Company: RWT-PA
Filing Date: 2025-01-16
Form Type: 424B5
Source: 0001104659-25-004099
Chunk: 100

Company: REDWOOD TRUST INC
Filing Date: 2025-01-16
Form: 424B5
Chunk 100
---
IC securitizations include imbedded interest swap
or cap contracts or other derivative instruments that potentially could produce non-qualifying income for the holder of the related REMIC
securities. In the case of CMBS treated as interests in grantor trusts, we would be treated as owning an undivided beneficial ownership
interest in the mortgage loans held by the grantor trust. The interest, original issue discount and market discount on such mortgage
loans would be qualifying income for purposes of the 75% gross income test to the extent that the obligation is secured by real property
and, if an obligation is secured by a mortgage on both real property and personal property, the fair market value of such personal property
does not exceed 15% of the total fair market value of all such property, as discussed above.

We believe that the interest
income that we receive from our mortgage-related investments and securities generally will be qualifying income for purposes of both
the 75% and 95% gross income tests. However, to the extent we own non-REMIC collateralized mortgage obligations or other debt instruments
secured by mortgage loans (rather than by real property) or secured by non-real estate assets, or debt securities that are not secured
by mortgages on real property or interests in real property, the interest income received with respect to such securities generally will
be qualifying income for purposes of the 95% gross income test, but not the 75% gross income test.

Fee Income

We may receive various fees
in connection with our operations. The fees generally will be qualifying income for purposes of both the 75% and 95% gross income tests
if they are received in consideration for entering into an agreement to make a loan secured by real property and the fees are not determined
by the income or profits of any person. Other fees are not qualifying income for purposes of either the 75% or 95% gross income test.
Any fees earned by a TRS are not included for purposes of the gross income tests.

Dividend and Certain Foreign Income

We may receive distributions
from TRSs or other corporations that are not REITs or qualified REIT subsidiaries. These distributions generally will be classified as
dividend income to the extent of the earnings and profits of the distributing corporation. Such distributions generally will constitute
qualifying income for purposes of the 95% gross income test, but not the 75% gross income test. Any dividends we receive from a REIT
will be qualifying income