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August 24, 2015

VIA EDGAR AND E-MAIL

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.W.

Washington, D.C. 20549

    Attn:
    Jaime G. John

    Branch Chief

    Division of Corporation Finance

    Re:
    Redwood Trust, Inc.

    Responses to Comments on:

    Form 10-K for the Fiscal Year Ended December 31, 2014

    Filed on February 25, 2015

    Form 10-Q for the Quarterly Period Ended March 31, 2015

    Filed on May 7, 2015

    File No. 1-13759

Dear Mr. John,

On behalf of Redwood Trust, Inc. (“Redwood”),
I hereby provide the following response in reply to the Staff’s comment letter dated August 14, 2015 (the “Comment
Letter”) in connection with the above-referenced Annual Report on Form 10-K (the “2014 Form 10-K”). For your
convenience, my response is preceded with an italicized recitation of the comment set forth in the Comment Letter.

Form 10-K for the fiscal year ended
December 31, 2014

Item 8. Financial Statements and
Supplementary Data

Note 5. Fair Value of Financial Instrument,
F-29

 1. We note in your response to comment 2 that the difference in fair value estimates implied by
pricing inputs obtained from market securitization activity versus from market whole loan transaction activity was minimal. Please
clarify whether fair value estimates for your residential loans held-for-investment are based upon pricing inputs for both the
securitization market and the whole loan market and if so, confirm that differences between fair value estimates based upon the
two markets are minimal as it relates specifically to residential loans held-for-investment. Also, explain to us why you adjust
the above pricing inputs and the nature of the adjustments.

Fair value estimates for our
residential loans held-for-investment are currently based only on whole loan pricing inputs. As such, there are not pricing differences
between whole loan and securitization pricing inputs for our held-for-investment loans.

In the description of our determination
of fair value in our Form 10-Q, we note that pricing inputs are “…adjusted as necessary for current market conditions.”
In certain cases, whole loan sales that provide comparative pricing inputs do not occur on the last day of the quarter and we must
consider how spreads or other pricing inputs may have changed between the time of the most recent comparative sale and quarter-end.
In certain cases, we will adjust pricing inputs from the most recent comparative sales to reflect changes in current market conditions
that we observe. Generally speaking, adjustments made to pricing inputs for this purpose have been minimal as we have typically
had sales that occurred close to quarter-end.

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As you have requested, we confirm that:

 · Redwood is responsible for the adequacy
and accuracy of the disclosure in the above-referenced 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 filings; and

 · Redwood may not assert staff comments
as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Should you have any further comments or
questions about this letter, please contact me by telephone at 415-384-3584, by fax at 415-381-1773, or by email at chris.abate@redwoodtrust.com.

    Very truly yours,

    Redwood Trust, Inc.

    By:
    /s/ Christopher J. Abate

    Christopher J. Abate

    Chief Financial Officer

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