Company: RWT-PA
Filing Date: 2025-11-07
Form Type: 10-Q
Source: 0000930236-25-000037
Chunk: 253

Company: REDWOOD TRUST INC
Filing Date: 2025-11-07
Form: 10-Q
Item: Part I, Item 8
Chunk 253
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 a lien (primarily second liens) on the property created by recording a security instrument (e.g., deed of trust) with respect to the property. Our investments in HEI expose us to both home price appreciation and depreciation of the associated property. In the second quarter of 2025, we began reporting our third-party originated HEI portfolio within the Legacy Investments segment, consistent with how the CODM evaluates financial performance and allocates resources across our reportable segments.At September 30, 2025 and December 31, 2024, within our Legacy Investments segment, we co-sponsored one and two HEI securitization entities, respectively, that we consolidated in accordance with GAAP, and have elected to account for this securitization under the CFE election. As such, market valuation changes for the securitized HEI are based on the fair value of the associated ABS issued by the entity, including the interest we own, and are reported in HEI income, net on our Consolidated statements of income. During the three months ended September 30, 2025, we called one of our HEI securitization entities and paid off the related outstanding ABS issued. Subsequent to the call of this securitization, we sold previously securitized and unsecuritized third-party originated HEI from our Legacy Investments segment totaling $262 million to a third party. The following table presents our HEI at September 30, 2025 and December 31, 2024.Table 10.1 – Home Equity Investments(In Thousands)September 30, 2025December 31, 2024Unsecuritized HEI$134,156 $257,315 HEI held at consolidated HEI securitization entities192,067 332,470 Total Home Equity Investments at fair value (1)$326,223 $589,785 (1)As of September 30, 2025, balance includes $315 million of third-party originated HEI included in our Legacy Investments segment.The following table details our HEI activity during the three and nine months ended September 30, 2025 and 2024. Changes in the value of HEI during the nine months ended September 30, 2025 are driven by incremental fair value adjustments, reflecting the sales on HEI held in our Legacy Investments segment during the third quarter of 2025. Table 10.2 – Activity of HEIThree Months Ended September 30