Company: RWT-PA
Filing Date: 2025-01-15
Form Type: 424B5
Source: 0001104659-25-003632
Chunk: 98

Company: REDWOOD TRUST INC
Filing Date: 2025-01-15
Form: 424B5
Chunk 98
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 95% gross income tests. However, to the extent we own non-REMIC collateralized mortgage obligations or other debt instruments
secured by mortgage loans (rather than by real property) or secured by non-real estate assets, or debt securities that are not secured
by mortgages on real property or interests in real property, the interest income received with respect to such securities generally will
be qualifying income for purposes of the 95% gross income test, but not the 75% gross income test.

Fee Income

We may receive various fees
in connection with our operations. The fees generally will be qualifying income for purposes of both the 75% and 95% gross income tests
if they are received in consideration for entering into an agreement to make a loan secured by real property and the fees are not determined
by the income or profits of any person. Other fees are not qualifying income for purposes of either the 75% or 95% gross income test.
Any fees earned by a TRS are not included for purposes of the gross income tests.

Dividend and Certain Foreign Income

We may receive distributions
from TRSs or other corporations that are not REITs or qualified REIT subsidiaries. These distributions generally will be classified as
dividend income to the extent of the earnings and profits of the distributing corporation. Such distributions generally will constitute
qualifying income for purposes of the 95% gross income test, but not the 75% gross income test. Any dividends we receive from a REIT
will be qualifying income in our hands for purposes of both the 95% and 75% gross income tests.

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Income inclusions from equity
investments in certain foreign corporations, such as controlled foreign corporations and passive foreign investment companies, as defined
in the Code, are technically neither dividends nor any of the other enumerated categories of income specified in the 95% gross income
test for U.S. federal income tax purposes. However, under IRS guidance, certain such income inclusions generally will constitute qualifying
income for purposes of the 95% gross income test.

Hedging Transactions

From time to time, we may
enter into hedging transactions with respect to one or more of our assets or liabilities. Our hedging activities may include entering
into interest rate swaps, caps, and floors, options to purchase these items, and futures and forward contracts. Income from a hedging
transaction, including gain from the sale or disposition of such a transaction, that