REDWOOD TRUST INC

Business Update

Our second quarter 2026 results reflect continued execution against Redwood’s strategy to scale our capital-efficient mortgage banking platforms supported by diversified products, distribution channels, and our joint venture partnerships. During the quarter, combined production across Sequoia, Aspire, and CoreVest reached $8.0 billion for the second consecutive quarter, representing the second-highest quarterly production level in our Company’s history and nearly double the volume generated in the second quarter of 2025.

The operating environment remained characterized by constrained housing affordability, limited housing supply, elevated mortgage rates, and continued market volatility. We adopted a more measured operating posture during April and May before activity accelerated as conditions stabilized in June, when more than 40% of quarterly production was generated. Despite this backdrop, our mortgage banking platforms continued to gain market share while maintaining margins within targeted ranges.

Our financial results reflected continued strength across our operating platforms, partially offset by the performance of our Legacy Investments portfolio. Redwood reported a GAAP net loss of $(0.03) per share, compared to a GAAP net loss of $(0.07) per share in the first quarter of 2026, while our mortgage banking platforms generated $40 million of combined GAAP net income. GAAP book value per share declined to $6.90 at June 30, 2026 from $7.12 at March 31, 2026, driven principally by loan resolutions, mark-to-market changes, and ongoing carrying costs within Legacy Investments.

Our Sequoia platform locked $5.6 billion of loans during the second quarter, compared to $6.5 billion in the first quarter and $3.3 billion in the second quarter of 2025, representing the second-highest quarterly lock volume in Sequoia’s history. New products represented 30% of quarterly lock volume, including hybrid adjustable-rate loans, medical professional loans and closed-end second lien loans. We also began rolling out our HELOC program during the quarter. Sequoia distributed approximately $6.5 billion 1 of loans through securitizations and whole loan sales while cost per loan declined to 17 basis points from 18 basis points in the first quarter.

Aspire generated record lock volume of approximately $2.1 billion during the second quarter, increasing 31% from $1.6 billion in the first quarter. Aspire’s active seller network expanded to more than 150 loan sellers at June 30, 2026. Aspire distributed approximately $1.3 billion of loans through securitizations and whole loan sales, including two transactions issued through its SPIRE securitization platform, completed with a third-party co-sponsor that retained the requisite risk retention securities and subordinate securities.

CoreVest funded $410 million of loans during the quarter, compared to $432 million in the first quarter, as elevated interest rates impacted demand within the term loan pipeline and housing legislation uncertainty slowed activity in the sector. CoreVest distributed approximately $375 million of newly originated loans through securitizations, whole loan sales, and joint venture transfers. During the quarter, CoreVest completed a $268 million CAFL term loan securitization through its joint venture, our first broadly syndicated term loan securitization since 2022, with over 20 discrete investors participating.

Across our platforms, distribution remained a key driver of capital efficiency and liquidity. Total mortgage banking distributions were approximately $8.2 billion during the quarter. Late in the period, we priced three securitizations during a single week - one for each of Sequoia, Aspire, and CoreVest - for the first time in Redwood’s history, bringing total securitizations during the first half of 2026 to more than 20 across our platforms.

We continued to advance our capital-efficient strategy through institutional partnerships. In the second quarter, we began distributing loans to our Sequoia joint venture and, early in the third quarter, executed definitive documentation for a strategic joint venture to support Aspire's continued growth. Together with our relationship with our CoreVest joint venture, these partnerships provide more than $1.2 billion of dedicated strategic capital across our enterprise.

Capital allocated to our Legacy Investments portfolio continued to decline as we advanced the accelerated wind-down of our non-core exposures. At June 30, 2026, capital allocated to Legacy Investments represented less than 12% of total capital, down from 15% at March 31, 2026. The reduction of capital allocated to our Legacy Investments is intended to improve balance sheet flexibility, and redeploy capital toward our core operating businesses and other accretive uses.

We also continued to invest in technology and operational infrastructure through RWT Horizons. At June 30, 2026, AI-enabled automation initiatives were generating an increasing amount of time savings, as compared to the first quarter of 2026. These initiatives supported improvements in due diligence, loan-level pricing, underwriting support, and guideline analysis.

Looking ahead, housing market activity continues to be influenced by affordability constraints, elevated interest rates, geopolitical developments, and evolving housing and bank regulatory policy. These dynamics reinforce the importance of flexible, capital-efficient platforms with broad products, seller relationships, and distribution capabilities.