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&lt;b&gt;Note 1. Redwood Trust&lt;/b&gt;&lt;/p&gt;
&lt;p style="MARGIN-TOP: 12pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt" align="justify"&gt;Redwood Trust, Inc., together with its subsidiaries
(&amp;#x201C;Redwood,&amp;#x201D; &amp;#x201C;we,&amp;#x201D; or &amp;#x201C;us&amp;#x201D;), is
an internally-managed operating company focused on engaging in
residential and commercial mortgage banking activities and
investing in mortgage- and other real estate-related assets. We
seek to generate fee and gain on sale income through our mortgage
banking activities and to invest in real estate-related assets that
have the potential to generate attractive cash flow returns over
time.&lt;/p&gt;
&lt;p style="MARGIN-TOP: 12pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt" align="justify"&gt;Our investment portfolio includes investments in
residential mortgage-backed securities issued in Sequoia
securitization transactions, as well as residential securities
issued by third parties. We may also invest in other assets,
securities, and instruments that are related to residential real
estate, such as, mortgage servicing rights (&amp;#x201C;MSRs&amp;#x201D;).
Our investment portfolio also includes investments in commercial
loans that are originated through our commercial mortgage banking
activities and may also include investments in commercial mortgage
backed securities (&amp;#x201C;CMBS&amp;#x201D;) or other forms of commercial
real estate financing originated by others. We assume a range of
risks in our investments and the level of risk is influenced by,
among other factors, the manner in which we finance our purchases
of, and derive income from, our investments.&lt;/p&gt;
&lt;p style="MARGIN-TOP: 12pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt" align="justify"&gt;Redwood was incorporated in the State of Maryland
on April&amp;#xA0;11, 1994, and commenced operations on August&amp;#xA0;19,
1994. Our executive offices are located at One Belvedere Place,
Suite 300, Mill Valley, California 94941.&lt;/p&gt;
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 -Publisher FASB

 -Name Accounting Standards Codification

 -Topic 275

 -SubTopic 10

 -Section 50

 -Paragraph 2

 -URI http://asc.fasb.org/extlink&amp;oid=6927468&amp;loc=d3e6003-108592



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