Company: RWT-PA
Filing Date: 2025-11-07
Form Type: 10-Q
Source: 0000930236-25-000037
Chunk: 87

Company: REDWOOD TRUST INC
Filing Date: 2025-11-07
Form: 10-Q
Item: Part I, Item 1
Chunk 87
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 The outstanding residential investor bridge loans held-for-investment at September 30, 2025 were first-lien, interest-only loans with original maturities of 8 to 36 months and were comprised of 37% one-month SOFR-indexed adjustable-rate loans, and 63% fixed-rate loans.At September 30, 2025, $626 million of our residential investor unsecuritized bridge loans were classified as HFS in connection with our planned disposition strategy for non-core assets or are loans that we intend to sell through securitizations or whole loan sales. During the third quarter of 2025, as part of our plans to accelerate the wind-down of the Legacy Investments portfolio, we transferred a portfolio totaling $484 million in fair value of legacy unsecuritized bridge loans and REO assets to the Legacy Trust. These transfers met the criteria to be accounted for as sales for financial reporting purposes, in accordance with GAAP. We determined that the Legacy Trust is a variable-interest entity ("VIE") but that Redwood is not the primary beneficiary, as we do not have the power to direct the activities that most significantly affect the Legacy Trust’s economic performance. Accordingly, the Legacy Trust is not consolidated in our financial statements. In connection with this transfer, we recognized a negative $6 million investment fair value change within our Consolidated Statements of (Loss) Income, reflecting adjustments associated with completing the transaction. As part of the transaction, we retained a $182 million subordinate beneficial interest in the Legacy Trust, which is recorded as an AFS real estate security on our Consolidated balance sheet, as well as a funding commitment to provide capital support if the Legacy Trust’s portfolio loan-to-value ratios exceed specified thresholds. See Notes 9 and 19 for further discussion on the beneficial interest and the funding commitment, respectively. The change in fair value of residential investor loans from December 31, 2024 to September 30, 2025 reflects both realized and anticipated changes in portfolio performance and composition. The overall decline in fair value was primarily attributable to the unsecuritized residential investor bridge loan portfolio, which decreased to $626 million at September 30, 2025 from $1.1 billion at December 31, 2024. This decline was primarily driven by the sale transaction to the Legacy Trust and other resolutions in the third quarter of 2025. During the nine month period ended September 30, 2025, losses also reflected adverse market developments and the