Investments in Unconsolidated Entities

3 Months Ended

Mar. 31, 2022

Equity Method Investments and Joint Ventures [Abstract]

Investments in Unconsolidated Entities

Investments in Unconsolidated EntitiesThe Company has various equity investments in entities where it has the ability to exert significant influence over such entity, but does not control such entity. In these cases the criteria for consolidation have not been met and the Company is required to account for such investments under ASC 323-10; the Company has elected the FVO for its investments in unconsolidated entities. As of March 31, 2022 and December 31, 2021, the Company's investments in unconsolidated entities had an aggregate fair value of $219.3 million and $195.6 million, respectively, which is included on the Consolidated Balance Sheet in Investments in unconsolidated entities, at fair value. For the three-month periods ended March 31, 2022, and 2021, the Company recognized $(5.5) million and $6.6 million, respectively, in Earnings (losses) from investments in unconsolidated entities, on its Consolidated Statement of Operations. Certain of the entities that the Company accounts for under ASC 323-10 are deemed to be VIEs, and the maximum amount at risk is generally limited to the Company's investment in the VIE. As of March 31, 2022 and December 31, 2021, the fair value of the Company's investments in unconsolidated entities that have been deemed to be VIEs was $76.8 million and $63.9 million, respectively.

The following table provides details about the Company's investments in unconsolidated entities as of March 31, 2022 and December 31, 2021:

		Percentage Ownership of Unconsolidated Entity
Investment in Unconsolidated Entity	Form of Investment	March 31, 2022	December 31, 2021
Loan Originators:
Longbridge Financial, LLC(1)	Preferred shares	49.6%	49.6%
LendSure Mortgage Corp.(1)(2)	Common shares	49.9%	49.9%
Other(1)(3)	Various	31.5%–80.0%	31.5%–80.0%
Co-investments with Ellington affiliate(s)(1):
Elizon DB 2015-1 LLC(4)(5)	Membership Interest	6.3%	3.4%
Elizon NM CRE 2020-1 LLC(4)(6)	Membership Interest	33.9%	20.5%
Elizon CH CRE 2021-1 LLC(4)(7)	Membership Interest	35.5%	30.5%
Other(4)	Membership Interest	—%	16.8%
Equity investments in securitization-related risk retention vehicles(8)	Membership Interest	24.6%–56.3%	56.3%
Other:
Jepson Holdings Limited(1)(4)	Membership Interest	7.2%	19.6%
Other(1)(4)(9)	Various	8.2%–79.0%	8.0%–79.0%

(1)See Note 13 for additional details on the Company's related party transactions.

(2)Excludes investment in warrants convertible into non-voting common shares; including such warrants the Company's additional non-voting stake in the entity was 13.8% as of both March 31, 2022 and December 31, 2021. See Note 13 Related Party Transactions—Transactions Involving Certain Loan Originators for additional information.

(3)Excludes investment in non-voting common shares of a loan originator; including such shares the Company's additional non-voting stake in such entity was 16.4% as of both March 31, 2022 and December 31, 2021. See Note 13 Related Party Transactions—Transactions Involving Certain Loan Originators for additional information.

(4)The Company has evaluated this entity and determined that it meets the definition of a VIE. The Company evaluated its interest in the VIE and determined that the Company does not have the power to direct the activities of the VIE and does not have control of the underlying assets, where applicable. As a result, the Company determined that it is not the primary beneficiary of this VIE and therefore has not consolidated the VIE.

(5)As discussed in Note 13 Related Party Transactions—Participation in Multi-Borrower Financing Facilities, the Company and the Affiliated Entities (as defined in Note 13) each consolidate their segregated silos of the Joint Entity (as defined in Note 13). The Company's effective percentage ownership before the effects of consolidation of both its and the Affiliated Entities' respective segregated silos of the Joint Entity, was 52.8% and 47.5% as of March 31, 2022 and December 31, 2021, respectively.

(6)As discussed in Note 13 Related Party Transactions—Participation in Multi-Borrower Financing Facilities, the Company and the Affiliated Entities (as defined in Note 13) each consolidate their segregated silos of the Joint Entity (as defined in Note 13). The Company's effective percentage ownership before the effects of consolidation of both its and the Affiliated Entities' respective segregated silos of the Joint Entity, was 29.3% and 31.0% as of March 31, 2022 and December 31, 2021, respectively.

(7)As discussed in Note 13 Related Party Transactions—Participation in Multi-Borrower Financing Facilities, the Company and the Affiliated Entities (as defined in Note 13) each consolidate their segregated silos of the Joint Entity (as defined in Note 13). The Company's effective percentage ownership before the effects of consolidation of both its and the Affiliated Entities' respective segregated silos of the Joint Entity, was 57.4% and 44.8% as of March 31, 2022 and December 31, 2021, respectively.

(8)Includes interests in Consumer Risk Retention Vehicles, as defined in Note 10—Participation in Multi-Seller Consumer Loan Securitizations. The Company has evaluated these entities and determined that they do not meet the definition of a VIE. The Company evaluated its interest in the entity under the voting interest model outlined in ASC 810, and has determined that the Company does not control these entities. As a result, the Company has not consolidated the entity. See Note 10 for additional details on the Company's securitization transactions.

(9)Includes interest in warehouse facilities; see Note 13—Participation in CLO Transactions, for additional details.

As of March 31, 2022 and December 31, 2021, the Company had non-controlling equity interests in various loan originators with an aggregate fair value of $130.2 million and $137.8 million, respectively. As of March, 2022, the Company's two largest investments in unconsolidated entities were in mortgage loan originators, LendSure Mortgage Corp., or "LendSure" and Longbridge Financial, LLC, or "Longbridge."

The Company's investment in LendSure was considered significant pursuant to Regulation S-X for the three-month period ended March 31, 2022. For the three-month periods ended March 31, 2022 and 2021, the Company recognized $(4.3) million and $2.4 million, respectively of unrealized gains (losses) from its investment in Lendsure, which is included in Earnings (losses) from investments in unconsolidated entities on the Condensed Consolidated Statement of Operations. As of March 31, 2022 and December 31, 2021, the fair value of the Company's investment in LendSure was $41.2 million and $45.5 million, respectively, which is included on the Condensed Consolidated Balance Sheet in Investments in unconsolidated entities, at fair value. The following table provides a summary of the results of operations of LendSure for the three-month periods ended March 31, 2022 and 2021.

	Three-Month Period Ended
(In thousands)	March 31, 2022		March 31, 2021
Revenue	$	15,562	$	12,365
Net income (loss)	$	399	$	3,630

The Company's investment in Longbridge was considered significant pursuant to Regulation S-X for the three-month period ended March 31, 2022. For the three-month periods ended March 31, 2022 and 2021, the Company recognized $(3.2) million and $0.5 million, respectively of unrealized gains (losses) from its investment in Longbridge, which is included in Earnings (losses) from investments in unconsolidated entities on the Condensed Consolidated Statement of Operations. As of March 31, 2022 and December 31, 2021, the fair value of the Company's investment in Longbridge was $71.3 million and $74.5 million, respectively, which is included on the Condensed Consolidated Balance Sheet in Investments in unconsolidated entities, at fair value. The following table provides a summary of the results of operations of Longbridge for the three-month period ended March 31, 2022 and 2021.

	Three-Month Period Ended
(In thousands)	March 31, 2022		March 31, 2021
Revenue(1)	$	(57,741)	$	38,536
Net income (loss)	$	(10,651)	$	12,526

(1)Longbridge includes in Revenue mark-to-market gains and losses on certain reverse mortgage loans held for investment.