Company: RWT-PA
Filing Date: 2025-01-15
Form Type: 424B5
Source: 0001104659-25-003632
Chunk: 42

Company: REDWOOD TRUST INC
Filing Date: 2025-01-15
Form: 424B5
Chunk 42
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 there could be downward    
 pressure on the price of the notes in the open market after pricing that could adversely       
 affect investors who purchase in the offering.                                                 |

<div align='center'>S-25</div>

| · | Penalty                                                                                       
 bids permit the underwriters to reclaim a selling concession from a syndicate member when     
 the notes originally sold by the syndicate member are purchased in a stabilizing or syndicate 
 covering transaction to cover syndicate short positions.                                      |

These stabilizing transactions,
syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of the notes and our
common stock or preventing or retarding a decline in the market price of the notes and our common stock. As a result the price of the
notes may be higher than the price that might otherwise exist in the open market. These transactions may be effected on the NYSE or otherwise
and, if commenced, may be discontinued at any time.

Neither we
nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of our notes. In addition, neither we nor any of the underwriters make any representation that
the representatives will engage in these transactions or that these transactions, once committed, will not be discontinued without notice.

Conflicts of Interest and Other Relationships

Certain of the underwriters
and their affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial
and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage
and other financial and non-financial activities and services. Certain of the underwriters and their affiliates have provided, and may
in the future provide, a variety of these services to us and to persons and entities with relationships with us, for which they received
or will receive customary fees and expenses, including potentially advising us in connection with the recently proposed acquisition of
an operating platform that originates residential investor loans, together with an associated portfolio of loans and subordinate mortgage-backed
securities.

In the ordinary course of
their various business activities, the underwriters and their affiliates, officers, directors and employees may purchase, sell or hold
a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other
financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve
or relate to our assets, securities