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 measures of financial performance prepared in accordance with GAAP, and reconciliation between GAAP and non-GAAP financial measures are provided in our third quarter Redwood review available on our website at redwoodtrust.com.
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.
After restored first half of the year, our team continued on our path toward transformative growth.
After having communicated an ambitious second half of 2021 forecast, our third quarter results still managed to exceed our expectations.
The entire organization has been energized to see the durability of our business model as we produce strong financial results and risk adjusted portfolio returns.
Our GAAP earnings were $0.65 per diluted share for the third quarter, and our GAAP book value increased 4.7% in the quarter to $12 per share at September 30th.
This contributes to an overall year-to-date increase in our GAAP book value of 21% despite having raised our dividend each quarter of the year thus far.
When combined our GAAP book value growth in dividends paid resulted in a 27% economic return to shareholders year-to-date.
Operationally speaking, you'll hear more from Dash and Brooke on our third quarter results.
But suffice it to say it was a very strong quarter, several in-house records broken.
I'm particularly proud of a series of strategic and innovative transactions across our firm that were both accretive to earnings and foundational for future operating progress.
This included the first private label RMBS securitization to leverage blockchain technology, completed in collaboration with liquid mortgage and early horizons investment partner.
We also completed our first ever bridge loan securitization through our BPL platform, which provides a meaningful new distribution alternative to us.
Next, our investment portfolio team co-sponsored the first ever securitization backed entirely by residential home equity investments.
Finally, these deals are rounded out by six new venture investments by RWT Horizons in the third quarter.
I'm also pleased that after following strict health and safety protocols, we're able to successfully host our third Investor Day in September, the first since the onset of the pandemic.
During the event, we affirmed our commitment to our corporate mission to make quality housing, whether rented or owned accessible to all American households.
We also unveiled a much bolder strategic vision, become the leading operator and strategic capital provider driving sustainable innovation and housing finance.
As we showed in New York, opportunities for transformative scale are clear and now attainable, based on the strategic progress we've made in recent years.
Our vision is built upon an immense multi-trillion dollar addressable market that transcends the traditional mortgage lending space.
We're already attacking antiquated processes in our markets with technology enabled solutions, and over time, we plan to completely reimagine how the non-agency housing finance market works.
Across the Redwood enterprise, we've cultivated a talented and engaged workforce that as you might expect, believes in our mission, and is inspired to innovate and help us realize our strategic vision and goals.
Our role is not a typical one for REIT, much less one, one of the longest tenured publicly traded REITs in the country.
But that should not come as a surprise as we never defined our business by way of our Federal tax election.
Those who do, risk missing the growth potential of our platform, particularly as we continue to analyze our optimal long-term corporate structure.
Run into bend toward the end of the year, we remain very optimistic about our business, but we are proceeding cautiously.
We see several macro and market risks ahead, COVID-19 variants, rising inflation, Central Bank tapering, and Federal debt ceiling stripe to name a few.
More fundamentally, recent trends and unemployment claims suggest that we're still in a recovery phase, and the current economic situation is far from stable, notwithstanding the consistent upward pressure on home prices and rents that we've all observed in recent quarters.
Our interest rate capital and broader risk management posture reflects this view.
While we've generated strong earnings thus far this year, we've done so with record amounts of cash on hand, putting $557 million at September 30.
Going forward, our stakeholders should expect that we will continue to work to fulfill our broadly conceived mission focused on the significant addressable market in front of us and run a business grounded in fundamentals and sound analysis.
All while nurturing and diverse and talented bench team members were engaged and aligned with our values.
As Chris describe, the third quarter was another prolific one across our platform with increases in purchase and origination volumes complemented by innovative work across technology and capital markets.
Our teams are operating at a highly productive and sustainable level, as the foundation we have laid drives efficiency gains and demand for our products remains robust.
Notwithstanding the recent uptick in benchmark rates, excess capital in the market is still in search of yield.
We remain the partner of choice for whole loan and securities investors alike and continue to expand our distribution channels creatively to our capital efficiency and bottom line.
Our third quarter results reflect continued execution of the strategic goals we laid out at the beginning of the year.
As Chris referenced, we are seeing meaningful progress in a number of the initiatives that we presented at our recent Investor Day, both organically and through new investments and partnerships already bearing fruit.
In this vein, we strive to innovate daily in addressing the issues facing the housing market, but also look to take advantage of our strategic positioning in the markets we serve, to continue to grow profitably and sustainably.
Our progress also underscores important realities about housing affordability and accessibility, themes we focused on at Investor day.
Housing finance needs more creative solutions, driven by technology, a common sense approach to underwriting and most importantly, leadership and bringing market constituents together in pursuit of common goals.
During the third quarter, we took important steps in this direction.
Our results reinforce this broader backdrop and the opportunity across our platforms to continue serving growing areas in housing.
And the recent path of home prices, coupled with the evolution in consumer demand and important trends in industry regulation has created ample room for other creative solutions to help consumers monetize equity in their homes.
Our third quarter results represent another step in the path toward transformative growth that we laid out at Investor Day, with our core operating businesses leading the way and notable strategic progress across the enterprise.
The durability and diversification of our business model, coupled with our crisp execution and technological innovation, puts us in a unique position to drive change that benefits all stakeholders.
With this in mind, it's important to unpack the key drivers of profitability across our platforms.
Our residential business continued executing in the third quarter, and we believe is well positioned heading into year end, facing several market headwinds, including renewed inflation fears and meaningful rate volatility.
The team drove margins and volumes higher and once again broke new ground in our Sequoia securitization program.
We generated a record $4.7 billion of lock volume during the quarter, making quick work of our prior record of $4.6 million two quarters earlier.
Overall, locks were up 22% versus the second quarter, 59% of which were on purchase money loans, an important statement about the quality of our pipeline and our sellers, given the benchmark rates during the quarter hit lows not seen since February.
The volume of choice locks remained steady versus the second quarter.
And now the current mortgage rates are approximately 30 basis points higher versus the lows of Q3.
It is a helpful reminder that we have locked choice loans with over 100 different sellers thus far this year, important groundwork that we believe will bear fruit as we head into next year.
The depth of our distribution channels was another highlight during the quarter, as we sold $2.4 billion of loans alongside our securitization activities.
RMBS issuance remained elevated in the third quarter, with September a particularly crowded month.
As expected during any substantial uptick in supply, we witnessed more noticeable price tearing from investors across transactions, differentiation that we once again benefited from during the quarter.
Our third quarter issuance, Sequoia 2021-6 was $449 million in size and executed well inside competing transactions marketed during a similar period.
At time of securitization, the loans underpinning the deal were on average just one month old, compared to three to four months for our competitors, a testament to our efficiency and turning inventory.
A key hallmark of the transaction was the first of its kind use of blockchain based technology within private label RMBS for enhanced remittance reporting for bond investors.
Liquid Mortgage, an early partner through Redwood Horizons, is acting as distributed ledger agent, or DLA, on the transaction, providing an added and more real time remittance reporting option for investors who choose to leverage it.
Liquid Mortgage has integrated with Redwood subservicer to receive payment information that will be published on the blockchain daily.
This is a significant first step toward applying technological advancements and transparency to an area of the mortgage industry that has historically been less advanced.
We are excited to be leading the market in this effort and expect to implement this enhanced functionality going forward.
In fact, liquid mortgages also acting as DLA on our most recent Sequoia securitization, which closed in October and is backed by $407 million of jumbo residential loans.
Leveraging technology remains a major organizational focus and we continue to achieve milestones on our organic technology roadmap.
Rapid funding through which we provide accelerated settlement timelines for sellers, recently eclipsed $1 billion in purchases since program inception one year ago.
Our Redwood Live app has also gained significant traction recently, and we expect seller adoption to increase and allow us to continue growing wallet share with our seller base.
The third quarter was also another high point for CoreVest our business purpose lending platform, the third quarter $639 million in fundings were the highest since late 2019 and reflected a consistent balance between single family rental and bridge SFR fundings totaled $394 million, up 26% from the second quarter.
Production deposition does the price and SFR securitization in early October, backed by approximately $304 million in loans and CoreVests 19th securitization overall.
CoreVest continues to deepen its operational moat.
And during the third quarter we achieved a T capital markets milestone as well when completing our inaugural transaction backed by bridge loans.
CoreVests has long been an industry leading bridge lender and we expect structures like this to further drive our competitive advantage.
The transaction creates $300 million of financing capacity of which we sold liabilities representing 90% of the capital structure.
Procuring additional leverage on a non-recourse, non-marginal basis at a cost of funds of less than 2.5% on the issued bonds.
Importantly, the transaction was structured with a 30 month reinvestment period for loan payoffs.
The longest of its kind to date for this type of transaction, making it another important liquidity management tool for the business as we expand originations.
Operating momentum in the Bridge business means we will likely use these types of structures and others likely going forward.
As third quarter fundings total $245 million, an increase of 14% from the second quarter.
As competition ramps up across the BPL market, product development remains a key priority.
We continue to expand our channels and BPL through a combination of direct lending and sourcing loans from third party originators.
To that end, during the third quarter, we made key progress in our correspondent loan business and further capitalize on our strategic investment in Churchill.
Our technology initiatives also continued to advance in the quarter furthering this expansion.
We launched an initial release of our refresh client portal with strong initial feedback and remain focused on creating more efficiencies at the front end of the underwriting process.
The fourth quarter has traditionally been our most prolific for BPL originations and we feel confident about our capacity to manage higher volumes entering 2022.
Our investment portfolio remained in step with our operating progress and continue to generate strong returns with our securities book appreciating in value by approximately 15 % [Phonetic] during the third quarter, and our bridge portfolio helping to drive net interest income higher.
As Brooke will discuss in more detail, we believe there remains significant value to be unlocked from our investments based on the remaining discount in the book, coupled with continued execution of our call ride strategy.
As Chris noted, our portfolio team delivered its own first of its kind transaction during the third quarter cosponsoring a securitization backed entirely by residential home equity investments.
Completed in partnership with Point Digital, a fintech originator.
The hallmark transaction is backed by a product that enables consumers to monetize equity in their homes, without having to sell or incur additional debt.
Of the $34 trillion in total estimated US home value that we mapped out and invest today, approximately $23 trillion is in home equity, either backing existing debt or held for cash by a growing cohort of zero LTV borrowers, while Point and others have made progress and unlocking a small portion of this value.
The opportunity demands additional product creativity and flexible capital.
In parallel with a securitization, we reupped our flow purchase arrangement with Point, providing us with a continued acquisition source and the opportunity to explore adjacent products.
Point and Liquid Mortgage were too early Redwood Horizons investments and are now part of a growing suite of portfolio companies that we believe will be a driver of long-term value creation for Redwood.
Horizons continued it's strong investment pace during the third quarter completing six investments in total.
The go forward pipeline is highlighted by an array of technology solutions, including several opportunities and climate analytics, particularly busy areas, firms attempt to evolve traditional methods of predicting how climate change impacts property valuation, insurability and overall credit performance.
With a direct nexus to our firmwide ESG work, we expect to continue dedicating focus to this area.
Our efforts to drive scale in our current businesses while executing on initiatives to innovate and reimagine the industry, drove another strong quarter financial results.
We report a GAAP earnings of $0.65 per diluted share, representing a 27% annualized return on equity for the quarter, which significantly outpaced our dividends.
As a result, book value increased $0.54 or 4.7% to $12 per share on the quarter.
We've had an outstanding 2021 today and are pleased to have built on the momentum from the first half of the year.
We delivered our third consecutive dividend increase of 17% to $0.21 per share ahead of market expectations.
We have consistently generated annualized economic returns in excess of 20% over the last five quarters.
Our economic return spotlights not only the evolution of our dividends, but more importantly, the expansion in our book value.
Our results reflect the operating leverage of the platform.
In the first nine months of the year, transaction volumes and our mortgage banking businesses have already surpassed the average annual volumes of the past several years.
On a combined basis, our operating businesses generated an annualized after-tax operating return of 31% in Q3.
They utilized roughly 450 million of average capital or 30% of our total allocated capital that produced two-thirds of our adjusted revenue for the quarter.
As a reminder, these earnings can be retained in the business, driving the differential between the nearly 5% increase in book value and 2% increase contributed from the investment portfolio.
This underscores our ability to create organic capital, which we've been continuing to convey to the market.
The residential mortgage banking team generated a 26% after tax operating return on capital during the quarter.
Income from mortgage banking activities net was 12 million higher than the second quarter as loan purchase commitments of $3.3 billion increased 20% from the second quarter, and our gross margins improved approximately 25 basis points, which is above the high end of our historical range.
Margin expansion was attributable to improved execution on securitization during the quarter and hedge outperformance into a rising rate environment.
We saw continued strength from our business purpose mortgage banking operations, which delivered a 43% after-tax operating return on capital.
Spreads continued to tighten in Q3, but the pace moderated, resulting in a lower increase in the price of loans and inventory at the beginning of the quarter relative to second quarters change.
Aside from this, BPL mortgage banking results benefited from a 22% increase in funding volume, as well as strong execution on the securitizations completed in the quarter.
Next, I'll turn to the investment portfolio, which has been a consistent source of value creation in 2021.
Following the $95 million of investment fair value changes we booked through the second quarter.
We had another $26 million in Q3 from further improvement in credit performance and spread tightening, particularly in our third-party reperforming loan and retain for best securities.
Additional positive fair value changes were realized through the first ever securitization of home equity investments.
Separately, during the quarter, we settled call rights on to Sequoia securitization, acquiring 66 million of season jumbo loans at par, which had a small benefit to book value.
Portfolio net interest income increased by roughly nine million, driven by lower interest expense on bridge loan financing and increased discount accretion income on our available-for-sale securities.
The increase in accretion was driven by expectations for certain of our retains Sequoia securities to be called over the next several quarters, benefiting our cash flow forecasts and effective yields for those investments.
But it is important to note that there is no impact book value from these changes.
Looking ahead, net of our third quarter gains, there remains potential upside of roughly $3 per share in our portfolio through a combination of accretable market discount and call REITs that we control.
We estimate $1.2 billion of loans can become callable across capital and Sequoia through the end of 2022.
Should current market conditions persist, these callable loans can generally be sold or resecuritized well above their par value.
REIT taxable income increased to $0.14 per share from $0.11 in the second quarter due to higher net interest income.
Our taxable REIT subsidiaries earned $0.32 per share in Q3 up from $0.27 in Q2.
We recognized a lower income tax provision compared to the second quarter from the release of valuation allowance on a portion of our deferred tax assets, partially offset by an increase in state taxes.
Our balance sheet and funding profile remain in excellent shape with unrestricted cash of $557 million, which equates to over 75% of our outstanding marginable debt.
We also had investable capital of $350 million to deploy into new investments.
During the quarter, we added $350 million of financing capacity to support growth of our operating platform.
We also completed the bridge securitization and a new $100 million non-marketable term financing collateralized by retain capital securities in our investment portfolio, each of those which contributed roughly -- to a roughly 20 basis point reduction in the cost of funds of our business purpose lending segment.
Our recourse leverage was unchanged at 2.2 times, as we incurred additional warehouse borrowings to finance higher loan inventories, while rotating certain financings into non-recourse debt and experiencing appreciation of our equity base.
One central tenet of our strategic plan is to continue enhancing our capital and operating efficiencies.
During the third quarter, we maintain cost per loan for our residential mortgage banking operations of 28 basis points, compared with our historical average of 35 basis points during 2013 to 2019.
Our business purpose mortgage banking operations also delivered improved efficiencies, with a lower net cost to originate relative to the second quarter.
Even with higher general and administrative expenses on the quarter, due to increased variable compensation tied to our strong year to date financial performance, various efficiency ratios, such as pre-tax margin or operating expense as a percentage of GAAP net income, demonstrate very positive trend lines and our efficiency gains.
And finally, we are embedding sustainability across our operations and investment strategy.
We are committed to transparency and further integrating ESG into our financial reporting going forward.
We recently provided a comprehensive ESG review at our Investor Day event in September, including new disclosure of human capital metrics, and programs and an overview of our key priorities and top commitments over the near to intermediate term.
As Dash mentioned, we are analyzing opportunities within horizon, which will aid our evaluation of various environmental and social impacts and risks within the portfolio.
It has the potential to further evolve our risk management policies and build our upper regional resilience.

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q3 gaap earnings per share $0.65.
gaap book value per common share was $12.00 at september 30, 2021, up 4.7% from june 30, 2021.

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