Company: RWT-PA
Filing Date: 2025-08-08
Form Type: 10-Q
Source: 0000930236-25-000029
Chunk: 155

Company: REDWOOD TRUST INC
Filing Date: 2025-08-08
Form: 10-Q
Item: Part I, Item 1
Chunk 155
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 unsecuritized bridge and term loan portfolios, our third-party securities portfolio, and other non-core legacy assets. These assets are in the active process of sale, runoff, or other disposition as part of accelerated strategic repositioning of our business model. This segment is expected to wind down over time as the assets are sold or otherwise resolved. 

Sequoia Mortgage Banking contributed $3 million lower net interest income due to lower volume as total lock volumes fell by 10% compared to the first quarter of 2025. Furthermore, a large, seasoned bulk portfolio that we locked in the first quarter and settled in the second quarter lowered the gross coupon on our pipeline relative to the first quarter.

Additional detail on net interest income is provided in the “Net Interest Income” section that follows.

Mortgage Banking Activities, Net 

Mortgage Banking activities, net increased by $8 million during the second quarter of 2025, primarily due to higher CoreVest Mortgage Banking revenues. 

The increase in CoreVest Mortgage Banking activities of $6 million was primarily attributable to improved economics from whole loan sales and joint venture executions, as we saw a 38% increase in loan distribution volume to $583 million, the highest level of quarterly distribution in CoreVest's history. Increased volume and our origination mix contributed to the increase in revenue, as loan fundings increased by 6% to $509 million, compared to the prior quarter. Notably we saw higher originations of higher-margin term loans. 

The increase in Sequoia Mortgage Banking activities of $2 million was primarily attributable to a strong execution on loan sales despite a 10% decline in total lock volume from the prior quarter, as well as outperformance of this segment's interest rate hedges. Gain-on-sale margins expanded to 131 basis points, exceeding historical averages, and distribution activity remained robust, with $2.9 billion of loans distributed.

A more detailed analysis of the changes in this line item is included in the “Sequoia Mortgage Banking Segment” and “CoreVest Mortgage Banking Segment” sections that follows. 

Investment Fair Value Changes, Net

Investment fair value changes, net declined by $80 million, resulting in a loss of $85 million during the second quarter of 2025. The decline was primarily driven by negative fair value adjustments on our legacy unsecuritized bridge loans, and to a lesser extent, legacy unsecuritized term loans, reflecting both realized and anticipated