About Redwood Trust

Redwood Trust, Inc., together with its subsidiaries, is a specialty finance company. The company is focused on several distinct areas of housing credit, with an intention to help make quality housing, whether rented or owned, accessible to all American households. The company’s operating platforms occupy a unique position in the housing finance value chain, providing liquidity to growing segments of the U.S. housing market not well served by government programs. The company delivers customized housing credit investments to a diverse mix of investors through the company’s securitization platforms, whole-loan distribution activities and the company’s publicly-traded securities. The company’s aggregation, origination and investment activities have evolved to incorporate a diverse mix of residential consumer and residential investor housing credit assets. The company’s primary sources of income are net interest income from its investments and non-interest income from the company’s mortgage banking activities. Income from mortgage banking activities is generated through the origination and acquisition of loans, and their subsequent sale, securitization, or transfer to the company’s investment portfolio. The company’s mortgage banking activities and investments in mortgage servicing rights (‘MSRs’) are generally carried out through the company’s taxable REIT subsidiaries, while the company’s portfolio of mortgage- and other real estate-related investments is primarily held at the company’s REIT. Business Segments The company operates its business in three segments: Residential Consumer Mortgage Banking, Residential Investor Mortgage Banking, and Investment Portfolio. The company’s two mortgage banking segments generate income from the origination or acquisition of loans and the subsequent sale or securitization of those loans. The company’s investment portfolio is consisted of investments sourced through the company’s mortgage banking operations, as well as investments purchased from third-parties. Following is a further description of the company’s three business segments: Residential Consumer Mortgage Banking This segment consists of a mortgage loan conduit that acquires residential loans from third-party originators for subsequent sale to whole loan buyers, securitization through the company’s SEMT (Sequoia) private-label securitization program, or transfer into the company’s investment portfolio. The company typically acquires prime jumbo mortgages and the related mortgage servicing rights on a flow basis from the company’s extensive network of loan sellers. Securities that the company retains from its Sequoia securitizations are transferred to and held in the company’s Investment Portfolio segment. This segment also includes various financial instruments, including derivatives and securities, that the company utilizes to manage certain risks associated with its inventory of residential loans held-for-sale within this segment. This segment’s main source of income is net interest income from its inventory of loans held-for-sale, as well as income from mortgage banking activities, which includes valuation changes on loans the company acquires (and associated loan purchase commitments) and subsequently sells, securitizes, or transfers into the company’s investment portfolio, and interest income/expense and gains/losses from hedges used to manage risks associated with these activities. Residential Investor Mortgage Banking This segment consists of a platform that originates business purpose lending (‘BPL’) loans for subsequent securitization, sale, or transfer into the company’s investment portfolio. Business purpose loans are loans to investors in single-family and multifamily residential properties, which the company classifies as either ‘term’ loans (which include loans with maturities that generally range from 3 to 30 years) or ‘bridge’ loans (which include loans with maturities that generally range between 12 and 36 months). Term loans are mortgage loans secured by residential real estate (primarily 1-4 unit detached or multifamily) that the borrower owns as an investment property and rents to residential tenants. BPL bridge loans are mortgage loans, which are generally secured by unoccupied (or in the case of certain multifamily properties, partially occupied) single-family or multifamily residential real estate that the borrower owns as an investment and that is being renovated, rehabilitated or constructed. The company typically distributes most of its term loans through the company’s CAFL private-label securitization program, or through whole loan sales, and typically transfer the company’s BPL bridge loans to co-investments in joint venture partnerships or to the company’s Investment Portfolio, where they will either be retained for investment or securitized, or they are sold as whole loans. This segment also includes various derivative financial instruments that the company utilizes to manage certain risks associated with its inventory of loans held-for-sale. This segment’s main sources of income are net interest income earned from its inventory of loans held-for-sale, as well as income from mortgage banking activities, which includes origination and other fees on loans, valuation changes on loans from the time they are originated or purchased to when they are sold, securitized or transferred into the company’s investment portfolio, and gains/losses from hedges used to manage risks associated with these activities. Investment Portfolio This segment consists of organic investments sourced through the company’s mortgage banking operations, including primarily securities retained from the company’s residential consumer and investor securitization activities, and BPL bridge loans, as well as third-party investments including RMBS issued by third parties, investments in Freddie Mac K-Series multifamily loan securitizations and reperforming loan securitizations, servicer advance investments, home equity investments (‘HEI’), and other housing-related investments and associated hedges. This segment’s main sources of income are net interest income and other income from investments, changes in fair value of investments and associated hedges, and realized gains and losses upon the sale of securities. Consolidated Securitization Entities The company sponsors its SEMT (Sequoia) securitization program, which the company uses for the securitization of residential mortgage loans. The company also sponsors its CAFL securitization program, which the company uses for the securitization of BPL term and bridge mortgage loans. The company refers to these securitization entities as the ‘consolidated CAFL entities’. In addition, the company has co-sponsored securitizations of HEI. The company refers to these securitization entities as ‘HEI securitization entities’. The company also consolidates certain third-party Freddie Mac K-Series and Freddie Mac Seasoned Loans Structured Transaction (‘SLST’) securitization and re-securitization entities that the company determined were VIEs and for which the company determined it was the primary beneficiary. Tax Status The company has elected to be taxed as a real estate investment trust (REIT) under the Internal Revenue Code of 1986, as amended, beginning with its taxable year ended December 31, 1994. The company is required to distribute at least 90% of its REIT taxable income as dividends to shareholders. History Redwood Trust, Inc. was founded in 1994. The company was incorporated in the state of Maryland in 1994.