Castlelake, L.P. and Redwood Trust Inc. (NYSE: RWT) announced the formation of a joint venture to purchase up to $8 billion of prime jumbo mortgage loans through Redwood's Sequoia platform.

The partnership allows Castlelake, a global alternative investment firm, to gain programmatic purchasing power for fully documented prime jumbo mortgage loans. Sequoia will source, aggregate, and conduct due diligence on loans that meet defined eligibility criteria.

"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," said Lucas Jackson, Head of North American Residential Mortgage Finance at Castlelake.

Redwood reported that Sequoia has experienced growth over the past year, with loan acquisition volumes more than doubling. "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," said Brooke Carillo, Executive Vice President and Chief Financial Officer at Redwood Trust.

Redwood's Sequoia platform has operated as a non-agency correspondent platform since the company's founding in 1994. The platform has purchased approximately $100 billion of loans and securitized over $50 billion throughout its operation.

Castlelake manages approximately $36 billion of assets and has acquired or financed more than $10 billion in residential and commercial loans since 2024. The firm operates as a strategic partner of Brookfield Asset Management Ltd.

The joint venture includes flexibility to scale as opportunities emerge, including potential acquisition of seasoned loans from bank balance sheets, according to the companies' statement.