Company: RWT-PA
Filing Date: 2025-08-08
Form Type: 10-Q
Source: 0000930236-25-000029
Chunk: 41

Company: REDWOOD TRUST INC
Filing Date: 2025-08-08
Form: 10-Q
Item: Part I, Item 2
Chunk 41
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 $14 million fair value loss on our third-party originated HEI portfolio. The latter of which reflects the anticipated near-term sale of a substantial portion of this portfolio.

 Capital allocated to Legacy Investments declined by $107 million or 17% at June 30, 2025 from March 31, 2025, largely due to paydowns, sales and fair value adjustments of our legacy unsecuritized bridge and term loan portfolios and the sale, or pending sale, of non-core third-party securities portfolio and other legacy assets. Looking ahead, we intend to continue reducing our capital allocation to Legacy Investments, targeting a decrease to approximately 20% by year-end 2025 from 33% at the end of the second quarter. This would allow us to potentially reallocate up to $200 to $250 million of capital to our core mortgage banking platforms over time. While subject to market conditions and execution timing, our long-term goal is to bring the percentage of our capital allocated to Legacy Investments down to a range of 0% to 5% by the end of 2026. As we execute on this reallocation strategy, we believe there is an opportunity for consolidated returns to improve.

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

The decrease in segment contribution in the six months ended June 30, 2025, as compared to the six months ended June 30, 2024 is due to the decline in Investment fair value changes, net of $67 million and the decline in HEI income, net of $28 million, driven by similar trends as mentioned above.

Investments Detail and Activity

This section presents additional details on our securities portfolio, home equity investments and unsecuritized residential investor loans held in this segment and their activity during the three and six months ended June 30, 2025. 

Securities Portfolio

The following table sets forth activity in our securities held in our Legacy Investments segment for the three and six months ended June 30, 2025. This table includes our economic interests in securities issued by consolidated re-performing loan securitization entities which we consolidate in accordance with GAAP. For GAAP purposes, we consolidated $1.26 billion of loans and $1.01 billion of ABS issued associated with these investments at June 30, 2025. We consolidated $1.24 billion of loans and $1.01 billion of ABS issued associated with these investments at December 31