SEC Comment Letter for REDWOOD TRUST INC (RWT, RWTN, RWTO, RWTP, RWTQ, RWT-PA) (CIK 0000930236) (RWT) — Jun 24, 2015
REDWOOD TRUST INC (RWT, RWTN, RWTO, RWTP, RWTQ, RWT-PA) (CIK 0000930236)
Date: June 24, 2015 · CIK: 0000930236 · Accession: 0000000000-15-033260
AI Filing Summary & Sentiment
Reasoning
Letter
June 24, 2015 Via E -Mail Christopher J. Abate Chief Financial Officer Redwood Trust, Inc. One Belvedere Place, Suite 300 Mill Valley , CA 94941
Re: Redwood Trust, Inc. Form 10 -K for the Fiscal Ye ar Ended December 31, 20 14 Filed February 25, 201 5 Form 10 -Q for the Quarterly Period Ended March 31, 2015 Filed May 7, 2015 File No. 001 -13759
Dear Mr. Abate :
We have limited our review of your filing to the financial statements and related disclosures and have the following comment s. In our comment s, we ask you to provide us with information so we may better understand your disclosure.
Please respond to these comment s within ten busine ss days by providing the requested information or advis e us as soon as possible when you will respond. If you do not believe our co mment s apply to your facts and circumstances, please tell us why in your response.
After reviewing your response to these comment s, we may have additional comments.
Christopher J. Abate Redwood Trust , Inc. June 24, 2015 Page 2
Form 10 -K for the fiscal year ended December 31, 2014
Item 7. Management’ s Discussion and Analysis of Financial Condition and Results of Operations
Mortgage Servicing Rights Investments, page 60
1. Please provide us with additional details regarding your Mortgage Servicing Rights investments (MSRs) including whether you have retained the basic MSR and excess MSR. Additionally , tell us the weighted average yield that you have earned on these assets for all periods present ed and whether you have any outstanding servicer advances. Please update your disclosure in future filings accordingly.
Item 8. Financial Statements and Supplementary Data
Note 5. Fair Value of Financial Instruments, F -29
2. We note your disclosure on page F -36 that the fair value for residential loans is determined based on either an exit price to securitization or the whole loan market. Please tell us how you determine which of these two markets to use for your residential loans an d how you have concluded that the market used in your valuation is the principal or most advantageous market.
Form 10 -Q for the quarterly period ended March 31, 2015
Item 2. Management’s Discussion and Analysis of Financial Condition and Re sults of Operations
Mortgage Banking Activities, Net, page 69
3. We note your disclosure on page 70 that you began to account for commitments to purchase jumbo loans as derivatives as a result of amendments to the agreements governing these commitme nts. Please provide to us additional details regarding the terms of the referenced amendments, how they qualify your loan purchase commitments to be accounted for as a derivative, and quantify the impact to your financial statements. Also, tell us t he accounting guidance upon you which you relied.
We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes the information the Securities Exchange Act of 193 4 and all applicable Exchange Act rules require. Since the company and its management are in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made.
Christopher J. Abate Redwood Trust , Inc. June 24, 2015 Page 3
In responding to our comment s, please provide a written statement from the company acknowledging that:
the company is responsible for the adequacy and accuracy of the disclosure in the filing;
staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and
the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of t he United States.
If you have any questions, you may contact Jorge L. Bonilla at (202) 551 -3414 or me at (202) 551 -3446 .
Sincerely,
/s/ Jaime G. John
Show Raw Text
June 24, 2015
Via E -Mail
Christopher J. Abate
Chief Financial Officer
Redwood Trust, Inc.
One Belvedere Place, Suite 300
Mill Valley , CA 94941
Re: Redwood Trust, Inc.
Form 10 -K for the Fiscal Ye ar Ended December 31, 20 14
Filed February 25, 201 5
Form 10 -Q for the Quarterly Period Ended March 31, 2015
Filed May 7, 2015
File No. 001 -13759
Dear Mr. Abate :
We have limited our review of your filing to the financial statements and related
disclosures and have the following comment s. In our comment s, we ask you to provide
us with information so we may better understand your disclosure.
Please respond to these comment s within ten busine ss days by providing the
requested information or advis e us as soon as possible when you will respond. If you do
not believe our co mment s apply to your facts and circumstances, please tell us why in
your response.
After reviewing your response to these comment s, we may have additional
comments.
Christopher J. Abate
Redwood Trust , Inc.
June 24, 2015
Page 2
Form 10 -K for the fiscal year ended December 31, 2014
Item 7. Management’ s Discussion and Analysis of Financial Condition and Results of
Operations
Mortgage Servicing Rights Investments, page 60
1. Please provide us with additional details regarding your Mortgage Servicing Rights
investments (MSRs) including whether you have retained the basic MSR and excess
MSR. Additionally , tell us the weighted average yield that you have earned on these
assets for all periods present ed and whether you have any outstanding servicer
advances. Please update your disclosure in future filings accordingly.
Item 8. Financial Statements and Supplementary Data
Note 5. Fair Value of Financial Instruments, F -29
2. We note your disclosure on page F -36 that the fair value for residential loans is
determined based on either an exit price to securitization or the whole loan market.
Please tell us how you determine which of these two markets to use for your
residential loans an d how you have concluded that the market used in your valuation
is the principal or most advantageous market.
Form 10 -Q for the quarterly period ended March 31, 2015
Item 2. Management’s Discussion and Analysis of Financial Condition and Re sults of
Operations
Mortgage Banking Activities, Net, page 69
3. We note your disclosure on page 70 that you began to account for commitments to
purchase jumbo loans as derivatives as a result of amendments to the agreements
governing these commitme nts. Please provide to us additional details regarding the
terms of the referenced amendments, how they qualify your loan purchase
commitments to be accounted for as a derivative, and quantify the impact to your
financial statements. Also, tell us t he accounting guidance upon you which you
relied.
We urge all persons who are responsible for the accuracy and adequacy of the
disclosure in the filing to be certain that the filing includes the information the Securities
Exchange Act of 193 4 and all applicable Exchange Act rules require. Since the company
and its management are in possession of all facts relating to a company’s disclosure, they
are responsible for the accuracy and adequacy of the disclosures they have made.
Christopher J. Abate
Redwood Trust , Inc.
June 24, 2015
Page 3
In responding to our comment s, please provide a written statement from the company
acknowledging that:
the company is responsible for the adequacy and accuracy of the disclosure in the
filing;
staff comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking any action with respect to the filing; and
the company may not assert staff comments as a defense in any proceeding
initiated by the Commission or any person under the federal securities laws of t he
United States.
If you have any questions, you may contact Jorge L. Bonilla at (202) 551 -3414 or
me at (202) 551 -3446 .
Sincerely,
/s/ Jaime G. John
Jaime G. John
Branch Chief