Company: RWT-PA
Filing Date: 2025-03-03
Form Type: 10-K
Source: 0000930236-25-000007
Chunk: 236

Company: REDWOOD TRUST INC
Filing Date: 2025-03-03
Form: 10-K
Item: Item 1A
Chunk 236
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 in connection with executing securitization transactions.

Various federal and state laws and regulations impact our ability to execute securitization transactions, including the Dodd-Frank Act. Provisions of the Dodd-Frank Act relate to, among other things, the legal and regulatory framework under which ABS, including RMBS and securities backed by residential investor mortgage loans and HEI, are issued through the execution of securitization transactions. In addition, the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC) have published regulations relating to the issuance of ABS, including RMBS; and recently, the SEC finalized regulations prohibiting certain conflicts of interest in securitization transactions which will require us, as a sponsor of securitization transactions, to adopt policies and procedures for reviewing, approving and tracking transactions that could be considered “conflicted transactions” and these regulations could limit certain risk mitigating practices we might otherwise seek to engage in and/or increase the cost and operational burden of compliance. Furthermore, as further discussed within these Risk Factors, in January 2025, the Maryland OFR issued emergency regulations and formal guidance providing that, unless exempt or otherwise not so required, an issuer of mortgage-backed securities must obtain the appropriate Maryland licenses or face OFR administrative action against the issuer and/or other transaction parties, including potential assessment of civil monetary penalties and issuance of cease-and-desist orders. OFR and industry representatives recently proposed legislation that would provide a licensing exemption for entities that acquire mortgage loans by assignment but do not originate, service, or collect these loans on their own behalf (e.g., securitization trusts), but there is no assurance this proposed legislation will become law. Absent superseding action by OFR or the Maryland legislature, mortgage securitization trusts holding Maryland loans—including trusts that have issued Redwood- or CoreVest-sponsored securities—will be expected to obtain the appropriate licenses, which could be complicated, time consuming, costly, and/or lead to enforcement activity or litigation. Additional federal or state laws and regulations that could affect our ability to execute future securitization transactions could be proposed, enacted, or implemented. In addition, various federal and state agencies and law enforcement authorities, as well as private litigants, have initiated and may, in the future, initiate additional broad-based enforcement actions or claims, the resolution of which may include industry-wide changes to the way mortgage loans and HEI are originated, transferred, serviced, and securitized, and any of these changes could also affect