Company: RWT-PA
Filing Date: 2025-01-15
Form Type: 424B5
Source: 0001104659-25-003632
Chunk: 41

Company: REDWOOD TRUST INC
Filing Date: 2025-01-15
Form: 424B5
Chunk 41
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. The underwriters will have no obligation to make a market in the notes, however, and may cease
market- making activities, if commenced, at any time. Accordingly, an active trading market on the NYSE for the notes may not develop
or, even if one develops, may not last, in which case the liquidity and market price of the notes could be adversely affected, the difference
between bid and asked prices could be substantial and your ability to transfer the notes at the time and price desired will be limited.

Price Stabilization, Short Positions and Penalty Bids

In connection with the offering
the underwriters may engage in stabilizing transactions, over-allotment transactions, syndicate covering transactions, and penalty bids
in accordance with Regulation M under the Exchange Act.

| · | Stabilizing                                                                                  
 transactions permit bids to purchase the underlying security so long as the stabilizing bids 
 do not exceed a specified maximum.                                                           |

| · | Over-allotment                                                                                  
 involves sales by the underwriters of notes in excess of the aggregate principal amount of      
 the notes the underwriters are obligated to purchase, which creates a syndicate short position. 
 The short position may be either a covered short position or a naked short position. In a       
 covered short position, the aggregate principal amount of the notes over-allotted by the        
 underwriters is not greater than the aggregate principal amount of the notes that it may        
 purchase in the over-allotment option. In a naked short position, the aggregate principal       
 amount of the notes involved is greater than the aggregate principal amount of the notes        
 in the over-allotment option. The underwriters may close out any short position by either       
 exercising its over-allotment option and/or purchasing notes in the open market.                |

| · | Syndicate                                                                                      
 covering transactions involve purchases of the notes in the open market after the distribution 
 has been completed in order to cover syndicate short positions. In determining the source      
 of notes to close out the short position, the underwriters will consider, among other things,  
 the price of notes available for purchase in the open market as compared to the price at       
 which they may purchase notes through the over- allotment option. If the underwriters sell     
 more notes than could be covered by the over-allotment option, a naked short position, that    
 position can only be closed out by buying notes in the open market. A naked short position     
 is more likely to be created if the underwriters are concerned that