Company: RWT-PA
Filing Date: 2025-08-08
Form Type: 10-Q
Source: 0000930236-25-000029
Chunk: 189

Company: REDWOOD TRUST INC
Filing Date: 2025-08-08
Form: 10-Q
Item: Part I, Item 1
Chunk 189
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059)Fair Value at End of Period $935,946 $935,946 

(1)Advances reflect newly originated loans that we intend to sell to securitizations or to our joint ventures.

For the three and six months ended June 30, 2025, interest income, net recognized on Legacy bridge and term loans totaled $9 million and $28 million, respectively. These amounts include a net write-off of deferred interest of $0.5 million in the three months ended June 30, 2025 and recognition of $4 million of deferred income during the six months ended June 30, 2025. The decrease in net interest income recognized in the three-month period was due to an increase in the balance of our legacy unsecuritized bridge and term loan portfolios on non-accrual during the quarter.

At June 30, 2025, legacy unsecuritized bridge and term loans in this portfolio with an aggregate fair value of $186 million and an unpaid principal balance of $274 million, were greater than 90+ days delinquent. Included in the 90+ days delinquent balance are legacy bridge loans in foreclosure with an aggregate fair value of $35 million and an aggregate unpaid principal balance of $53 million. Additionally, the fair value of REO associated with legacy unsecuritized bridge loans decreased from $66 million at March 31, 2025, to $58 million at June 30, 2025, resulting from dispositions and a decrease in fair value totaling $9 million, partially offset by transfers to REO of $8 million.

In the second quarter of 2025, the fair value of the legacy unsecuritized bridge and term loan portfolios declined by $69 million. This decline was driven by fair value losses recognized during the period, reflecting adverse market developments and anticipated near-term resolutions on these loans, as well as changes in the underlying performance on certain of these loans, particularly those of the 2021 and 2022 vintage. These valuations are subject to a rigorous fair value process for our residential investor loans, which consistently includes regular management reviews of underlying property fundamentals and the fair value of the collateral securing the loan, updated third-party appraisals, estimated sales costs, and independent market data verification where available. The amounts we may ultimately recover through the foreclosure of loans and the sale of the underlying collateral or through alternative strategies, such as through loan sales or discounted payoffs, could