibly , diversifying our seller base and thereby driving reliable margins .

Concurrent with our operating progress we significantly reduced our exposure to legacy investments since the end of the second quarter, we sold our full re performing loan portfolio Sos tea and approximately half of our third party hei investments at accretive levels versus our June 32025 marks while also resolving our transferring a significant.

Speaker #6: The platform grew its loan originator partner base by nearly 50% in the third quarter , with plans to continue growing further , including with several top originators in the coming quarters .

Speaker #6: While aspires distribution thus far has been focused on whole loan sales . We are in process to expand our distribution efforts further through securitization and joint ventures outlets , where we have had success in other channels of our business .

<unk> portion of our legacy bridge loans, including selling over half of the portfolio into a partnership structure capitalized with multi year nonrecourse borrowings with preferred and residual co investments by a third party.

Speaker #6: Our residential investor loan platform , continued to evolve its production mix while highest quarterly volume since mid 2022 . Notably , originations within Corvisart are increasingly driven by smaller , balanced products .

Dashiell Robinson: Our residential investor loan platform CoreVest Mortgage Banking continued to evolve its production mix while achieving its highest quarterly volume since mid-2022. Notably, originations within CoreVest are increasingly driven by smaller balance products. Originations of residential transition loans or RTLs and DSCR comprise 40% of Q3 volume and are up 45% versus the same period last year. The smaller balance market remains a significant opportunity for CoreVest Mortgage Banking given we have been relatively underpenetrated in a space that continues to grow and remains in demand with our capital partners. The broader origination landscape for investor loans remains robust but uneven as many platforms' competitive posture as always ebbs and flows in step with their access to capital. Depth of distribution remains a competitive advantage for CoreVest Mortgage Banking, which has distributed nearly $1.5 billion of loans year to date via joint ventures and wholly owned sales.

Pro forma for these activities legacy investments now represent approximately 25% of total capital.

Speaker #6: Originations of residential transition loans , or Rtls and DSR , comprised 40% of Q3 volume and are up 45% versus the same period last year .

Down from 33% at June 32025.

With further reductions expected through year end, primarily through additional resolutions in the legacy bridge portfolio.

Speaker #6: The smaller balance market remains a significant opportunity for Corvus , given we have been relatively underpenetrated in a space that continues to grow and remains in demand with our capital partners , the broader origination landscape for investor loans remains robust , but uneven , as many platforms competitive posture as always ebbs and flows in step with their access to capital , depth of distribution remains a competitive advantage for Corvus , which has distributed nearly $1.5 billion of loans year to date via joint ventures and home loan sales .

I'll now turn the call over to broke to discuss our financial results.

Thank you Josh for the third quarter, we reported a GAAP net loss of $9 5 million or <unk> 10 per share compared to a loss of 100 million or 70.

Our Shannon Klinger.

The GAAP loss, primarily reflecting transaction related expenses associated with the resolution of transfer of the past $900 million of legacy branch asset in an ongoing net income drag from our legacy investment portfolio.

Book value per common share was $7 and 35 at September 30, compared to seven 9% and 49% at June 30, and our economic return on book value of 11, 5%, including <unk> 10 per share of accretion from share repurchases.

Speaker #6: Concurrent with our operating progress , we significantly reduced our exposure to legacy investments . Since the end of the second quarter , we sold our full Reperforming loan portfolio , Slst and approximately half of our third party high investments at accretive levels versus our June 30th , 2025 marks .

Dashiell Robinson: Concurrent with our operating progress, we significantly reduced our exposure to legacy assets. Since the end of the second quarter, we sold our full reperforming loan portfolio SLST and approximately half of our third-party Home Equity Investment options at accretive levels versus our June 30, 2025 marks, while also resolving or transferring a significant portion of our legacy bridge loans, including selling over half of the portfolio into a partnership structure capitalized with multi-year non-recourse borrowings with preferred and residual co-investments by a third party. Pro forma for these activities, legacy assets now represent approximately 25% of total capital, down from 33% at June 30, 2025, with further reductions expected through year end, primarily through additional resolutions in the legacy bridge portfolio. I'll now turn the call over to Brooke E. Carillo to discuss our financial results.

Total repurchase activities in June with 5 million share.

Speaker #6: While also resolving or transferring a significant portion of our legacy bridge loans , including selling over half of the portfolio into a partnership structure capitalized with multi-year non-recourse borrowings with preferred and residual co-investments by a third party pro these activities .

I think of our outstanding common shares.

On a non-GAAP basis core segments earnings available for distribution.

Core segments, E&P like $27 million or <unk> 20 per share.

17% return on equity. This compares to 18 per share in the second quarter and underscoring the continued earnings strength of our three core segments.

Speaker #6: Legacy investments represent approximately 25% of total capital , down from 33% at June 30th , 2025 , with further reductions expected through year end , primarily through additional resolutions in the Legacy Bridge portfolio .

And mortgage banking, which currently includes our IR platform.

Mortgage banking and Redwood investment.

Across our operating platform, we've increased capital allocation by more than 80% in 2024, including a $160 million increase since the end of the second quarter.

Speaker #6: I'll now turn the call over to Brooke to discuss our financial results .

Speaker #7: Thank you . Dash , for the third quarter , we reported a GAAP net loss of $9.5 million , or $0.08 per share , compared to a loss of $100 million , or $0.76 per share , in the second quarter .

Brooke E. Carillo: Thank you. Dash, for the third quarter we reported a GAAP net loss of $9.5 million or $0.08 per share, compared to a loss of $100 million or $0.76 per share in the second quarter. The GAAP loss primarily reflected transaction-related expenses associated with the resolution or transfer of approximately $600 million of legacy bridge assets and the ongoing net interest income drag from our legacy investments portfolio. Book value per common share was $7.35 at September 30th compared to $7.49 at June 30th, and our economic return on book value was 0.5%, including $0.06 per share of accretion from share repurchases. Total repurchase activity since June was $6.5 million. Shares were 5% of our outstanding common shares. On a non-GAAP basis, Core Segments earnings available for distribution, or Core Segments EAD, was $27 million or $0.20 per share, representing a 7.17% return on equity.

GAAP return on equity from mortgage banking segment reached 28% in Q3, marking the fifth consecutive quarter returns exceeded 20%.

Speaker #7: The gap loss primarily reflected transaction-related expenses associated with the resolution or transfer of approximately $600 million of legacy bridge assets and the ongoing net income drag from our legacy investment portfolio.

At the client mortgage banking segment net income rose to $34 million, producing at 29% compared to $22 million and a 19% Io in the prior quarter.

Speaker #7: Book value per common share was $7.35 at September 30th , compared to $7.49 at June 30th . And our economic return on book value was 0.5% , including $0.06 per share of accretion from share repurchases , total repurchases .

Total lock volume reached $6 3 billion, including $5 1 billion Pensacola, and one 2 billion gallons buyer.

Gain on sale margins averaged 93 basis points at the high end of our long term target range.

Robust mortgage banking generated $3 5 million of segment net income and a 30% return on equity funding volume of 521 million. The highest since 2022 does that 14% year over year supported by strong distribution and a shift in production mix towards term.

Speaker #7: Activity since June was 6.5 million shares , or 5% of our outstanding common shares . On a non-GAAP basis , core segments Earnings available for distribution were core segments , EED was 27 million , or $0.20 per share , representing a 17% return on equity .

Erin will rebound French product.

Speaker #7: This compares to $0.18 per share in the second quarter , and underscores the continued earnings strength of our three core segments Sequoia mortgage banking , which currently includes our Aspire platform , Corvus Mortgage Banking and Redwood Investments across our operating platforms , we've increased capital allocation by more than 80% since mid 2024 , including a $160 million increase since the end of the second quarter .

Redwood investment delivering segment net income of $10 million and a 10% AAD Arlene and modest decline in net income relative to the second quarter was attributable to pay downs and sales of third party securities, partially offset by gains and maintain investment as rates decline and spreads tightened.

Brooke E. Carillo: This compares to $0.18 per share in the second quarter and underscores the continued earnings strength of our three core Sequoia Mortgage Banking, which currently includes our Aspire platform, CoreVest Mortgage Banking, and Redwood Investments. Across our operating platforms, we've increased capital allocation by more than 80% since mid-2024, including a $160 million increase since the end of the second quarter. Combined GAAP return on equity for mortgage banking segments reached 28% in Q3, marking the fifth consecutive quarter returns exceeded 20% at Sequoia Mortgage Banking. Segment net income rose to $34 million, producing a 29% ROE compared to $22 million and a 19% ROE in the prior quarter. Total lock volume reached $6.3 billion, including $5.1 billion from securities and $1.2 billion from Aspire. Gain on sale margins averaged 93 basis points at the high end of our long-term target range.

Approximately $30 million of capital into assets from our operating businesses and completed our fourth nonrecourse financing Trina maintained investment reducing total securities with a balance of $28 million, which is down 85% from Q3 2024.

Speaker #7: Combined GAAP return on equity for mortgage Banking segments reached 28% in Q3 , marking the fifth consecutive quarter returns exceeded 20% at Sequoia mortgage banking segment net income rose to 34 million , producing a 29% ROE , compared to 22 million and a 19% ROE in the prior quarter .

The investment portfolio saw steady to declining delinquencies of craft products, including 90, plus day delinquencies on characterize <unk> announced that philosophy, and where we continue to see healthy repayment velocity.

Speaker #7: Total lock volume reached 6.3 billion , including 5.1 billion from Sequoia and 1.2 billion from aspire . Gain on sale margins averaged 93 basis points at the high end of our long term target range for mortgage banking generated 3.5 million of segment net income and a 30% return on equity .

Turning to legacy investments this segment reported at 22 million net loss.

Driven by the transaction costs and continued net interest margin pressure on the $1 billion of assets sold or transferred this quarter, we recorded an approximate five.

Brooke E. Carillo: CoreVest Mortgage Banking generated $3.5 million of segment net income and a 38% EAD return on equity. Funding volume of $521 million, the highest since 2022, was up 14% year over year, supported by strong loan distribution and a shift in production mix towards term DSCR and smaller balance bridge products. Redwood Investments delivered segment net income of $10 million and a 10% EAD ROE. The modest decline in net income relative to the second quarter was attributable to paydowns and sales of third-party securities, partially offset by gains on retained investments as rates declined and spreads tightened. We deployed approximately $30 million of capital into assets sourced from our operating businesses and completed our fourth non-recourse financing trade of retained investments, reducing total securities repo balances to just $28 million, which is down 85% from Q3 2024.

The loss equating to negative 15% return versus returns exceeding 20% across our operating businesses or the $150 million of capital generated from resolution activity will be redeployed total operating expenses decreased 3% or $1 7 million from the second quarter, driven by lower portfolio management cost.

Speaker #7: Funding volume of 521 million , the highest since 2022 , was up 14% year over year , supported by strong loan distribution and a shift in production mix towards term and smaller balance bridge products .

Speaker #7: Redwood investments delivered segment net income of 10 million and a the modest decline in net income relative to the second quarter was attributable to Paydowns and sales of third party securities , partially offset by gains on retained investments .

This was partially offset by higher G&A related to personnel and other expenses supporting the growth of our newer platform.

All operating segments. We saw continued gains in operating efficiency with notable improvements in cost per loan, reflecting the benefits of record quarter origination volumes this quarter.

Speaker #7: As rates decline and spreads tightened . We deployed approximately 30 million of capital into asset sourced from our operating businesses and completed our fourth non-recourse financing trade of retained investments , reducing total securities repo balances to just 28 million , which is down 85% from the investment portfolio saw steady to declining delinquencies across products , including 90 plus day delinquencies on securitized bridge loans that now sit below 3% .

Turning to our balance sheet and capital structure, our overall recourse leverage increased from three two times to four times driven by warehouse utilization tied to record mortgage banking activity, excluding recourse leverage from our mortgage banking businesses are combined footprint and portfolio leverage ratio declined from one nine to one six times.

Brooke E. Carillo: The investment portfolio saw steady to declining delinquencies across products, including 90+ day delinquencies on securitized bridge loans that now sit below 3%, and where we continue to see healthy repayment velocity. Turning to legacy investments, the segment reported a $22 million net loss driven by the transaction cost and continued net interest margin pressure on the $1 billion of assets sold or transferred this quarter. We recorded an approximate $0.05 EAD loss, equating to negative 15% return versus returns exceeding 20% across our operating businesses, where the $150 million of capital generated from resolution activity will be redeployed. Total operating expenses decreased 3%, or $1.7 million, from the second quarter, driven by lower portfolio management costs. This is partially offset by higher G&A related to personnel and other expenses supporting the growth of our newer platforms.

Consistent with the ongoing repositioning of the balance sheet towards our operating platform.

Speaker #7: And where we continue to see healthy repayment velocity . Turning to legacy investments , the segment reported a 22 million net loss driven by the transaction costs and continued net interest margin pressure on the 1 billion of assets sold or transferred this quarter .

2.3 turns of recourse leverage associated with the warehouse lines remain well supported by highly liquid jumbo loan, where we turn capital quickly.

Of course that balances increased by $771 million from the second quarter, reflecting record funding volume of $5 1 billion and 2 billion of which has already been sold or securitized month today.

Speaker #7: We recorded an approximate $0.05 EED loss, equating to a -15% return versus returns exceeding 20% across our operating businesses, where the $150 million of capital generated from resolution activity will be redeployed.

Subsequent to quarter end, we retired our 2025 convertible notes and as announced today expanded our revolving credit facility by 150 million to $400 million in total capacity extending the maturity to September 2028. These actions strengthen our liquidity simplify our debt profile and increased flexibility to support continued.

Speaker #7: Total operating expenses decreased 3% , or 1.7 million , from the second quarter , driven by lower portfolio management costs . This was partially offset by higher G&A related to personnel and other expenses supporting the growth of our newer platforms across all operating segments .

In our core platform.

In addition, our companywide cost of funds declined approximately 40 basis points from the prior quarter, driven both by lower silver grades and narrower spreads across our aggregate facilities.

Brooke E. Carillo: Across all operating segments, we saw continued gains in operating efficiency with notable improvements in cost per loan, reflecting the benefits of record quarter origination volumes. Turning to our balance sheet and capital structure, our overall recourse leverage increased from 3.2 times to 4 times, driven by warehouse utilization tied to record mortgage banking activity. Excluding recourse leverage from our mortgage banking businesses, our combined corporate and portfolio leverage ratio declined from 1.9 to 1.6 times. Consistent with the ongoing repositioning of the balance sheet towards our operating platforms, the 2.3 turns of recourse leverage associated with the warehouse lines remain well supported by highly liquid jumbo loans. Where we turn capital quickly, recourse debt balances increased by $771 million from the second quarter, reflecting record funding volume of $5.1 billion, and $2 billion of which has already been sold or securitized month to date.

Speaker #7: We saw continued gains in operating efficiency , notable in cost per loan benefits of record quarter origination volumes this quarter . Turning to our balance sheet and capital structure , our overall resource leverage increased from 3.2 times to four times , driven by warehouse utilization tied to record mortgage banking activity .

To close Redwood is executing with focus and consistency.

Simplifying our business scaling our core platforms and redeploying capital into higher return opportunities.

This quarter underscores the strength of our operating model and the earnings potential of our core segments repositioning redwood to deliver sustainable profitability and long term value for our shareholder.

Speaker #7: Excluding recourse leverage from our mortgage banking businesses , our combined corporate and portfolio leverage ratio declined from 1.9 to 1.6 times , consistent with the ongoing repositioning of the balance sheet towards our operating platforms .

With that I'll turn the call back over to the operator for questions.

Speaker #7: The 2.3 turns of recourse leverage associated with the warehouse lines remain well supported by highly liquid jumbo loans , where we turn capital quickly , recourse debt balances increased by 771 million from the second quarter , reflecting record funding volume of 5.1 billion and 2 billion , of which has already been sold or securitized month to date .

Thank you.

We'll now be conducting a question and answer session with selected analysts are invited to ask a question.

Our first question comes from Bose George from K B W. You May proceed with your question.

Hey, everyone. Good afternoon. Thank.

Thank you first I wanted to ask about the the sort of longer term earnings power.

Speaker #7: Subsequent to end , we retired our 2025 convertible notes and as announced today , expanded our facility by 150 million to 400 million .

Brooke E. Carillo: Subsequent to quarter end, we retired our 2025 convertible notes and, as announced today, expanded our revolving credit facility by $150 million to $400 million in total capacity, extending the maturity to September of 2028. These actions strengthen our liquidity, simplify our debt profile, and increase flexibility to support continued growth in our core platform. In addition, our company-wide cost of funds declined approximately 40 basis points from the prior quarter, driven both by lower SOFR rates and narrower spreads across our aggregate facilities. To close, Redwood Trust Inc. is executing with focus and consistency. We are simplifying our business, scaling our core platforms, and redeploying capital into higher return opportunities. The progress this quarter underscores the strength of our operating model and the earnings potential of our core segments, repositioning Redwood Trust Inc. to deliver sustainable profitability and long-term value for our shareholders.

You'd noted you largely expect the legacy assets be rolled on.

Thanks.

And so when you look at the earnings power after that should we look at the non-GAAP core number this quarter was 20.

Speaker #7: In total capacity , extending the maturity to September of 2028 . These actions strengthen our liquidity , simplify our debt profile , and increase flexibility to support continued growth in our core platforms .

Plus the deployment of all the capital that comes out of that that's still under legacy pieces that kind of a way to bridge to earning.

Earnings power after.

Speaker #7: In addition , our company wide cost of funds declined approximately 40 basis points from the prior quarter , driven both by lower sofr rates and narrow spreads across our aggregate facilities .

Hey, Bose I can start on that one the short answer is yes, I think as as the legacy.

Speaker #7: To close , Redwood is executing with focus and consistency . We are simplifying our business , scaling our core platforms and redeploying capital into higher return opportunities .

Segment winds down.

Our earnings our consolidated earnings will start to look a lot closer to what we're generating today and core. So as you said there was 20 exceeded the dividend.

Speaker #7: The progress this quarter underscores the strength of our operating model and the earnings potential of our core segments . Repositioning Redwood to deliver sustainable profitability and long term value for our shareholders .

I think thats.

The redeployment is going to be a question of how quickly we can wind that down but certainly in the third quarter. We turbo did so to speak.

Speaker #7: And with that , I'll turn the call back net over to the operator for questions .

Brooke E. Carillo: With that, I'll turn the call back over to the operator for questions.

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I think Brook mentioned, we'd freed up $150 million of capital for reinvestment. So that was capital that was was generating.

Speaker #3: Thank you . We will now be conducting a question and answer session where selected analysts are invited to ask a question . Our first question comes from Bose George from KB .

Operator: Thank you. We will now be conducting a question and answer session where selected analysts are invited to ask a question. Our first question comes from Bose George from KBW. You may proceed with your question.

A negative return.

On a consolidated basis and now can be redeployed into the mortgage banking segments, which I think we stated have generated greater than 20% ROE for the past four or five quarters.

Speaker #3: You may proceed with your question everyone .

Speaker #8: Good afternoon . Actually , first I wanted to about the the sort of longer term earnings power . You know , noted you largely expect the assets to be rolled out by 2026 .

[Analyst 1]: Hey everyone, good afternoon. I first wanted to ask about the EAD sort of longer term earnings power. You noted you largely expect the legacy assets to be rolled off by 2026. When you look at the earnings power after that, should we look at the non-GAAP core number? This quarter was $0.20 plus the deployment of all the capital that comes out of that's still in the legacy piece. Is that kind of the way to bridge to sort of the earnings power after?

Okay.

Just in terms of the 20 <unk>.

That basically just strips out the the legacy piece.

But as you redeploy that there'll be essentially whatever 20% return on that piece right. So that sort of incremental to that 'twenty is that does that.

Speaker #8: And so when we look at the earnings power after that , should we look at the non-GAAP core number this quarter was $0.20 plus the deployment of all the capital that that comes out of that's still in the legacy piece , is that kind of the way to bridge to the earnings power after .

Yeah.

That's why we still have $400 million of capital associated with our legacy segment. So as that capital is absolutely that will be redeployed into mortgage banking.

Speaker #5: He bows I can I can start on that one . The short answer is yes . I think as as the legacy segment winds down , you know , our earnings , our consolidated earnings will start to to look a lot closer to what we're generating in EDI today .

[Company Representative]: Hey Bose, I can start on that one. The short answer is yes. I think as the legacy segment winds down, our earnings, our consolidated earnings will start to look a lot closer to what we're generating in EAD today and core EAD. As you said, that was $0.20, exceeded the dividend. I think the redeployment is going to be a question of how quickly we can wind that down. Certainly in the third quarter we turboed it, so to speak. I think Brooke mentioned we'd freed up $150 million of capital for reinvestments. That was capital that was generating a negative return on a consolidated basis and now can be redeployed into the mortgage banking segments, which I think we stated have generated greater than 20% ROEs for the past four or five quarters.

Okay, Great and then just one other quick one the gap the ROE on the Redwood investment.

The non-GAAP.

ROE it looked like it was.

Last quarter I think was 16 this quarter it looked like it was 10.

Is that was that rates can you just discuss like what drove that.

Speaker #5: And core EDI . So as you said , that was $0.20 exceeded the dividend . You know I think that's the redeployment is going to be a question of how quickly we can wind that But certainly in the third quarter we showed it .

So a lot of it came from.

Lower NII from our investment portfolio.

We saw our net interest income up about $1 million overall.

Youre really starting to see kind of the benefit of our mix shift here, where our capital is being redeployed from the portfolio into mortgage banking, so I think our mortgage banking.

Speaker #5: So to speak , and , you know , I think Brooke mentioned we'd freed up $150 million of capital for reinvestment . So that was capital that was was generating a negative return on a consolidated basis .

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Really from.

Speaker #5: And now can be redeployed into the mortgage banking segments , which I think we stated have generated greater than 20% , rose for the past 4 or 5 quarters .

And primarily in payoffs and about 400 on the $450 million of payoffs and our term.

Term loans across our.

Speaker #8: Okay . And but just in terms of the the $0.20 that basically just strips out the , the legacy piece . But as you redeploy that , there'll be the essentially whatever 20% return on that piece .

Our consolidated assets so and.

[Analyst 1]: Okay, in terms of the $0.20, that basically just strips out the legacy piece. As you redeploy that, there'll be essentially whatever 20% in return on that piece. Right. That's sort of incremental to the $0.20. Is that fair?

That was excellent reasons okay.

Okay that makes sense. Thank you.

Okay.

Our next question comes from Rick Shane from Jpmorgan. You May proceed with your question.

Speaker #8: Right . So that's sort of incremental to the $0.20 . Is that is that fair ?

Speaker #7: Yeah . That's right . We still have 400 million of capital associated with our legacy segment . So as that capital is freed up .

Hey, everybody thanks for taking my questions.

Brooke E. Carillo: Yeah, that's right. We still have $400 million of capital associated with our legacy segment. As that capital is freed up, absolutely, that will be redeployed into mortgage banking.

I have to Q1, a little faster with Bose asked most of what I wanted to discuss.

Speaker #7: Absolutely . That will be redeployed into mortgage banking .

But.

Speaker #8: Okay . Great . And then just one other quick one , the gap the ROE on the Redwood Investments , the the non-GAAP eed ROE looked like it was last , last quarter I it was 16 this quarter .

Basically if you sort of look at the timeline in terms of what you're describing for releasing capital from the legacy investment portfolio, it's about $100 million a quarter, that's going to run off over the next four or five quarters.

[Analyst 1]: Okay, great. Just one other quick one. The gap, the ROE on the Redwood Investments, the non-GAAP EAD ROE looked like it was last quarter. I think it was 16%. This quarter it looked like it was 10%. Was that right? Can you just discuss what drove that?

Speaker #8: It looked like it was ten . It was was that right ? So can you just discuss like what drove that .

When we look at the three remaining core businesses.

Speaker #7: Yes I'm happy to . So a lot of it came from just lower NII from our investment portfolio . We actually saw our net interest income up about $1 million overall .

Brooke E. Carillo: Yes, I'm happy to. A lot of it came from just lower NII from our investment portfolio. We actually saw our net interest income up about $1 million overall. You're really starting to see the benefit of our mix shift here, where our capital is being redeployed from the portfolio into mortgage banking. I think our mortgage banking NII was at about $5 million. This was really from sales primarily and payoffs. We had about $400 million, almost $450 million, of payoffs in our bridge and term loans across our consolidated assets. That was.

I'm curious.

Which of those businesses will actually generate additional net income with additional capital. For example, does the mortgage banking business is a capital constrained right now or is it a market share issue.

Speaker #7: And you're really starting to see kind of the benefit of our mix shift here where our capital is being redeployed from the portfolio into mortgage banking .

Speaker #7: So I think our mortgage banking and I was up about 5 million . This was really from sales primarily and payoffs . We had about 400 , almost 450 million of payoffs in our bridge and term loans across , you know , our , our consolidated assets .

And that additional cash it will be built market share growing regardless of capital or and so how should we think about that actual capital being allocated to the three different businesses.

Speaker #7: So that was part of the reason for the .

Hey, Rick I'll take a stab at this one to start.

Speaker #8: Okay , that makes sense . Thank you .

[Analyst 1]: Okay, that makes sense. Thank you.

I would say we've shown I.

Speaker #9: Yeah .

I think we said we've grown capital to that sector, 80% or so over the past four or five quarters. So so effectively what that means is every dollar that we've been able to free up we've deployed.

Speaker #3: Our next question comes from Rick Shane from J.P. Morgan . You may proceed with your question .

Operator: Our next question comes from Rick Shane from J.P. Morgan. You may proceed with your question.

Speaker #10: Hey , everybody . Thanks for taking my questions . I have to queue in a little faster because asked most of what I wanted to discuss , but look , basically , if you sort of look at the timeline in terms of what you're describing for releasing capital from the legacy investment portfolio , it's about $100 million a quarter that's going to run off over the next 4 or 5 quarters .

[Analyst 2]: Hey everybody, thanks for taking my questions. I have to queue in a little faster because Bose asked most of what I wanted to discuss. If you sort of look at the timeline in terms of what you're describing for releasing capital from the legacy investment portfolio, it's about $100 million a quarter that's going to run over the next four or five quarters. When we look at the three remaining core businesses, I'm curious which of those businesses will actually generate additional net income with additional capital. For example, does the mortgage banking business, is it capital constrained right now or is it a market share issue? That additional capital, will it be about market share growing regardless of capital? How should we think about that actual capital being allocated to the three different businesses?

And I think that dynamic will continue into the foreseeable future. So as as we free up more capital.

We have uses for it fairly quickly in mortgage banking.

Across the three three platforms candidly, we had a record quarter in Sequoia, we mentioned that aspire grew forex quarter over quarter. So when you think about those growth rates.

Speaker #10: When we look at the three remaining core businesses , I'm curious if which of those businesses will actually generate additional net income with additional capital , for example , does the mortgage banking business , is it capital constrained right now or is it a market share issue ?

The cat the need for capital is going to continue to be there. It's a big reason why.

We continued and extended our relationship with CPP investments, which has been a great partnership for us.

So I think we're pretty excited about our ability to deploy capital in the core businesses here over the next year or so.

Got it Okay. That's helpful, Chris and when we think about it.

Speaker #10: And that additional it will be about market share growing regardless of capital or and so how should we think about that actual capital being allocated to the three different businesses .

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Yes.

Over the last two quarters.

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For Sequoia.

Is bookended, 19% to 28% Roe.

Speaker #5: Hey Rick , I'll take a stab at this one to start . You know , I would say we've we've shown I think we said we've grown capital to that sector .

[Company Representative]: Hey, Rick, I'll take a stab at this one. To start, I would say we've shown, I think we said we've grown capital to that sector 80% or so over the past four or five quarters. Effectively, what that means is every dollar that we've been able to free up, we've deployed. I think that dynamic will continue into the foreseeable future. As we free up more capital, we have uses for it fairly quickly and we mortgage banking across the three platforms. Candidly, we had a record quarter in Sequoia, we mentioned that Aspire grew 4x quarter over quarter. When you think about those growth rates, the need for capital is going to continue to be there. It's a big reason why we continued, extended our relationship with CPP Investments, which has been a great partnership for us.

Even though the low and Thats, obviously very attractive and supports the dividend.

I am curious when you think about what drove the expansion and how we think about that going forward is that ROE expansion a function of scale or is it more a function of shape of the curve and a particularly favor.

Speaker #5: 80% or so over the past 4 or 5 quarters . So , so effectively what that means is every dollar that we've been able to free up , we've we've deployed .

Speaker #5: And I think that dynamic will continue into the foreseeable future . So as , as we free up more capital , we have uses for it fairly quickly in mortgage banking across the three three platforms .

<unk> environment in terms of margin in that business.

Hey, Rick It's Josh Great question, it's probably a little bit of all of the above.

Speaker #5: Candidly , we had record quarter in Sequoia . We mentioned that aspire grew four x quarter over quarter . So when you think about those growth rates , you know the need for capital is going to continue to be there .

We've always strive to be as capital efficient in that business as possible loans on average or.

Coming on and leaving the balance sheet within a month.

We could probably continue to do that more efficiently. We've done 13, securitizations already year to date, which is obviously above one per month. So that's that's very very helpful. So capital efficiencies part of it.

Speaker #5: It's a big reason why , you know , we we continued extended our relationship with CPG investments , which has been a great partnership for us .

Speaker #5: And so I think we're pretty excited about our ability to deploy capital in the core businesses here over the next year or so .

[Company Representative]: I think we're pretty excited about our ability to deploy capital in the core businesses here over the next year or so.

Our operating efficiency just in terms of just expenses to revenues continue to improve those improved notably.

Speaker #10: Got it . Okay . That's helpful . Chris . And when we think about it and you know . You know , over the last two quarters , the math Roe math for Sequoia is bookended 19% to 28% ROE .

[Analyst 2]: Got it. Okay, that's helpful, Chris. When we think about it, over the last two quarters, the math, ROE math for Sequoia is bookended 19% to 28% ROE. Even on the low end, that's obviously very attractive and supports the dividend. I am curious, when you think about what drove the expansion and how we think about that going forward, is that ROE expansion a function of scale or is it more a function of shape of the curve and a particularly favorable environment in terms of margin in that business?

Quarter on quarter. So that's obviously helpful from just an overall.

Expense ratio perspective the.

The other big emerging story, which we talked about is just the synergies between aspire in Sequoia as well.

We're just scratching the surface with an aspire in terms of our market share where our implied market share annualized in that business in.

Speaker #10: Even on the low end . That's obviously very attractive and supports the dividend . I am curious when you think about what drove the expansion and how we think about that going forward , is that ROE expansion a function of scale , or is it more a function of shape of the curve and a particularly favorable environment in terms of margin in that business ?

In Q3 is probably like 3% or so if you extrapolate our volumes versus full year volume. So you asked about market share and I think for different reasons within Sequoia and aspire those businesses are prime too.

Continued to grow wallet share, it's aspire in particular, onboarding, new sellers and penetrating existing sequester sellers and as I mentioned are.

Adding to their product suite Thats, a very big deal.

We talked a lot about bang posture.

Speaker #6: Hey , Rick , it's a great question . It's probably a little bit of all of the above . You know , we've always strived to be as capital efficient in that business as possible .

Dashiell Robinson: Rick, it's Dash, great question. It's probably a little bit of all of the above. We've always strived to be as capital efficient in that business as possible. Loans on average are coming on and leaving the balance sheet within a month. We could probably continue to do that more efficiently. We've done 13 securitizations already year to date, which is obviously above one per month. That's very, very helpful. Capital efficiency is part of it. Our operating efficiency, just in terms of expenses to revenues, continues to improve. Those improved notably from quarter on quarter. That's obviously helpful from an overall expense ratio perspective. The other big emerging story, which we talked about, is the synergies between Aspire and Sequoia as well. We're just scratching the surface within aspects in terms of our market share.

Just the percentage of bank collateral that Sequoia did in the third quarter was close to 50%.

Thats very meaningful, particularly when you think about what's going on at Bank C. Suites dispositions rationalization of ROE is so the runway is really long to continue to grow share notwithstanding the size of the pie with rates et cetera, and so I think when you put all of that together.

Speaker #6: You know , loans on average are coming on and leaving the balance sheet within a month . You know , we could probably continue to do that more We've done now 13 securitizations already year to date , which is obviously , you know , above one per month .

Those can continue to drive Roe.

Speaker #6: So that's that's very , very helpful . So capital efficiency is part of it . You know our our operating efficiency just in terms of just expenses to revenues continue to improve those improved notably from , you know , quarter on quarter .

Hopefully to the wider end of the book that you talked about.

Got it thank you guys very much.

Our next question comes from Doug Harter with UBS you May proceed with your question.

Speaker #6: So that's obviously helpful from just an overall , you know , expense ratio perspective . The other big emerging story which we talked about is , is just the synergies between aspire and Sequoia as well .

Thanks.

Sticking with returns.

How do you think about the total size of the corporate.

Speaker #6: You know , we're just scratching the surface . You know , within aspire in terms of our market share . You know , our implied share annualized in that business in Q3 is probably like 3% or so .

Our corporate expense.

Dashiell Robinson: Our implied market share annualized in that business in Q3 is probably like 3% or so if you extrapolate our volumes versus full year volume. You asked about market share, and I think for different reasons within Sequoia and Aspire, those businesses are primed to continue to grow wallet share, and Aspire in particular, onboarding new sellers and penetrating existing Sequoia sellers, as I mentioned, are adding to their product suite. That's a very big deal. We talked a lot about bank posture. The percentage of bank collateral that Sequoia did in the third quarter was close to 50%. That's very meaningful, particularly when you think about what's going on in bank C-suites, dispositions, rationalization of ROEs. The runway is really long to continue to grow share notwithstanding the size of the pie, with rates, et cetera.

As you look to maximize kind of the overall Roe.

Speaker #6: If you extrapolate our volumes versus , you know , full year volume , so you asked , you know , about market share .

And then also how do you think about what the third party investment ROE can be.

Speaker #6: And I think for different reasons within Sequoia and Aspire , you know , those businesses are primed to , you know , continue to grow wallet share aspire in particular onboarding new sellers and penetrating existing Sequoia sellers that , as I mentioned , are adding to their product suite .

Look to kind of below the.

Hi, mortgage banking or are we to fall to the bottom line as much as possible.

Yes, Doug I'm happy to take that.

I think we think it's really important not to view our expense base just in the context of our capital base and we've talked.

Speaker #6: That's a very big deal . You know , we talked a lot about bank posture , just the percentage of bank collateral that Sequoia did in the third quarter was close to 50% .

A lot about our three scale, but still rapidly growing operating businesses.

Speaker #6: You know , that's very meaningful , particularly when you think about what's going on in bank C-suites dispositions , rationalization of Rois . So the runway is really long to continue to grow , share notwithstanding , you know , the size of the pie with rates , etc.

And when we think about who we're competing in what we're producing there.

The agenda side, we've kind of been neck.

<unk>.

And bank dealer desks of the top prime issue is it.

Speaker #6: . And so I think when you put all of that together , you know , those can continue to drive Rois , you know , to the hopefully to the wider end of the book end that you talked about .

Dashiell Robinson: I think when you put all of that together, those can continue to drive ROEs, hopefully to the wider end of the bookend that you talked about.

TARP issuer at Prime Jumbo loans.

And we're running that business on a fairly.

Lean operating expense days aspire as Ashok mentioned, just move quickly into a top five non Ken aggregator corvettes continues.

Speaker #10: Got it . Okay . Thank you guys very much .

[Analyst 2]: Got it. Thank you guys very much.

Speaker #3: Our next question comes from Doug Harder with UBS. You may proceed with your question.

Operator: Our next question comes from Doug Harder with UBS. You may proceed with your question.

The lead and the investment in small business lending and so and Meanwhile for several years, we've really chosen not to raise.

Speaker #8: Thanks .

[Analyst 1]: Thanks. I guess sticking with returns, just how do you think about the total size of the corporate expense as you look to maximize kind of the overall ROE? Also, how do you think about what the third party investment ROE can be as you look to kind of allow the high mortgage banking ROE to fall to the bottom line as much as possible.

Speaker #11: I guess sticking with returns , you know , just how do you think about the the total size of the corporate corporate expense ?

<unk> capital and instead focus on returning capital to shareholders through buybacks.

Our operating expenses it might look elevated as a percentage of equity, but we think that kind of right way to look at is the amount of operating leverage and productivity that we have and manage on our platform today.

Speaker #11: You know , as you look to to maximize kind of the , the overall ROE and then also how do you think about what the third party investment ROE can be ?

We basically managed $20 billion of assets with about 300 people and so we.

Speaker #11: You know , as you look to kind of allow the the high mortgage banking , are we to fall to the bottom line as much as possible ?

Remain highly focused on our expense structure, but we also believe that the rail past earnings creation is coming from further scaling our model and addressing our legacy capital.

Speaker #7: Yeah . Doug , I'm happy to take that . You know , I think we think it's really important not to view our expense base just in the context of of our capital base .

Brooke E. Carillo: Yeah, Doug, I'm happy to take that. I think we think it's really important not to view our expense base just in the context of our capital base. We've talked today a lot about our three scaled but still rapidly growing operating businesses. When we think about who we're competing with and what we're producing there, on the jumbo side, we've kind of been neck and neck with the biggest bank dealer desk as a top issuer of prime jumbo loans. We're running that business on a fairly lean operating expense base. Aspire, as Dash has mentioned, just moved quickly into a top 5 non-QM aggregator. CoreVest continues to kind of lead in the investment small business lending. Meanwhile, for several years we've really chosen not to raise dilutive capital and instead focus on returning capital to shareholders through buybacks.

Rather than shrinking our infrastructure. So I think the third party focus will remain.

Fairly limited, we kind of talked a lot about our strategic pivot.

Speaker #7: You know , we've talked today a lot about our three scaled , but still rapidly growing operating businesses . And when we think about who we're competing and what we're producing , there , you know , on the jumbo side , we've kind of been neck and neck with the biggest , you know , bank dealer desk as a top prime issue of the top issuer of prime jumbo loans .

Last quarter to focusing on our operating businesses or our franchise I think we're within third party, we're focused on assets that meet our cost of capital today.

And obviously with my only remark that helped move assets that we thought were suboptimal from that perspective.

Speaker #7: And we're running that business on a fairly , you know , lean operating expense base . Aspire , as Josh has mentioned , just moved quickly into a top five non-qm aggregator .

Great.

Thank you Brook.

Thank you.

Our next question comes from Don Vendetti with Wells Fargo. You May proceed with your question.

Speaker #7: Corvus continues to kind of lead in the investment and small business lending . And so and meanwhile , for several years , we've really chosen not to raise dilutive capital and instead focused on capital to shareholders through buybacks .

Yes.

Spire non QM can you talk a little can you talk a little bit about how you see the growth of that underlying market whether or not.

Speaker #7: So , you know , our operating expenses , it might look elevated as a percentage of equity . But we think the kind of right way to look at it is the amount of operating leverage .

The GSE footprint shrinking could potentially increase that.

Brooke E. Carillo: Our operating expenses might look elevated as a percentage of equity, but we think the right way to look at it is the amount of operating leverage and productivity that we have and manage on our platform today. We basically manage $20 billion of assets with about 300 people, and we remain highly focused on our expense structure. We also believe that the real path to earnings creation is coming from further scaling our model and addressing our legacy capital rather than shrinking our infrastructure. I think the third-party focus will remain fairly limited. We talked a lot about our strategic pivot last quarter to focusing on our operating businesses that are franchise. I think within third party, we're focused on assets that meet our cost of capital too, and obviously with where we were marked, that helped move assets that we thought were suboptimal from that perspective.

Okay.

Thanks, Don for the question I think setting aside the gse's for just a second I think we see that market just organically.

Speaker #7: And productivity that we have and manage on our platform today. You know, we basically manage $20 billion of assets with about 300 people.

Having significant growth runway.

Speaker #7: And so we remain highly focused on our expense structure , but we also believe that the real path to earnings creation is coming from further scaling our model .

If you look at just the employment.

Mix in this country theres more and more consumers.

Who earn non traditional income away from W. Two I think that's that's a very big deal the other pieces awareness I.

Speaker #7: And legacy capital , rather than shrinking our infrastructure . So I think the third party focus will remain , you know , fairly limited .

I think particularly with more originators, particularly larger <unk>.

Speaker #7: We we kind of talked a lot about our strategic pivot last quarter to focusing on our operating businesses that are franchise . I think we're within third party .

Involved in non QM originations I think more of the eligible consumer population.

You can take out some of these loans.

Speaker #7: We're focused on assets that meet our cost of capital today . And obviously , you know , with where we were marked , that helped move assets that we thought were suboptimal from that perspective .

As being reached frankly.

Now that more originators are involved in this space.

<unk>, particularly AI, that's a very very big deal in terms of managing cost to produce in this space. If you think back to when like bank statement loans.

Speaker #11: Great . Thank you . Brooke .

[Analyst 2]: Great.

[Analyst 1]: Thank you, Brooke.

Speaker #9: Thanks .

It really emerge 10, or 12 years ago very manual.

Speaker #3: Our next question comes from Don Fandetti with Wells Fargo. You may proceed with your question.

Operator: Our next question comes from Don Fandetti with Wells Fargo. You may proceed with your question.

Quite a quite a while for an underwriter to responsibly get through underwriting one of those loans.

Speaker #12: Yes . On the Aspire Non-qm , can you talk a little ? Can you talk a little bit about how you see the growth of that underlying market , whether or not , you know , the GSE footprint shrinking could potentially increase that ?

[Analyst 1]: Yes, on the Aspire non-QM, can.

Significantly shorter now than I think we are probably just at the tip of the iceberg in a good way in terms of how those efficiencies Ken can come to bear there is lot to be careful about in terms of.

[Analyst 2]: Can you talk a little?

Dashiell Robinson: A little bit about how you see.

[Analyst 1]: The growth of that underlying market, whether or not the GSE footprint shrinking could potentially increase that.

How those underwriting processes evolve that's something we're very focused on but that's also a big deal.

And on <unk>, just for context about 40% of aspires volume was <unk>, which is sort of smaller balance.

Speaker #6: Thanks , Don , for the question . I think setting aside the GSEs for just a second , I think the we see that market just organically , you know , having significant growth runway .

Dashiell Robinson: Thanks, Don, for the question. Setting aside the GSEs for just a second, we see that market just organically having significant growth runway. If you look at the employment mix in this country, there are more and more consumers who earn non-traditional income away from W2. I think that's a very big deal. The other piece is awareness. Particularly with more originators, particularly larger IMBs, involved in non-QM originations, more of the eligible consumer population that can take out some of these loans is being reached, frankly, now that more originators are involved in this space. Technology, particularly AI, is a very, very big deal in terms of managing cost to produce in the space.

Rental loans need to rent a ship in this country continues to grow I think ridership was up two 3% annualized last quarter.

Speaker #6: If you look at just the the employment mix in this country , there's more and more consumers . You know , who earn nontraditional income away from W2 .

You think about just continued challenges with with housing affordability et cetera. So I just think organically aspire.

Aspires Tam is going to continue to grow for for good reasons is.

Speaker #6: I think that's you know , that's a very big deal . The other piece is awareness . I think particularly with , you know , more originators , particularly larger imbs , you know , involved in non-qm originations .

As it relates to the GSE footprint these are not products.

That they really do right now.

Far be it for me to fully prognosticate around.

Speaker #6: I think more of the eligible consumer population that can take out some of these loans is being reached . Frankly , now that more , you know , originators are involved in this space technology , particularly AI , that's a very , very big deal in terms of managing cost to produce , you know , in the space , if you to when , like bank statement loans , you know , really emerged 10 or 12 years ago , very manual , you know , took quite a quite a while for an underwriter to responsibly get through underwriting one of those loans .

How they think about the footprint going forward, we need to be ready for anything.

Obviously, an overall footprint reduction with the Gse's on loan limits would be a huge boon for all of our business is probably most notably Sequoia, but.

And you even away from what's going on in DC. We just think the aspire Tam is growing for for good reasons.

Dashiell Robinson: If you think back to when bank statement loans really emerged 10 or 12 years ago, it was very manual. It took quite a while for an underwriter to responsibly get through underwriting one of those loans. That's significantly shorter now, and we're probably just at the tip of the iceberg in a good way in terms of how those efficiencies can come to bear. There is a lot to be careful about in terms of how those underwriting processes evolve. That's something we're very focused on, but that's also a big deal. On DSCR, just for context, about 40% of Aspire's volume was DSCR, which is sort of smaller balance rental loans. Rentership in this country continues to grow. I think rentership was up 2-3% annualized last quarter.

Thank you.

Our next question comes from Steve Delaney with JMP Securities. You May proceed with your question. Thanks. Good afternoon, everyone. So I wanted to ask a question about rates, which is probably dangerous after chairman Powell didn't do a very good job.

Speaker #6: That's significantly shorter now . And I think we're probably , you know , just at the tip think back terms of how those efficiencies can can come to bear .

Speaker #6: There's a lot to be careful about in terms of , you know , how those underwriting processes evolve . That's something we're very focused on , but that's also a big deal .

It is a little speech earlier today, so I guess, we don't know where theyre going.

We don't want to get at is looking at your.

Speaker #6: And on DSR , you know , just for context , about 40% of Aspire's volume was DSR , which is sort of smaller balance , you know , rental loans , rentership in this country continues to grow .

Securitize, Prob jumbo portfolio, and what kind of the coupons within the seasoned loans versus what youre quoting now on new Prime jumbo loans.

Speaker #6: I think Rentership was up two , 3% annualized last quarter . You know , when you think about just continued challenges with with housing affordability , etc.

Dashiell Robinson: When you think about continued challenges with housing affordability, et cetera, I just think organically Aspire's TAM is going to continue to grow for good reasons. As it relates to the GSE footprint, these are not products that they really do right now. Far be it from me to fully prognosticate around how they think about the footprint going forward. We need to be ready for anything. Obviously, an overall footprint reduction with the GSEs on loan limits would be a huge boon for all of our businesses, probably most notably Sequoia. Even away from what's going on in D.C., we just think the Aspire TAM is growing for good reasons.

Get a picture of baby.

What that dynamic looks like.

Speaker #6: . And so I just think organically , you know , Aspire's Tam is going to continue to grow for , you know , for good reasons , you know , as it relates to the GSE footprint , you know , these are not products that they really do right now .

Are you do you think your book is going to extend or could it accelerate in terms of CPR picking up and.

Just curious how youre going to approach that.

Speaker #6: Far be it from me to fully prognosticate around , you know , how they think about the footprint going forward . We need to be ready for anything .

And got a follow up related to that if you would just kind of comment on where you stand with the with respect to coupon rates.

Speaker #6: Obviously, an overall footprint reduction with the GSEs on loan limits would be a huge boon for all of our businesses. Probably most notably, Sequoia.

Sure.

<unk>.

Good to hear your voice I will take a shot here.

Speaker #6: But , you know , even away from what's going on in D.C. , we just think the Aspire Tam is is growing for , you know , for good .

I think a third or so of our of our volume. This quarter was was refi refi related so.

Speaker #6: reasons

Speaker #6: reasons

Speaker #12: Thank you .

[Analyst 1]: Thank you.

You know a lot of.

Speaker #3: Our next question comes from Steve Delaney with JMP securities . You may proceed with your question .

Most of.

Operator: Our next question comes from Steve Delaney with JMP Securities. You may proceed with your question.

Most homeowners are sort of out of the money and.

Speaker #13: Thanks . Good afternoon everyone . So I want to ask a question about rates , which is probably dangerous after Chairman Powell didn't do a very good job at his little speech earlier today .

[Analyst 3]: Thanks. Good afternoon, everyone. I want to ask a question about rates, which is probably dangerous after Chairman Powell didn't do a very good job at his little speech earlier today. I guess we don't know where they're going. What I want to get at is looking at your securitized prime jumbo portfolio and the WAC, kind of the coupons within those seasoned loans versus what you're quoting now on new prime jumbo loans. Help us get a picture maybe of what that dynamic looks like. Do you think your book is going to extend or could it accelerate in terms of CPR, you know, picking up? I'm just curious how you're going to approach that. I have a follow-up related to that if you would just kind of comment on where you stand with respect to coupon risk.

I think that that's reflected in our book as well so I'm not sure we're going to see more.

On the back of Powell.

<unk> remarks today, even though of course, the market is going to likely sell off in the near term.

Speaker #13: So I If you would just kind of comment on where you stand with with respect to coupon risk .

Speaker #13: guess we don't know where they're going . But what I want to get at is looking at your . Securitized prime jumbo portfolio and the kind of the coupons within those seasoned loans versus what you're quoting now on new Prime jumbo loans .

But by and large.

We're growing.

The portfolio at a rate where its trending towards current coupon.

And to the extent that continues the extent we were on a pace of more than a deal a month and we're retaining subs and likely Io.

Speaker #13: Help us get a picture maybe of what that dynamic looks like . Are you do you think your book is going to extend or could it accelerate in terms of CPR picking up and just curious how you're going to approach that and got a follow up related to that ?

That puts us in a good position to two.

To move the coupon.

And over time.

The combination of Io.

Got a good balance in the book today, So I'm not sure it's going to be overly meaningful for us.

Again, our business today is primarily the moving business. It's it's.

Mortgage banking and.

Less and less portfolio investing.

Speaker #5: Sure . Steve , good to your voice . I will take a shot here . You know , I think a third or so of our of our volume , this quarter was , was refi refi related .

[Company Representative]: Sure, Steve, good to hear your voice. I will take a shot here. I think a third or so of our volume this quarter was refi related. Most homeowners are sort of out of the money and I think that's reflected in our book as well. I'm not sure we're going to see much on the back of Powell's remarks today. Of course, the market's going to likely sell off in the near term. By and large, we're growing the portfolio at a rate where it's trending towards current coupon and to the extent that continues, the extent we run a pace of more than a deal a month and we're retaining subs and likely IO, that puts us in a good position to continue to move the coupon up. Over time, with a combination of IO, we've got a good balance in the book today.

I'm curious what is the correct I haven't been in the market lately, but what is the sort of current range for prime Jumbo 30 year fix.

Prime jumbo loans.

We were around.

Speaker #5: So , you know , a lot of , you know , most of you know , most homeowners are are sort of out of the money and , you know , I think that that's reflected in our book as well .

Six in a quarter.

This week again, we'll see what happens on the back of Paul's remarks.

Aspire is maybe 100 basis points higher than that.

Speaker #5: So I'm not sure we're going to see much on the back of Powell's remarks today , even though , of course , you know , the market's going to likely sell off in the near term .

So the market.

The market has come down meaningfully and again, we're starting to see more refi business in our pipeline.

Got it.

Speaker #5: But but by and large , you know , we're we're growing the portfolio at a rate where it's it's trending towards current coupon .

That's been largely absent for the last.

Three years or so so to the extent, we do see more easing.

Qt is officially done so.

Speaker #5: And to the extent that continues to the extent we you know we're on a pace of more than a deal a month and we're retaining subs and likely I oh , you know , that puts us in a good position to to you know , continue to to move the coupon up and , you know , over time , you know , with a combination of I o you know , we've we've got a good balance in the book today .

Into 2026 that could become a more meaningful component of our business.

That just adds to the opportunity.

And the <unk> pick up that Youre hearing here recently is that kind of HPA driven where.

People have had built up some some nice equity and they are looking at that.

Speaker #5: So I'm not sure it's going to be overly meaningful for us because again , you know , our business today is is primarily the moving business .

[Company Representative]: I'm not sure it's going to be overly meaningful for us because again our business today is primarily the moving business. It's mortgage banking and it's less and less portfolio investing.

I know, that's probably an aspect of the aspire program, but do you see that even in Sequoia Ware.

People are really coming in and they wanted to do a little bit of a cash out whether it's education or whatever the issues are.

Speaker #5: It's it's mortgage banking . And , you know , it's less and less portfolio investing .

We're certainly seeing some of that.

Speaker #13: Curious what is the current I haven't been in the market lately , but what is the sort of current range for for prime jumbo 30 year fixed prime jumbo loans ?

[Analyst 3]: Curious, what is the current, I haven't been in the market lately, but what is the sort of current range for prime jumbo 30-year fixed prime jumbo loans?

We have those products.

I would also say that just given the capacity and the origination system.

Speaker #5: We were around six and a quarter this week . You know , again , we'll see what happens on the back of of Powell's remarks .

People are getting call sooner. So the old adage that you have to be $50 75 to 100 basis points in the money to refi I think the combination of of capacity and technology is really shorten that up we're seeing.

[Company Representative]: We were around 6.25% this week. You know, again we'll see what happens on the back of Powell's remarks. You know, Aspire is maybe 100 basis points higher than that. The market has come down meaningfully and, you know, again we're starting to see more refi business in our pipeline. It's, you know, that's been largely absent for the last three years or so. To the extent we do see more easing, QT is officially done. Heading into 2026, you know, if that could become a more meaningful component of our business, that just adds to the opportunity.

Speaker #5: You know , aspires maybe 100 basis points higher than that . So so the market's the market has come down meaningfully . And you know , again we're starting to see more refi business in our pipeline .

Some homeowners refining.

<unk> 25, 35 basis points in the money, so I think thats that.

Speaker #5: But you know that that's been largely absent for the last , you know , three years or so . So the extent we do see more easing , you know , Kutty is officially done .

That presents an opportunity for us and again technology is a big part of that we've talked about AI and just processing loans faster.

Getting approvals faster.

Those are real upside.

Speaker #5: So you know , heading into 2026 , you know , if that could become a more meaningful component of , of our business that just that just adds to the opportunity .

Opportunities for us as we build out the infrastructure.

I appreciate your comments.

The business the mortgage business is changing for sure but it sounds like you guys are kind of riding the wave in right on top of what's going on so thanks for the feedback.

Speaker #13: And the refi . The refi pickup that you're hearing here recently is , is that kind of HPA driven where , you know , people have have built up some some nice equity and they're looking at that .

[Analyst 3]: The refi, the refi pickup that you're hearing here recently, is that kind of HPA driven where, you know, people have built up some nice equity and they're looking at that? I know that's probably an aspect of the Aspire program, but do you see that even in Sequoia, you know, the people are really coming in and they want to do a little bit of a cash out, whether it's education or whatever the issues.

Thank you.

Our next question comes from Eric Hagen with <unk> you May proceed with your question.

Speaker #13: You know , I know , I know that's probably an aspect of the aspire program . see that even in where , you know , the people are really coming in and they want to do a little bit of a cash out , whether it's education or whatever the issues are ?

Thanks, Scott I appreciate you.

Really strong quarter for jumbo volume, we're looking out now like call. It a year and looking at your capital needs and so if you stay on this pace what do you think will be the amount of.

Christopher Abate: We're certainly seeing some of that.

Speaker #5: Yeah , we're certainly seeing some of that . You know , we have those products . I'd also say that just given the capacity , you know , in the origination system .

[Company Representative]: We have those products. I'd also say that just given the capacity in the origination system, people are getting calls sooner. The old adage that you had to be 50, 75, 100 basis points in the money to refi, I think the combination of capacity and technology has really shortened that up. We are seeing some homeowners refiing perhaps 25, 35 basis points in the money. I think that presents an opportunity for us. Technology is a big part of that. We talked about AI and just processing loans faster, getting approvals faster. Those are real upside opportunities for us as we build out the infrastructure.

Of Jumbo volume that you securitize versus sell the third parties.

The next year.

Speaker #5: You know , people are getting calls sooner . So so the the old adage that you had to be 50 , 75 , 100 basis points in the money to refi , I think the combination of , of capacity and technology is really shorten that up where we are seeing , you know , some homeowners reifying , you know , perhaps 25 , 35 basis points in the money .

Well right now of Securitizations Ben.

Great option for us.

I think we have the most liquid shelf in the sector. So our financing costs are the lowest in jumbo.

The subordinate retain arent overly thick.

So the actual investment size isn't what it is at aspire.

Speaker #5: So , so I think that's that presents an opportunity for us . And again , technology is a big part of that . You know , we talked about AI and just processing loans faster , getting approvals faster .

Certainly core vest, so so that business.

We have we have the potential to grow through securitization for an extended period without necessarily needing outside.

Speaker #5: Those those are real upside opportunities for us as we build out the infrastructure .

Outside of capital per Se.

I'd say, though.

Speaker #13: Appreciate the comments . Business . The business the mortgage business is changing for sure , but it sounds like you guys are kind of riding the wave and right on top of what's going on .

[Analyst 3]: Appreciate the comments. The business, the mortgage business is changing for sure. It sounds like you guys are kind of riding the wave and right on top of what's going on. Thanks for the feedback.

We've been able to invest every dollar of capital that we've put in that business and I know that we can do more so so I think I mentioned fundraising for Sequoia and my prepared remarks, and we're going to be very focused on that.

Speaker #13: So thanks . Thanks for the feedback .

Speaker #5: Thank you .

[Company Representative]: Thank you.

Speaker #3: Our next question comes from Eric Hagen with BTIG. You may proceed with your question.

Over over the next few months we also.

Operator: Our next question comes from Eric Hagen with BTIG. You may proceed with your question.

Bank business was half of our.

Speaker #14: Hey , thanks , guys . I appreciate you . You know , really strong quarter for jumbo volume . We're looking out now like , you know , call it a year and looking at your capital needs .

[Analyst 3]: Thanks, guys. I appreciate you. Really strong quarter for jumbo volume. We're looking out now, like call it a year, and looking at your capital needs. If you stay on this pace, what do you think will be the amount of jumbo volume that you securitize versus sell to third parties over the next year?

Volume in Q3, again, that's way beyond where it's ever been and I think it's reflective of why we're able to grow market share so significantly in a market. That's essentially flat from a housing origination activity perspective. So that's another area of partnering with banks.

Speaker #14: And so, if you say on this pace, what do you think will be the amount of jumbo volume that you securitize versus sell to third parties over the next year?

So we've got great options, and Sequoia and to the extent, we can grow aspire and core vest as well I think the mortgage banking piece of the business has been pretty exciting for us.

Speaker #5: Well , right now , of , securitization has been , you know , a great option for us . You know , we I think we have the most liquid shelf in the sector .

[Company Representative]: Right now, you know, securitization has been a great option for us. I think we have the most liquid shelf in the sector. Our financing costs are the lowest, you know, in jumbo, you know, the subordinates that we retain aren't overly thick. The actual, you know, investment size, you know, isn't what it is at Aspire or certainly CoreVest. That business, you know, we have the potential to grow through securitization for an extended period without necessarily needing, you know, outside capital per se. I would say, though, you know, we've been able to invest every dollar of capital that we've put in that business and I know that we can do more. I think I mentioned fundraising for Sequoia in my prepared remarks and we're going to be very focused on that, you know, over the next few months.

Speaker #5: So our financing costs are the lowest . You know , in jumbo , you know , the subordinates that we retain aren't overly thick .

I think I'd add to that Eric.

Sorry, as we talked a little bit about the upsides of the CPP secured facility.

Speaker #5: So so the actual , you investment size , isn't what it is at at aspire or certainly Corvus . So so that business you know we have we have the potential to grow through securitization for an extended period without necessarily needing , you know , outside capital per se .

I think it's important to return to you for a second in terms of your question because not only did.

We upsize that facility by 150 million of capacity, but the.

Basically the borrowing base eligibility is moving in the direction, you're indicating which as you know more ability for us to use that facility to finance, our our operating activities and mortgage banking and not just hard assets.

Speaker #5: I would say, though, you know, we've been able to invest every dollar of capital that we've put into that business.

The upside is a big deal, but in terms of how.

Speaker #5: And I know that we can do more . So so I think I mentioned fundraising for Sequoia in my prepared remarks . And we're going to be very focused on that .

We're able to use that capital going forward that some pretty important too.

Yes, that's helpful.

That's helpful.

What are you guys looking at right now to give you confidence or some visibility that the credit performance in the BPL portfolio has basically been stabilized at this point.

Speaker #5: You know , over , over the next few months , we also , you know , I think bank business was half of our our volume in Q3 .

[Company Representative]: We also, you know, I think bank business was half of our volume in Q3. Again, that's way beyond where it's ever been and I think it's reflective of why we're able to grow market share so significantly, you know, in a market that's essentially flat from a housing origination activity perspective. That's another area partnering with banks. We've got great options in Sequoia and to the extent we can grow Aspire and CoreVest as well, you know, I think the mortgage banking piece of the business has been pretty exciting for us.

Speaker #5: Again , that's that's way beyond where it's ever been . And I think it's it's reflective of why we're able to grow market share .

I think it continues to be.

A vintage issue, we've talked about that for quite a while.

Speaker #5: So significantly in a market that's essentially flat from a housing origination activity perspective . So that's another area partnering with banks . So so we've got great options in Sequoia and to the extent we can grow , aspire and Corvus as You know , I think the the mortgage banking piece well .

I think the issues are.

Certainly the issues that have taken longer to.

Deal with or.

It resulted in higher severities are still very much limited to that really first half 2022 vintage is broke articulate in her remarks, our securitized bridge portfolio, which is basically the last three years of production net of Prepays is now below 3% 90, plus that's a good number we are seeing.

Speaker #5: of the business is has been pretty exciting for us .

Dashiell Robinson: Just one thing I'd add to that, Eric, sorry, is we talked a little bit about the upsides of the CPP Investments secured facility, which I think is important to return to for a SEC in terms of your question because not only did we upsize that facility by $150 million of capacity, but basically the borrowing base eligibility is moving in the direction you're indicating, which is more ability for us to use that facility to finance our operating activities in mortgage banking and not just hard assets. The upside is a big deal, but in terms of how we're able to use that capital going forward, that's pretty important too.

We're seeing prepay velocity pick up and if you look at the last minute within those portfolios we've seen.

Delinquencies combo be resolved efficiently and in many cases with little to no severity, which is a function of our pivot over the past few years to smaller balance more single family focused collateral.

And so Eric as you know that business is not a no loss business.

But if you look at the composition of what we've been originating I think multifamily was like 1% of our overall production last quarter Youre seeing it in just the overall ROE rates, but also the efficient the efficiency of being able to resolve whatever does go delinquent in the last two three years of production.

[Analyst 3]: That's helpful. What are you guys looking at right now to give you confidence or some visibility that the credit performance in the BPL portfolio has basically been stabilized at this point?

Okay.

Cash has come in I know I mentioned the amount of pay downs, we had in the quarter.

$280 million or so of that with bridge.

Dashiell Robinson: I think it continues to be, you know, a vintage issue. We've talked about that for quite a while. I think the issues are certainly the issues that have taken longer to deal with or have resulted in higher severities are still very much limited to that really first half, 2022 vintage. As Brooke E. Carillo articulated in her remarks, our securitized bridge portfolio, which is basically the last three years of production, net of prepays, is now below 3% 90 plus. That's a good number. We're seeing prepay velocity pick up, and if you look at the loss MIT within those portfolios, we've seen delinquencies come but be resolved efficiently and in many cases with little to no severity, which is a function of our pivot over the past few years to smaller balance, more single family focused collateral.

That includes that.

Two 7 million of Oreo and some of our special asset. So we are I think.

Not only seen that.

Payment velocity repayment velocity in performing assets, but also moving that that lag is.

Okay.

Okay. Thanks.

Thanks, guys I appreciate it.

This now concludes our question and answer session I would like to turn the floor back over to Kaitlyn Mauritz for closing comments.

Thank you everyone for joining today, we appreciate the ongoing engagement and sponsorship if you haven't already we encourage you also to check out our earnings materials, including the Redwood review and shareholder letter on our website. We're always here to answer questions that you have any and thank you and have a good rest of your evening.

Ladies and gentlemen, thank you for your participation. This concludes today's teleconference. Please disconnect your lines and have a wonderful day.

Dashiell Robinson: Eric, as you know, that business is not a no loss business, but if you look at the composition of what we've been originating, I think multifamily was like 1% of our overall production last quarter. You're seeing it in just the overall roll rates, but also the efficiency of being able to resolve whatever does go delinquent in the last two, three years of production.

Brooke E. Carillo: One thing I would just add to Dash's comment is I mentioned the amount of paydowns we had in the quarter, $280 million or so. That was bridge. That includes about $67 million of REO and some of our special assets. We are, I think, not only seeing the payment velocity, repayment velocity in performing assets, but also moving that legacy book as well.

[Analyst 3]: Thanks, guys. I appreciate it.

Operator: This now concludes our question and answer session. I would like to turn the floor back over to Kaitlyn Moritz for closing comments.

Kaitlyn Mauritz: Thank you everyone for joining today. We appreciate the ongoing engagement and sponsorship. If you haven't already, we encourage you also to check out our earnings material, including the Redwood Review and Shareholder Letter on our website. We're always here to answer questions if you have any. Thank you and have a good rest of your evening.

Operator: Ladies and gentlemen, thank you for your participation. This concludes today's teleconference. Please disconnect your lines and have a wonderful day.

Brooke E. Carillo: It.