Company: RWT-PA
Filing Date: 2025-05-09
Form Type: 10-Q
Source: 0000930236-25-000020
Chunk: 9

Company: REDWOOD TRUST INC
Filing Date: 2025-05-09
Form: 10-Q
Item: Part I, Item 2
Chunk 9
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 of lower variable-rate borrowing costs on our loan warehouse facilities.

Corporate net interest expense increased by $1.6 million during the first quarter of 2025. The increase was related to the higher cost of corporate unsecured debt relative to repurchases and payoffs of older vintage, lower coupon convertible debt. In particular, the majority of this increase was associated with the issuance of  $90 million of 9.125% senior notes issued in January 2025.  

Additional detail on net interest income is provided in the “Net Interest Income” section that follows.

Mortgage Banking Activities, Net 

Mortgage Banking activities, net increased by $7 million during the first quarter of 2025, primarily due to higher Sequoia Mortgage Banking revenues. 

The increase in Sequoia Mortgage Banking activities of $5 million was primarily attributable to an increase in lock volumes of 73% from last quarter from banks and independent mortgage bankers ("IMBs") across bulk and flow transactions, including our purchase commitment to buy a $1 billion bulk pool of seasoned jumbo loans from a large bank.

The increase in CoreVest Mortgage Banking activities of $1 million was primarily attributable to improved economics from whole loan sales and sales to joint ventures, which partially offset slightly lower margins and a 4% decline in funding volumes quarter over quarter.

A more detailed analysis of the changes in this line item is included in the “Sequoia Mortgage Banking Segment” and “CoreVest Mortgage Banking Segment” sections that follows. 

Investment Fair Value Changes, Net

Investment fair value changes, net improved by $20 million to a $5 million loss during the first quarter of 2025, driven in part by investment fair value gains, net on Third-Party Portfolio Investments as a decline in benchmark interest rates resulted in higher valuations. This was partially offset by higher residential bridge loan delinquencies resulting in incremental negative fair value changes on certain 2021 and 2022 vintage bridge loans in Legacy Bridge Loan Investments.

A more detailed analysis of the changes in this line item is included in the “Redwood Investments Segment” section that follows. 

HEI Income, net

HEI income, net increased by $4 million during the first quarter of 2025, primarily due to home price appreciation and prepayment speeds steadily improving relative to modeled assumptions. HEI income, net is primarily comprised of increases in the underlying value of the investments as driven by home price appreciation and other factors, such