Company: RWT-PA
Filing Date: 2025-08-08
Form Type: 10-Q
Source: 0000930236-25-000029
Chunk: 267

Company: REDWOOD TRUST INC
Filing Date: 2025-08-08
Form: 10-Q
Item: Part I, Item 8
Chunk 267
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2024, our consolidated balance sheets included 90 AFS securities, of which 20 were in an unrealized loss position and 11 were in a continuous unrealized loss position for 12 consecutive months or longer.Allowance for Credit LossesCredit impairments on our AFS securities are recorded in earnings using an allowance for credit losses, with the allowance limited to the amount by which the security's fair value is less than its amortized cost basis. We evaluate all securities in an unrealized loss position to determine if the impairment is credit-related (resulting in an allowance for credit losses recorded in earnings) or non-credit-related (resulting in an unrealized loss through other comprehensive income). The allowance for credit losses is calculated using a discounted cash flow approach and is measured as the difference between the beneficial interest’s amortized cost and the estimate of cash flows expected to be collected, discounted at the effective interest rate used to accrete the beneficial interest. No allowance is recorded for beneficial interests in an unrealized gain position. At June 30, 2025, our allowance for credit losses related to our AFS securities was $0.8 million.The following table details the activity related to the allowance for credit losses for AFS securities for the three and six months ended June 30, 2025 and 2024.Table 9.4 – Rollforward of Allowance for Credit LossesThree Months Ended June 30,(In Thousands)20252024Beginning balance allowance for credit losses$854 $1,853 Additional decreases to the allowance for credit losses on securities that had an allowance recorded in a previous period(15)(514)Ending balance of allowance for credit losses$839 $1,339 Six Months Ended June 30,(In Thousands)20252024Beginning balance allowance for credit losses$921 $2,482 Additional decreases to the allowance for credit losses on securities that had an allowance recorded in a previous period(82)(1,143)Ending balance of allowance for credit losses$839 $1,339 

34

REDWOOD TRUST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025(Unaudited) 

Note 10. Home Equity Investments (HEI)

 We have historically invested in HEI contracts from third party originators, however, we ceased new investments in third-party originated HEI contracts and began originating HEI directly in 2023 through our own Aspire HEI platform.