Company: RWT-PA
Filing Date: 2025-01-16
Form Type: 424B5
Source: 0001104659-25-004099
Chunk: 42

Company: REDWOOD TRUST INC
Filing Date: 2025-01-16
Form: 424B5
Chunk 42
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 notes involved is greater than the aggregate principal amount of the notes        
 in the over-allotment option. The underwriters may close out any short position by either       
 exercising its over-allotment option and/or purchasing notes in the open market.                |

| · | Syndicate                                                                                      
 covering transactions involve purchases of the notes in the open market after the distribution 
 has been completed in order to cover syndicate short positions. In determining the source      
 of notes to close out the short position, the underwriters will consider, among other things,  
 the price of notes available for purchase in the open market as compared to the price at       
 which they may purchase notes through the over- allotment option. If the underwriters sell     
 more notes than could be covered by the over-allotment option, a naked short position, that    
 position can only be closed out by buying notes in the open market. A naked short position     
 is more likely to be created if the underwriters are concerned that there could be downward    
 pressure on the price of the notes in the open market after pricing that could adversely       
 affect investors who purchase in the offering.                                                 |

<div align='center'>S-25</div>

| · | Penalty                                                                                       
 bids permit the underwriters to reclaim a selling concession from a syndicate member when     
 the notes originally sold by the syndicate member are purchased in a stabilizing or syndicate 
 covering transaction to cover syndicate short positions.                                      |

These stabilizing transactions,
syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of the notes and our
common stock or preventing or retarding a decline in the market price of the notes and our common stock. As a result the price of the
notes may be higher than the price that might otherwise exist in the open market. These transactions may be effected on the NYSE or otherwise
and, if commenced, may be discontinued at any time.

Neither we
nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of our notes. In addition, neither we nor any of the underwriters make any representation that
the representatives will engage in these transactions or that these transactions, once committed, will not be discontinued without notice.

Conflicts of Interest and Other Relationships

Certain of the underwriters
and their affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial
and investment banking,