Company: RWT-PA
Filing Date: 2025-05-09
Form Type: 10-Q
Source: 0000930236-25-000020
Chunk: 264

Company: REDWOOD TRUST INC
Filing Date: 2025-05-09
Form: 10-Q
Item: Part I, Item 8
Chunk 264
---
 1940;

•our stock may experience price declines, volatility, and poor liquidity, and we may reduce our dividends;

•decisions about raising, managing, and distributing capital;

•dividend distributions and the timing and character of such dividends may change; 

•limited number of institutional shareholders own a significant percentage of our common stock; and

•other factors not yet identified, including broad market fluctuations.

This Quarterly Report on Form 10-Q may contain statistics and other data that in some cases have been obtained from or compiled from information made available by servicers and other third-party service providers.

51

OVERVIEW

Business Update

Our results during the first quarter of 2025 demonstrate the progress of our strategic objectives, especially as our business lines —which encompass a broad suite of non-Agency products, connect borrowers not well-served by government programs with global asset allocators seeking exposure to U.S. housing. While the large money-center banks recently reported quarterly mortgage volume declines of 20% to 30%, our Sequoia jumbo lock volumes rose 73% from the prior quarter to $4 billion, our highest quarterly volume since the third quarter of 2021, which was a period of extreme quantitative easing by the Federal Reserve. Growth in our quarterly jumbo loan flow volume was supplemented by the acquisition of large, seasoned loan pools from both money-center and regional banks, driving higher annualized return on equity (“ROE”) for our Sequoia Mortgage Banking segment, with margins remaining above our historical target range. After making significant inroads with depositories over the past few years, bulk activity with banks now represents a unique and active addressable market for us.

During the first quarter, we expanded our Aspire platform by offering to our seller base an expanded set of loan products tailored to borrowers requiring an alternative underwriting approach. Aspire achieved lock volume of over $100 million in the first quarter, across nearly 25 sellers, including large mortgage originators who have recently broadened their mandates to include this type of lending. Aspire’s current focus is targeted at origination criteria outside of the conventional “W-2” borrower, a historically manual underwriting discipline that can be uniquely influenced by technology enhancements. This notably includes artificial intelligence (“AI”), a technology that continues to dominate the tech landscape. Redwood is actively developing its own data and AI capabilities to more effectively harness this potential and transform the borrowing experience for the prospective homeowners that our loan sellers serve. By providing these innovations to both specialty non-QM originators and