Company: RWT-PA
Filing Date: 2025-08-08
Form Type: 10-Q
Source: 0000930236-25-000029
Chunk: 168

Company: REDWOOD TRUST INC
Filing Date: 2025-08-08
Form: 10-Q
Item: Part I, Item 1
Chunk 168
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wood Investments Portfolio, associated with securitizations we sponsored that we consolidate under GAAP.

Three Months Ended June 30, 2025 Compared to Three Months Ended March 31, 2025 

The decrease in segment contribution in the three months ended June 30, 2025, as compared to the three months ended March 31, 2025, is primarily due to lower lock volumes, partially offset by an increase in gain on sale margins and hedge outperformance. Total lock volume for the second quarter of 2025 was $3.6 billion and reflects a 10% decrease from the prior quarter but a 35% increase compared to the $2.7 billion reported in the second quarter of 2024 (see discussion in the section following for the six-month periods). Note that the quarter over quarter difference was primarily driven by a $1.0 billion seasoned bulk pool that we committed to purchase in the first quarter of 2025. Total lock volume in the second quarter of 2025 included $3.3 billion in Sequoia jumbo locks and $330 million from Aspire's mortgage banking activities.

The lock activity was marked by an increase in on-the-run (or current coupon) production volume, which rose 15% quarter over quarter despite a temporary pullback in April due to tariff-related market volatility. Notably, this was the highest quarter of on-the-run lock volume since 2021, a time when the jumbo mortgage origination market was more than three times the size it is today. The strength of our lock volume is supported by ongoing inroads with our network of 214 loan sellers, a number of which includes some of the largest bank and non-bank jumbo originators in the market.

Gain on sale margins remained above historical targets, at 131 basis points, compared to 123 basis points in the prior quarter and above the long-term target range of 75 to 100 basis points. This improvement was supported by favorable execution conditions and strong institutional demand for Sequoia’s securitized and whole loan offerings.

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Distribution activity remained robust, with $2.9 billion of loans distributed during the quarter ($2.0 billion of which was through securitization and $0.9 billion of which was through whole loan sales), representing the most active distribution period since the second quarter of 2021. Sequoia continued to maintain its leadership in the jumbo loan RMBS market, completing four securitizations (three of