Company: RWT-PA
Filing Date: 2025-01-15
Form Type: 424B5
Source: 0001104659-25-003632
Chunk: 107

Company: REDWOOD TRUST INC
Filing Date: 2025-01-15
Form: 424B5
Chunk 107
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 property).

<div align='center'>37</div>

We believe that the assets
comprising our mortgage-related investments and securities that we own generally are qualifying assets for purposes of the 75% asset
test, and that our ownership of TRSs and other assets have been structured in a manner that will comply with the foregoing REIT asset
requirements, and we monitor compliance on an ongoing basis. There can be no assurance, however, that we will always be successful in
this effort. In this regard, to determine compliance with these requirements, we need to estimate the value of our assets, and we do
not expect to obtain independent appraisals to support our conclusions as to the total value of our assets or the value of any particular
security or other asset. Moreover, values of some assets, including our interests in our TRSs, may not be susceptible to a precise determination
and are subject to change in the future. Although we will continue to be prudent in making these estimates, there can be no assurance
that the IRS will not disagree with these determinations and assert that a different value is applicable, in which case we might not
satisfy the REIT asset tests, and could fail to qualify as a REIT.

In the event that we invest
in a mortgage loan that is not fully secured by real property, Revenue Procedure 2014-51 provides a safe harbor under which the IRS has
stated that it will not challenge a REIT’s treatment of a loan as being, in part, a qualifying real estate asset in an amount equal
to the lesser of: (1) the greater of (a) the fair market value of the real property securing the loan determined as of the
date the REIT committed to acquire the loan or (b) the fair market value of the real property securing the loan on the relevant
quarterly REIT asset testing date; or (2) the fair market value of the loan on the date of the relevant quarterly REIT asset testing
date. We intend to invest in mortgage loans in a manner consistent with satisfying the asset tests and maintaining our qualification
as a REIT.

The proper classification
of an instrument as debt or equity for U.S. federal income tax purposes may be uncertain in some circumstances, which could affect the
application of the REIT asset tests. Accordingly, there can be no assurance that the IRS will not assert that our interests in subsidiaries
or in the securities of other issuers caused a violation of the REIT