Company: RWT-PA
Filing Date: 2025-11-07
Form Type: 10-Q
Source: 0000930236-25-000037
Chunk: 252

Company: REDWOOD TRUST INC
Filing Date: 2025-11-07
Form: 10-Q
Item: Part I, Item 8
Chunk 252
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 by which the security's fair value is less than its amortized cost basis. We evaluate all securities in an unrealized loss position to determine if the impairment is credit-related (resulting in an allowance for credit losses recorded in earnings) or non-credit-related (resulting in an unrealized loss through other comprehensive income). The allowance for credit losses is calculated using a discounted cash flow approach and is measured as the difference between the beneficial interest’s amortized cost and the estimate of cash flows expected to be collected, discounted at the effective interest rate used to accrete the beneficial interest. No allowance is recorded for beneficial interests in an unrealized gain position. At September 30, 2025, our allowance for credit losses related to our AFS securities was $0.8 million.The following table details the activity related to the allowance for credit losses for AFS securities for the three and nine months ended September 30, 2025 and 2024.Table 9.4 – Rollforward of Allowance for Credit LossesThree Months Ended September 30,(In Thousands)20252024Beginning balance allowance for credit losses$839 $1,339 Additions to allowance for credit losses on securities for which credit losses were not previously recorded— 25 Additional decreases to the allowance for credit losses on securities that had an allowance recorded in a previous period(44)(497)Ending balance of allowance for credit losses$795 $867 Nine Months Ended September 30,(In Thousands)20252024Beginning balance allowance for credit losses$921 $2,482 Additions to allowance for credit losses on securities for which credit losses were not previously recorded— 25 Additional decreases to the allowance for credit losses on securities that had an allowance recorded in a previous period(126)(1,640)Ending balance of allowance for credit losses$795 $867 

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REDWOOD TRUST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2025(Unaudited) 

Note 10. Home Equity Investments (HEI)

 We have historically invested in HEI contracts acquired from third party originators, however, we ceased new investments in third-party originated HEI contracts and began originating HEI directly in 2023 through our own Aspire HEI platform. Each HEI provides the owner of such HEI the right to purchase a percentage ownership interest in an associated residential property, and the homeowner's obligations under the HEI are secured by