Company: RWT-PA
Filing Date: 2025-08-08
Form Type: 10-Q
Source: 0000930236-25-000029
Chunk: 107

Company: REDWOOD TRUST INC
Filing Date: 2025-08-08
Form: 10-Q
Item: Part I, Item 1
Chunk 107
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 $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. Each HEI provides the owner of such HEI the right to purchase a percentage ownership interest in an associated residential property, and the homeowner's obligations under the HEI are secured by a lien (primarily second liens) on the property created by recording a security instrument (e.g., deed of trust) with respect to the property. Our investments in HEI expose us to both home price appreciation and depreciation of the associated property.We co-sponsor two HEI securitization entities that we consolidated in accordance with GAAP, and have elected to account for them under the CFE election. As such, market valuation changes for the securitized HEI are based on the fair value of the associated ABS issued by the entity, including the interest we own, and are reported in HEI income, net on our Consolidated statements of income.In the second quarter of 2025, we began reporting our third-party originated HEI portfolio within the Legacy Investments segment, consistent with how the CODM evaluates financial performance and allocates resources across our reportable segments.The following table presents our HEI at June 30, 2025 and December 31, 2024.Table 10.1 – Home Equity Investments(In Thousands)June 30, 2025December 31, 2024Unsecuritized HEI$246,355 $257,315 HEI held at consolidated HEI securitization entities341,281 332,470 Total Home Equity Investments at fair