Financial Data and Key Metrics Changes - The company reported a GAAP net loss of $9.5 million or $0.08 per share for Q3 2025, a significant improvement from a loss of $100 million or $0.76 per share in Q2 2025 [19] - Book value per common share decreased to $7.35 at September 30, 2025, from $7.49 at June 30, 2025 [20] - Core segment earnings available for distribution (EAD) was $27 million or $0.20 per share, representing a 17% return on equity, up from $0.18 per share in the previous quarter [20][21] Business Line Data and Key Metrics Changes - Sequoia locked $5.1 billion of loans in Q3 2025, a 53% increase from Q2 2025, marking a record for the platform [11] - Aspire locked $1.2 billion in loans, nearly 4 times the volume from Q2 2025, with a record month of $550 million in September [14][15] - CoreVest achieved its highest quarterly volume since mid-2022, with funding volume of $521 million, up 14% year-over-year [22] Market Data and Key Metrics Changes - The company estimates its seller network now covers approximately 80% of market share for jumbo production, up from 20%-30% in 2023 [11] - The estimated jumbo market share increased to 7%, up from 1%-2% over the same period [11] - The residential mortgage market benefits from more rigorous underwriting standards and enhanced transparency compared to previous cycles [9] Company Strategy and Development Direction - The company is transitioning to a more scalable and simplified operating model, aiming to reduce legacy exposure from 33% to 20% of capital by year-end [4][8] - The expansion of the relationship with CPP Investments includes increasing the corporate-secured borrowing facility to $400 million from $250 million [7] - The focus is on capturing market share in a subdued housing market, with optimism for growth as mortgage rates decline [10] Management's Comments on Operating Environment and Future Outlook - Management noted that recent bankruptcies affecting clients of large banks highlight pressures in consumer asset-backed sectors, but the current residential mortgage market is more resilient due to improved standards [9] - The company anticipates strong growth in the housing finance sector as mortgage rates decline and monetary easing prospects improve [10] - Management expressed confidence in the ability to deploy capital effectively across core businesses, with a focus on maintaining high return on equity [37][38] Other Important Information - The company significantly reduced its exposure to legacy investments, with legacy investments now representing approximately 25% of total capital, down from 33% [18] - Total operating expenses decreased by 3% from the previous quarter, driven by lower portfolio management costs [23] - The company retired its 2025 convertible notes and expanded its revolving credit facility, enhancing liquidity and flexibility [25] Q&A Session Summary Question: Long-term earnings power and legacy assets - Management confirmed that as legacy assets wind down, consolidated earnings will align more closely with current core EAD, which was $0.20 this quarter [29][30] Question: ROE on Redwood Investments - The decline in ROE for Redwood Investments was attributed to lower net interest income from the investment portfolio, with a shift in capital towards mortgage banking [31] Question: Capital allocation and net income generation - Management indicated that additional capital will be quickly deployed into mortgage banking, which is not currently capital constrained [36][37] Question: ROE expansion drivers - The expansion in ROE is attributed to capital efficiency, improved operating efficiency, and synergies between Aspire and Sequoia [39][40] Question: Growth of Aspire non-QM market - Management sees significant organic growth potential in the non-QM market, driven by changing employment patterns and increased awareness among originators [50][51] Question: Current rates and coupon dynamics - The current range for prime jumbo loans is around 6.25%, with expectations for more refinancing activity as rates decline [59][60]