Company: RWT-PA
Filing Date: 2025-03-03
Form Type: 10-K
Source: 0000930236-25-000007
Chunk: 248

Company: REDWOOD TRUST INC
Filing Date: 2025-03-03
Form: 10-K
Item: Item 1A
Chunk 248
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 to enforcement actions relating to our HEI business and investments, which could include determinations that the HEI we originate or purchase could be impaired. 

In addition, federal lawmakers, regulatory agencies or a civil litigant may undertake enforcement actions and/or attempt to recharacterize or regulate HEI as mortgage loans under federal law. For example, as further discussed within these Risk Factors, the 

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January 2025 CFPB Actions expressed non-binding views by the CFPB regarding HEI, including that one particular consumer’s HEI contract is a “residential mortgage loan” and therefore “credit” under TILA. If HEI are recharacterized as mortgage loans under federal law, a number of additional federal laws and regulations may apply to the origination, servicing or ownership of HEI, including, among other things, federal laws such as ECOA, HMDA, RESPA, or TILA, among others, as well as regulations promulgated thereunder. If the CFPB, or another federal or state regulator, were to regulate HEI as a form of credit, our compliance costs would increase, and such regulation could negatively, and materially, impact our business, assets, financial condition, and results of operations. Violations of, or noncompliance with, federal and other laws and regulations also carry the risk of significant penalties, damages, and other remedies that may be sought by governmental authorities or civil litigants, including rescission and/or required disgorgement of payments received. Such remedies, if imposed, could have a negative impact on our financial or operational results, the validity or enforceability of HEI we own or securitize, and/or the ability to collect on such HEI, any of which could have a negative impact on the value of HEI and HEI-related assets we own.

To the extent HEI or HEI-related assets are broadly subjected to new or modified form(s) of regulation, regulatory enforcement, litigation or claims, or are recharacterized or regulated as loans—whether such regulation or claims are initiated by federal, state or local governmental, quasi-governmental or consumer rights organizations, by homeowners themselves, or otherwise—we may be unable to continue our HEI transaction volume at current levels (or at all), we may be unable to realize expectations as to revenue or profit from our HEI business or investments or to enforce our rights under HEI we own, or we could be subjected to civil penalties, fines or damages, any of which might be