REDWOOD TRUST INC

Summary

In addition to the proceeds from equity and debt capital-raising transactions, our principal sources of cash and liquidity consist of borrowings under mortgage loan and HEI warehouse facilities, secured term financing facilities, securities repurchase agreements, a corporate secured revolving financing facility, payments of principal and interest we receive from our investment portfolio assets, proceeds from the sale of investment portfolio assets, and cash generated from our mortgage banking operating activities, such as the sale and securitization of mortgage loans.

Our most significant uses of cash are to purchase and originate mortgage loans for our mortgage banking operations, including financing loans held for sale and managing hedges associated with those activities; to purchase investment securities and make other investments, to repay principal and interest on our debt, including warehouse and other recourse borrowings as loans are sold or securitized; to meet margin calls associated with our debt and other obligations, to make dividend payments on our capital stock, to fund draws on our bridge loan portfolio and other commitments when requested, and to fund our operations.

At December 31, 2025, our total capital was $1.76 billion, consisting of (i) $0.98 billion of equity capital, (ii) $769 million of convertible notes and other corporate debt on our consolidated balance sheets (including $297 million of convertible debt due in 2027, $143 million of senior unsecured notes due in 2029, $189 million of senior unsecured notes due in 2030, and $140 million of trust-preferred securities due in 2037), and (iii) $9 million of promissory notes payable on demand, subject to a 90-day notice. Excluding the $9 million promissory notes payable on demand within 90 days, at December 31, 2025, our corporate debt does not have any portion maturing in 2026.

Our capital structure continues to reflect the strategic shift toward mortgage banking, which is characterized by faster capital turnover and an originate-to-distribute model. Approximately 62% of our recourse debt is concentrated within our mortgage banking platforms, where loans typically remain on balance sheet for a short duration and related borrowings are repaid as loans are sold or securitized, supporting rapid recycling of our capital for subsequent reinvestment.

Liquidity remains strong, with $256 million of unrestricted cash at December 31, 2025, providing meaningful financial flexibility. While we believe our available cash is sufficient to fund our operations, we may raise equity or debt capital from time to time to increase our unrestricted cash and liquidity, to repay existing debt, to make long-term portfolio investments, to fund strategic acquisitions and investments, or for other purposes. In particular, we continue to focus on additional joint ventures with strategic investors who seek to acquire the assets our operations originate and source and/or seek to provide capital to support the growth potential of our operating platforms. To the extent we seek to raise additional capital, our approach will continue to be based on what we believe to be in the best interests of the Company.

In the discussion that follows and throughout this document, we distinguish between marginable and non-marginable debt and recourse and non-recourse debt. Refer to the section set forth below under the heading "Risks Relating to Debt Incurred under Borrowing Facilities" for additional information regarding these terms on our debt.

At December 31, 2025, in aggregate, we had $3.63 billion of secured recourse debt outstanding, financing our mortgage banking operations and investment portfolio, of which $2.71 billion was marginable and $926 million was non-marginable. The majority of this debt relates to short-term warehouse financing supporting our Sequoia and Aspire mortgage banking platforms, where capital turns rapidly, with loans remaining on balance sheet for an average of approximately 36 days before being sold or securitized.

We are subject to risks relating to our liquidity and capital resources, including risks relating to incurring debt under loan warehouse facilities, securities repurchase facilities, other short- and long-term debt facilities, and other risks relating to our corporate debt and use of derivatives. A further discussion of these risks is set forth below under the heading “Risks Relating to Debt Incurred under Borrowing Facilities" and in Part I, Item 1A - Risk Factors of this Annual Report on Form 10-K.

Repurchase Authorization

In July 2025, our Board of Directors approved an authorization for the repurchase of up to $150 million of our common stock, and continued its previous authorizations for the repurchase of up to $70 million of our preferred stock, and the repurchase of our outstanding debt securities, including convertible and exchangeable debt. This authorization replaced our previous $125 million common stock repurchase authorization. This authorization has no expiration date and does not obligate us to acquire any specific number of shares or securities.

During the year ended December 31, 2025, we repurchased 9.2 million shares of our common stock for a total cost of $53 million and we repurchased $3 million of our senior unsecured notes. At December 31, 2025, $111 million of the authorization remained available for the repurchase of shares of our common stock, and $70 million remained available for the repurchase of shares of our preferred stock. Like investments we may make, any repurchases of our common stock, preferred stock, or debt securities under these authorizations would reduce our available capital and unrestricted cash described above.

Cash Flows and Liquidity for the Year Ended December 31, 2025

Cash flows from our mortgage banking activities and our investments can be volatile from year to year depending on many factors, including the timing and amount of loan originations, acquisitions, sales and profitability within our mortgage banking operations, the timing and amount of securities acquisitions, sales and repayments, as well as changes in interest rates, prepayments, and credit losses. Therefore, cash flows generated in the current period are not necessarily reflective of the long-term cash flows we will receive from these operating or investment activities.

Cash Flows from Operating Activities

In 2025, cash flows used in operating activities increased by $4.23 billion from $5.86 billion in the year ended December 31, 2024, to $10.09 billion in the year ended December 31, 2025, primarily due to the increase in residential consumer loan purchases and an increase in originations of residential investor loans associated with our mortgage banking activities. Excluding cash flows from the purchase, origination, sale and principal payments of loans classified as held-for-sale, and the settlement of associated derivatives (which cumulatively totaled $10.11 billion of net cash outflows for 2025, compared to $5.84 billion of net cash outflows in 2024), cash flows from operating activities were positive $13 million for the year ended December 31, 2025 and negative $26 million for the year ended December 31, 2024.

Cash Flows from Investing Activities

In 2025, our net cash provided by investing activities was $4.53 billion. This was due to the receipt of $4.66 billion of principal payments received on primarily securitized loans held-for-investment. Additionally, during 2025, we sold $385 million of real estate securities, including $254 million of residential re-performing loan securities, as well as $262 million of third-party originated HEI from our Legacy Investments segment. Because many of our investment securities, loans and HEI are financed through various borrowing agreements, a significant portion of the proceeds from any sales or principal payments of these assets are generally used to repay balances under these financing sources. Similarly, all or a significant portion of cash flows from principal payments of loans and HEI at consolidated securitization entities would generally be used to repay ABS issued by those entities.

Cash Flows from Financing Activities

In 2025, our net cash provided by financing activities was $5.70 billion. This primarily resulted from $4.52 billion of net borrowings under ABS issued (resulting from the issuance of sixteen Sequoia securitizations, two residential investor bridge securitizations, as well as the issuance of ABS through three Sequoia re-securitizations of certain consolidated and unconsolidated Sequoia securities, net of related issuance costs), and $1.34 billion of net borrowings on debt obligations. During the year ending December 31, 2025, net cash provided from debt obligations included two issuances of senior notes due in 2030 totaling $190 million, a $93 million recourse subordinate financing facility providing non-marginable debt financing of certain securities retained from our Sequoia securitizations and other third-party securities, as well as the issuance of $50 million of 7.75% senior convertible notes due in 2027 in a private offering. During 2025, we repaid $124 million of our exchangeable notes at the maturity date.

Material Cash Requirements

In the normal course of business, we enter into transactions that may require future cash payments. As required by GAAP, some of these obligations are recorded on our balance sheet, while others are off-balance sheet or recorded on the balance sheet in amounts different from the full contractual or notional amount of the transaction.

Our material cash requirements from known contractual and other obligations during the twelve months following December 31, 2025 include maturing debt obligations, interest payments on debt obligations and ABS issued, funding commitments for residential investor and consumer loans, strategic investments, potential repurchases of previously sold or securitized loans, payments on operating leases, and other current payables. Our material cash requirements from known contractual and other obligations beyond the twelve months following December 31, 2025 include maturing long-term debt, interest payments on long-term debt, payments on operating leases and funding commitments for residential investor bridge loans, and strategic investments (including our joint ventures), and principal and interest payments under ABS issued (as described further below under Liquidity Needs for our Investment Portfolio).

At December 31, 2025, we had commitments to fund up to $258 million of additional advances on existing residential investor bridge loans, of which $92 million related to loans currently in securitizations co-sponsored by one of our joint ventures. These commitments are generally subject to loan agreements with covenants regarding the financial performance of the borrower and other terms regarding advances that must be met before we fund the commitment (for example, funding is dependent on actual progress on a project and we retain the right to conduct due diligence with respect to each draw request to confirm conditions have been met). A majority of the commitments are for longer-term renovate/build-for-rent loans (which generally have funding caps below their full commitment amount) and are expected to fund over the next several quarters. Additionally, at December 31, 2025, we had $1.84 billion of available warehouse capacity for residential investor loans and scheduled bridge loan maturities are expected to provide an additional source of cash that can be used to fund our commitments.

In the third quarter of 2025, in connection with the sale of legacy unsecuritized bridge loans to the Legacy Trust, we entered into an agreement to provide up to $35 million of capital support if the Legacy Trust’s portfolio loan-to-value ratios exceed specified thresholds. We funded $10 million at closing, with up to $25 million in additional funding commitments if certain triggers are met. The arrangement was determined to have a fair value of zero initially and at December 31, 2025. The fair value of this funding commitment will be re-evaluated each reporting period.

In the first quarter of 2024, we entered into a joint venture with an institutional investment manager pursuant to which we will offer to sell certain residential investor bridge and term loans we originate into joint venture entities that meet specified criteria at contractually pre-established prices. We have committed approximately $140 million of equity capital to be allocated to the joint venture entities and joint venture co-investments to be held in Redwood's investment portfolio. At December 31, 2025, we had $42 million of net contributed capital to the joint venture.

In the second quarter of 2023, we entered into a joint venture with another institutional investment manager to invest in residential investor bridge loans originated by CoreVest. We have a commitment to contribute up to approximately $19 million to the joint venture to fund the joint venture's purchase of residential investor bridge loans, under the updated terms of the joint venture. At December 31, 2025, we had $5 million of contributed capital to the joint venture.

For additional information on commitments and contingencies as of December 31, 2025 that could impact our liquidity and capital resources, see Note 19 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Most of our loan warehouse facilities and our servicer advance financing were established with initial one-year terms and are regularly amended on an annual basis to extend the terms for an additional year ahead of their maturity. We renewed several of these facilities during 2025, extinguished others we deemed under-utilized, and have other such facilities with scheduled maturities during the next twelve months. While there is no assurance of our ability to renew our other facilities maturing in the next year, given current market conditions we expect to extend these in the normal course of business.

We expect to meet our obligations coming due in less than one year from December 31, 2025, through a combination of cash on hand, payments of principal and interest we receive from our investment portfolio assets, cash generated from our operating activities, incremental borrowings under existing, new or amended financing arrangements, or through the issuance of equity or debt capital.

See Note 18 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information on our debt obligations.

Liquidity Needs for our Mortgage Banking Activities

We generally use loan warehouse facilities to finance the loans we acquire and originate in our mortgage banking operations while we aggregate the loans for sale or securitization.

At December 31, 2025, our residential consumer loan warehouse facilities total capacity was $3.55 billion of total capacity, with $756 million of available capacity. These included non-marginable facilities with $400 million of total capacity and marginable facilities with $3.15 billion of total capacity. At December 31, 2025, our residential investor loan warehouse facilities total capacity was $2.13 billion, with $1.84 billion of available capacity. All of the residential investor financing facilities are non-marginable. We note that several of these facilities used to finance our CoreVest Mortgage Banking loan inventory are also used to finance bridge loans held in our legacy portfolio.

In October 2025, we extended the commitment period of our joint venture partnership with an institutional investment manager through September 2028 to support ongoing platform growth for our CoreVest Mortgage Banking operations. Additionally, we increased the commitment amount of our secured revolving financing facility from $250 million to $400 million and extended the maturity through March 2027, with an option to extend the maturity through September 2028. Our secured revolving financing facility may be used to finance our Redwood Investments and Sequoia and CoreVest mortgage banking operations, as well as Legacy Investments. This facility provides recourse financing secured by eligible collateral, which may include residential securities, other investments, and equity interests in certain operating subsidiaries. This facility is structured as non-marginable; however, it may be subject to margin requirements or cash flow sweeps under certain circumstances.

As discussed above, several of the facilities we use to finance our mortgage banking loan inventory are short-term in nature and will require renewals. Additionally, because several of our warehouse facilities are uncommitted, at any given time we may not be able to obtain additional financing under them when we need it, exposing us to, among other things, liquidity risks. Additional information regarding risks related to the debt we use to finance our mortgage banking operations can be found under the heading "Risks Relating to Debt Incurred under Borrowing Facilities" that follows within this section.

Liquidity Needs for our Redwood Investments

We use various forms of secured recourse and non-recourse debt to finance assets in our investment portfolio. Our ABS issued is non-recourse and represents debt of securitization entities that we consolidate for GAAP reporting purposes. Our exposure to these entities is primarily through the financial interests we have purchased or retained from these entities (typically subordinate securities and interest only securities). As the debt issued by these entities is not a direct obligation of Redwood and generally remains outstanding for the full term of the underlying loans, it effectively provides long-term financing for these assets. Certain ABS issued, including CAFL bridge loan, are subject to optional redemptions and interest rate step-ups. If we do not redeem these securitizations, the interest rates increase, reducing net interest income; if we elect to redeem them, we must secure alternative financing or utilize available cash. See Note 16 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, for additional information on our principles of consolidation and Note 17 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, for additional information on our asset-backed securities issued.

We also utilize non-recourse, non-marginable warehouse facilities to finance a portion of our residential investor loan portfolio. These facilities have fixed terms and may be refinanced or repaid at maturity. In addition, we consolidate an entity formed to finance servicer advances through non-recourse securitization debt secured by those advances. Our joint ventures similarly maintain dedicated, non-recourse warehouse facilities. See Notes 12 and 19 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, for additional information regarding our residential investor bridge loan joint ventures.

The remainder of the debt used to finance our investments consists of secured recourse facilities, including subordinate securities financing facilities, residential investor loan financing facilities, MSR financing, repurchase agreements, and our HEI warehouse facility. Certain subordinate financing facilities are subject to optional redemption and interest rate step-ups, which may increase financing costs if not refinanced.

Delinquencies on residential investor bridge loans financed through warehouse facilities may result in reduced advance rates or repurchase requirements, requiring the use of additional liquidity. Elevated delinquencies within certain CAFL bridge securitizations could also affect structural features of those transactions, including amortization or revolving provisions.

We use a mix of fixed- and floating-rate debt to finance fixed- and floating-rate investments in order to manage interest rate exposure and net interest income. If interest rates remain elevated, maturing fixed-rate borrowings may require refinancing at higher rates. Conversely, if interest rates decline, approximately 47% of our portfolio debt is callable or matures within the next twelve months, which may provide flexibility if rates decline.

At December 31, 2025, in addition to our ABS issued, our Redwood Investments portfolio was financed with $524 million of secured recourse debt, of which $127 million was marginable and $397 million was non-marginable, and $312 million of secured non-recourse debt that was non-marginable. In addition, $71 million of borrowings from our secured revolving financing facility was allocated to this segment.

Liquidity Needs for our Legacy Investments

At December 31, 2025, we financed our Legacy Investments with a combination of recourse and non-recourse, non-marginable residential investor loan warehouse facilities, a recourse non-marginable HEI facility, and non-recourse securitization debt (ABS issued). Certain residential investor warehouse facilities may impose advance rate step-downs or repurchase requirements if underlying loan performance or property valuations deteriorate, which could require the use of additional liquidity. At December 31, 2025, we have also allocated $212 million of outstanding borrowings from our secured revolving financing facility to finance our Legacy Investments segment.

Corporate Capital

In addition to secured recourse and non-recourse debt we use specifically in association with our mortgage banking operations, Redwood Investments and Legacy investment portfolios, we also use unsecured recourse debt to finance our overall operations. This debt generally consists of convertible and non-convertible senior debt securities issued in the public markets and also includes trust preferred securities and promissory notes. See Note 18 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, for additional information on our unsecured debt obligations, net.

Risks Relating to Debt Incurred under Borrowing Facilities

In the ordinary course of our business, we use debt financing obtained through various types of borrowing facilities to finance the acquisition and/or origination of residential consumer and investor loans and HEI, as well as investments in securities and other investments. We may also use borrowings to fund other aspects of our operations, including repurchases of common or preferred stock or debt securities. Debt incurred under these facilities is generally either a direct obligation of Redwood Trust, Inc. or its subsidiaries and, in the case of recourse debt, is guaranteed by Redwood Trust, Inc.

Residential Consumer and Investor Loans, MSRs, and HEI Warehouse Facilities. We utilize secured loan, MSR, and HEI warehouse facilities as a primary method of debt financing. As of December 31, 2025, we maintained residential consumer loan warehouse facilities with seven different financial institution counterparties, as well as residential investor loan warehouse facilities financing both term and bridge loans.

The aggregate borrowing limits under these facilities as of December 31, 2025, were:

•Residential consumer loan warehouse facilities: $3.55 billion

•Residential investor loan warehouse facilities: $2.13 billion

•MSR warehouse facility: $125 million

•HEI warehouse facility: $150 million

These facilities are generally uncommitted, meaning a counterparty may decline a borrowing request even if available capacity exists under the facility. Under these arrangements, we transfer mortgage loans, MSRs, or HEI to a counterparty in exchange for cash proceeds at less than 100% of the asset’s principal amount and agree to repurchase the assets at a later date for the same amount plus a financing charge.

To qualify for financing, the loans, MSRs, or HEI must initially and thereafter satisfy specific eligibility criteria. Loans generally may not be delinquent or in default, although certain facilities permit limited continued financing if a loan becomes delinquent. These facilities also impose maximum financing periods, or “dwell time” limits, which may be as short as 364 days, and may include geographic concentration limits on underlying collateral. Our general strategy is to repay borrowings using proceeds from securitization, asset sales, new financing arrangements, or other sources of capital at or before the financing's maturity.

Our warehouse facilities can be categorized as either "marginable" or "non-marginable." Under marginable facilities, a decline in the market value of a financed loan (as determined by the counterparty) may result in a margin call, requiring us to either repurchase the loan or post additional collateral (such as cash or other loans) equal to the value decline. Non-marginable facilities may also permit margin calls under specified circumstances, including loan delinquency, other credit events, declines in underlying property values, extended dwell times, or specified interest rate movements.

For example, a margin call could occur if an appraisal indicates a drop in the estimated value of the property securing the financed mortgage loan. Many warehouse facilities also include netting or offset provisions, allowing a lender to use amounts owed to us under other financial arrangements (e.g., derivative contracts) to satisfy a margin call.

The uncommitted nature of certain warehouse facilities may limit our ability to obtain additional financing when needed. In addition, loans or HEI that become ineligible for financing, decline in value, or exceed permitted financing terms may require repayment or the use of additional liquidity. These facilities are subject to customary representations, warranties, covenants, and events of default. A breach of these provisions, including cross-defaults under other debt arrangements, could result in acceleration of outstanding borrowings and restrict future access to financing. Financial covenants associated with these debt facilities are detailed further in the"Financial Covenants Associated with Debt Facilities and Other Debt Financing" section.

A material adverse change in our business could result in the termination of certain facilities and the acceleration of outstanding borrowings. Failure to comply with facility terms may adversely affect our liquidity, as outlined in the"Risk Factors" and"Market Risks" sections of the Annual Report on Form 10-K.

In addition to the warehouse facilities described above, we may establish additional facilities in the ordinary course of business, which could be larger in size or subject to more restrictive terms. If a counterparty to one or more of our warehouse facilities becomes insolvent or otherwise fails to perform, we may be unable to access short-term financing or recover the full value of financed assets.

Securities Repurchase Facility. We also obtain financing through securities repurchase facilities with financial institution counterparties. These facilities do not have aggregate borrowing limits but are uncommitted, meaning counterparties may decline borrowing requests. Under these arrangements, we transfer securities to a counterparty in exchange for cash proceeds at less than 100% of the securities’ fair value and agree to repurchase the securities at a later date for the same amount plus a financing charge.

Under these securities repurchase facilities, securities are financed for a fixed period, which would not generally exceed 90 days. We generally intend to repay the short-term financing of a security under one of these facilities through a renewal of that financing with the same counterparty, through a sale of the security, or with other sources of capital. If the market value of a financed security declines (as determined by the counterparty), we may be required to repurchase the security or post additional collateral, such as cash or U.S. Treasury securities, equal to the decline in value. As of December 31, 2025, borrowings under securities repurchase facilities totaled $31 million. See further discussion below under the heading “Margin Call Provisions Associated with Debt Facilities and Other Debt Financing.”

At the end of the fixed period applicable to the financing of a security under a securities repurchase facility, if we intend to continue financing that security, we would typically request the same counterparty to renew the financing for an additional fixed period. If the counterparty does not renew the financing, it may be difficult to obtain financing for that security under another securities repurchase facility, as counterparties may only provide financing for securities purchased from them or their affiliates.

Because our securities repurchase facilities are uncommitted, at any given time we may not be able to obtain additional financing under them when we need it, exposing us to, among other things, liquidity risks as described in Part I, Item 1A of this Annual Report on Form 10-K under the heading “Risk Factors,” and in Part II, Item 7A of this Annual Report on Form 10-K under the heading “Market Risks.” In addition, securities financed under these facilities are subject to market, credit, and liquidity risks if they decline in value or reach the maximum financing term permitted under the applicable facility.

Under our securities repurchase facilities, we also make various representations and warranties and have agreed to certain covenants, events of default, and other terms (including of the type described above under the heading “Residential Consumer and Residential Investor Warehouse Facilities”) that if breached or triggered can result in our being required to immediately repay all outstanding amounts borrowed under these facilities and these facilities being unavailable to use for future financing needs. In particular, the terms of these facilities include financial covenants, cross-default provisions, judgment default provisions, and other events of default (including of the type described above under the heading “Residential Consumer and Investor Loans and HEI Warehouse Facilities”). Financial covenants included in our repurchase facilities are further described below under the heading “Financial Covenants Associated with Debt Facilities and Other Debt Financing.”

Our securities repurchase facilities could also become unavailable and outstanding amounts borrowed thereunder could become immediately due and payable if there is a material adverse change in our business. If we breach or trigger the representations and warranties, covenants, events of default, or other terms of our securities repurchase facilities, we are exposed to liquidity and other risks, including of the type described in Part I, Item 1A of this Annual Report on Form 10-K under the heading “Risk Factors,” and in Part II, Item 7A of this Annual Report on Form 10-K under the heading “Market Risks.”

In the ordinary course of business we may seek to establish additional securities repurchase facilities that may have similar or more restrictive terms. In the event a counterparty to one or more of our securities repurchase facilities becomes insolvent or unable or unwilling to perform its obligations under the facility, we may be unable to access the short-term financing we need or fail to recover the full value of our securities financed.

Servicer Advance Financing. In connection with our servicer advance investments, we consolidate an entity that was formed to finance servicing advances and for which we, through our control of an affiliated entity majority owned by Redwood (the "SA Buyer") formed to invest in servicer advance investments and excess MSRs, are the primary beneficiary. The servicer advance financing consists of non-recourse securitization debt secured by servicer advances. Although we consolidate the securitization entity, its assets and liabilities are not legal obligations of Redwood.

SA Buyer has agreed to purchase future servicer advances under certain residential mortgage servicing agreements and relies, in part, on committed capital contributions from its members to fund those purchases. A failure by members to fund required contributions could result in an event of default under the financing and a loss of our investment in SA Buyer and its servicer advance investments and excess MSRs. In addition, if the servicer of the underlying mortgage loans fails to recover servicer advances, or recovery is delayed beyond expectations, the value of our investment could be adversely affected.

The outstanding balance of servicer advances securing the financing is not expected to be repaid before the maturity date in December 2026. We expect to seek renewal or refinancing; however, there can be no assurance such financing will be extended on acceptable terms, which may include higher interest rates, reduced advance rates, or more restrictive conditions. If the financing is not renewed or refinanced, the securitization entity will be required to repay the outstanding balance at maturity. If repayment is not made, the counterparty may foreclose on the pledged servicer advances.

Under this financing, SA Buyer, the securitization entity, and the servicer make customary representations, warranties, and covenants. A breach of these provisions could result in acceleration of outstanding borrowings and a loss on our investment. The financial covenants of SA Buyer included in this servicer advance financing are further described below under the heading “Financial Covenants Associated with Debt Facilities and Other Debt Financing.”

Subordinate Securities Financing Facilities. We obtain non-marginable recourse financing on subordinate securities through subordinate securities financing facilities. Financing is obtained by transferring securities to the counterparty in exchange for cash proceeds at less than 100% of fair value and agreeing to repurchase those securities for the same amount plus a financing charge. These facilities are fully and unconditionally guaranteed by Redwood.

At December 31, 2025, borrowings under one facility totaled $263 million secured by $330 million of real estate securities (including securities retained from consolidated CAFL® securitization entities). Borrowings under a second facility totaled $87 million, secured by $110 million of real estate securities (including securities retained from consolidated Sequoia securitizations and certain third-party issued interest-only securities).

In the ordinary course of business, we may establish additional long-term securities repurchase facilities that could be larger or subject to more restrictive terms.

These facilities contain customary representations, warranties, covenants, and events of default. A breach of these provisions, including failure to repurchase securities at maturity or insolvency of Redwood as guarantor, could result in acceleration of outstanding borrowings and restrict future access to financing. Additional discussion of related risks is includedin Part I, Item 1A of this Annual Report on Form 10-K under the heading “Risk Factors,” and in Part II, Item 7A of this Annual Report on Form 10-K under the heading “Market Risks.”

Secured Revolving Financing Facility. We also utilize a secured revolving facility providing non-marginable recourse financing secured by previously unencumbered assets, including retained subordinate securities and equity interests in certain subsidiaries. The facility is fully and unconditionally guaranteed by Redwood Trust, Inc. This facility has a capacity of $400 million, matures on March 31, 2027 (with an option to extend to September 30, 2028) and had $283 million outstanding at December 31, 2025. Although characterized as non-marginable, the facility may require additional collateral or cash flow sweeps if declines in collateral value cause the effective advance rate to exceed specified thresholds.

These facilities contain customary representations, warranties, covenants, and events of default. A breach of these provisions, including failure to repurchase securities at maturity or insolvency of Redwood as guarantor, could result in acceleration of outstanding borrowings and restrict future access to financing. Additional discussion of related risks is includedin Part I, Item 1A of this Annual Report on Form 10-K under the heading “Risk Factors,” and in Part II, Item 7A of this Annual Report on Form 10-K under the heading “Market Risks.”

Financial Covenants Associated With Debt Facilities and Other Debt Financing

Set forth below is a summary of the financial covenants associated with our debt facilities and other debt financing facilities.

•Residential Consumer and Residential Investor Loan, Securities and MSR Repurchase Facilities, and HEI Warehouse Facilities. As noted above, one source of our debt financing is secured borrowings under residential consumer and residential investor loan facilities, securities and MSR repurchase facilities, and HEI warehouse facilities that we have established with various financial institution counterparties and, as of December 31, 2025, were in place with several different financial institution counterparties. Financial covenants included in these facilities are as follows and at December 31, 2025, and through the date of this Annual Report on Form 10-K, we were in compliance with each of these financial covenants:

•Maintenance of a minimum dollar amount of stockholders’ equity/tangible net worth at Redwood.

•Maintenance of a minimum dollar amount of cash and cash equivalents at Redwood.

•Maintenance of a maximum ratio of consolidated recourse indebtedness to stockholders’ equity or tangible net worth at Redwood.

•Servicer Advance Financing. As noted above, servicer advance financing consists of non-recourse securitization debt, secured by servicing advances. Financial covenants associated with this financing facility are as follows and at December 31, 2025, and through the date of this Annual Report on Form 10-K, we were in compliance with each of these financial covenants:

•Maintenance of a minimum dollar amount of stockholders’ equity/tangible net worth at SA Buyer.

•Maintenance of a minimum dollar amount of cash and cash equivalents at SA Buyer.

•Corporate Secured Revolving Financing Facility. As noted above, another source of our debt financing is through a corporate secured revolving financing facility. Financial covenants included in this facility are as follows and at December 31, 2025, and through the date of this Annual Report on Form 10-K, we were in compliance with each of these financial covenants:

•Maintenance of a minimum dollar amount of stockholders’ equity/tangible net worth at Redwood.

•Maintenance of a minimum dollar amount of cash and cash equivalents at Redwood.

•Maintenance of a maximum ratio of consolidated recourse indebtedness to consolidated adjusted tangible net worth at Redwood.

•Maintenance of a minimum ratio of consolidated adjusted tangible net worth at Redwood to outstanding under this facility.

As noted above, at December 31, 2025, and through the date of this Annual Report on Form 10-K, we were in compliance with the financial covenants associated with our debt financing facilities. In particular, with respect to these covenants:

•We exceeded minimum equity and tangible net worth requirements by more than $200 million; and

•We could have incurred approximately $2 billion of additional recourse indebtedness while remaining in compliance with leverage covenants.

Margin Call Provisions Associated With Debt Facilities and Other Debt Financing

•Residential Consumer and Residential Investor Loan, MSR, and HEI Warehouse Facilities. As noted above, one source of our debt financing is secured borrowings under residential consumer and residential investor loan and HEI warehouse facilities we have established and, as of December 31, 2025, were in place with several different financial institution counterparties. These warehouse facilities include the margin call provisions described below and during the twelve months ended December 31, 2025, and through the date of this Annual Report on Form 10-K, we complied with any margin calls received from creditors under these warehouse facilities:

•Under our marginable residential consumer loan warehouse facilities, if at any time the market value of any residential consumer loan financed under a facility declines (as determined by the creditor), then the creditor may demand that we transfer additional collateral to the creditor (in the form of cash, U.S. Treasury obligations (in certain cases), or additional residential consumer loans) with a value equal to the amount of the decline. If we receive any such demand, (i) under two of our residential consumer loan warehouse facilities, we would generally be required to transfer the additional collateral on the same day (although demands received after a certain time would only require the transfer of additional collateral on the following business day) and (ii) under two of our residential consumer loan warehouse facilities and our MSR financing facility, we would generally be required to transfer the additional collateral on the following business day. The value of additional residential mortgage loans transferred as additional collateral is determined by the creditor.

•Under certain non-marginable residential consumer and residential investor loan and HEI warehouse facilities, if the value of the property securing a mortgage loan or HEI financed under a facility declines (as determined by an appraisal, broker price opinion, or home price appreciation index, as applicable), then the creditor may demand that we transfer additional collateral to the creditor (in the form of cash, U.S. Treasury obligations (in certain cases), or additional mortgage loans or HEI) with a value equal to the amount of the decline. The conditions precedent to which the creditor may request updated valuation reports varies by agreement, including, for example, based on an agreed schedule, or based on the number of days the loan has been financed under such facility. If we receive any such demand as a result of a margin deficit based on an updated valuation report, we would generally be required to transfer the additional collateral as soon as the same day to within three business days depending on the terms of the agreement. The value of additional residential consumer and residential investor mortgage loans or HEI transferred as additional collateral is determined by the creditor.

•Securities Repurchase Facilities. As noted above, another source of our debt financing is through secured borrowings under securities repurchase facilities we have established with various financial institution counterparties. These repurchase facilities include the margin call provisions described below and during the twelve months ended December 31, 2025, and through the date of this Annual Report on Form 10-K, we complied with any margin calls received from creditors under these repurchase facilities:

•If at any time the market value (as determined by the creditor) of any securities financed under a facility declines, then the creditor may demand that we transfer additional collateral to the creditor (in the form of cash, U.S. Treasury obligations, or additional securities) with a value equal to the amount of the decline. If we receive any such demand, we would generally be required to transfer the additional collateral on the same day (although demands received after a certain time would only require the transfer of additional collateral on the following business day). The value of additional securities transferred as additional collateral is determined by the creditor.

•Secured Revolving Financing Facility. As noted above, another source of our debt financing is through a corporate secured revolving financing facility. This facility includes the margin call provisions described below and during the twelve months ended December 31, 2025, and through the date of this Annual Report on Form 10-K, we complied with any margin calls received from the creditor under this facility:

•If at any time the market value of financed collateral declines in an aggregate amount that causes the effective advance rate associated with the financing facility to exceed a specified threshold, based on market value determinations by Redwood and one or more third party valuation agents, then the creditor may demand that we transfer additional collateral to the creditor (in the form of cash, U.S. Treasury obligations, or additional securities) in an amount sufficient to decrease the effective advance rate below the specified threshold. If we receive any such demand, we would generally be required to transfer the additional collateral within five business days. The value of additional collateral transferred to satisfy the margin call is determined by the creditor.