Redwood Mortgage Investors IX
08/14/2026 | Press release | Distributed by Public on 08/14/2026 11:55
Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the unaudited financial statements and notes thereto, which are included in Item 1 of this report on Form 10-Q, as well as the audited financial statements and the notes thereto, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the company's Annual Report on Form 10-K for the year ended December 31, 2025 (the "2025 Annual Report"), filed with the U.S. Securities and Exchange Commission (or SEC). The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the operations results to be expected for the full year.
Forward-Looking Statements
Certain statements in this Annual Report on Form 10-Q ("this report") which are not historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ("Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"), including statements regarding the company's expectations, hopes, intentions, beliefs and strategies regarding the future. Forward-looking statements, which are based on various assumptions (some of which are beyond our control), may be identified by reference to a future period or periods or by use of forward-looking terminology, such as "may," "will," "believe," "expect," "anticipate," "continue," "possible" or similar terms or variations on those terms or the negative of those terms. Forward-looking statements include statements regarding trends in the California real estate market; future interest rates and economic conditions and their effect on the company and its assets; estimates as to the allowance for loan losses; forecasts of future redemptions of units, forecasts of future funding of loans; loan payoffs and the possibility of future loan sales (and the gain thereon, net of expenses) to third parties, if any; future fluctuations in the net distribution rate; and beliefs relating to how the company will be affected by current economic conditions and trends in the financial and credit markets. Actual results may be materially different from what is projected by such forward-looking statements therefore, you should not place undue reliance on forward looking statements, which reflect our view only as of the date hereof.
Factors that might cause such a difference include, but are not limited to, the following:
•
changes in economic conditions, interest rates, or changes in California real estate markets;
•
the impact of competition and competitive pricing for mortgage loans;
•
the manager's ability to make and arrange for loans that fit our investment criteria;
•
whether we will have any future loan sales to unaffiliated third parties, and if we do, any gain, net of expenses, and the volume and timing of loan sales to unaffiliated third parties, which to date have provided only immaterial gains to us;
•
the concentration of credit risks to which we are exposed;
•
increases in payment delinquencies and defaults on our mortgage loans;
•
the timing and dollar amount of financial support, if any, from the manager and the corresponding impact on the net distribution rate to members;
•
changes in government regulation and legislative actions affecting our business; and
•
the impact of wildfires, floods, earthquakes and other natural disasters.
All forward-looking statements and reasons why results may differ included in this Form 10-Q are made as of the date hereof, and we assume no obligation to update any such forward-looking statement or reason why actual results may differ unless required by law.
Overview
Redwood Mortgage Investors IX, LLC ("we", "RMI IX" or "the company") is a Delaware limited liability company formed in October 2008 to engage in business as a mortgage lender and investor by making and holding-for-investment mortgage loans secured by California real estate, primarily through first and second deeds of trust. The company is externally managed by Redwood Mortgage Corp. ("RMC" or "the manager"). See Note 3 (Manager and Other Related Parties) to the financial statements included in Part I, Item 1 of this report for a detailed presentation of the company's activities for which related parties are compensated and for other related party transactions.
Cash generated from loan payoffs and borrower payments of principal and interest is used for operating expenses, distributions to members and unit redemptions. The cash flow, if any, in excess of these uses and advances on the line of credit is reinvested in new loans.
Pursuant to the Operating Agreement, the company will not, in any calendar year, redeem more than five percent (5%) (or in any calendar quarter 1.25%) of the weighted average number of units outstanding during the twelve-month period immediately prior to the date of the redemption; however, the manager may, but is not required to, waive this limitation if it deems it in the best interest of the company. In the event unit withdrawal requests exceed 5% in any calendar year (or 1.25% in any calendar quarter), and are held by the company, units will be redeemed in the order of priority provided in the Operating Agreement. The manager may, in its sole discretion, also waive any other holding periods or penalties applicable to redemptions in the event of the death of a member or other exigent circumstances or if the manager believes such waiver is in the best interests of the company.
The manager has no present intention to exercise its discretionary power to waive or modify the enforcement of the redemption limitation in the foreseeable future. See "Results of Operations - Redemptions of members' capital" below for a detailed presentation on capital redemption limitations.
To determine the amount of cash to be distributed in any specific month, the company relies in part on its forecast of full year profits.
See Note 1 (Organization and General) to the financial statements included in Part I, Item 1 of this report for additional detail on the organization and operations of RMI IX which detail is incorporated by this reference into this Item 2.
Critical Accounting Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions about the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, at the dates of the financial statements and the reported amounts of revenues and expenses during the reported periods. Such estimates relate principally to the determination of the allowance for credit losses, including determining the fair value of the collateral, and the valuation of real estate owned. Actual results could differ significantly from these estimates.
Accounting estimates are an integral part of our financial statements. For a summary of our critical accounting estimates, see "Critical Accounting Estimates" in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2025 Annual Report.
There have been no material changes to our critical accounting estimates since our 2025 Annual Report.
Results of Operations
The following discussion describes our results of operations for the three and six months ended June 30, 2026.
Key Performance Indicators
Key performance indicators as of and for the six months ended June 30, 2026 and 2025 are presented in the following tables ($ in thousands).
|
2026 |
2025 |
|||||||
|
Members' capital, gross - end of period balance |
$ |
60,412 |
$ |
63,307 |
||||
|
Members' capital, gross - average daily balance |
$ |
61,507 |
$ |
65,548 |
||||
|
Member redemptions(1) |
$ |
1,582 |
$ |
1,674 |
||||
|
Secured loans principal - end of period balance |
$ |
53,317 |
$ |
45,185 |
||||
|
Secured loans principal - average daily balance |
$ |
56,879 |
$ |
46,963 |
||||
|
First trust deeds |
26 |
23 |
||||||
|
Principal - first trust deeds |
$ |
45,567 |
$ |
39,779 |
||||
|
Weighted average OLTV - first trust deeds(2) |
54.6 |
% |
55.9 |
% |
||||
|
Second trust deeds |
5 |
6 |
||||||
|
Principal - second trust deeds |
$ |
7,750 |
$ |
5,406 |
||||
|
Weighted average OLTV - second trust deeds(2) |
55.5 |
% |
53.9 |
% |
||||
|
Interest income |
$ |
2,781 |
$ |
2,137 |
||||
|
Portfolio interest rate(3) |
10.2 |
% |
10.0 |
% |
||||
|
Effective rate(4) |
9.8 |
% |
9.1 |
% |
||||
|
Line of credit - end of period balance |
$ |
1,900 |
$ |
- |
||||
|
Line of credit - average daily balance(5) |
$ |
1,753 |
$ |
492 |
||||
|
Line of credit - interest expense |
$ |
63 |
$ |
19 |
||||
|
Line of credit - interest rate (5) |
7.1 |
% |
7.8 |
% |
||||
|
Provision for credit losses |
$ |
330 |
$ |
110 |
||||
|
Non-interest income - Gain on sale of REO |
$ |
309 |
$ |
- |
||||
|
Total operations expense |
$ |
1,391 |
$ |
1,519 |
||||
|
Net income(9) |
$ |
1,300 |
$ |
488 |
||||
|
Percent of average members' capital(6)(7) |
4.2 |
% |
1.5 |
% |
||||
|
Member distributions |
$ |
1,013 |
$ |
1,384 |
||||
|
Percent of average members' capital(6)(8) |
3.3 |
% |
4.2 |
% |
||||
(1)
Redemption requests at June 30, 2026 were approximately $29.5 million and are carried forward to subsequent quarters until paid. See Note 3 (Manager and Other Related Parties) to the financial statements included in Part I, Item 1 of this report for a detailed discussion of redemptions of members' capital.
(2)
The LTVs use the fair value at origination of the loans (OLTV). See table below for LTVs based on updated collateral fair market values and loan balances
(3)
Stated note interest rate, weighted daily average (annualized).
(4)
Percent of secured loans - average daily balance (annualized).
(5)
Stated note interest rate. See Note 6 (Line of Credit) to the financial statements included in Part 1, Item 1 of this report for a presentation of the activity and discussion of the terms and conditions of the loan agreement.
(6)
Percent of members' capital, gross - average daily balance (annualized).
(7)
Percent based on the net income available to members (excluding 1% allocated to manager).
(8)
Members Distributions is net of O&O expenses allocated to members' accounts during the year.
Key performance indicators as of and for the three months ended June 30, 2026 and 2025 are presented in the following table ($ in thousands).
|
2026 |
2025 |
||||||||
|
Members' capital, gross - end of period balance |
$ |
60,412 |
$ |
63,307 |
|||||
|
Members' capital, gross - average daily balance |
$ |
61,119 |
$ |
65,137 |
|||||
|
Member redemptions(1) |
$ |
783 |
$ |
834 |
|||||
|
Secured loans principal - end of period balance |
$ |
53,317 |
$ |
45,185 |
|||||
|
Secured loans principal - average daily balance |
$ |
54,849 |
$ |
45,208 |
|||||
|
First trust deeds |
26 |
23 |
|||||||
|
Principal - first trust deeds |
$ |
45,567 |
$ |
39,779 |
|||||
|
Weighted average OLTV - first trust deeds(2) |
54.6 |
% |
55.9 |
% |
|||||
|
Second trust deeds |
5 |
6 |
|||||||
|
Principal - second trust deeds |
$ |
7,750 |
$ |
5,406 |
|||||
|
Weighted average OLTV - second trust deeds(2) |
55.5 |
% |
53.9 |
% |
|||||
|
Interest income |
$ |
1,377 |
$ |
1,058 |
|||||
|
Portfolio interest rate(3) |
10.2 |
% |
10.1 |
% |
|||||
|
Effective rate(4) |
10.0 |
% |
9.4 |
% |
|||||
|
Line of credit - end of period balance |
$ |
1,900 |
$ |
- |
|||||
|
Line of credit - average daily balance(5) |
$ |
1,900 |
$ |
- |
|||||
|
Line of credit - interest expense |
$ |
34 |
$ |
- |
|||||
|
Line of credit - interest rate (5) |
7.1 |
% |
7.8 |
% |
|||||
|
Provision for credit losses |
$ |
330 |
$ |
110 |
|||||
|
Non-interest income - Gain on sale of REO |
$ |
309 |
$ |
- |
|||||
|
Total operations expense |
$ |
671 |
$ |
671 |
|||||
|
Net income |
$ |
645 |
$ |
271 |
|||||
|
Percent of average members' capital(6)(7) |
4.2 |
% |
1.6 |
% |
|||||
|
Member distributions |
$ |
504 |
$ |
671 |
|||||
|
Percent of average members' capital(6)(8) |
3.3 |
% |
4.1 |
% |
|||||
(1)
Redemption requests at June 30, 2026 were approximately $29.5 million and are carried forward to subsequent quarters until paid. See Note 3 (Manager and Other Related Parties) to the financial statements included in Part I, Item 1 of this report for a detailed discussion of redemptions of members' capital.
(2)
The LTVs use the fair value at origination of the loans (OLTV). See table below for LTVs based on updated collateral fair market values and loan balances
(3)
Stated note interest rate, weighted daily average (annualized).
(4)
Percent of secured loans - average daily balance (annualized).
(5)
Stated note interest rate. See Note 6 (Line of Credit) to the financial statements included in Part 1, Item 1 of this report for a presentation of the activity and discussion of the terms and conditions of the loan agreement.
(6)
Percent of members' capital, gross - average daily balance (annualized).
(7)
Percent based on the net income available to members (excluding 1% allocated to manager).
(8)
Members Distributions is net of O&O expenses allocated to members' accounts during the year.
Redemptions of members' capital
The Operating Agreement provides for a unit redemption program, whereby a member may redeem all or part of their units, subject to certain limitations. For more information about the unit redemption program, see Note 1 (Organization and General) - "Liquidity and unit redemption program" to the financial statements included in Part I, Item 1 of this report.
Redemptions of members' capital received by the manager and unpaid at June 30, 2026 approximated $29.5 million, of which,
•
$26.6 million were received at or prior to March 31, 2026; and
•
$2.9 million were received in the quarter ended June 30, 2026 (and will be eligible at September 30, 2026).
Secured loans
Loan origination for the six months ended June 30, 2026 decreased by approximately $4.0 million compared to the same period in 2025. The decrease is primarily due to the timing of payoffs during the quarter and the limitation of new draws on the line of credit until the company's loan payment delinquency rate is compliant with the covenants of the credit agreement.
Secured loans, principal, advances and interest unpaid, by LTV and lien position
LTVs presented in the following tables have been updated for changes in fair values of the collateral as indicated by appraisals, broker opinion of value, or other external market evidence received by the manager after the origination of the loan, if any.
Secured loans, principal by LTV and lien position at June 30, 2026 are presented in the following table ($ in thousands).
|
Secured loans, principal |
|||||||||||||||||||||
|
LTV(1) |
First trust |
Percent(2) |
Second trust |
Percent(2) |
Total |
Percent(2) |
|||||||||||||||
|
<40% |
$ |
6,774 |
12.7 |
% |
$ |
1,100 |
2.1 |
% |
$ |
7,874 |
14.8 |
% |
|||||||||
|
40-49% |
- |
0.0 |
- |
0.0 |
- |
0.0 |
|||||||||||||||
|
50-59% |
17,486 |
32.8 |
4,800 |
9.0 |
22,286 |
41.8 |
|||||||||||||||
|
60-69% |
11,819 |
22.2 |
1,250 |
2.3 |
13,069 |
24.5 |
|||||||||||||||
|
Subtotal <70% |
36,079 |
67.7 |
7,150 |
13.4 |
43,229 |
81.1 |
|||||||||||||||
|
70-79% |
8,498 |
16.0 |
- |
0.0 |
8,498 |
16.0 |
|||||||||||||||
|
Subtotal <80% |
44,577 |
83.7 |
7,150 |
13.4 |
51,727 |
97.1 |
|||||||||||||||
|
≥80%(3) |
990 |
1.8 |
600 |
1.1 |
1,590 |
2.9 |
|||||||||||||||
|
Total |
$ |
45,567 |
85.5 |
% |
$ |
7,750 |
14.5 |
% |
$ |
53,317 |
100.0 |
% |
|||||||||
(1)
LTV classifications in the table above are based on the sum of principal, advances and interest unpaid at June 30, 2026.
(2)
Percent of secured loans principal, end of period balance.
(3)
See the table below for specific details of the loans that have an LTV over 80%.
Secured loans (loan balance), with payments in arrears, by LTV and lien position at June 30, 2026 are presented in the following table ($ in thousands).
|
Secured loans with payments in arrears, principal |
|||||||||||||||||||||
|
LTV(4) |
First trust |
Percent(5) |
Second trust |
Percent(5) |
Total |
Percent(5) |
|||||||||||||||
|
50-59% |
$ |
1,900 |
3.6 |
% |
$ |
- |
0.0 |
$ |
1,900 |
3.6 |
% |
||||||||||
|
60-69% |
8,570 |
16.1 |
1,250 |
2.3 |
9,820 |
18.4 |
|||||||||||||||
|
70-79% |
6,223 |
11.7 |
- |
0.0 |
6,223 |
11.7 |
|||||||||||||||
|
Subtotal <80% |
16,693 |
31.4 |
1,250 |
2.3 |
17,943 |
33.7 |
|||||||||||||||
|
≥80% |
990 |
1.8 |
600 |
1.1 |
1,590 |
2.9 |
|||||||||||||||
|
Total |
$ |
17,683 |
33.2 |
% |
$ |
1,850 |
3.4 |
% |
$ |
19,533 |
36.6 |
% |
|||||||||
(4)
LTV classifications in the table above are based on the sum of principal, advances and interest unpaid at June 30, 2026.
(5)
Percent of secured loans principal, end of period balance.
The $19.5 million of loans with payments in arrears is comprised of the following nine loans.
•
In San Francisco (LTV 110%, principal $990 thousand), a three-unit mixed use building (first lien deed of trust) - The loan matured in December 2025, and the borrower is 180 days or more delinquent on monthly payments. The property was acquired by the company via foreclosure in July 2026.
•
In Los Angeles (LTV 87%, principal $600 thousand), a multi-family building (second lien deed of trust) - The loan matured in April 2025 and the borrower is 90 days delinquent on monthly payments. The first lien holder filed an NOD (May 2026) and RMI IX filed a NOD (June 2026). In June 2026, RMI IX received court approval to appoint a receiver.
•
In Palo Alto, Santa Clara County (LTV 79%, principal $4.7 million), an office building with approved plans for a senior living housing facility (first lien deed of trust) - The loan matured in October 2023. The borrower defaulted on a payment agreement entered into in 2026.
•
In Napa (LTV 74%, principal $633 thousand), a single-family residence (first lien deed of trust) - The loan matured in December 2024, and the borrower is 180 days or more delinquent on monthly payments.
•
In Los Angeles (LTV 69%, principal $1.3 million), an office building (second lien deed of trust) - The loan matured in December 2025, and the borrower continues making monthly payments.
•
In Livermore, Alameda County (LTV 66%, principal $1.2 million), a commercial condominium (first lien deed of trust) - The loan matured in October 2025 and the borrower was 90 days delinquent on monthly payments. In July 2026, the borrower signed an agreement and made a payment of $154 thousand to bring the monthly payments current. The borrower agreed to pay the loan in full prior to August 31, 2026.
•
In San Diego (LTV 63%, principal $7.4 million), an industrial building (first lien deed of trust) - The borrower is 180 or more days delinquent on monthly payments. The loan matured in March 2026.
•
In San Francisco (LTV 75%, principal $858 thousand), a warehouse building (first lien deed of trust) - The loan matured in January 2026, and the borrower continues making monthly payments. Pursuant to an agreement dated August 3, 2026, the loan will mature in June 2027.
•
In Cambria, San Luis Obispo County (LTV 58%, principal $1.9 million) a retail property (first lien deed of trust) - The loan matures in January 2027, and the borrower is 30 days delinquent on monthly payments.
Payments in arrears for secured loans (i.e., principal and interest payments past due 30 or more days) for the above nine secured loans at June 30, 2026 totaled approximately $18.4 million of which approximately $17.6 million was principal and approximately $810 thousand was accrued interest.
Secured loans (loan balance) for matured loans, by LTV and lien position at June 30, 2026 are presented in the following table ($ in thousands).
|
Secured loans past maturity, principal |
|||||||||||||||||||||
|
LTV(6) |
First trust |
Percent(7) |
Second trust |
Percent(7) |
Total |
Percent(7) |
|||||||||||||||
|
60-69% |
$ |
8,570 |
16.1 |
% |
$ |
1,250 |
2.3 |
% |
$ |
9,820 |
18.4 |
% |
|||||||||
|
70-79% |
6,223 |
11.7 |
- |
0.0 |
6,223 |
11.7 |
|||||||||||||||
|
Subtotal <80% |
14,793 |
27.8 |
1,250 |
2.3 |
16,043 |
30.1 |
|||||||||||||||
|
≥80% |
990 |
1.8 |
600 |
1.1 |
1,590 |
2.9 |
|||||||||||||||
|
Total |
$ |
15,783 |
29.6 |
% |
$ |
1,850 |
3.4 |
% |
$ |
17,633 |
33.0 |
% |
|||||||||
(6) LTV classifications in the table above are based on the sum of principal, advances and interest unpaid at June 30, 2026.
(7) Percent of secured loans principal, end of period balance.
See Note 4 (Loans) to the financial statements included in Part I, Item 1 of this report for detailed presentations as to the secured loan portfolio, including loan characteristics, scheduled maturities, delinquency and payments in arrears, loans in non-accrual status and the allowance for credit losses.
Performance overview/net income 2026 v. 2025
Net income available to members as a percent of members' capital, gross - average daily balance (annualized) was 4.2% and 1.5% for the six months ended June 30, 2026 and 2025. Net income increased approximately $1.0 million (166.4%) for the six months ended June 30, 2026 as compared to the same period in 2025 primarily due to an increase in interest income of approximately $644 thousand (30.1%) and a decrease in operations expenses of approximately $128 thousand (8.4%), offset partially by an increase in interest expense of approximately $45 thousand (128.6%) and an increase in provision for credit losses of $20 thousand (18.2%).
The portfolio interest rate on secured loans increased by 0.2 percentage points to 10.2% since June 30, 2025. The effective yield rate increased by 0.7 percentage points to 9.8% due to an increase of approximately $82 thousand (136.7%) in the collection of post-maturity and foregone interest.
Analysis and discussion of income from operations 2026 v. 2025 (six months ended)
Significant changes to net income for the six months ended June 30, 2026 and 2025 are summarized in the following table ($ in thousands).
|
Net interest |
Provision for |
Operations |
Net |
|||||||||||||
|
Six months ended |
||||||||||||||||
|
June 30, 2026 |
$ |
2,701 |
330 |
1,391 |
$ |
1,300 |
||||||||||
|
June 30, 2025 |
2,102 |
110 |
1,519 |
488 |
||||||||||||
|
Change |
$ |
599 |
220 |
(128 |
) |
$ |
812 |
|||||||||
|
Change |
||||||||||||||||
|
Increase in secured loans principal - average daily balance |
$ |
448 |
- |
10 |
$ |
438 |
||||||||||
|
Increase in effective yield |
196 |
- |
- |
196 |
||||||||||||
|
Decrease in members' capital - average daily balance |
- |
- |
(16 |
) |
16 |
|||||||||||
|
Increase in RMI IX capital as a percent of total related mortgage funds capital managed by RMC |
- |
- |
39 |
(39 |
) |
|||||||||||
|
Interest on line of credit |
(45 |
) |
- |
- |
(45 |
) |
||||||||||
|
Allowance for credit losses, specific reserve |
- |
220 |
- |
(220 |
) |
|||||||||||
|
Late fees |
- |
- |
- |
2 |
||||||||||||
|
Gain on sale, loans |
- |
- |
- |
(6 |
) |
|||||||||||
|
Decrease in allocable expenses from RMC |
- |
- |
(13 |
) |
13 |
|||||||||||
|
REO holding costs |
- |
- |
56 |
(56 |
) |
|||||||||||
|
Gain on REO sales |
- |
- |
- |
309 |
||||||||||||
|
Tax compliance services |
- |
- |
(3 |
) |
3 |
|||||||||||
|
Legal services |
- |
- |
(21 |
) |
21 |
|||||||||||
|
Timing of services rendered |
- |
- |
3 |
(3 |
) |
|||||||||||
|
Independent contractors |
- |
- |
25 |
(25 |
) |
|||||||||||
|
Audit services |
- |
- |
(225 |
) |
225 |
|||||||||||
|
Other |
- |
- |
17 |
(17 |
) |
|||||||||||
|
Change |
$ |
599 |
220 |
(128 |
) |
$ |
812 |
|||||||||
The table above presents only the significant changes to net income for the period, and is not intended to cross-foot.
Net interest income
Net interest income increased approximately $599 thousand (28.5%) for the six months ended June 30, 2026 compared to the same period in 2025. The increase in net interest income is due to an increase in interest income of approximately $644 thousand (30.1%) due to an increase in the average daily balance - secured loans of approximately $9.9 million (21.1%) and an increase in the collection of post-maturity and foregone interest of approximately $82 thousand (136.7%), partially offset by an increase in interest expense due to utilizing the line of credit. See Key performance indicators table included above in Item 2 of this report for specific details of average interest rate on the line of credit.
Provision/allowance for credit losses
See Note 4 (Loans) to the financial statements included in Part I, Item 1 of this report for a detailed presentation of the provision/allowance for credit losses.
Operations expense
Significant changes to operations expense for the six months ended June 30, 2026 and 2025 are summarized in the following table ($ in thousands).
|
Mortgage |
Asset |
Costs |
Professional |
REO holding costs |
Other |
Total |
||||||||||||||||||||||
|
Six months ended |
||||||||||||||||||||||||||||
|
June 30, 2026 |
$ |
71 |
220 |
314 |
709 |
56 |
21 |
$ |
1,391 |
|||||||||||||||||||
|
June 30, 2025 |
61 |
236 |
288 |
902 |
- |
32 |
1,519 |
|||||||||||||||||||||
|
Change |
$ |
10 |
(16 |
) |
26 |
(193 |
) |
56 |
(11 |
) |
$ |
(128 |
) |
|||||||||||||||
|
Change |
||||||||||||||||||||||||||||
|
Increase in secured loans principal - average daily balance |
$ |
10 |
- |
- |
- |
- |
- |
$ |
10 |
|||||||||||||||||||
|
Decrease in members' capital - average daily balance |
- |
(16 |
) |
- |
- |
- |
- |
(16 |
) |
|||||||||||||||||||
|
Increase in RMI IX capital as a percent of total related mortgage funds capital managed by RMC |
- |
- |
39 |
- |
- |
- |
39 |
|||||||||||||||||||||
|
Decrease in allocable expenses from RMC |
- |
- |
(13 |
) |
- |
- |
- |
(13 |
) |
|||||||||||||||||||
|
REO holding costs |
- |
- |
- |
- |
56 |
- |
56 |
|||||||||||||||||||||
|
Tax compliance services |
- |
- |
- |
(3 |
) |
- |
- |
(3 |
) |
|||||||||||||||||||
|
Legal services |
- |
- |
- |
(21 |
) |
- |
- |
(21 |
) |
|||||||||||||||||||
|
Timing of services rendered |
- |
- |
- |
3 |
- |
- |
3 |
|||||||||||||||||||||
|
Independent contractors |
- |
- |
- |
25 |
- |
- |
25 |
|||||||||||||||||||||
|
Audit services |
- |
- |
- |
(225 |
) |
- |
- |
(225 |
) |
|||||||||||||||||||
|
Other |
- |
- |
- |
28 |
- |
(11 |
) |
17 |
||||||||||||||||||||
|
Change |
$ |
10 |
(16 |
) |
26 |
(193 |
) |
56 |
(11 |
) |
$ |
(128 |
) |
|||||||||||||||
Mortgage servicing fees
The increase in mortgage servicing fees of approximately $10 thousand for the six months ended June 30, 2026 as compared to the same period in 2025 was due to an increase in the average daily balance - secured loans of approximately $9.9 million at the annual mortgage servicing fee to RMC of 0.25%.
Asset Management Fees
The decrease in asset management fees of approximately $16 thousand was due to a decrease in the members' capital base at year-end December 31, 2025 compared to year-end December 31, 2024. The decrease in the members' capital base is due to quarterly redemptions made. Members' capital is expected to continue to decrease as pending redemptions are paid out. See Redemptions in members' capital above for detail on redemption requests received but unpaid as of June 30, 2026. The asset management fee is computed using the prior year end member's capital base which is the then fair value of the company's loans plus working capital reserves less outstanding debt.
Costs from RMC, net
RMC is entitled to request reimbursement for operations expense incurred on behalf of RMI IX, including without limitation, RMC's personnel and non-personnel costs incurred for qualifying business activities, including investor services, accounting, tax and data processing, postage and out-of-pocket general and administration expenses.
The increase is primarily due to an increase in RMI IX capital as a percent of total related mortgage funds capital managed by RMC, partially offset by a reduction in allocable expenses incurred by RMC. The increase in capital as a percent of total related mortgage funds is expected to continue as a related mortgage fund winds-down.
Professional Services
Professional services consist primarily of information technology, legal, audit and tax compliance, and consulting expenses.
The decrease in professional services of approximately $193 thousand for the six months ended June 30, 2026 compared to the same period in 2025 was because audit fees decreased approximately $225 thousand due to reduced services and change of vendor and legal fees decreased approximately $21 thousand due to less activities, partially offset by an increase in fees to independent contractors of approximately $25 thousand due to increased activities.
Analysis and discussion of income from operations 2026 v. 2025 (three months ended)
Significant changes to net income for the three months ended June 30, 2026 and 2025 are summarized in the following table ($ in thousands).
|
Net interest |
Provision for |
Operations |
Net |
|||||||||||||
|
Three months ended |
||||||||||||||||
|
June 30, 2026 |
$ |
1,334 |
330 |
671 |
$ |
645 |
||||||||||
|
June 30, 2025 |
1,050 |
110 |
671 |
271 |
||||||||||||
|
Change |
$ |
284 |
220 |
- |
$ |
374 |
||||||||||
|
Change |
||||||||||||||||
|
Increase in secured loans principal - average daily balance |
$ |
221 |
- |
6 |
$ |
215 |
||||||||||
|
Increase in effective yield |
98 |
- |
- |
98 |
||||||||||||
|
Decrease in members' capital - average daily balance |
- |
- |
(8 |
) |
8 |
|||||||||||
|
Increase in RMI IX capital as a percent of total related mortgage funds capital managed by RMC |
- |
- |
17 |
(17 |
) |
|||||||||||
|
Interest on line of credit |
(35 |
) |
- |
- |
(35 |
) |
||||||||||
|
Late fees |
- |
- |
- |
(1 |
) |
|||||||||||
|
Gain on sale, loans |
- |
- |
- |
2 |
||||||||||||
|
Increase in allocable expenses from RMC |
- |
- |
6 |
(6 |
) |
|||||||||||
|
Allowance for credit losses, specific reserve |
- |
220 |
- |
(220 |
) |
|||||||||||
|
Timing of services rendered |
- |
- |
3 |
(3 |
) |
|||||||||||
|
REO holding costs |
- |
- |
36 |
(36 |
) |
|||||||||||
|
Gain on REO sales |
- |
- |
- |
309 |
||||||||||||
|
Legal services |
- |
- |
9 |
(9 |
) |
|||||||||||
|
Independent contractors |
- |
- |
16 |
(16 |
) |
|||||||||||
|
Audit services |
- |
- |
(105 |
) |
105 |
|||||||||||
|
Other |
- |
- |
20 |
(20 |
) |
|||||||||||
|
Change |
$ |
284 |
220 |
- |
$ |
374 |
||||||||||
The table above presents only the significant changes to net income for the period, and is not intended to cross-foot.
Net interest income
Net interest income increased approximately $284 thousand (27.0%) for the three months ended June 30, 2026 compared to the same period in 2025. The increase in net interest income is due to an increase in interest income of approximately $319 thousand (30.2%) due to an increase in the average daily balance - secured loans of approximately $9.6 million (21.3%) and an increase in the collection of post-maturity and foregone interest of approximately $82 thousand (315.4%), partially offset by an increase in interest expense due to utilizing the line of credit. See Key performance indicators table included above in Item 2 of this report for specific details of average interest rate on the line of credit.
Provision/allowance for credit losses
See Note 4 (Loans) to the financial statements included in Part I, Item 1 of this report for a detailed presentation of the provision/allowance for credit losses.
Operations expense
Significant changes to operations expense for the three months ended June 30, 2026 and 2025 are summarized in the following table ($ in thousands).
|
Mortgage |
Asset |
Costs |
Professional |
REO holding costs |
Other |
Total |
||||||||||||||||||||||
|
Three months ended |
||||||||||||||||||||||||||||
|
June 30, 2026 |
$ |
35 |
110 |
171 |
313 |
36 |
6 |
$ |
671 |
|||||||||||||||||||
|
June 30, 2025 |
29 |
118 |
148 |
370 |
- |
6 |
671 |
|||||||||||||||||||||
|
Change |
$ |
6 |
(8 |
) |
23 |
(57 |
) |
36 |
- |
- |
||||||||||||||||||
|
Change |
||||||||||||||||||||||||||||
|
Increase in secured loans principal - average daily balance |
$ |
6 |
- |
- |
- |
- |
- |
$ |
6 |
|||||||||||||||||||
|
Decrease in members' capital - average daily balance |
- |
(8 |
) |
- |
- |
- |
- |
(8 |
) |
|||||||||||||||||||
|
Increase in RMI IX capital as a percent of total related mortgage funds capital managed by RMC |
- |
- |
17 |
- |
- |
- |
17 |
|||||||||||||||||||||
|
Increase in allocable expenses from RMC |
- |
- |
6 |
- |
- |
- |
6 |
|||||||||||||||||||||
|
REO holding costs |
- |
- |
- |
- |
36 |
- |
36 |
|||||||||||||||||||||
|
Legal services |
- |
- |
- |
9 |
- |
- |
9 |
|||||||||||||||||||||
|
Timing of services rendered |
- |
- |
- |
3 |
- |
- |
3 |
|||||||||||||||||||||
|
Independent contractors |
- |
- |
- |
16 |
- |
- |
16 |
|||||||||||||||||||||
|
Audit services |
- |
- |
- |
(105 |
) |
- |
- |
(105 |
) |
|||||||||||||||||||
|
Other |
- |
- |
- |
20 |
- |
- |
20 |
|||||||||||||||||||||
|
Change |
$ |
6 |
(8 |
) |
23 |
(57 |
) |
36 |
- |
- |
||||||||||||||||||
Mortgage servicing fees
The increase in mortgage servicing fees of approximately $6 thousand for the three months ended June 30, 2026 as compared to the same period in 2025 was due to an increase in the average daily balance - secured loans of approximately $9.6 million at the annual mortgage servicing fee to RMC of 0.25%.
Asset Management Fees
The decrease in asset management fees of approximately $8 thousand was due to a decrease in the members' capital base at year-end December 31, 2025 compared to year-end December 31, 2024. The decrease in the members' capital base is due to quarterly redemptions made. Members' capital is expected to continue to decrease as pending redemptions are paid out. See Redemptions in members' capital above for detail on redemption requests received but unpaid as of June 30, 2026. The asset management fee is computed using the prior year end member's capital base which is the then fair value of the company's loans plus working capital reserves less outstanding debt.
Costs from RMC, net
RMC is entitled to request reimbursement for operations expense incurred on behalf of RMI IX, including without limitation, RMC's personnel and non-personnel costs incurred for qualifying business activities, including investor services, accounting, tax and data processing, postage and out-of-pocket general and administration expenses.
The increase is primarily due to an increase in RMI IX capital as a percent of total related mortgage funds capital managed by RMC, partially offset by a reduction in allocable expenses incurred by RMC. The increase in capital as a percent of total related mortgage funds is expected to continue as a related mortgage fund winds-down.
Professional Services
Professional services consist primarily of information technology, legal, audit and tax compliance, and consulting expenses.
The decrease in professional services of approximately $57 thousand for the three months ended June 30, 2026 compared to the same period in 2025 was because audit fees decreased approximately $105 thousand due to reduced services and change of vendor, partially offset by an increase of approximately $9 thousand in legal fees and an increase of approximately $16 thousand in fees to independent contractors due to increased activities.
Cash flows and liquidity
Cash flows by business activity for the six months ended June 30, 2026 and 2025 are presented in the following table ($ in thousands).
|
2026 |
2025 |
||||||||
|
Members' capital |
|||||||||
|
Distributions to members, net of DRIP |
$ |
(1,055 |
) |
$ |
(1,398 |
) |
|||
|
Redemptions, net |
(1,582 |
) |
(1,674 |
) |
|||||
|
O&O expenses repaid by RMC |
5 |
11 |
|||||||
|
Cash - members' capital, net |
(2,632 |
) |
(3,061 |
) |
|||||
|
Borrowings |
|||||||||
|
Line of credit borrowings (payments), net |
1,900 |
(4,000 |
) |
||||||
|
Interest paid |
(52 |
) |
(75 |
) |
|||||
|
Debt issuance costs paid |
(65 |
) |
- |
||||||
|
Cash - borrowings, net |
1,783 |
(4,075 |
) |
||||||
|
Cash - members' capital and borrowings, net |
(849 |
) |
(7,136 |
) |
|||||
|
Loan principal/advances/interest |
|||||||||
|
Loans funded & advances, net |
(11,098 |
) |
(15,054 |
) |
|||||
|
Principal collected |
11,480 |
23,293 |
|||||||
|
Loans sold to non-affiliate |
3,384 |
1,076 |
|||||||
|
Interest received, net |
2,389 |
2,122 |
|||||||
|
Late fees |
(6 |
) |
14 |
||||||
|
Cash - loans, net |
6,149 |
11,451 |
|||||||
|
Formation loan collected |
208 |
104 |
|||||||
|
Operations expense |
(1,185 |
) |
(1,594 |
) |
|||||
|
REO |
|||||||||
|
REO holding costs |
(142 |
) |
- |
||||||
|
REO sales |
1,065 |
- |
|||||||
|
Cash - REO operations and sales |
923 |
- |
|||||||
|
Net change in cash |
$ |
5,246 |
$ |
2,825 |
|||||
|
Cash, end of year |
$ |
5,808 |
$ |
14,883 |
|||||
Distributions to members
To determine the amount of cash to be distributed in any month, the company relies in part on its forecast of full-year net income, which takes into account the difference between the forecasted net income for the remainder of the year and actual results in the year to date and the requirement to maintain a cash reserve.
Liquidity, borrowings and capital resources
The ongoing sources of funds are the proceeds from:
•
loan payoffs;
•
borrowers' monthly principal and interest payments;
•
line of credit advances (to fund secured loans only);
•
loan sales to unaffiliated third parties; and
•
payments from RMC on the outstanding balance of the formation loan.
The company's cash balances are maintained at levels sufficient to support on-going operations and satisfy obligations, without reducing loan fundings or suspending distributions or redemptions, although these options are available if future circumstances warrant. If at any time the company has fully deployed the capital available to lend, the manager would continue to utilize loan assignments to related mortgage funds and loan sales to unaffiliated third parties to maintain liquidity of the company. The manager believes these sources of funds will provide sufficient funds to adequately meet financial obligations for the next twelve months.
In addition, the company has a $10 million revolving line of credit (subject to a borrowing base) and term loan facility which expires on March 13, 2028. Advances on the line of credit are to be used exclusively to fund secured loans. The credit agreement for the facility contains various covenants, including a credit payment delinquency rate (measured quarterly), which, if exceeded, would not allow the company to make further borrowings under the facility until the company regains compliance. See Note 6 (Line of Credit) to the financial statements included in Part II, Item 8 of this report for a detailed presentation of the activity and discussion on additional terms and provisions of the credit agreement (and subsequent modifications), which presentation is incorporated by this reference into this Item II. There can be no assurance that the company will have adequate funds from which loans may be funded.
See Note 6 (Line of Credit) to the financial statements included in Part I, Item 1 of this report for a detailed presentation of the activity and discussion on the terms and provisions of the credit agreement (and subsequent modifications), which presentation is incorporated by this reference into this Item 2.
In the six months ended June 30, 2026, four loans with principal of approximately $3.4 million were sold to an unaffiliated third party, respectively. The company recognized a gain of approximately $2 thousand, net of the commission. In the six months ended June 30, 2025, one loan with principal of approximately $1.1 million was sold to an unaffiliated third party. The company recognized a gain of approximately $8 thousand, net of the commission.
Contractual obligations and commitments
At June 30, 2026, the company had no construction or rehabilitation loans outstanding, no loan commitments pending, and no off-balance sheet arrangements as such arrangements are not permitted by the Operating Agreement. Note 3 (Manager and Other Related Parties) to the financial statements included in Part I, Item 1 of this report presents detailed discussion of the company's contractual obligations to RMC.
Redwood Mortgage Investors IX published this content on August 14, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on August 14, 2026 at 17:56 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]