Company: RWT-PA
Filing Date: 2025-03-03
Form Type: 10-K
Source: 0000930236-25-000007
Chunk: 223

Company: REDWOOD TRUST INC
Filing Date: 2025-03-03
Form: 10-K
Item: Item 1A
Chunk 223
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 we rely on provide us with inaccurate or fraudulent information), or the scope of our underwriting or due diligence is limited, we may incur losses. Losses could occur due to the fact that a counterparty that sold us a loan or other asset (or that is the obligor or a party related to an obligor of a residential investor loan we originate or acquire) refuses or is unable (e.g., due to its financial condition) to repay or repurchase that loan or asset or pay damages to us if we determine subsequent to purchase that one or more of the representations or warranties made to us in connection with the sale or origination was inaccurate. In addition, when we originate mortgage loans and HEI we rely on title insurance companies and their agents to conduct title review and issue, when applicable, title insurance relating to the validity and priority of any mortgage or lien interest on real property that we receive as collateral. If this title review process is not accurate or if the title insurance company or its agent otherwise fails to properly carry out its procedures (whether due to error, misconduct or fraud) we may not successfully establish the mortgage or lien (or the appropriate mortgage or lien priority) that is contemplated in our underwriting process, which could result in a failure in our ability to realize on the value of the real property collateral securing the loan repayment or HEI obligations owed to us in the event the borrower or HEI optionee fails to fulfill their obligations to us. Moreover, to the extent we seek 

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recourse to title insurance, we may not be successful in receiving insurance proceeds and may expend resources in pursuing title insurance claims.

Our ability to operate our business in the manner described above depends on the availability and productivity of our personnel and the personnel of third-party vendors. To the extent our management or personnel, or those of our key vendors, are impacted in significant numbers by natural disaster, outbreak of pandemic or epidemic disease, or other force majeure event, our business and operating results may be negatively impacted.

In addition, when selling mortgage loans or HEI, or acquiring servicing rights associated with residential mortgage loans, we typically make representations and warranties to the purchaser or to other third parties regarding, among other things, certain characteristics of those assets, including characteristics we seek to verify through our underwriting and due diligence efforts. If our representations and warranties are inaccurate with respect to any asset, we may be obligated to repurchase that asset or pay damages, which may result in a loss. We generally only establish reserves for potential liabilities relating to representations