Feb. 15: Redwood Trust results dissected; builders & tariffs; Sovereign Wealth fund explained; Saturday Spotlight: SWBC Mortgage

Winter tends to see the annual spike in people pulling homes off the market, responding to lower demand in the cold months, and potentially taking the time to reconsider the sale price or make improvements ahead of a new listing. CoreLogic tells us that 73,000 homes were pulled from sale in December, the single highest number in a given month going back to December 2015 and up 64 percent from December of 2023. To put it in perspective, it means that about a tenth of the properties on the market were yanked from sale. Lenders (and their real estate agent clients) know that home sales last year were at their lowest level in almost 30 years due to a variety of reasons like inventory, interest rates, insurance costs… Narrowing down our field of view, the massive skyscrapers catering to ultrawealthy clientele in Manhattan have run into a problem: Nobody’s bothering to go to the in-building private restaurants and business is waning. The restaurants are certainly attractive, staffed with talent, and regarded as a perk by those in the building. But globe-trotting billionaires, who otherwise treat their luxury apartments as Manhattan P.O. boxes blow into town, they mostly want to eat out. The restaurants are kept afloat through maintenance fees or minimum spending.

Saturday Spotlight: SWBC Mortgage

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Company Name: SWBC Mortgage

In 3-5 sentences, describe your company (when was it founded and why, what it does, where, recent growth and plans for near-term future growth).

Founded in 1988, SWBC Mortgage is more than just a company. We’re a team of real, approachable people who genuinely care about the success of our employees. We retain the majority of servicing on our loans, giving our loan originators exclusive access to data that helps predict when clients are ready to buy or sell again. With cutting-edge tools and a focus on relationships, we make sure our team spends time where it matters most. Our leadership is hands-on, accessible, and invested in creating a collaborative environment where people can thrive.

As we continue to grow and expand our footprint, our focus remains on building stronger communities, enhancing our technology, and empowering our team for long-term success.

Tell us about what type of volunteer work employees are encouraged to engage in, or charities your company supports, and why.

Beyond mortgages, we are committed to giving back. SWBC Mortgage is a division of SWBC, and each year, through our SWBCares program, our employees contribute thousands of volunteer hours and donate hundreds of thousands of dollars to charities. Since 2013, the SWBC Foundation has donated more than $13.3 million to a variety of philanthropic efforts, including the MBA Opens Doors Foundation.

Aligned with SWBC’s priority programs (children and family services, education, health & wellness, quality of life, and safety net services) SWBC Mortgage has provided over $1.4 million in grant funds to assist first-time homebuyers. We also proudly support veteran services and homelessness prevention efforts both nationwide and locally.

What does your company do to help elevate your employees’ growth? Describe any mentoring programs, outside classes or training, in-house training. How does the company help people develop?

When you join SWBC Mortgage, you become part of a team that values leadership, mentorship, and professional development. We provide ongoing training, cutting-edge tools, and dedicated support to help you thrive in your career.

We develop programs like the SWBC Move Up Program™, which promotes home affordability in underserved communities. Whether through flexible and unique programs, sales coaching, marketing resources, or industry-leading training, we empower our loan officers to serve the neighborhoods where they live and lend. We also host weekly sales calls where our top performers, leadership team, and industry experts and realtors share their stories and best practices.

By working together, we can share ideas more freely, support each other more effectively, and celebrate our successes as a cohesive team.

Tell us how your company maintains its culture in a work-from-home environment, or how you plan on bringing employees back into the office, if applicable.

SWBC Mortgage supports flexible work arrangements that empower our team to succeed. While we have production employees all over the country, many of whom work remotely, we remain committed to maintaining strong connections and a dynamic company culture. We do so by fostering an environment where collaboration and camaraderie thrive. We believe that being in person, even occasionally, plays a crucial role in this. In 2024, we hosted sales rallies in San Antonio and Nashville to discuss staying in touch with current trends and best practices, ensuring we remain ahead of the competition in local markets.

Fun fact about your company.

SWBC Mortgage, a division of SWBC founded in San Antonio, Texas, by sports enthusiasts Charlie Amato and Gary Dudley, is the official mortgage provider of the Dallas Cowboys! SWBC has been a partner of the Dallas Cowboys, welcoming All-Pro linebacker Micah Parsons as the spokesperson and brand ambassador. In 1993, Amato and Dudley became minority owners of the San Antonio Spurs.

(For more information on having your firm’s extracurricular activities, employee growth, and your charitable side featured, contact Chrisman LLC’s Anjelica Nixt.) 

Why lenders should care about a sovereign wealth fund

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Sovereign: sov·​er·​eign ˈsä-v(ə-)rən -vərn, also ˈsə- variants or less commonly sovran. Synonyms of sovereign. One possessing or held to possess supreme political power or sovereignty. One that exercises supreme authority within a limited sphere. An acknowledged leader: arbiter.

The clock is ticking (90 days from the Trump’s executive order) for Treasury Secretary Scott Bessent and incoming Commerce Secretary Howard Lutnick to deliver a plan for the creation of the first-ever American sovereign wealth fund. An executive order signed last week will give them 90 days to map out funding mechanisms and investment strategies, as well as fund structure and the governance model. The aim here is to leverage returns to "promote fiscal sustainability, lessen the burden of taxes, and establish long-term economic security."

Dozens of nations around the world, like Saudi Arabia and Norway, already have sovereign wealth funds. Even within the United States, 23 states maintain their own funds that control a total of $332B in assets. These can finance certain services or provide dividends, like the Alaska Permanent Fund, which uses oil revenues and invests in stocks and other traditional sectors. The likely goal is rebalancing global trade flows and capital holdings in the American government’s favor.

Sovereign wealth funds are government-owned investment vehicles with the same purpose as private portfolios: generating financial returns. Proponents of sovereign wealth funds argue the yields can be used as substitutes for taxes, to pay down the national debt or advance broader social goals, such as reducing inequality.

Funds from the new U.S. sovereign wealth fund could be allocated to national development projects, like infrastructure and manufacturing hubs. It might also help in areas that are seen as critical for national security, like supply chain minerals, defense capabilities or nuclear fusion projects. Another idea floated by President Trump is using the new fund for a TikTok deal, with the popular short-form video app facing a potential ban.

Personnel in the Administration want to lessen the costs and increase the benefits associated with global dollar hegemony, meaning using tariffs and currency policy (i.e., exchange rate interventions) to devalue the dollar, force allies to bear a larger share of their collective defense costs and protect national security-related supply chains. A sovereign wealth fund would be an important part of the overall policy machine.

One way to make sense of a sovereign wealth fund is if we adopt a fundamentally different perspective on the role of American finance in the world economy. Instead of serving as a de facto global underwriter, our government can wield the fund as part of a strategy to use its low borrowing rates, induced by dollar reserve status, to acquire a larger share of the world’s wealth.

Lenders know that the overall debt picture includes mortgage-backed securities. The U.S. is already $36 trillion in debt, and sovereign wealth funds are usually set up by commodity-rich nations that run big surpluses. However, the federal government could look for additional ways to monetize the asset side of its balance sheet, as well as through natural resource reserves like oil and gas leases. Other ideas include selling stakes in Fannie Mae and Freddie Mac, or utilizing the hundreds of thousands of seized bitcoins used in illicit activity. Note that the fund's creation would require an act of Congress and things can get controversial if funding is sourced through appropriations bills or new debt issuance.

When you think of jumbo buyers…

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Redwood Trust, Inc. reported its Q4 2024 financial results, highlighting a GAAP book value per share of $8.46, down from $8.74 in Q3. The company recorded a GAAP net loss of $8.4 million, or $0.07 per share, but reported non-GAAP Earnings Available for Distribution (EAD) of $18.4 million, or $0.13 per share. Despite an economic return on book value of (1.1 percent) for the quarter, the company achieved a 5.7 percent return for the full year. Redwood's recourse leverage ratio stood at 2.4x, slightly lower than the previous quarter, while it raised its quarterly dividend by 5.9 percent to $0.18 per share. The company maintained a strong liquidity position, with $245 million in cash and cash equivalents and $4.7 billion in excess warehouse financing capacity. It also completed a $40 million reopening of its 7.75 percent convertible notes due 2027, using the proceeds to extend the maturity of its outstanding convertible debt.

Operationally, Redwood’s Sequoia Mortgage Banking unit locked $2.3 billion in loans, a 4 percent increase from Q3, with strong gross margins. The business distributed $2.5 billion in loans, including $1.1 billion in securitizations and $1.4 billion in whole loan sales. Meanwhile, CoreVest Mortgage Banking saw a 9 percent increase in funded loans to $501 million, with bridge loan volume reaching record highs and term loan volume growing 43 percent to $227 million. Redwood Investments deployed $81 million into internally sourced and third-party investments, with stable credit trends across its portfolio. Additionally, the company renewed or established $1.0 billion in financing facilities and launched new expanded loan programs through Aspire in early Q1 2025. Redwood has continued its securitization efforts in 2025, distributing $1.4 billion of Sequoia loans and $400 million of CoreVest loans while issuing $90 million in senior unsecured notes due 2030.

Go ahead with tariffs, just not on me

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The National Association of Home Builders (NAHB) urged the Trump Administration to exempt building materials from the proposed tariffs “to avoid exacerbating the housing affordability crisis.” In particular, the association said more than 70 percent of the imports of softwood lumber and gypsum (both essential to current home building) come from Canada and Mexico, respectively.

Builders are concerned. The building industry faces three critical issues heading into the first half of 2025. The first is that a new tariff effectively changes the upstream cost structure for a number of housing categories. Rising mortgage rates, which effectively increase the cost of payments to homeowners. Lastly, builders are seeing a more price sensitive consumer, who since mid-2024 no longer has excess savings to offset payment shock.

Costs for housing materials would increase 6 to 14 percent in 2025, based on value chain exposure to tariff and domestic manufacturer response. Builders are concerned about deferred home sales and remodels, based on path of mortgage rate and buyer sensitivity to costs, as well as an approximate eight to 18 month “brand readjustment” will occur as suppliers balance margin challenges versus shifting market share.

Proponents of tariffs are telling builders to look to alternative markets to source materials internationally. But can the domestic market within the U.S. support potential demand for lumber and related materials? Supply chains readjust, but it takes time (usually eight to 14 months). Only some of the adjustment is actual change in source of production, while other adjustments are “on paper” (imports still from countries in question but are routed through other regions in such a way to deceive/avoid tariffs).

Any lender working with a builder should know that there are nearly zero fully “domestic” manufacturers. Even if manufacturers make their own products, they rely on components and tools from other countries. We saw this in 2021 (when domestic manufacturers faced shortages because of upstream components). Domestic manufacturers also don’t set their prices in a vacuum. When tariffs on Chinese stainless steel occurred in 2012, domestic manufacturers subsequently raised their prices.

Stay tuned!

A German tourist in London decides to skip his tour group and explore the city on his own.

He wanders around, seeing the sights, and occasionally stopping at a quaint pub to soak up the local culture, chat with the lads, and have a pint of the local favorite.

After a while, he finds himself in a very high-class neighborhood: big, stately residences, no pubs, no stores, no restaurants, and worst of all... no public restrooms!

He really, really has to go, after all that ale.

He finds a narrow side street, with high walls surrounding the adjacent buildings and decides to use the wall to solve his problem.

As he is unzipping, he is tapped on the shoulder by a London Bobbie, who says, "Sir, you simply cannot do that here, you know."

"I'm very sorry, officer," replies the German, "but I really, really HAVE TO GO, and I just can't find a public restroom."

"Ah, yes," said the Bobbie, "Just follow me." He leads him to a back "delivery alley," then along a wall to a gate, which he opens. "In there," points the Bobbie. "Whiz away... anywhere you want."

The fellow enters and finds himself in the most beautiful garden he has ever seen.

Manicured grass lawns, statuary, fountains, sculptured hedges, and huge beds of gorgeous flowers, all in perfect bloom.

Since he has the cop's blessing, he zips down and unburdens himself and is greatly relieved.

As he goes back through the gate, he says to the Bobbie, "That was really decent of you. Is that ‘English Hospitality?’"

"No," replied the Bobbie, with a satisfied smile on his face, "that is the U.S. Embassy."    

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you're interested, visit my periodic blog at the STRATMOR Group web site. This month’s piece is titled, “Natural Disasters and Economic Resilience.” The Commentary’s podcast is live and at any place you obtain your podcasts (like Apple or Spotify).

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(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. This newsletter is for sophisticated mortgage professionals only. There are no paid endorsements by me. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2025 Chrisman LLC. All rights reserved. Occasionally paid job & product listings do appear. This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Rob Chrisman. The views and opinions in this newsletter are mine alone unless otherwise specifically stated herein.)