Castlelake is forming a joint venture with Redwood Trust to purchase up to $8 billion of prime jumbo mortgage loans.

The partnership was designed to support the growth of Redwood's Sequoia platform and give Castlelake, an investment firm specializing in asset-based private credit, programmatic purchasing power for the fully documented loans. Sequoia will source, aggregate and perform due diligence on loans that meet defined criteria, the companies announced in a press release Wednesday.

"Castlelake is pleased to partner with Redwood and its Sequoia platform to provide our investors with access to what we expect to be high-quality, fully documented prime jumbo assets and to establish a relationship grounded in shared principles of disciplined underwriting and strong institutional governance," said Lucas Jackson, head of North American residential mortgage finance, in the release. 

This is the second significant announcement Castlelake has made this month, after buying a majority stake in Resfin Partners last week. It also agreed to purchase up to $2 billion in new nonagency mortgages through a partnership with Invictus Capital Partners last April.

Castlelake has acquired or financed more than $10 billion in residential and commercial loans since 2024, according to the release.

"This transaction highlights Castlelake's granular, loan level approach to deploying capital into opportunities that we expect to create attractive, risk‑adjusted outcomes for our investors," Jackson said.

Redwood has been a player in the prime jumbo mortgage market through its Sequoia platform since Redwood was founded in 1994, the release said. The platform has provided liquidity to the market, buying about $100 billion of loans and securitizing more than $50 billion.

"Sequoia has experienced significant momentum over the past year, with loan acquisition volumes more than doubling as we continue to build share in the jumbo market," said Brooke Carillo, executive vice president and chief financial officer at Redwood, in the release. "We see a dynamic and expanding opportunity set ahead, and this initiative is aligned with our strategy of scaling our platforms alongside leading capital providers."

Redwood hit a record $8.5 billion in mortgage banking production in the first quarter, up from $7.3 billion in the previous quarter. Its mortgage banking platforms posted a combined GAAP net income of $36.7 million, while Sequoia individually locked $6.5 billion of loans, up 22% from the fourth quarter of 2025 and 67% from a year earlier, according to the company's earnings report.

"We delivered a third consecutive quarter of record mortgage banking volume, as Sequoia and Aspire continued to scale while maintaining disciplined margins," CEO Christopher Abate said in a press release. "As we expand our product set and deepen relationships across our ecosystem, we are seeing sustained demand from institutional investors seeking consistent access to the high-quality assets we source."