You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. 
Text: 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 fourth quarter Redwood Review available on our website.
Also note that the content of this conference call contains time-sensitive information that is accurate only as of today.
The company does not intend and undertakes no obligation to update this information to reflect subsequent events or circumstances.
Finally, today's call is being recorded and will be available on the company's website later today.
As I reflected on the past year, it's hard to contextualize what our country has been through in the opening weeks of 2021, let alone all of 2020.
With unprecedented turmoil in Washington, an economy still rocked by the coronavirus pandemic, now seemingly populist revolt under way on Wall Street, it's hard for any investor to navigate all the tumult and volatility.
So we feel all the more fortunate to have emerged from such an unprecedented year in a renewed position of strength.
It's motivated us to make 2021 the best year in our company's history.
We exited 2020 with momentum building across both of our platforms, including record lock volumes in residential lending and very strong originations and contribution from business purpose lending.
GAAP earnings for the fourth quarter were $0.42 per share, well in excess of our $0.14 per share dividend, and our GAAP book value increased $0.50 per share from the third quarter to $9.91 in the fourth quarter.
Based on the trajectory of our operating businesses and our expectations for sustainably higher net interest income throughout the year, we are confident that we can safely support a stable to growing dividend in 2021.
We plan to announce our first quarter dividend in March.
Looking ahead, our strategic priorities for 2021 include allocating ample capital to our residential consumer and business purpose lending platforms, doubling down on our technology investments to scale our business and continuing to support and develop our team members.
Strategically speaking, the COVID-19 pandemic has only further validated our core investment thesis, as demand for single-family detached housing has grown significantly.
We expect much of that demand to be durable, as families choose to move away from dense urban areas, and more people are able to work remotely out of their homes regardless of proximity to the workplace.
This has already caused ripple effects across both the residential and commercial property sectors, especially in major metropolitan areas.
That's why our primary focus for 2021 will remain on our operating platforms.
The operating capital we allocate to these businesses is expected to generate returns on equity north of 20% post tax levels very difficult to come by when sourcing third-party investments in today's compressed yield environment.
Most importantly, these businesses serve large and growing markets not covered by government lending programs, and as such are positioned to generate scalable and repeatable sources of future earnings, even in a less accommodative interest rate environment.
Since they are earned within our taxable subsidiaries, the earnings generated can also be retained to provide a steady stream of internally sourced investment capital that can be deployed to further grow earnings and book value.
Turning to our investment portfolio, our portfolio remains a strategic element of our business model, so that supports our operating platforms and third-party investing activities.
Overall credit performance of the book remained strong as delinquencies have continued to decrease since their peak in the summer and strong home price appreciation has kept the actual credit losses low.
This means that, even if we retrace back to "preCOVID-19" valuations, we continue to expect significant further upside in these investments.
Coupled with positive credit trends, high prepayment speeds have begun to unlock additional value on most of our credit investments held at a discount to par.
And to channel the late Yogi Berra, I'll remind everybody that "loans that prepay, don't default.
On the technology front, speed and disruption are top of mind in 2021 across the Redwood enterprise.
The goal is not simply to grow volume or issue more securitizations.
We aim to fundamentally change how the non-Agency sector operates, from end-to-end.
That entails more speed and automation, and keeping technology at the forefront of our planning process.
In the past several months, we have launched several new technology initiatives through both organic and new venture investment strategies.
And just today, we are announcing the recent launch of RWT Horizons, a new venture investing strategy focused on early stage technology companies with business plan squarely focused on innovations that can disrupt the mortgage finance landscape.
The amount of capital deployed through this new platform will likely be smaller at first, however, the investments are designed to have an outsized impact on how our business operates.
Our strategy centers on creating new efficiencies across the mortgage value chain, thereby making us a more meaningful partner to the broad network of market constituents to whom we provide liquidity.
Paramount to our success are our people and the core values by which we conduct our business.
Caring for our employees has never been as important, as we continue to support our team members and their families through the impacts of COVID-19.
Investments in our employee programs and stewardship of our culture remain strategic priorities, and we're proud of the work that we've done to engage, develop and retain our workforce over such a challenging year.
We stand behind our core values, including an earnest focus on diversity, equity and inclusion, and a commitment to strong corporate citizenship, both socially and environmentally.
Our commitment to our larger communities through volunteerism and charitable giving have also remained in sharp focus for us, particularly as our shared humanity has been amplified by the COVID-19 pandemic.
We believe our strategy will enable us to scale our business and take market share, grow durable and repeatable earnings and serve our mission to help make quality housing whether rented our owned, accessible to all Americans.
With optimism on the horizon for 2021, we're looking forward to the positive impact that Redwood can make for our collective stakeholders, including our shareholders, our employees and our communities.
With record performances from our operating businesses during the second half of 2020, we entered 2021 in a position of strength.
Our fourth quarter results reflect continued improvement in the broader credit markets, the depth and breadth of our competitive advantages and opportunities for our business to further build market share and growing segments of housing finance.
Our crisp execution during the quarter was supported by progress on key technology initiatives and increased efficiency in turning our capital.
Before getting into our results, I will further discuss some of the key housing industry trends we are observing.
The theme as we saw in the third quarter have continued and tailwinds for our operating businesses remain strong.
Secular trends driving single-family housing demand do not appear to be abating.
Even with the promise of a vaccine, consumers are embracing the flexibility of the work-from-home model, detethering them from urban centers and creating a substantial pocket of fresh demand for housing.
The need for space and functionality to conduct business in private homes has driven higher home values at all price points, in turn fueling the potential for expansion in both the owner occupied and an investor-owned segments of the market.
Home price appreciation continues at pace as demand for single-family homes as far outstripping supply.
Market observers estimate that US housing stock and a total of $2.5 trillion in value in 2020, including $2.2 trillion from appreciation and existing homes.
Nationwide home prices were up over 10% year-on-year in December.
And while the number of homes sold rose over 20%, inventory available for sale fell over 40%.
Resale inventories at its tightest level ever in many top markets and on average stands at less than two months of supply.
Once more mortgage rates have remained at or near record lows, even as 10-year treasury rates now stand more than 25 basis points higher than in late December.
And while the pandemic continues to impact certain segments of the labor market in different ways, the personal savings rate at year end was up 90% from the end of 2019.
As such, a key outcome of Fed stimulus has been meaningful upward pressure on bank deposit levels, a phenomenon that among other things has important ramifications for bank appetite for assets.
This data coupled with the demand trends we are seeing for our products and the performance of our portfolio makes us optimistic about our immediate and long-term opportunities for growth.
In many ways, we will measure our success in 2021 by the velocity with which we enter 2022.
We believe our competitive positioning, commitment to technology solutions and deep client base will allow our businesses to operate at a steadily increasing capacity as the year progresses.
Now I'll turn to some key metrics from the fourth quarter.
Sparkling results from our residential and BPL platforms coupled with strong performance in our investment portfolio drove a 20% annualized return on equity for the quarter.
In our residential business, we recorded a record $3.8 billion of locks with over 90 discrete sellers, up 81% from the third quarter.
Loan purchase commitments, those adjusted for potential pipeline fallout during the quarter were $2.5 billion, more than double the amount in the third quarter.
Momentum has continued into 2021, as January locks totaled $1.6 billion.
The vast majority of our locks continue to be select loans, which are reflecting some of the strongest credit metrics we have seen since the great financial crisis.
Including average FICOs in the high-700s and debt ratios of 30% or lower.
These record volumes were well balanced by our multi-channel distribution model.
During the quarter, we achieved strong execution on two securitizations backed by $669 million of loans in aggregate, including a $345 million single-investor securitization placed with an insurance company.
We also sold over $800 million of loans during the fourth quarter and entered into agreements to sell forward an additional $1 billion, expected to settle in the coming weeks.
We believe that in 2021, we will see a pronounced increase in consumer demand for jumbo loans, and that we are in the early stages of historically significant refinancing wave.
With rates remaining low, we are seeing our seller network continue to hire additional loan officers to support pent-up demand in the jumbo pipeline and an increase in participation in our seller training sessions.
In December, we officially launched a new seller initiative, Redwood Rapid Funding, demand has exceeded our expectations.
And as of January 31st, we had funded nearly $120 million of loans through the program.
We are in the process of onboarding several more sellers as we transition from the pilot phase into a more formal program for a broader set of our clients.
Additionally, we recently launched the pilot phase of Redwood Live, an app-based tool designed to give our sellers visibility into the underwriting process with live status updates for each of their loans.
Also during the fourth quarter, we launched a new initiative to modernize our workflow on the Capital Markets' desk, which will include an end-to-end solution for accessing, reporting and analyzing standardized loan level data for our Sequoia securitizations.
This platform will provide secure real-time data and transparency on the underlying loan performance within our existing securitizations and a portal for potential investors during the marketing period.
In the coming months, we look forward to sharing more on these and other new programs, including the automation of certain portions of our underwriting process.
Turning to CoreVest, our investment thesis for entering the business purpose lending segment continues to be supported by origination growth and clean credit performance.
CoreVest continues to post truly differentiated operating results, fueled by growing consumer demand for single-family homes for rent and institutional investor appetite for the asset class.
We originated $448 million in BPL loans during the quarter, up 71% from the third quarter.
Almost 80% of this production was in single-family rental loans, for which demand from the securitization markets remains a highlight.
We completed two securitizations in the fourth quarter, including an innovative single-investor transaction placed with a leading insurance company.
Our broadly distributed deal was backed by $274 million of SFR loans and was particularly well received by the market.
Certificates placed with third-party investors represented 91% of the capital structure with the weighted average yield of 1.48%.
This was 20 basis point improvement upon the already strong execution of our previous issuance.
The single-investor securitization provides $200 million in financing for SFR loans, and includes a unique ramp up feature that enhances capital efficiency and reduces our reliance on traditional warehouse funding.
During the fourth quarter, we distributed $60 million in SFR loans into the structure and expect to complete the ramp up later this month.
We intend to pursue similar deals in 2021, which would accelerate our ability to grow the business with more efficient use of capital and reduced market risk.
Additionally, in the fourth quarter, we called one of our previously issued SFR securitizations, which has $75 million of outstanding loans, the majority of these loans have either been refinanced or resecuritized, and the call allowed us to recycle our capital at a significantly improved cost of funds.
Our BPL borrowers are encouraged by the resilience of tenant performance this past year, and continue to raise additional capital to expand their portfolios.
Importantly, we continue to believe that there is a deep group of potential borrowers, many of which are seasoned real estate investors that remains unserved by these types of lending products.
The tailwinds that fueled our residential and BPL businesses have also positively impacted our investment portfolio.
During the quarter, the fair value of our securities book increased approximately 3%, supported by of our securities book increased approximately 3%, supported by continued improvement in credit spreads and strength in underlying credit performance.
Overall, 90-plus day delinquencies in our securitized portfolios across both jumbo and SFR are now below 2%.
Additionally, elevated prepayment speeds are accelerating our ability to unlock the value of many of our subordinate bonds.
The majority of which we have the right to call at specified dates or once the underlying pools pay down to a certain size.
These call rights are generally at par reflecting a discount to our current estimate of the fair value of the underlying loans.
In total, the net discount on our securities portfolio as of year-end was well in excess of $400 million.
And while expected losses will to an extent influence its full realization, this discount reflects substantial potential upside to book value.
All in all, we remain very pleased with how our firm is positioned as we start the year.
Against the favorable backdrop for our businesses, we are committed to the use of technology to facilitate scale, reduce customer acquisition costs and serve our growing client base more efficiently.
These high-quality operating earnings are complemented by more proprietary deployment opportunities for our portfolio, which should help to drive net interest income higher through time.
As Chris and Dash discussed, our fourth quarter earnings and book value benefited from strong results across our operating businesses and investment portfolio, contributing to GAAP earnings of $0.42 per share for the quarter and generating a 7% economic return on book value for the quarter.
After the payment of our $0.14 dividend, our book value increased to $9.91 per share, representing a 5% increase for the quarter.
That was primarily driven by the strong earnings at our operating businesses.
As Chris mentioned, these businesses are operated within our taxable subsidiary, giving us the optionality to retain and reinvest that income or distribute it through a dividend.
Focusing in on some of the operating results within the business, our residential mortgage banking team achieved record lock volumes while increasing gross margins relative to the prior quarter to generate $24 million of mortgage banking income.
CoreVest also saw a large sequential volume growth and improved securitization execution during the quarter, which helped to generate $33 million of mortgage banking income.
And a similar dynamic to the third quarter, though to a lesser extent, business purpose mortgage banking results included a benefit from spread tightening on the $286 million of SFR loan inventory it carried into the fourth quarter.
In our investment portfolio, net interest income remained relatively stable as capital deployment into CoreVest and Sequoia investments was outpaced by pay-downs, which have remain elevated due to higher prepayment fees.
As dash mentioned, higher prepay speeds, along with tighter spreads continue to benefit our subordinate securities that we hold at discount, and we saw a positive fair value changes across our portfolio.
Shifting to the tax side, in the fourth quarter, we had REIT taxable income of $0.05 per share and $0.37 per share of taxable income at our TRS.
Our fourth quarter REIT taxable income was negatively impacted by a year-end adjustments and we expect it will shift up in the first quarter of 2021, and continue growing as we deploy capital into our investment portfolio, which is generally held at 3.
[Phonetic] Given our full-year net taxable loss at the REIT, we currently expect all of our dividends paid in 2020 to be characterized as a return of capital for tax purposes.
Turning to our balance sheet, we ended the fourth quarter with unrestricted cash of $461 million.
After allocating incremental working capital to our mortgage banking operations during the fourth quarter and net of other corporate and risk capital, we estimate we had approximately $200 million of capital available for investment at December 31st.
Our financing structure remained stable in the fourth quarter, after significant changes in prior quarters.
Overall, we saw non-recourse leverage decreased slightly to 1.3 times at the end of the year from 1.4 times at the end of the third quarter.
This decrease was primarily due to some effective deleveraging within our investment portfolio from higher levels of paydowns and fair value increases during the quarter.
Additionally, as we completed several securitizations near the end of the year, we held at relatively low balance of loans in inventory, which helped to keep overall leverage down.
As we discussed, we generally expect our overall leverage to increase as we continue to build inventory levels at our mortgage banking operations.
We may also explore adding incremental non-marginable leverage to our investment portfolio, which currently has less than one times direct leverage excluding our long-term corporate unsecured debt.
At our mortgage banking operations to support growing volumes, we increased our residential warehouse capacity from $600 million to $1.3 billion and maintain $1 billion of capacity for BPL operations, with nearly 70% of this total capacity being non-marginable.
I'll close with our outlook, which is also detailed in the new 2021 financial outlook section of our fourth quarter Redwood Review.
We expect demand for single-family housing to remain robust throughout 2021, which should benefit both of our operating platforms.
Though we may experience a rising rate environment, we expect most existing jumbo loans will remain in the money and refinanceable in 2021.
Before 2021, we'll continue to focus on growth, technological efficiency and increased profitability in our operating businesses, which should allow us to retain more capital within our taxable subsidiary and grow book value.
We also expect these activities to support incremental capital deployment into our investment portfolio, which should drive higher net interest income and support a stable to growing dividend.
Looking forward, we have arranged our outlook to focus on our operating businesses, which we run out of our taxable subsidiary and our investment portfolio, which we generally hold at our REIT.
We think it's important to make this distinction as our operating businesses generate higher returns and have a steeper growth trajectory.
And with the ability to retain earnings from these operations, over time, we expect a significant capital we have allocated to these platforms to be valued as a function of their forecasted earnings streams.
On that note, at December 31st, we had approximately $375 million of capital allocated to our operating businesses, including $215 million for residential mortgage banking and $160 million for BPL mortgage banking.
And in 2021, we expect after-tax returns on this capital to 20%.
We may allocate additional capital to each of these businesses to support growth in volumes throughout the year with similar return expectations.
Shifting to our investment portfolio, at December 31st, we had approximately $1.1 billion of capital deployed here, which we expect can generate returns on capital in 2021 between 10% to 12% relative to our year-end basis.
We expect net interest income to trend higher throughout 2021 as we deploy incremental capital into largely proprietary portfolio investments at returns consistent with or higher than our in-place portfolio.
Additionally, given current market conditions, we forecast the average cost of funds on our secured debt to continue improving throughout 2021.
To support our operating businesses and investment portfolio, we expect corporate operating expenses to be between $50 million and $55 million for 2021, with variable compensation commensurate with company performance.
And we expect long-term unsecured debt service costs over 2021 to remain consistent with 2020, at approximately $40 million annually.
I'll note that while this outlook provides for a strong returns in 2021, we expect that to return potential of the businesses will grow throughout the year as we deploy additional capital and continue to expand our operating platforms, positioning the business to generate even higher overall returns in 2022.
Operator, you can open the call for Q&A.

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q4 gaap earnings per share $0.42.
gaap book value per common share was $9.91 at december 31, 2020.

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