Redwood Trust (RWT) 10-Q 7 Nov 14 2014 Q3 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	9 Months Ended
	Sep. 30, 2014	Nov. 03, 2014
Document Type	'10-Q	'
Amendment Flag	'false	'
Document Period End Date	30-Sep-14	'
Document Fiscal Year Focus	'2014	'
Document Fiscal Period Focus	'Q3	'
Trading Symbol	'RWT	'
Entity Registrant Name	'REDWOOD TRUST INC	'
Entity Central Index Key	'0000930236	'
Current Fiscal Year End Date	'--12-31	'
Entity Filer Category	'Large Accelerated Filer	'
Entity Common Stock, Shares Outstanding	'	83,283,922

Consolidated_Balance_Sheet

Consolidated Balance Sheet (USD $)	Sep. 30, 2014		Dec. 31, 2013
In Thousands, unless otherwise specified
ASSETS	'		'
Residential loans	$3,287,587		$2,166,434
Commercial loans	497,997		432,455
Real estate securities, at fair value	1,394,985		1,682,861
Mortgage servicing rights, at fair value	135,152		64,824
Cash and cash equivalents	149,617		173,201
Total earning assets	5,465,338		4,519,775
Restricted cash	455		398
Accrued interest receivable	15,261		13,475
Derivative assets	7,756		7,787
Deferred securities issuance costs	10,190		13,453
Other assets	112,768		53,640
Total Assets	5,611,768	[1]	4,608,528	[1]
Liabilities	'		'
Short-term debt	1,887,688		862,763
Accrued interest payable	10,480		6,366
Derivative liabilities	38,263		18,167
Accrued expenses and other liabilities	48,239		48,704
Deferred tax liability	7,316		7,316
Long-term debt	696,902		476,467
Total liabilities	4,345,090	[1]	3,362,745	[1]
Equity	'		'
Common stock, par value $0.01 per share, 180,000,000 shares authorized; 83,284,392 and 82,504,801 issued and outstanding	833		825
Additional paid-in capital	1,768,612		1,760,899
Accumulated other comprehensive income	159,771		148,766
Cumulative earnings	879,745		806,298
Cumulative distributions to stockholders	-1,542,283		-1,471,005
Total equity	1,266,678		1,245,783
Total Liabilities and Equity	5,611,768		4,608,528
Asset-backed Securities	'		'
Liabilities	'		'
Asset-backed securities issued	1,656,202		1,942,962
Residential Loans Held For Sale	'		'
ASSETS	'		'
Residential loans	1,502,429		404,267
Residential Loans Held For Investment at Fair Value	'		'
ASSETS	'		'
Residential loans	238,651		'
Residential Loans Held for Investment	'		'
ASSETS	'		'
Residential loans	1,546,507		1,762,167
Commercial Loans Held For Sale	'		'
ASSETS	'		'
Commercial loans	104,709		89,111
Commercial Loans Held For Investment	'		'
ASSETS	'		'
Commercial loans	$393,288		$343,344
[1]	Our consolidated balance sheets include assets of consolidated variable interest entities ("VIEs") that can only be used to settle obligations of these VIEs and liabilities of consolidated VIEs for which creditors do not have recourse to the primary beneficiary (Redwood Trust, Inc.). At September 30, 2014 and December 31, 2013, assets of consolidated VIEs totaled $2,013,807 and $2,299,576, respectively, and liabilities of consolidated VIEs totaled $1,657,782 and $1,944,911, respectively. See Note 4 for further discussion.

Consolidated_Balance_Sheet_Par

Consolidated Balance Sheet (Parenthetical) (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, except Share data, unless otherwise specified
Long-term debt at fair value	$66,146	$0
Common stock, par value	$0.01	$0.01
Common stock, shares authorized	180,000,000	180,000,000
Common stock, issued	83,284,392	82,504,801
Common stock, outstanding	83,284,392	82,504,801
Variable interest held by entity, assets	2,013,807	2,299,576
Variable interest held by entity, liabilities	1,657,782	1,944,911
Commercial Loans Held For Investment	'	'
Loans at fair value	$70,712	$0

Consolidated_Statements_Of_Inc

Consolidated Statements Of Income (USD $)	3 Months Ended				9 Months Ended
In Thousands, except Share data, unless otherwise specified	Sep. 30, 2014		Sep. 30, 2013		Sep. 30, 2014		Sep. 30, 2013
Interest Income	'		'		'		'
Residential loans	$19,280		$17,027		$45,539		$53,497
Commercial loans	12,603		10,740		34,204		30,534
Real estate securities	31,461		29,649		97,062		84,480
Cash and cash equivalents	7		4		15		153
Total interest income	63,351		57,420		176,820		168,664
Interest Expense	'		'		'		'
Short-term debt	-8,441		-5,227		-17,409		-13,721
Asset-backed securities issued	-7,838		-9,604		-24,462		-30,815
Long-term debt	-7,071		-6,894		-21,689		-16,908
Total interest expense	-23,350		-21,725		-63,560		-61,444
Net Interest Income	40,001		35,695		113,260		107,220
Reversal of provision (provision) for loan losses	1,596		-1,727		629		-493
Net Interest Income After Provision	41,597		33,968		113,889		106,727
Noninterest Income	'		'		'		'
Mortgage banking activities, net	17,872		-8,698		23,950		85,562
Mortgage servicing rights income, net	5,821		3,113		4,650		14,681
Other market valuation adjustments, net	-3,706	[1]	462	[1]	-13,966	[1]	-6,099	[1]
Realized gains, net	8,532		10,469		10,687		23,291
Total noninterest income, net	28,519		5,346		25,321		117,435
Operating expenses	-21,406		-22,320		-63,660		-66,937
Other income	1,600		'		1,600		'
Net income before provision for income taxes	50,310		16,994		77,150		157,225
(Provision for) benefit from income taxes	-5,213		4,935		-3,703		-9,113
Net Income	$45,097		$21,929		$73,447		$148,112
Basic earnings per common share	$0.53		$0.26		$0.87		$1.76
Diluted earnings per common share	$0.50		$0.25		$0.84		$1.65
Regular dividends declared per common share	$0.28		$0.28		$0.84		$0.84
Basic weighted average shares outstanding	83,017,534		82,201,473		82,722,079		81,888,231
Diluted weighted average shares outstanding	96,956,232		84,422,039		85,031,130		93,233,865
[1]	For the three months ended September 30, 2014, other-than-temporary impairments were $188, all of which was recognized through the income statement. For the three months ended September 30, 2013, there were no other-than-temporary impairments. For the nine months ended September 30, 2014, other-than-temporary impairments were $4,774, of which $565 were recognized through the Income Statement and $4,209 were recognized in Accumulated Other Comprehensive Income. For the nine months ended September 30, 2013, other-than-temporary impairments were $1,666, all of which was recognized through the income statement.

Consolidated_Statements_Of_Inc1

Consolidated Statements Of Income (Parenthetical) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Total other-than-temporary impairments	$188	$0	$4,774	$1,666
Income Statement, other-than-temporary impairments	188	'	565	1,666
Accumulated other comprehensive income, other-than-temporary impairments	$0	'	$4,209	'

Statements_Of_Consolidated_Com

Statements Of Consolidated Comprehensive Income (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Net income	$45,097	$21,929	$73,447	$148,112
Other comprehensive income (loss):	'	'	'	'
Net unrealized gain (loss) on available-for-sale securities	1,849	-633	35,078	-29,615
Reclassification of unrealized (gain) loss on available-for-sale securities to net income	-6,409	-6,962	-6,750	-19,211
Net unrealized (loss) gain on interest rate agreements	-3,258	4,018	-17,454	25,043
Reclassification of unrealized loss on interest rate agreements to net income	32	62	131	219
Total other comprehensive income (loss)	-7,786	-3,515	11,005	-23,564
Total Comprehensive Income	$37,311	$18,414	$84,452	$124,548

Consolidated_Statements_Of_Equ

Consolidated Statements Of Equity (USD $)	Total	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Income	Cumulative Earnings	Cumulative Distributions to Stockholders
In Thousands, except Share data, unless otherwise specified
Beginning balance at Dec. 31, 2012	$1,140,164	$817	$1,744,554	$138,332	$633,052	($1,376,591)
Beginning balance (in shares) at Dec. 31, 2012	'	81,716,416	'	'	'	'
Net income	148,112	'	'	'	148,112	'
Other comprehensive income (loss)	-23,564	'	'	-23,564	'	'
Issuance of common stock:	'	'	'	'	'	'
Dividend reinvestment & stock purchase plans (in shares)	'	374,371	'	'	'	'
Dividend reinvestment & stock purchase plans	7,077	4	7,073	'	'	'
Employee stock purchase and incentive plans (in shares)	'	297,715	'	'	'	'
Employee stock purchase and incentive plans	-5,387	3	-5,390	'	'	'
Non-cash equity award compensation	11,443	'	11,443	'	'	'
Common dividends declared	-70,675	'	'	'	'	-70,675
Ending balance at Sep. 30, 2013	1,207,170	824	1,757,680	114,768	781,164	-1,447,266
Ending balance (in shares) at Sep. 30, 2013	'	82,388,502	'	'	'	'
Beginning balance at Dec. 31, 2013	1,245,783	825	1,760,899	148,766	806,298	-1,471,005
Beginning balance (in shares) at Dec. 31, 2013	'	82,504,801	'	'	'	'
Net income	73,447	'	'	'	73,447	'
Other comprehensive income (loss)	11,005	'	'	11,005	'	'
Issuance of common stock:	'	'	'	'	'	'
Dividend reinvestment & stock purchase plans (in shares)	'	336,810	'	'	'	'
Dividend reinvestment & stock purchase plans	6,055	4	6,051	'	'	'
Employee stock purchase and incentive plans (in shares)	'	442,781	'	'	'	'
Employee stock purchase and incentive plans	-7,268	4	-7,272	'	'	'
Non-cash equity award compensation	8,934	'	8,934	'	'	'
Common dividends declared	-71,278	'	'	'	'	-71,278
Ending balance at Sep. 30, 2014	$1,266,678	$833	$1,768,612	$159,771	$879,745	($1,542,283)
Ending balance (in shares) at Sep. 30, 2014	'	83,284,392	'	'	'	'

Consolidated_Statements_Of_Cas

Consolidated Statements Of Cash Flows (USD $)	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Cash Flows From Operating Activities:	'	'
Net income	$73,447	$148,112
Adjustments to reconcile net income to net cash used in operating activities:	'	'
Amortization of premiums, discounts, and securities issuance costs, net	-26,248	-18,060
Depreciation and amortization of non-financial assets	369	310
Purchases of held-for-sale loans	-6,844,403	-6,864,921
Proceeds from sales of held-for-sale loans	5,328,901	6,263,058
Principal payments on held-for-sale loans	19,648	9,467
Net settlements of derivatives	-22,776	55,694
Provision (reversal of provision) for loan losses	-629	493
Non-cash equity award compensation expense	8,934	11,443
Market valuation adjustments, net	-1,787	-76,425
Realized gains, net	-10,687	-34,322
Net change in:	'	'
Accrued interest receivable and other assets	-57,806	2,374
Accrued interest payable, deferred tax liabilities, and accrued expenses and other liabilities	-266	17,378
Net cash used in operating activities	-1,533,303	-485,399
Cash Flows From Investing Activities:	'	'
Purchases of loans held-for-investment	-65,584	-63,071
Proceeds from sales of held-for-investment loans	'	440
Principal payments on held-for-investment loans	267,425	415,576
Purchases of real estate securities	-132,393	-142,628
Proceeds from sales of real estate securities	457,131	204,462
Principal payments on real estate securities	144,598	124,030
Purchase of mortgage servicing rights	-41,834	-3,106
Net change in restricted cash	-57	-34
Net cash provided by investing activities	629,286	535,669
Cash Flows From Financing Activities:	'	'
Proceeds from borrowings on short-term debt	5,615,317	5,745,892
Repayments on short-term debt	-4,643,308	-5,459,511
Repayments on asset-backed securities issued	-286,248	-465,986
Deferred securities issuance costs	'	-9,184
Proceeds from issuance of long-term debt	272,937	332,119
Repayments on long-term debt	-685	-14
Net settlements of derivatives	-2,507	-9
Net proceeds from issuance of common stock	3,840	6,452
Taxes paid on equity award distributions	-7,635	-5,789
Dividends paid	-71,278	-70,675
Net cash provided by financing activities	880,433	73,295
Net (decrease) increase in cash and cash equivalents	-23,584	123,566
Cash and cash equivalents at beginning of period	173,201	81,080
Cash and cash equivalents at end of period	149,617	204,646
Cash paid during the period for:	'	'
Interest	57,047	60,394
Taxes	1,399	3,397
Supplemental Noncash Information:	'	'
Real estate securities retained from loan securitizations	126,009	370,498
Retention of mortgage servicing rights from loan securitizations and sales	30,962	41,128
Transfers from loans held-for-sale to loans held-for-investment	278,913	'
Transfers from residential loans to real estate owned	$4,753	$3,448

Redwood_Trust

Redwood Trust	9 Months Ended
	Sep. 30, 2014
Redwood Trust	'
	Note 1. Redwood Trust
	Redwood Trust, Inc., together with its subsidiaries, focuses on investing in mortgage- and other real estate-related assets and engaging in residential and commercial mortgage banking activities. We seek to invest in real estate-related assets that have the potential to generate attractive cash flow returns over time and to generate income through our residential and commercial mortgage banking activities.
	Our primary sources of income are net interest income from our investment portfolios and noninterest income from our mortgage banking activities. Net interest income consists of the interest income we earn on investments less the interest expense we incur on borrowed funds and other liabilities. Income from mortgage banking activities consists of the profit we seek to generate through the acquisition or origination of loans and their subsequent sale or securitization. References herein to “Redwood,” the “company,” “we,” “us,” and “our” include Redwood Trust, Inc. and its consolidated subsidiaries, unless the context otherwise requires.
	We operate our business in three segments: residential mortgage banking, residential investments, and commercial mortgage banking and investments.
	Our residential mortgage banking segment primarily consists of operating a mortgage loan conduit that acquires residential loans from third-party originators for subsequent sale through securitization or as whole loans. Jumbo loans we acquire are typically sold through private-label securitization through our Sequoia securitization program or to institutions that acquire pools of whole loans. Conforming loans we acquire are generally sold to Fannie Mae and Freddie Mac (the “Agencies”). Our residential loan acquisitions are usually made on a flow basis, after origination by banks or mortgage companies, and are periodically augmented by bulk acquisitions. Our acquisition and accumulation of residential loans is generally funded with equity and short-term debt. This segment also includes various derivative financial instruments and IO securities retained from our Sequoia securitizations that we utilize to manage certain risks associated with residential loans we acquire. Our residential mortgage banking segment’s main source of revenue is mortgage banking income, which includes valuation increases (or gains) on the loans we acquire for sale or securitization as well as valuation changes in associated derivatives and IO securities that are used in part to manage risks associated with our mortgage banking activities. Additionally, this segment may generate interest income on loans held for future sale or securitization and interest income from IO securities. Interest expense on short-term debt used to fund the purchase of residential loans, direct operating expenses and tax provisions associated with these activities are also included in the residential mortgage banking segment.
	Our residential investments segment includes a portfolio of investments in residential mortgage-backed securities retained from our Sequoia securitizations, as well as residential mortgage-backed securities issued by third parties. This segment also includes mortgage servicing rights (“MSRs”) associated with residential loans securitized through our Sequoia program or sold to third parties and MSRs purchased from third parties as well as residential loans acquired and held-for-investment. The residential investment segment’s main sources of revenue are interest income from investment portfolio securities and residential loans held-for-investment, as well as the realized gains recognized upon sales of these securities and income from MSRs. This segment also includes derivative financial instruments that we utilize to manage certain risks associated with our residential investment portfolio. Also included in this segment is interest expense on the short-term debt and asset-backed securities (“ABS”) used to partially finance certain of these securities, as well as direct operating expenses and tax provisions associated with these activities.
	Our commercial mortgage banking and investments segment consists of our commercial mortgage banking operations as well as our portfolio of held-for-investment commercial real estate loans. We operate as a commercial real estate lender by originating mortgage loans and providing other forms of commercial real estate financing. This may include senior or subordinate mortgage loans, mezzanine loans, and other forms of financing, such as preferred equity interests in special purpose entities that own commercial real estate. We typically sell the senior loans we originate to third parties for securitization and the mezzanine and subordinate loans we originate are generally held for investment. This segment also includes derivative financial instruments that we utilize to manage certain risks associated with our commercial loan origination activity. Our commercial mortgage banking and investments segment’s main sources of revenue are interest income from our commercial loan investments as well as income from mortgage banking activities, which includes valuation increases (or gains) on the senior commercial loans we originate for sale as well as valuation changes in associated derivatives that are used to manage risks associated with our mortgage banking activities. Interest expense from a commercial securitization we engaged in during 2012 (“Commercial Securitization”) and from short-term and long-term debt used to fund the purchase of commercial loans as well as operating expenses and tax provisions associated with these activities are also included in the commercial mortgage banking and investments segment.
	Redwood was incorporated in the State of Maryland on April 11, 1994, and commenced operations on August 19, 1994. Our executive offices are located at One Belvedere Place, Suite 300, Mill Valley, California 94941.

Basis_of_Presentation

Basis of Presentation	9 Months Ended
	Sep. 30, 2014
Basis of Presentation	'
	Note 2. Basis of Presentation
	The consolidated financial statements presented herein are at September 30, 2014 and December 31, 2013, and for the three and nine months ended September 30, 2014 and 2013. These consolidated financial statements have been prepared in conformity with generally accepted accounting principles (“GAAP”) in the United States of America — as prescribed by the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) — and using the Securities and Exchange Commission’s (“SEC”) instructions to Form 10-Q.
	Organization
	Redwood Trust, Inc. has elected to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), beginning with its taxable year ended December 31, 1994. We generally refer, collectively, to Redwood Trust, Inc. and those of its subsidiaries that are not subject to subsidiary-level corporate income tax as “the REIT” or “our REIT.” We generally refer to subsidiaries of Redwood Trust, Inc. that are subject to subsidiary-level corporate income tax as “our operating subsidiaries” or “our taxable REIT subsidiaries” or “TRS.” Our mortgage banking activities and investments in MSRs are generally carried out through our taxable REIT subsidiaries, while our portfolio of mortgage- and other real estate-related investments is primarily held at our REIT. We generally intend to retain profits generated and taxed at our taxable REIT subsidiaries, and to distribute as dividends at least 90% of the taxable income we generate at our REIT.
	We sponsor our Sequoia securitization program, which we use for the securitization of residential mortgage loans. References to Sequoia with respect to any time or period generally refer collectively to all the then consolidated Sequoia securitization entities for the periods presented. We have also engaged in securitization transactions in order to obtain financing for certain of our securities and commercial loans.
	Principles of Consolidation
	We apply FASB guidance to determine whether we must consolidate transferred financial assets and variable interest entities (“VIEs”) for financial reporting purposes. We currently consolidate the assets and liabilities of certain Sequoia securitization entities where we maintain an ongoing involvement, as well as an entity formed in connection with a resecuritization transaction we engaged in during 2011 (“Residential Resecuritization”), and an entity formed in connection with a commercial securitization we engaged in during 2012 (“Commercial Securitization”). Each securitization entity is independent of Redwood and of each other and the assets and liabilities are not owned by and are not legal obligations of Redwood Trust, Inc. Our exposure to these entities is primarily through the financial interests we have retained in them, although we are also exposed to certain financial risks associated with our role as a sponsor, manager, or depositor of these entities or as a result of our having sold assets directly or indirectly to these entities.
	For financial reporting purposes, the underlying loans and securities owned at the consolidated Sequoia entities, the Residential Resecuritization entity, and the Commercial Securitization entity are shown under residential and commercial loans and real estate securities on our consolidated balance sheets. The ABS issued to third parties by these entities are shown under ABS issued. In our consolidated statements of income, we record interest income on the loans and securities owned at these entities and interest expense on the ABS issued by these entities.
	See Note 4 for further discussion on principles of consolidation.

Summary_of_Significant_Account

Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2014
Summary of Significant Accounting Policies	'
	Note 3. Summary of Significant Accounting Policies
	Use of Estimates
	The preparation of financial statements requires us to make a number of significant estimates. These include estimates of fair value of certain assets and liabilities, amounts and timing of credit losses, prepayment rates, and other estimates that affect the reported amounts of certain assets and liabilities as of the date of the consolidated financial statements and the reported amounts of certain revenues and expenses during the reported period. It is likely that changes in these estimates (e.g., valuation changes due to supply and demand, credit performance, prepayments, interest rates, or other reasons) will occur in the near term. Our estimates are inherently subjective in nature and actual results could differ from our estimates and the differences could be material.
	Fair Value Measurements
	Our financial statements include assets and liabilities that are measured at their estimated fair values in accordance with GAAP. A fair value measurement represents the price at which an orderly transaction would occur between willing market participants at the measurement date. We develop fair values for financial assets or liabilities based on available inputs and pricing that is observed in the marketplace. Examples of market information that we attempt to obtain include the following:
		—		Quoted prices for the same or similar securities;
		—		Relevant reports issued by analysts and rating agencies;
		—		The current level of interest rates and any directional movements in relevant indices, such as credit risk indices;
		—		Information about the performance of mortgage loans, such as delinquency and foreclosure rates, loss experience, and prepayment rates;
		—		Indicative prices or yields from broker/dealers (including prices from counterparties under securities repurchase and whole-loan warehouse agreements); and,
		—		Other relevant observable inputs, including nonperformance risk and liquidity premiums.
	After considering all available indications of the appropriate rate of return that market participants would require, we consider the reasonableness of the range indicated by the results to determine an estimate that is most representative of fair value.
	The markets for many of the loans and securities that we invest in and issue are generally illiquid. Establishing fair values for illiquid assets and liabilities is inherently subjective and is often dependent upon our estimates and modeling assumptions. If we determine that either the volume and/or level of trading activity for an asset or liability has significantly decreased from normal market conditions, or price quotations or observable inputs are not associated with orderly transactions, the market inputs that we obtain might not be relevant. For example, broker or pricing service quotes might not be relevant if an active market does not exist for the financial asset or liability. The nature of the quote (for example, whether the quote is an indicative price or a binding offer) is also evaluated.
	In circumstances where relevant market inputs cannot be obtained, increased analysis and management judgment are required to estimate fair value. This generally requires us to establish internal assumptions about future cash flows and appropriate risk-adjusted discount rates. Regardless of the valuation inputs we apply, the objective of fair value measurement is unchanged from what it would be if markets were operating at normal activity levels and/or transactions were orderly; that is, to determine the current exit price.
	See Note 5 for further discussion on fair value measurements.
	Fair Value Option
	We have the option to measure eligible financial assets, financial liabilities, and commitments at fair value on an instrument-by-instrument basis. This option is available when we first recognize a financial asset or financial liability or enter into a firm commitment. Subsequent changes in the fair value of assets, liabilities, and commitments where we have elected the fair value option are recorded in our consolidated statements of income.
	We elect the fair value option for certain residential and commercial loans, Sequoia IO securities, and MSRs. We generally elect the fair value option for residential and commercial loans that are held-for-sale, due to our intent to sell or securitize the loans in the near-term. We generally elect the fair value option for Sequoia IO securities as we use these in part to hedge certain risks associated with our residential loans held-for-sale. We elect the fair value option for our MSRs in order to reflect the current value of these investments in our financial position and results each period. We also elect the fair value option for certain secured borrowings we may recognize when the sale of commercial loans do not meet the sale criteria in ASC 860.
	See Note 5 for further discussion on the fair value option.
	Real Estate Loans
	Residential and Commercial Loans — Held-for-Sale at Fair Value
	Residential and commercial loans held-for-sale include loans that we are marketing for sale to third parties, including transfers to securitization entities that we plan to sponsor and expect to be accounted for as sales for financial reporting purposes. We generally elect the fair value option for residential and commercial loans that we purchase with the intent to sell to third parties or transfer to Sequoia securitizations. Coupon interest is recognized as revenue when earned and deemed collectible or until a loan becomes more than 90 days past due. Changes in fair value are recurring and are reported through our consolidated statements of income in mortgage banking activities, net.
	Residential and Commercial Loans — Held-for-Investment
	Residential Loans — At Fair Value
	Certain loans that were originally purchased with the intent to sell as part of our residential mortgage banking operations, and for which we elected the fair value option at acquisition, were subsequently reclassified to held-for-investment when the loans were pledged as collateral for borrowings made from the Federal Home Loan Bank of Chicago (“FHLBC”). As of September 30, 2014, our current intention is to hold these loans for longer-term investment while they are financed by the FHLBC. Coupon interest is recognized as revenue when earned and deemed collectible or until a loan becomes more than 90 days past due. Changes in fair value are recurring and are reported through our consolidated statements of income in other market valuation adjustments, net.
	Commercial Loans — At Fair Value
	We may elect the fair value option for senior commercial mortgage loans that we originate or acquire that are bifurcated into a senior portion that is sold to a third party and a junior portion that we retain as an investment. When the transfer of the senior portion does not meet the criteria for sale treatment under GAAP, the entire loan (the senior and junior portions) remains on our consolidated balance sheet, and we account for the transfer of the senior portion as a secured borrowing liability. Coupon interest is recognized as revenue when earned and deemed collectible or until a loan becomes more than 90 days past due. Changes in fair value are recurring and are reported through our consolidated statements of income in mortgage banking activities, net.
	Residential and Commercial Loans — At Amortized Cost
	Loans held-for-investment include residential loans owned at Consolidated Sequoia Entities and commercial loans owned at the Commercial Securitization entity and by us, net of any allowance for loan losses. Coupon interest is recognized as revenue when earned and deemed collectible or until a loan becomes more than 90 days past due or has been individually impaired, at which point the loan is placed on nonaccrual status. Interest previously accrued for loans that have become greater than 90 days past due or individually impaired is reserved for in the allowance for loan losses. Residential loans delinquent more than 90 days or in foreclosure are characterized as a serious delinquency. Cash principal and interest that is advanced from servicers subsequent to a loan becoming greater than 90 days past due or individually impaired is accounted for as a reduction in the outstanding loan principal balance. When a seriously delinquent loan previously placed on nonaccrual status has cured, meaning all delinquent principal and interest have been remitted by the borrower, the loan is placed back on accrual status. Alternately, loans that have been individually impaired may be placed back on accrual status if restructured and after the loan is considered reperforming. A restructured loan is considered reperforming when the loan has been current for at least 12 months.
	We use the interest method to determine an effective yield to amortize the premium or discount on real estate loans held-for-investment. For residential loans acquired prior to July 1, 2004, we use coupon interest rates as they change over time and anticipated principal payments to determine periodic amortization. For residential and commercial loans acquired after July 1, 2004, we use the initial coupon interest rate of the loans (without regard to future changes in the underlying indices) and anticipated principal payments, if any, to determine periodic amortization.
	We reclassify loans held-for-investment as loans held-for-sale if we determine that these loans will be sold or transferred to third parties. This may occur, for example, if we exercise our right to call ABS issued by a Sequoia securitization trust and decide to subsequently sell the underlying loans to third parties.
	See Note 6 for further discussion on residential loans. See Note 7 for further discussion on commercial loans.
	Residential Loans — Allowance for Loan Losses
	For residential loans classified as held-for-investment, we establish and maintain an allowance for loan losses based on our estimate of credit losses inherent in our loan portfolios at the reporting date. To calculate the allowance for loan losses, we assess inherent losses by determining loss factors (defaults, the timing of defaults, and loss severities upon defaults) that can be specifically applied to each loan or pool of loans.
	We consider the following factors in evaluating the allowance for loan losses:
		—		Ongoing analyses of loans, including, but not limited to, the age of loans and year of origination, underwriting standards, business climate, economic conditions, and other observable data;
		—		Historical loss rates and past performance of similar loans;
		—		Relevant market research and publicly available third-party reference loss rates;
		—		Trends in delinquencies and charge-offs;
		—		Effects and changes in credit concentrations;
		—		Information supporting a borrower’s ability to meet obligations;
		—		Ongoing evaluations of fair values of collateral using current appraisals and other valuations; and,
		—		Discounted cash flow analyses.
	Once we determine the amount of defaults, the timing of the defaults, and severity of losses upon the defaults, we estimate expected losses for each individual loan or pool of loans over its expected life. We then estimate the timing of these losses and the losses probable to occur over an appropriate loss confirmation period. This period is defined as the range of time between the occurrence of a credit loss (such as the initial deterioration of the borrower’s financial condition) and the confirmation of that loss (the actual impairment or charge-off of the loan). The losses expected to occur within the estimated loss confirmation period are the basis of our allowance for loan losses, since we believe these losses exist at the reported date of the financial statements. We re-evaluate the adequacy of our allowance for loan losses quarterly.
	As part of the loss mitigation efforts undertaken by servicers of residential loans owned at Sequoia securitization entities, certain delinquent loans have been modified and additional loans may be modified in the future. Loan modifications may include, but are not limited to: (i) conversion of a floating rate mortgage loan into a fixed rate mortgage loan; (ii) reduction in the contractual interest rate of a mortgage loan; (iii) forgiveness of a portion of the contractual interest and/or principal amounts owed on a mortgage loan; and, (iv) extension of the contractual maturity of a mortgage loan. We evaluate all loan modifications performed by servicers to determine if they constitute troubled debt restructurings (“TDRs”) according to GAAP. If a loan is determined to be a TDR, it is removed from the general loan pools used for calculating allowances for loan losses and assessed for impairment on an individual basis based upon any adverse change in the expected future cash flows resulting from the modification. This difference is recorded to the provision for loan losses in our consolidated statements of income.
	When foreclosed property is received in full satisfaction for a defaulted loan, we estimate the fair value of the property, based on estimated net proceeds from the sale of the property (including servicer advances and other costs). To the extent that the fair value of the property is below the recorded investment of the loan, we record a charge against the allowance for loan losses for the difference. Foreclosed property is subsequently recorded as real estate owned (“REO”), a component of other assets on our consolidated balance sheets. Actual losses incurred on loans liquidated through a short-sale are also charged against the allowance for loan losses.
	See Note 6 for further discussion on the allowance for loan losses for residential loans.
	Commercial Loans — Allowance for Loan Losses
	For commercial loans classified as held-for-investment, we establish and maintain a general allowance for loan losses inherent in our portfolio at the reporting date and, where appropriate, a specific allowance for loan losses for loans we have determined to be impaired at the reporting date. An individual loan is considered impaired when it is deemed probable that we will not be able to collect all amounts due according to the contractual terms of the loan.
	Our methodology for assessing the adequacy of the allowance for loan losses begins with a formal review of each commercial loan in the portfolio and the assignment of an internal impairment status. Reviews are performed at least quarterly. We consider the following factors in evaluating each loan:
		—		Loan to value ratios upon origination or acquisition of the loan;
		—		The most recent financial information available for each loan and associated properties, including net operating income, debt service coverage ratios, occupancy rates, rent rolls, as well as any other loss factors we consider relevant, such as, but not limited to, specific loan trigger events that would indicate an adverse change in expected cash flows or payment delinquency;
		—		Economic trends, both macroeconomic as well as those directly affecting the properties associated with our loans, and the supply and demand of competing projects in the sub-market in which the subject property is located; and,
		—		The loan sponsor or borrowing entity’s ability to ensure that properties associated with the loan are managed and operated sufficiently.
	Loan reviews are completed by asset management and finance personnel and reviewed and approved by senior management.
	Based on the assigned internal impairment status, a loan is categorized as “Pass,” “Watch List,” or “Workout.” Pass loans are defined as loans that are performing in accordance with the contractual terms of the loan agreement. Watch List loans are defined as performing loans for which the timing of cost recovery is under review. Workout loans are defined as loans that we believe have a credit impairment that may lead to a realized loss. Workout loans are typically assessed for impairment on an individual basis. Where an individual commercial loan is impaired, we record an allowance to reduce the carrying value of the loan to the current present value of expected future cash flows discounted at the loan’s effective rate or if a loan is collateral dependent, we reduce the carrying value to the estimated fair market value of the loan, with a corresponding charge to provision for loan losses on our consolidated statements of income.
	For all commercial loans that are not individually impaired, we assess the commercial loan portfolio in aggregate for loan losses based on our expectation of credit losses inherent in the portfolio at the reporting date. Our expectation of credit losses is informed by, among other things:
		—		Historical loss rates and past performance of similar loans in our own portfolio, if any;
		—		Publicly available third-party reference loss rates on similar loans; and,
		—		Trends in delinquencies and charge-offs in our own portfolio and among industry participants.
	See Note 7 for further discussion on the allowance for loan losses for commercial loans.
	Repurchase Reserves
	We sell residential mortgage loans to various parties, including (1) securitization trusts, (2) the Agencies, and (3) banks and other financial institutions that purchase mortgage loans. We also purchase mortgage servicing rights. We may be required to repurchase residential mortgage loans we have sold, or loans associated with MSRs we own, in the event of a breach of specified contractual representations and warranties made in connection with these sales and purchases. We do not originate residential mortgage loans and believe the initial risk of loss due to loan repurchases (i.e., due to a breach of representations and warranties) would generally be a contingency to the companies from whom we acquired the loans. However, in some cases, such as where loans were acquired from companies that have since become insolvent, we may be required to repurchase loans.
We establish reserves for mortgage repurchase liabilities related to various representations and warranties that reflect management’s estimate of losses for loans for which we could have a repurchase obligation, based on a combination of factors. Such factors can include estimated future defaults and loan repurchase rates, the potential severity of loss in the event of defaults, and the probability of our being liable for a repurchase obligation. We establish a reserve at the time loans are sold and continually update our reserve estimate during its life. The reserve for mortgage loan repurchase losses is included in other liabilities on our consolidated balance sheets and the related expense is included as a component of mortgage banking activities, net on our consolidated statements of income.
We have originated and sold commercial mortgage loans and have made standard representations and warranties upon sale of the loans to the loan purchasers, and in some cases, to securitization trusts. We review the need for a repurchase reserve related to these commercial loans on an ongoing basis and are not aware of any breaches of representations and warranties related to these loans.
See Note 15 for further discussion on the residential repurchase reserve.
Real Estate Securities, at Fair Value
We classify our real estate securities as trading or available-for-sale securities. We use the “prime” or “non-prime” designation to categorize our residential securities based upon the general credit characteristics of the residential loans underlying each security at the time of origination. For example, prime residential loans are generally characterized by lower loan-to-value (“LTV”) ratios at the time the loans were originated, and are made to borrowers with higher Fair Isaac Corporation (“FICO”) scores. Non-prime residential loans are generally characterized by higher LTV ratios at the time the loans were originated and may have been made to borrowers with lower credit scores or impaired credit histories (while exhibiting the ability to repay their loans) at the time the loan was originated. Regardless of whether or not the loans underlying a residential security were designated as prime or non-prime at origination, there is a risk that the borrower may not be able to repay the loan.
Trading Securities
We primarily denote trading securities as those securities where we have adopted the fair value option. Trading securities are carried at their estimated fair values and coupon interest is recognized as interest income when earned and deemed collectible. Changes in the fair value of Sequoia IO and senior securities designated as trading securities are reported in mortgage banking activities, net, a component of our consolidated statements of income. Changes in the fair value of other trading securities are reported through our consolidated statements of income in other market valuation adjustments, net.
Available-for-Sale Securities
AFS securities primarily consist of non-agency residential mortgage backed securities (“RMBS”) and may include other residential and commercial securities. Non-Agency RMBS are not issued or guaranteed by a federally chartered corporation, such as Fannie Mae or Freddie Mac, or any agency of the U.S. Government. AFS securities are carried at their estimated fair value with unrealized gains and losses excluded from earnings (except when an other-than-temporary impairment (“OTTI”) is recognized, as discussed below) and reported in accumulated other comprehensive income (“AOCI”), a component of stockholders’ equity.
Interest income on AFS securities is accrued based on their outstanding principal balance and contractual terms and interest income is recognized based on the security’s effective interest rate. In order to calculate the effective interest rate, we must project cash flows over the remaining life of each security and make assumptions with regards to interest rates, prepayment rates, the timing and amount of credit losses, and other factors. On at least a quarterly basis, we review and, if appropriate, make adjustments to our cash flow projections based on input and analysis received from external sources, internal models, and our own judgments about interest rates, prepayment rates, the timing and amount of credit losses, and other factors. Changes in cash flows from those originally projected, or from those estimated at the last evaluation, may result in a prospective change in the yield and interest income recognized on these securities or in the recognition of OTTI as discussed below.
For AFS securities purchased and held at a discount, a portion of the discount may be designated as non-accretable purchase discount (“credit reserve”), based on the cash flows we have projected for the security. The amount designated as credit reserve may be adjusted over time, based on our periodic evaluation of projected cash flows. If the performance of a security with a credit reserve is more favorable than previously forecasted, a portion of the credit reserve may be reallocated to accretable discount and recognized into interest income over time. Conversely, if the performance of a security with a credit reserve is less favorable than forecasted, the amount designated as credit reserve may be increased, or impairment charges and write-downs of such securities to a new cost basis could result.
When the fair value of an AFS security is less than its amortized cost at the reporting date, the security is considered impaired. We assess our impaired securities at least quarterly to determine if the impairment is temporary or other-than-temporary (resulting in an OTTI). If we either — (i) intend to sell the impaired security; (ii) will more likely than not be required to sell the impaired security before it recovers in value; or (iii) if there has been an adverse change in cash flows — the impairment is deemed an OTTI. In the case of criteria (i) and (ii), we record the entire difference between the security’s estimated fair value and its amortized cost at the reporting date in our consolidated statements of income. If there has been an adverse change in cash flows, only the portion of the OTTI related to “credit” losses is recognized through other market valuation adjustments, net on our consolidated statements of income, with the remaining “non-credit” portion recognized through AOCI on our consolidated balance sheet. If the first two criteria are not met and there has not been an adverse change in cash flows, the impairment is considered temporary and the entire unrealized loss is recognized through AOCI on our consolidated balance sheets.
For impaired AFS securities, to determine if there has been an adverse change in cash flows and if any portion of a resulting OTTI is related to credit losses, we compare the present value of the cash flows expected to be collected as of the current financial reporting date to the amortized cost basis of the security. The discount rate used to calculate the present value of expected future cash flows is the current yield used for income recognition purposes. If the present value of the current expected cash flows is less than the amortized cost basis, there has been an adverse change and the security is considered OTTI with the difference between these two amounts representing the credit loss. The determination as to whether an OTTI exists and, if so, the amount of credit impairment recognized in earnings is subjective, and based on information available at the time of the assessment as well as our estimates of future performance and cash flows. As a result, the timing and amount of OTTI constitute a material estimate that is susceptible to significant change.
See Note 8 for further discussion on real estate securities.
MSRs
We recognize MSRs through the retention of servicing rights associated with residential mortgage loans that we have acquired and subsequently transferred to third parties (including the Agencies) or through the direct acquisition of MSRs sold by third parties. Typically, our MSRs are created through the transfer of loans to a third party or to a Sequoia residential mortgage securitization sponsored by us that meets the GAAP criteria for sale accounting.
Our MSRs are held and managed at Redwood Residential Acquisition Corporation, a wholly-owned subsidiary of RWT Holdings, Inc., which is a taxable REIT subsidiary of ours. We contract with a licensed sub-servicer to perform servicing functions for loans associated with our MSRs. We have elected the fair value option for all of our MSRs, and they are initially recognized and carried at their estimated fair values. Income from MSRs and changes in the estimated fair value of MSRs are reported in MSR income, net, a component of our consolidated statements of income.
See Note 9 for further discussion on MSRs.
Cash and Cash Equivalents
Cash and cash equivalents include non-restricted cash and highly liquid investments with original maturities of three months or less.
Restricted Cash
Restricted cash primarily includes principal and interest payments that are collateral for, or payable to, owners of ABS issued by consolidated securitization entities. Restricted cash may also include cash retained in the Sequoia securitization entities or in the Residential Resecuritization or Commercial Securitization entities prior to the payments on or redemptions of outstanding ABS issued.
Accrued Interest Receivable
Accrued interest receivable includes interest that is due and payable to us and deemed collectible. Cash interest is generally received within thirty days of recording the receivable. For financial assets where we have elected the fair value option, the associated accrued interest receivable on these assets is measured at fair value. For financial assets where we have not elected the fair value option, the associated accrued interest carrying values approximate fair values.
Derivative Financial Instruments
Derivative financial instruments we typically utilize include swaps, swaptions, financial futures contracts, CMBX credit default index swaps, and “To Be Announced” (“TBA”) contracts. These derivatives are primarily used to manage interest rate risk associated with our operations. In addition, we enter into certain residential loan purchase commitments (“LPCs”) and residential loan forward sale commitments (“FSCs”) that are treated as derivatives for financial reporting purposes. All derivative financial instruments are recorded at their estimated fair values on our consolidated balance sheets. Derivatives with positive fair values to us are reported as assets and derivatives with negative fair values to us are reported as liabilities. We classify each derivative as either (i) a trading instrument (no specific hedging designation for financial reporting purposes) or (ii) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge).
Changes in the fair values of derivatives accounted for as trading instruments, including any associated interest income or expense, are recorded in our consolidated statements of income through other market valuation adjustments, net, to the extent they are used to manage risks associated with our residential investment portfolio. Derivatives used to manage certain risks associated with our residential and commercial mortgage banking activities, including valuation changes related to residential LPCs and FSCs, are included in mortgage banking activities, net, on our consolidated statements of income.
Changes in the fair values of derivatives accounted for as cash flow hedges, to the extent they are effective, are recorded in accumulated other comprehensive income, a component of equity on our consolidated balance sheets. Interest income or expense, and any ineffectiveness associated with these derivatives, are recorded as a component of net interest income in our consolidated statements of income. We measure the effective portion of cash flow hedges by comparing the change in fair value of the expected future variable cash flows of the derivative hedging instruments with the change in fair value of the expected future variable cash flows of the hedged item.
We will discontinue a designated cash flow hedging relationship if (i) we determine that the hedging derivative is no longer expected to be effective in offsetting changes in the cash flows of the designated hedged item; (ii) the derivative expires or is sold, terminated, or exercised; (iii) the derivative is de-designated as a cash flow hedge; or, (iv) it is probable that a forecasted transaction associated with the hedged item will not occur by the end of the originally specified time period. To the extent we de-designate or terminate a cash flow hedging relationship and the associated hedged item continues to exist, any unrealized gain or loss of the cash flow hedge at the time of de-designation remains in accumulated other comprehensive income and is amortized using the straight-line method through interest expense over the remaining life of the hedged item.
Swaps and Swaptions
Interest rate swaps are agreements in which (i) one counterparty exchanges a stream of fixed interest payments for another counterparty’s stream of variable interest cash flows; or, (ii) each counterparty exchanges variable interest cash flows that are referenced to different indices. Interest rate swaptions are agreements that provide the owner the right but not the obligation to enter into an underlying interest rate swap with a counterparty in the future. Interest rate caps are agreements in which the owner receives payments at the end of each period for which the prevailing interest rate exceeds an agreed upon strike price. We enter into interest rate agreements primarily to reduce significant changes in our income or equity caused by interest rate volatility. Certain of these interest rate agreements may be designated as cash flow hedges.
Eurodollar Futures and Financial Futures
Eurodollar futures are futures contracts on time deposits denominated in U.S. dollars at banks outside the United States. Eurodollar futures, unlike our other derivatives, have maturities of only three months. Therefore, in order to achieve the desired interest rate offset necessary to manage our risk, consecutively maturing contracts are required, resulting in a stated notional amount that is typically higher than our other derivatives. Financial futures are futures contracts on benchmark U.S. Treasury rates.
TBA Contracts
TBA contracts are forward contracts to purchase mortgage-backed securities that will be issued by a U.S. government sponsored enterprise in the future. We purchase or sell these derivatives to offset — to varying degrees — changes in the values of mortgage products for which we have exposure to interest rate volatility.
CMBX Credit Default Index Swaps
CMBX credit default index swaps are derivative instruments that reference an index reflecting the performance of specified tranches from selected commercial mortgage-backed securities (“CMBS”) transactions. Transacting in CMBX credit default index swaps enables us to hedge certain financial risks we are exposed to as we originate senior commercial mortgage loans in anticipation of the sale of these loans into CMBS transactions.
Loan Purchase and Forward Sale Commitments
We use the term LPCs to refer to agreements with third-party residential loan originators to purchase residential loans at a future date that qualify as a derivative under GAAP and we use the term FSCs to refer to agreements with third-parties to sell residential loans at a future date that also qualify as derivatives under GAAP. LPCs and FSCs are recorded at their estimated fair values on our consolidated balance sheets and changes in fair value are recurring and are reported through our consolidated statements of income in mortgage banking activities, net.
See Note 10 for further discussion on derivative financial instruments.
Deferred Tax Assets and Liabilities
Our deferred tax assets/liabilities are generated by temporary differences in GAAP and taxable income at our taxable subsidiaries. These differences generally reflect differing accounting treatments for GAAP and tax, such as accounting for mortgage servicing rights, discount and premium amortization, credit losses, asset impairments, and certain valuation estimates. As a result of these differences, we may recognize taxable income in periods prior to when we recognize income for GAAP. When this occurs, we pay the tax liability as required and establish a deferred tax asset. As the income is subsequently realized in future periods under GAAP, the deferred tax asset is reduced. We may also recognize income under GAAP in periods prior to when we recognize the income for tax. When this occurs, we establish a deferred tax liability. As the income is subsequently realized in future periods for tax, the deferred tax liability is reduced.
In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We consider historical and projected future taxable income and capital gains as well as tax planning strategies in making this assessment. We determine the extent to which realization of this deferred asset is not assured and establish a valuation allowance accordingly. The estimate of net deferred tax assets could change in future periods to the extent that actual or revised estimates of future taxable income during the carryforward periods change from current expectations.
Deferred Securities Issuance Costs
Securities issuance costs are expenses associated with the issuance of long-term debt, and the ABS issued from the Residential Resecuritization, the Commercial Securitization, and Sequoia securitization entities we sponsor and consolidate for financial reporting purposes. These expenses typically include underwriting, rating agency, legal, accounting, and other fees. ABS issuance costs associated with liabilities reported at cost are deferred. Deferred securities issuance costs are reported on our consolidated balance sheets as deferred charges (an asset) and are amortized as an adjustment to interest expense using the interest method, based upon the actual and estimated repayment schedules of the related securities issued.
Other Assets
Other assets include margin and investment receivable, REO, income tax receivables, fixed assets, principal receivable, and other prepaid expenses and receivables.
REO property acquired through, or in lieu of, foreclosure is initially recorded at fair value, and subsequently reported at the lower of its carrying amount or fair value (less estimated cost to sell). Changes in the fair value of an REO property that has a fair value at or below its carrying amount are recorded in our consolidated statements of income as a component of other market valuation adjustments, net. Margin receivable reflects cash collateral we have posted with various counterparties relating to our derivative and lending agreements with those counterparties, as applicable.
See Note 11 for further discussion on other assets.
Short-Term Debt
Short-term debt includes borrowings under master repurchase agreements, loan warehouse facilities, and other forms of borrowings that expire within one year with various counterparties. These borrowings may be unsecured or collateralized by cash, loans, or securities. If the value (as determined by the applicable counterparty) of the collateral securing those borrowings decreases, we may be subject to margin calls during the period the borrowings are outstanding. In instances where we do not satisfy the margin calls within the required time frame, the counterparty may retain the collateral and pursue any outstanding debt amount from us.
See Note 12 for further discussion on short-term debt.
Accrued Interest Payable
Accrued interest payable includes interest that is due and payable to third parties. Interest is generally paid within one to three months of recording the payable, based upon our remittance requirements, and is paid semi-annually for our convertible debt. For borrowings where we have elected the fair value option, the associated accrued interest on these liabilities is measured at fair value. For financial liabilities where we have not elected the fair value option, the associated accrued interest carrying values approximate fair values.
Asset-Backed Securities Issued
ABS issued represents asset-backed securities issued by bankruptcy-remote entities sponsored and consolidated by Redwood. These entities include certain Sequoia entities, the Residential Resecuritization, and the Commercial Securitization. Assets at these entities are held in the custody of securitization trustees and are not owned by Redwood. These trustees collect principal and interest payments (less servicing and related fees) from the assets and make corresponding principal and interest payments to the ABS investors.
ABS issued are carried at their unpaid principal balances net of any unamortized discount or premium.
See Note 13 for further discussion on ABS issued.
Long-Term Debt
FHLBC Borrowings
FHLBC borrowings include amounts borrowed, also referred to as “advances,” from the Federal Home Loan Bank of Chicago that are secured by eligible collateral, including, but not limited to, residential mortgage loans and residential mortgage-backed securities. FHLBC borrowings are carried at their unpaid principal balance and interest on advances is paid every 13 weeks from when each respective advance is made. If the value (as determined by the FHLBC) of the collateral securing those borrowings decreases, we may be subject to margin calls during the period the borrowings are outstanding. In instances where we do not satisfy the margin calls within the required time frame, the FHLBC may foreclose upon the collateral and pursue any outstanding debt amount from us. Individual advances can be made with maturities ranging from one day to 30 years.
Commercial Long-term Debt
Commercial long-term debt includes borrowings under a master repurchase agreement that, as of the date reported, expires in more than one year with a financial institution counterparty. Beginning in the third quarter of 2014, amounts previously classified as commercial long-term debt were reclassified to short-term debt due to the associated agreement expiring in less than one year as of September 30, 2014.
Commercial Secured Borrowings
Commercial secured borrowings represent liabilities recognized in association with cash received from transfers of portions of senior commercial mortgage loans to third parties that did not meet the criteria for sale treatment under ASC 860 and were accounted for as financings. We elect the fair value option for these secured borrowings and they are held at their estimated fair value on our consolidated balance sheets. These amounts do not represent legal obligations of Redwood and we are not required to make interest payments on these borrowings.
Convertible Notes
Convertible notes include unsecured convertible senior notes and are carried at their unpaid principal balance. Interest on the notes is payable semiannually and the notes mature on April 15, 2018. If converted by a holder, upon conversion the holder of the notes would receive shares of our common stock.
Trust Preferred Securities and Subordinated Notes
Trust preferred securities and subordinated notes are carried at their unpaid principal balance. This long-term debt is unsecured and interest is paid quarterly until it is redeemed in whole or matures at a future date.
See Note 14 for further discussion on long-term debt.
Equity
Accumulated Other Comprehensive Income
Net unrealized gains and losses on real estate securities available-for-sale and interest rate agreements designated as cash flow hedges are reported as components of accumulated other comprehensive income on our consolidated statements of changes in equity and our consolidated balance sheets. Net unrealized gains and losses on securities and interest rate agreements held by our taxable subsidiaries that are reported in other comprehensive income are adjusted for the effects of taxation and may create deferred tax assets or liabilities.
Earnings Per Common Share
Basic earnings per common share (“EPS”) is computed by dividing net income allocated to common shareholders by the weighted average common shares outstanding. Net income allocated to common shareholders represents net income less income allocated to participating securities (as described herein). Diluted EPS is computed by dividing income allocated to common shareholders by the weighted average common shares outstanding plus amounts representing the dilutive effect of share-based payment awards. In addition, if the assumed conversion of convertible notes to common shares is dilutive, diluted EPS is adjusted by adding back the periodic interest expense associated with dilutive convertible debt to net income and adding the shares issued in an assumed conversion to the diluted share count.
The two-class method is an earnings allocation formula under which EPS is calculated for common stock and participating securities according to dividends declared and participating rights in undistributed earnings. Under this method, all earnings (distributed and undistributed) are allocated between participating securities and common shares based on their respective rights to receive dividends or dividend equivalents. Accounting guidance on EPS defines vested and unvested share-based payment awards containing nonforfeitable rights to dividends or dividend equivalents as participating securities that are included in computing EPS under the two-class method.
See Note 16 for further discussion on equity.
Incentive Plans
In May 2014, our shareholders approved the 2014 Redwood Trust, Inc. Incentive Plan (“Incentive Plan”) for executive officers, employees, and non-employee directors, which replaced the 2002 Redwood Trust, Inc. Incentive Plan. The Incentive Plan provides for the grant of restricted stock, deferred stock, deferred stock units, performance-based awards (including performance stock units), dividend equivalents, stock payments, restricted stock units, and other types of awards to eligible participants. Long-term incentive awards granted under the Incentive Plan generally vest over a three- or four-year period. Awards made under the Incentive Plan to officers and other employees in lieu of the payment in cash of a portion of annual bonuses earned generally vest immediately, but are subject to a three-year mandatory holding period. Non-employee directors are also provided annual awards under the Incentive Plan that generally vest immediately. The cost of the awards is amortized over the vesting period on a straight-line basis.
Employee Stock Purchase Plan
In May 2013, our shareholders approved an amendment to our previously amended 2002 Redwood Trust, Inc. Employee Stock Purchase Plan (“ESPP”) to increase the number of shares available under the ESPP. The purpose of the ESPP is to give our employees an opportunity to acquire an equity interest in the Company through the purchase of shares of common stock at a discount. The ESPP allows eligible employees to purchase common stock at 85% of its fair value, subject to certain limits. Fair value as defined under the ESPP is the lesser of the closing market price of the common stock on the first day of the calendar year or the last day of the calendar quarter.
Executive Deferred Compensation Plan
In November 2013, our Board of Directors approved an amendment to our 2002 Executive Deferred Compensation Plan (“EDCP”) to allow non-employee directors to defer certain cash payments and dividends into Deferred Stock Units (“DSUs”). The EDCP allows eligible employees and directors to defer portions of current salary and certain other forms of compensation. The Company matches some deferrals. Compensation deferred under the EDCP is recorded as a liability on our consolidated balance sheets. The EDCP allows for the investment of deferrals in either an interest crediting account or DSUs.
401(k) Plan
We offer a tax-qualified 401(k) Plan to all employees for retirement savings. Under this Plan, employees are allowed to defer and invest up to 100% of their cash earnings, subject to the maximum 401(k) Plan contribution limit set forth by the Internal Revenue Service. We match some employee contributions to encourage participation and to provide a retirement planning benefit to employees. Vesting of the 401(k) Plan matching contributions is based on the employee’s tenure at the Company, and over time an employee becomes increasingly vested in both prior and new matching contributions.
See Note 17 for further discussion on equity compensation plans.
Taxes
We have elected to be taxed as a REIT under the Internal Revenue Code and the corresponding provisions of state law. To qualify as a REIT we must distribute at least 90% of our annual REIT taxable income to shareholders (not including taxable income retained in our taxable subsidiaries) within the time frame set forth in the tax code and also meet certain other requirements related to assets, income, and stock ownership. We assess our tax positions for all open tax years and record tax benefits only if tax positions meet a more-likely-than-not threshold in accordance with FASB guidance on accounting for uncertainty in income taxes. We classify interest and penalties on material uncertain tax positions as interest expense and operating expense, respectively, in our consolidated statements of income.
See Note 20 for further discussion on taxes.
Recent Accounting Pronouncements
In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers.” ASU 2014-09 supersedes the revenue recognition requirements in “Topic 605, Revenue Recognition” and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective retrospectively for annual or interim reporting periods beginning after December 15, 2016, with early application not permitted. We are currently evaluating the new standard.
Balance Sheet Netting
Certain of our derivatives and short-term debt are subject to master netting arrangements or similar agreements. Under GAAP, in certain circumstances we may elect to present certain financial assets, liabilities and related collateral subject to master netting arrangements in a net position on our consolidated balance sheets. However, we do not report any of these financial assets or liabilities on a net basis, and instead present them on a gross basis on our consolidated balance sheets.
The table below presents financial assets and liabilities that are subject to master netting arrangements or similar agreements categorized by financial instrument, together with corresponding financial instruments and corresponding collateral received or pledged at September 30, 2014 and December 31, 2013.
Offsetting of Financial Assets, Liabilities, and Collateral
		Gross		Gross		Net Amounts of		Gross Amounts Not Offset
		Amounts of		Amounts		Assets		in Consolidated
		Recognized		Offset in		(Liabilities)		Balance Sheet (1)
		Assets		Consolidated		Presented in
		(Liabilities)		Balance		Consolidated
September 30, 2014				Sheet		Balance Sheet		Financial		Cash		Net Amount
(In Thousands)								Instruments		Collateral
										(Received)
										Pledged
Assets (2)
Interest rate agreements		$	2,892	$	-	$	2,892	$	(1,033)	$	(1,150)	$	709
Credit default index swaps			2,372		-		2,372		-		(375)		1,997
TBAs			1,496		-		1,496		(1,484)		-		12
Total Assets		$	6,760	$	-	$	6,760	$	(2,517)	$	(1,525)	$	2,718
Liabilities (2)
Interest rate agreements		$	(34,449)	$	-	$	(34,449)	$	1,033	$	33,416	$	-
TBAs			(3,298)		-		(3,298)		1,484		1,267		(547)
Futures			(411)		-		(411)		-		411		-
Loan warehouse debt			(1,241,074)		-		(1,241,074)		1,241,074		-		-
Security repurchase agreements			(646,614)		-		(646,614)		646,614		-		-
Total Liabilities		$	(1,925,846)	$	-	$	(1,925,846)	$	1,890,205	$	35,094	$	(547)
		Gross		Gross		Net Amounts of		Gross Amounts Not Offset
		Amounts of		Amounts		Assets		in Consolidated
		Recognized		Offset in		(Liabilities)		Balance Sheet (1)
		Assets		Consolidated		Presented in
		(Liabilities)		Balance		Consolidated
December 31, 2013				Sheet		Balance Sheet		Financial		Cash		Net Amount
(In Thousands)								Instruments		Collateral
										(Received)
										Pledged
Assets (2)
Interest rate agreements		$	6,566	$	-	$	6,566	$	(5,402)	$	-	$	1,164
TBAs			1,138		-		1,138		(656)		(482)		-
Total Assets		$	7,704	$	-	$	7,704	$	(6,058)	$	(482)	$	1,164
Liabilities (2)
Interest rate agreements		$	(16,599)	$	-	$	(16,599)	$	5,402	$	11,197	$	-
TBAs			(661)		-		(661)		656		5		-
Futures			(528)		-		(528)		-		528		-
Loan warehouse debt			(184,789)		-		(184,789)		184,789		-		-
Security repurchase agreements			(677,974)		-		(677,974)		677,974		-		-
Commercial borrowings			(49,467)		-		(49,467)		49,467		-		-
Total Liabilities		$	(930,018)	$	-	$	(930,018)	$	918,288	$	11,730	$	-
-1	Amounts presented in these columns are limited in total to the net amount of assets or liabilities presented in the prior column by instrument. In certain cases, there is excess cash collateral or financial assets we have pledged to a counterparty (which may, in certain circumstances, be a clearinghouse) that exceed the financial liabilities subject to a master netting arrangement or similar agreement. Additionally, in certain cases, counterparties may have pledged excess cash collateral to us that exceeds our corresponding financial assets. In each case, any of these excess amounts are excluded from the table although they are separately reported in our consolidated balance sheets as assets or liabilities, respectively.
-2	Interest rate agreements, TBAs, and futures are components of derivatives instruments on our consolidated balances sheets. Loan warehouse debt, which is secured by residential and commercial mortgage loans, and security repurchase agreements are components of short-term debt on our consolidated balance sheets.
For each category of financial instrument set forth in the table above, the assets and liabilities resulting from individual transactions within that category between us and a counterparty are subject to a master netting arrangement or similar agreement with that counterparty that provides for individual transactions to be treated as a single transaction. For certain categories of these instruments, some of our transactions are cleared and settled through one or more clearinghouses that are substituted as our counterparty and references herein to master netting arrangements or similar agreements include the arrangements and agreements governing the clearing and settlement of these transactions through the clearinghouses. In the event of the termination and close-out of any of those transactions, the corresponding master netting arrangement or similar agreement provides for settlement on a net basis and for settlement to include the proceeds of the liquidation of any corresponding collateral, subject to certain limitations on termination, settlement, and liquidation of collateral that may apply in the event of the bankruptcy or insolvency of a party that should not inhibit the eventual practical realization of the principal benefits of those transactions or the corresponding master netting arrangement or similar agreement and any corresponding collateral.

Principles_of_Consolidation

Principles of Consolidation	9 Months Ended
	Sep. 30, 2014
Principles of Consolidation	'
	Note 4. Principles of Consolidation
	GAAP requires us to consider whether securitizations we sponsor and other transfers of financial assets should be treated as sales or financings, as well as whether any VIEs that we hold variable interests in – for example, certain legal entities often used in securitization and other structured finance transactions – should be included in our consolidated financial statements. The GAAP principles we apply require us to reassess our requirement to consolidate VIEs each quarter and therefore our determination may change based upon new facts and circumstances pertaining to each VIE. This could result in a material impact to our consolidated financial statements during subsequent reporting periods.
	Analysis of Consolidated VIEs
	The VIEs we are required to consolidate include certain Sequoia securitization entities, the Residential Resecuritization entity, and the Commercial Securitization entity. Each of these entities is independent of Redwood and of each other and the assets and liabilities are not owned by and are not legal obligations of ours, although we are exposed to certain financial risks associated with our role as the sponsor or manager of these entities as well as from retained financial interests we hold in certain of these entities. The following table presents a summary of the assets and liabilities of these VIEs. Intercompany balances have been eliminated for purposes of this presentation.
	Assets and Liabilities of Consolidated VIEs at September 30, 2014
	September 30, 2014		Sequoia		Residential		Commercial		Total
	(Dollars in Thousands)		Entities		Resecuritization		Securitization
	Residential loans, held-for-investment		$	1,546,507	$	-	$	-	$	1,546,507
	Commercial loans, held-for-investment			-		-		204,741		204,741
	Real estate securities, at fair value			-		233,311		-		233,311
	Restricted cash			147		-		138		285
	Accrued interest receivable			1,882		506		1,527		3,915
	Other assets			3,349		-		21,699		25,048
	Total Assets		$	1,551,885	$	233,817	$	228,105	$	2,013,807
	Accrued interest payable		$	1,034	$	7	$	539	$	1,580
	Asset-backed securities issued			1,484,751		56,508		114,943		1,656,202
	Total Liabilities		$	1,485,785	$	56,515	$	115,482	$	1,657,782
	Number of VIEs			24		1		1		26
	We consolidate the assets and liabilities of certain Sequoia securitization entities, as we did not meet the GAAP sale criteria at the time we transferred financial assets to these entities. Our involvement in consolidated Sequoia Entities continues in the following ways: (i) we continue to hold subordinate investments in each entity, and for certain entities, more senior investments; (ii) we maintain certain discretionary rights associated with our sponsorship of, or our subordinate investments in, each entity; and (iii) we continue to hold a right to call the assets of certain entities (once they have been paid down below a specified threshold) at a price equal to, or in excess of, the current outstanding principal amount of the entity’s asset-backed securities issued. These factors have resulted in our continuing to consolidate the assets and liabilities of these Sequoia Entities in accordance with GAAP.
	We consolidate the assets and liabilities of the Residential Resecuritization entity as we did not meet the GAAP sale criteria at the time the financial assets were transferred to this entity based on our role in the entity’s inception and design. We transferred senior residential securities to Credit Suisse First Boston Mortgage Securities Corp., which subsequently sold them to CSMC 2011-9R, the Residential Resecuritization entity. In connection with this transaction, we acquired certain senior and subordinate securities that we continue to hold. We engaged in the Residential Resecuritization primarily for the purpose of obtaining permanent non-recourse financing on a portion of our senior residential securities portfolio. Our credit risk exposure is largely unchanged as a result of engaging in the transaction, as we remain economically exposed to the financed securities through our senior and subordinate investment in the Residential Resecuritization.
	We consolidate the assets and liabilities of the Commercial Securitization entity, as we did not meet the GAAP sale criteria at the time the financial assets were transferred to this entity based on our role in the entity’s inception and design. We transferred subordinate commercial loans to RCMC 2012-CREL1, a securitization entity. In connection with this transaction, we acquired certain subordinate securities that we continue to hold. We engaged in the Commercial Securitization primarily for the purpose of obtaining permanent non-recourse financing on a portion of our commercial mezzanine loan portfolio. Our credit risk exposure is largely unchanged as a result of engaging in the transaction, as we remain economically exposed to the financed loans through our subordinate investment in the Commercial Securitization.
	Analysis of Unconsolidated VIEs with Continuing Involvement
	Since 2012, we have transferred residential loans to 21 Sequoia securitization entities sponsored by us and accounted for these transfers as sales for financial reporting purposes. We also determined we were not the primary beneficiary of these VIEs as we lacked the power to direct the activities that will have the most significant economic impact on the entities. For the transferred loans where we held the servicing rights prior to the transfer and continue to hold the servicing rights, we recorded MSRs on our consolidated balance sheets, and classified those MSRs as Level 3 assets. We also retained senior and subordinate securities in these securitizations that we classified as Level 3 assets.
	The following table presents information related to securitization transactions that occurred during the three and nine months ended September 30, 2014 and 2013.
	Securitization Activity Related to Unconsolidated VIEs Sponsored by Redwood
			Three Months Ended September 30,				Nine Months Ended September 30,
	(In Thousands)		2014		2013		2014		2013
	Principal balance of loans transferred		$	635,608	$	1,210,604	$	982,913	$	5,253,314
	Trading securities retained, at fair value			1,680		8,702		71,243		100,552
	AFS securities retained, at fair value			39,330		71,527		59,757		278,622
	MSRs recognized			4,356		12,514		6,542		41,128
	Our continuing involvement in these securitizations is limited to customary servicing obligations associated with retaining residential MSRs (which we retain a third-party servicer to perform) and the receipt of interest income associated with the securities we retained. The following table summarizes the cash flows between us and the unconsolidated VIEs sponsored by us during the three and nine months ended September 30, 2014 and 2013.
	Cash Flows Related to Unconsolidated VIEs Sponsored by Redwood
			Three Months Ended September 30,				Nine Months Ended September 30,
	(In Thousands)		2014		2013		2014		2013
	Cash proceeds		$	610,167	$	507,202	$	877,943	$	4,366,556
	MSR fees received			3,571		3,160		10,618		6,235
	Funding of compensating interest			(68)		(152)		(144)		(415)
	Cash flows received on retained securities			16,190		15,656		44,417		30,606
	The following table presents the key weighted-average assumptions to measure MSRs at the date of securitization.
	MSR Assumptions Related to Unconsolidated VIEs Sponsored by Redwood
			Issued During
			Three Months Ended September 30,				Nine Months Ended September 30,
	At Date of Securitization		2014		2013		2014		2013
	Prepayment speeds			5 - 16      %		5 - 8  %		5 - 16      %		5 - 13  %
	Discount rates			11      %		12  %		11      %		12  %
	The following table presents additional information at September 30, 2014 and December 31, 2013, related to unconsolidated securitizations accounted for as sales since 2012.
	Unconsolidated VIEs Sponsored by Redwood
	(In Thousands)		September 30, 2014		December 31, 2013
	On-balance sheet assets, at fair value:
	Interest-only and senior securities, classified as trading		$	100,613	$	110,505
	Senior and subordinate securities, classified as AFS			441,835		405,415
	Maximum loss exposure (1)			542,448		515,920
	Assets transferred:
	Principal balance of loans outstanding			7,173,303		6,627,874
	Principal balance of delinquent loans 30+ days delinquent			16,482		14,587
	-1	Maximum loss exposure from our involvement with unconsolidated VIEs pertains to the carrying value of our securities retained from these VIEs and represents estimated losses that would be incurred under severe, hypothetical circumstances, such as if the value of our interests and any associated collateral declines to zero. This does not include, for example, any potential exposure to representation and warranty claims associated with our initial transfer of loans into a securitization.
	The following table presents key economic assumptions for assets retained from unconsolidated VIEs and the sensitivity of their fair values to immediate adverse changes in those assumptions at September 30, 2014 and December 31, 2013.
	Key Assumptions and Sensitivity Analysis for Assets Retained from Unconsolidated VIEs Sponsored by Redwood
	September 30, 2014		MSRs		Senior Securities		Subordinate
	(Dollars in Thousands)						Securities
	Fair value at June 30, 2014		$	59,890	$	100,613	$	441,835
	Expected life (in years) (1)			7		6		10
Prepayment speed assumption (annual CPR) (1)			12   %		9   %		10   %
Decrease in fair value from:
10% adverse change		$	2,454	$	4,552	$	404
25% adverse change			5,589		10,470		2,058
Discount rate assumption (1)			11   %		7   %		9   %
Decrease in fair value from:
100 basis point increase		$	2,381	$	4,444	$	33,310
200 basis point increase			4,568		8,528		62,862
Credit loss assumption (1)			N/A		0.25   %		0.25   %
Decrease in fair value from:
10% higher losses			N/A	$	144	$	3,132
25% higher losses			N/A		349		7,779
December 31, 2013		MSRs		Senior Securities		Subordinate
(Dollars in Thousands)						Securities
Fair value at December 31, 2013		$	60,318	$	110,505	$	405,415
Expected life (in years) (1)			8		7		11
Prepayment speed assumption (annual CPR) (1)			8   %		10   %		11   %
Decrease in fair value from:
10% adverse change		$	1,649	$	5,773	$	1,658
25% adverse change			4,218		13,555		4,354
Discount rate assumption (1)			11   %		5   %		6   %
Decrease in fair value from:
100 basis point increase		$	2,468	$	5,632	$	30,644
200 basis point increase			4,828		10,757		57,836
Credit loss assumption (1)			N/A		0.23   %		0.23   %
Decrease in fair value from:
10% higher losses			N/A	$	70	$	1,369
25% higher losses			N/A		175		3,420
-1	Expected life, prepayment speed assumption, discount rate assumption, and credit loss assumption presented in the tables above represent weighted averages.
Analysis of Third-Party VIEs
Third-party VIEs are securitization entities in which we maintain an economic interest, but do not sponsor. Our economic interest may include several securities from the same third-party VIE, and in those cases, the analysis is performed in consideration of all of our interests. The following table presents a summary of our interests in third-party VIEs at September 30, 2014, grouped by collateral type.
Third-Party Sponsored VIE Summary
(In Thousands)		September 30, 2014
Residential real estate securities at Redwood
Senior		$	552,793
Re-REMIC			176,117
Subordinate			123,626
Total Investments in Third-Party Real Estate Securities		$	852,536
We determined that we are not the primary beneficiary of any third-party residential, commercial, or collateralized debt obligation entities, as we do not have the required power to direct the activities that most significantly impact the economic performance of these entities. Specifically, we do not service or manage these entities or otherwise hold decision making powers that are significant. As a result of this assessment, we do not consolidate any of the underlying assets and liabilities of these third-party VIEs – we only account for our specific interests in them.
Our assessments of whether we are required to consolidate a VIE may change in subsequent reporting periods based upon changing facts and circumstances pertaining to each VIE. Any related accounting changes could result in a material impact to our financial statements.
Other Transfers of Financial Assets
Certain of our senior commercial mortgage loans were bifurcated into a senior portion that was sold to a third party and a junior portion that we retained as an investment. When the transfer of the senior portion did not meet the criteria for sale treatment under GAAP, the entire loan (the senior and junior portions) remains on our consolidated balance sheet classified as a held-for-investment loan and we account for the transfer of the senior portion as a secured borrowing.
The following table presents commercial loan transfers accounted for as secured borrowings for the three and nine months ended September 30, 2014.
Loan Transfers Accounted for as Secured Borrowings
(In Thousands)		Three Months Ended		Nine Months Ended
		September 30, 2014		September 30, 2014
Principal balance		$	-	$	63,375
Cash proceeds			-		65,048

Fair_Value_of_Financial_Instru

Fair Value of Financial Instruments	9 Months Ended
	Sep. 30, 2014
Fair Value of Financial Instruments	'
	Note 5. Fair Value of Financial Instruments
	For financial reporting purposes, we follow a fair value hierarchy established under GAAP that is used to determine the fair value of financial instruments. This hierarchy prioritizes relevant market inputs in order to determine an “exit price” at the measurement date, or the price at which an asset could be sold or a liability could be transferred in an orderly process that is not a forced liquidation or distressed sale. Level 1 inputs are observable inputs that reflect quoted prices for identical assets or liabilities in active markets. Level 2 inputs are observable inputs other than quoted prices for an asset or liability that are obtained through corroboration with observable market data. Level 3 inputs are unobservable inputs (e.g., our own data or assumptions) that are used when there is little, if any, relevant market activity for the asset or liability required to be measured at fair value.
	In certain cases, inputs used to measure fair value fall into different levels of the fair value hierarchy. In such cases, the level at which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. Our assessment of the significance of a particular input requires judgment and considers factors specific to the asset or liability being measured.
	The following table presents the carrying values and estimated fair values of assets and liabilities that are required to be recorded or disclosed at fair value at September 30, 2014 and December 31, 2013.
			September 30, 2014						December 31, 2013
	(In Thousands)		Carrying		Fair				Carrying				Fair
			Value		Value				Value				Value
	Assets
	Residential loans, held-for-sale
	At fair value		$	1,501,252	$	1,501,252			$	402,602			$	402,602
	At lower of cost or fair value			1,502		1,662				1,665				1,817
	Residential loans, held-for-investment, at fair value			238,326		238,326				-				-
	Residential loans, held-for-investment			1,546,507		1,447,463				1,762,167				1,610,024
	Commercial loans, held-for-sale			175,421		175,421				89,111				89,111
	Commercial loans, held-for-investment
	At fair value			70,712		70,712				-				-
	At amortized cost			322,576		328,076				343,344				348,305
	Trading securities			108,750		108,750				124,555				124,555
	Available-for-sale securities			1,286,235		1,286,235				1,558,306				1,558,306
	MSRs			135,152		135,152				64,824				64,824
	Cash and cash equivalents			149,617		149,617				173,201				173,201
	Restricted cash			455		455				398				398
	Accrued interest receivable			15,261		15,261				13,475				13,475
	Derivative assets			7,756		7,756				7,787				7,787
	REO (1)			3,349		3,407				3,661				4,084
	Margin receivable (1)			56,217		56,217				31,149				31,149
	Other collateral posted (1)			5,000		5,000				5,000				5,000
	Liabilities
	Short-term debt		$	1,887,688	$	1,887,688			$	862,763			$	862,763
	Accrued interest payable			10,480		10,480				6,366				6,366
	Derivative liabilities			38,263		38,263				18,167				18,167
	ABS issued			1,656,202		1,548,795				1,942,962				1,746,906
	FHLBC Borrowings			203,756		203,756				-				-
	Commercial long-term debt			-		-				49,467				49,467
	Commercial secured borrowings			66,146		66,146				-				-
	Convertible notes			287,500		285,344				287,500				299,719
	Other long-term debt			139,500		101,835				139,500				111,600
	-1	These assets are included in Other Assets on our consolidated balance sheets.
	We elected the fair value option for $3.31 billion and $6.12 billion of residential loans (principal balance) and $340 million and $609 million of commercial loans (principal balance) we acquired during the three and nine months ended September 30, 2014, respectively. We also elected the fair value option for $65 million of commercial secured borrowings we recorded during the nine months ended September 30, 2014. We anticipate electing the fair value option for all future purchases of residential loans and commercial senior loans that we intend to sell to third parties or transfer to securitizations.
	The following table presents the assets and liabilities that are reported at fair value on our consolidated balance sheets on a recurring basis at September 30, 2014, as well as the fair value hierarchy of the valuation inputs used to measure fair value.
	Assets and Liabilities Measured at Fair Value on a Recurring Basis at September 30, 2014
	September 30, 2014		Carrying		Fair Value Measurements Using
	(In Thousands)		Value		Level 1				Level 2				Level 3
	Assets
	Residential loans, at fair value		$	1,739,578	$	-			$	399,145			$	1,340,433
	Commercial loans, at fair value			175,421		-				-				175,421
	Trading securities			108,750		-				-				108,750
	Available-for-sale securities			1,286,235		-				-				1,286,235
	MSRs			135,152		-				-				135,152
	Derivative assets			7,756		1,496				5,327				933
	Liabilities
	Derivative liabilities			38,263		3,709				34,472				82
	Commercial secured borrowings			66,146		-				-				66,146
	The following table presents additional information about Level 3 assets and liabilities measured at fair value on a recurring basis for the nine months ended September 30, 2014.
	Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis
			Assets																Liabilities
	(In Thousands)		Residential		Commercial				Trading				AFS		MSRs		Derivatives (1)		Commercial
			Loans		Loans				Securities				Securities						Secured
																			Borrowings
	Beginning balance - December 31, 2013		$	391,100	$	89,111			$	124,555			$	1,558,306	$	64,824	$	(379)	$	-
	Principal paydowns			(20,728)		(3,684)				(5,848)				(138,751)		-		-		(1,081)
	Discount accretion			-		-				-				32,774		-		-		-
	Gains (losses) in net income, net			35,971		14,986				(15,041)				9,389		(5,944)		6,434		2,179
Unrealized gains in OCI, net			-		-				-				28,328		-		-		-
Acquisitions			3,557,753		611,624				66,253				192,151		76,272		-		65,048
Sales			(2,621,349)		(536,671)				(61,169)				(395,962)		-		-		-
Other settlements, net			(2,314)		55				-				-		-		(5,204)		-
Ending balance - September 30, 2014		$	1,340,433	$	175,421			$	108,750			$	1,286,235	$	135,152	$	851	$	66,146
(1) For the purpose of this presentation, derivative assets and liabilities, which consist of loan purchase commitments, are presented net.
The following table presents the portion of gains or losses included in our consolidated statements of income that were attributable to Level 3 assets and liabilities recorded at fair value on a recurring basis and held at September 30, 2014 and 2013. Gains or losses incurred on assets or liabilities sold, matured, called, or fully written down during the three and nine months ended September 30, 2014 and 2013 are not included in this presentation.
Portion of Net Gains (Losses) Attributable to Level 3 Assets and Liabilities Still Held at September 30, 2014 and 2013 Included in Net Income
		Included in Net Income
		Three Months Ended September 30,						Nine Months Ended September 30,
(In Thousands)		2014		2013				2014				2013
Assets
Residential loans, at fair value		$	7,280	$	(1,864)			$	8,524			$	(3,088)
Commercial loans, at fair value			2,009		831				2,009				831
Trading securities			(1,882)		(1,525)				(16,033)				28,491
Available-for-sale securities			(188)		-				(434)				940
MSRs			3,509		1,344				(3,184)				12,561
Liabilities
Loan purchase commitments			932		-				932				-
Commercial secured borrowing			(420)		-				1,339				-
The following table presents information on assets recorded at fair value on a non-recurring basis at September 30, 2014. This table does not include the carrying value and gains or losses associated with the asset types below that were not recorded at fair value on our balance sheet at September 30, 2014.
Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis at September 30, 2014
														Gain (Loss) for
September 30, 2014		Carrying		Fair Value Measurements Using										Three Months Ended		Nine Months Ended
(In Thousands)		Value		Level 1				Level 2				Level 3		September 30, 2014		September 30, 2014
Assets
Residential loans, at lower of cost or fair value		$	1,106	$	-			$	-			$	1,106	$	1	$	(1)
REO			1,944		-				-				1,994		0		(133)
The following table presents the components of market valuation adjustments, net, recorded in our consolidated statements of income for the three and nine months ended September 30, 2014 and 2013.
Market Valuation Adjustments, Net
		Three Months Ended September 30,						Nine Months Ended September 30,
(In Thousands)		2014		2013				2014				2013
Mortgage banking activities
Residential loans, at fair value		$	13,446	$	(10,804)			$	34,554			$	(17,339)
Commercial loans, at fair value			4,305		3,171				13,644				2,826
Trading securities			(1,332)		(1,866)				(14,419)				36,399
Derivative instruments, net			(2,404)		442				(18,159)				51,009
Loan purchase and forward sale commitments			2,487		-				6,077				-
Total mortgage banking activites (1)			16,502		(9,057)				21,697				72,895
MSRs			2,321		460				(5,944)				9,628
Other
Residential loans, at lower of cost or fair value			43		(11)				54				68
Held-for-investment loans at fair value			(991)		-				(991)				-
Trading securities			(577)		540				(653)				(4,168)
Impairments on AFS securities			(188)		-				(565)				(1,666)
REO			(361)		(76)				(825)				(407)
Other derivative instruments, net			(1,632)		9				(10,986)				74
Total other			(3,706)		462				(13,966)				(6,099)
Total Market Valuation Adjustments, Net		$	15,117	$	(8,135)			$	1,787			$	76,425
-1	Income from mortgage banking activities presented above does not include fee income or provisions for repurchases that is a component of mortgage banking income presented on our consolidated statements of income as these amounts do not represent a market valuation adjustment.
Valuation Policy
We maintain a policy that specifies the methodologies we use to value different types of financial instruments. Significant changes to the valuation methodologies are reviewed by members of senior management to confirm the changes are appropriate and reasonable. Valuations based on information from external sources are performed on an instrument-by-instrument basis with the resulting amounts analyzed individually against internal calculations as well as in the aggregate by product type classification. Initial valuations are performed by our portfolio management group using the valuation processes described below. A subset of our finance department then independently reviews all fair value estimates using available market, portfolio, and industry information to ensure they are reasonable. Finally, members of senior management review all fair value estimates, including an analysis of valuation changes from prior reporting periods.
Valuation Process
We estimate fair values for financial assets or liabilities based on available inputs observed in the marketplace as well as unobservable inputs. We primarily use two pricing valuation techniques: market comparable pricing and discounted cash flow analysis. Market comparable pricing is used to determine the estimated fair value of certain instruments by incorporating known inputs and performance metrics, such as observed prepayment rates, delinquencies, credit support, recent transaction prices, pending transactions, or prices of other similar instruments. Discounted cash flow analysis techniques generally consist of developing an estimate of future cash flows that are expected to occur over the life of an instrument and then discounting those cash flows at a rate of return that results in an estimate of fair value. After considering all available indications of the appropriate rate of return that market participants would require, we consider the reasonableness of the range indicated by the results to determine an estimate that is most representative of fair value. We also consider counterparty credit quality and risk as part of our fair value assessments.
The following table provides quantitative information about the significant unobservable inputs used in the valuation of our Level 3 assets and liabilities measured at fair value.
Fair Value Methodology for Level 3 Financial Instruments
September 30, 2014		Fair		Unobservable Input		Range				Weighted
(Dollars in Thousands)		Value								Average
Assets
Residential loans, at fair value:
Loans priced to securitization or priced to whole loan market and uncommitted to sell		$	758,501	Discount rate			4 - 5    %				4    %
				Prepayment rate			8 - 8    %				8    %
				Default rate			1 - 1    %				1    %
				Loss severity			20 - 20    %				20    %
				Credit support			8 - 8    %				8    %
				Spread to securitization			38 - 38    bps				38    bps
				Credit spread			118 - 173    bps				129    bps
Loans priced to whole loan market, committed to sell			581,932	Pool fallout assumption			10 bps - 10 bps				10    bps
Residential loans, at lower of cost or fair value			1,106	Loss severity			15-28    %				21    %
Commercial loans, at fair value			175,421	Credit spread			152 bps - 152 bps				152    bps
				Credit support			24 - 24    %				24    %
Trading and AFS securities			1,394,985	Discount rate			4 - 12    %				6    %
				Prepayment speed			1 - 35    %				12    %
				Default rate			0 - 35    %				8    %
				Loss severity			20 - 64    %				35    %
				Credit support			0 - 88    %				6    %
MSRs			135,152	Discount rate			8 - 11    %				10    %
				Prepayment rate			4 - 60    %				10    %
REO			1,994	Loss severity			13 - 96    %				34    %
Loan purchase commitments, net (1)			851	MSR Multiple			1 - 5x				4x
				Pullthrough rate			58 - 99    %				82    %
Liabilities
Commercial secured financing			66,146	Credit spread			152 bps - 152 bps				152    bps
				Credit support			24 - 24    %				24    %
(1) For the purpose of this presentation loan purchase commitment assets and liabilities are presented net.
Determination of Fair Value
A description of the instruments measured at fair value as well as the general classification of such instruments pursuant to the Level 1, Level 2, and Level 3 valuation hierarchy is listed herein. We generally use both market comparable information and discounted cash flow modeling techniques to determine the fair value of our Level 3 assets and liabilities. Use of these techniques requires determination of relevant inputs and assumptions, some of which represent significant unobservable inputs as indicated in the preceding table. Accordingly, a significant increase or decrease in any of these inputs – such as anticipated credit losses, prepayment speeds, interest rates, or other valuation assumptions – in isolation, would likely result in a significantly lower or higher fair value measurement.
Residential loans
Estimated fair values for residential loans are determined based on either an exit price to securitization or the whole loan market. For loans valued based on an exit to securitization, significant inputs in the valuation analysis are predominantly Level 3 in nature, due to the limited availability of market quotes on newly issued Residential Mortgage-Backed Securities and related inputs. Relevant market indicators that are factored into the analyses include third-party RMBS sales, pricing points for secondary sales of RMBS we have issued in past periods, yields for RMBS issued by government sponsored enterprises, indexed swap yields, credit rating agency guidance on expected credit enhancement levels for newly issued RMBS transactions, interest rates, and prepayment speeds (Level 3).
For loans valued based on an exit to the whole loan market, significant inputs in the valuation analysis are predominantly Level 3 in nature. Relevant market indicators that are factored into the analyses include prices on recent sales of our own whole loans, indexed swap yields, interest rates, prepayment speeds, and loss severities (Level 3). These assets would generally decrease in value based upon an increase in the loss severity assumption and would generally increase in value if the loss severity assumption were to decrease.
Estimated fair values for conforming loans are determined based upon quoted market prices (Level 2). Conforming loans are mortgage loans that conform to Agency guidelines. As necessary, these values are adjusted for servicing value, market conditions and liquidity.
Commercial loans
Estimated fair values for senior commercial loans are determined by an exit price to securitization. Certain significant inputs in the valuation analysis are Level 3 in nature. Relevant market indicators that are factored into the analyses include third-party Commercial Mortgage-Backed Securities (“CMBS”) sales, pricing points for secondary sales of CMBS, yields for synthetic instruments that use CMBS bonds as an underlying index, indexed swap yields, credit rating agency guidance on expected credit enhancement levels for newly issued CMBS transactions, and interest rates (Level 3). In certain cases, commercial senior mortgage loans are valued based on third-party offers for the securities for purchase into securitization (Level 2).
Estimated fair values for mezzanine commercial loans are determined by both market comparable pricing and discounted cash flow analysis valuation techniques (Level 3). Our discounted cash flow models utilize certain significant unobservable inputs including the underwritten net operating income and debt coverage ratio assumptions and actual performance relative to those underwritten metrics as well as estimated market discount rates. A decrease in these unobservable inputs will reduce the estimated fair value of the commercial loans.
Real estate securities
Real estate securities primarily include residential mortgage-backed securities that are generally illiquid in nature and trade infrequently. Significant inputs in the valuation analysis are predominantly Level 3 in nature, due to the lack of readily available market quotes and related inputs. For real estate securities, we utilize both market comparable pricing and discounted cash flow analysis valuation techniques. Relevant market indicators that are factored into the analyses include bid/ask spreads, the amount and timing of credit losses, interest rates, and prepayment speeds. Estimated fair values are based on applying the market indicators to generate discounted cash flows (Level 3). These cash flow models use significant unobservable inputs such as a discount rate, prepayment rate, default rate, loss severity and credit support. The estimated fair value of our securities would generally decrease based upon an increase in serious delinquencies or loss severities, or a decrease in prepayment speeds or credit support.
As part of our securities valuation process, we request and consider indications of value from third-party securities dealers. For purposes of pricing our securities at September 30, 2014, we received dealer price indications on 81% of our securities, representing 94% of our carrying value. In the aggregate, our internal valuations of the securities for which we received dealer price indications were within 2% of the aggregate dealer valuations. Once we receive the price indications from dealers, they are compared to other relevant market inputs, such as actual or comparable trades, and the results of our discounted cash flow analysis. In circumstances where relevant market inputs cannot be obtained, increased reliance on discounted cash flow analysis and management judgment are required to estimate fair value.
Derivative assets and liabilities
Our derivative instruments include swaps, swaptions, TBAs, financial futures, CMBX credit default index swaps, LPCs, and FSCs. Fair values of derivative instruments are determined using quoted prices from active markets, when available, or from valuation models and are supported by valuations provided by dealers active in derivative markets. TBA and financial futures fair values are generally obtained using quoted prices from active markets (Level 1). Our derivative valuation models for swaps and swaptions require a variety of inputs, including contractual terms, market prices, yield curves, credit curves, measures of volatility, prepayment rates, and correlations of certain inputs. Model inputs can generally be verified and model selection does not involve significant management judgment (Level 2). CMBX credit default index swaps are generally obtained using quoted prices; however, they are not always actively traded (Level 2). LPC fair values are estimated based on quoted Agency MBS prices, estimates of the fair value of the MSRs we expect to retain in the sale of the loans, and the probability that the mortgage loan will be purchased (Level 3). FSC fair values are obtained using quoted Agency prices. Model inputs can generally be verified and model selection does not involve significant management judgment (Level 2).
For other derivatives, valuations are based on various factors such as liquidity, bid/ask spreads, and credit considerations for which we rely on available market inputs. In the absence of such inputs, management’s best estimate is used (Level 3).
MSRs
MSRs represent the rights to service jumbo and conforming residential mortgage loans. Significant inputs in the valuation analysis are predominantly Level 3, due to the nature of these instruments and the lack of readily available market quotes. These inputs include market discount rates, prepayment speeds of serviced loans, and the market cost of servicing. Changes in the fair value of MSRs occur primarily due to the collection/realization of expected cash flows, as well as changes in valuation inputs and assumptions. Estimated fair values are based on applying the inputs to generate the net present value of estimated MSR income, which is what we believe market participants would use to estimate fair value (Level 3). These discounted cash flow models utilize certain significant unobservable inputs including prepayment rate and discount rate assumptions. An increase in these unobservable inputs will reduce the estimated fair value of the MSRs.
As part of our MSR valuation process, we received a valuation estimate from a third-party valuations group. In the aggregate, our internal valuation of the MSRs was less than 1% lower than the third-party valuation at September 30, 2014.
Cash and cash equivalents
Cash and cash equivalents include cash on hand and highly liquid investments with original maturities of three months or less. Fair values equal carrying values (Level 1).
Restricted cash
Restricted cash primarily includes interest-earning cash balances at Consolidated Sequoia Entities and at the Residential Resecuritization and Commercial Securitization entities for the purpose of distribution to investors and reinvestment. Due to the short-term nature of the restrictions, fair values approximate carrying values (Level 1).
Accrued interest receivable and payable
Accrued interest receivable and payable includes interest due on our assets and payable on our liabilities. Due to the short-term nature of when these interest payments will be received or paid, fair values approximate carrying values (Level 1).
REO
REO includes properties owned in satisfaction of foreclosed loans. Fair values are determined using available market quotes, appraisals, broker price opinions, comparable properties, or other indications of value (Level 3).
Margin receivable
Margin receivable reflects cash collateral we have posted with our various derivative and debt counterparties as required to satisfy margin requirements. Fair values approximate carrying values (Level 1).
Short-term debt
Short-term debt includes our credit facilities that mature within one year. Fair values approximate carrying values (Level 1).
ABS issued
ABS issued includes asset-backed securities issued through the Sequoia, Residential Resecuritization, and Commercial Securitization entities. These instruments are illiquid in nature and trade infrequently, if at all. For ABS issued, we utilize both market comparable pricing and discounted cash flow analysis valuation techniques. Significant inputs in the valuation analysis are predominantly Level 3, due to the nature of these instruments and the lack of readily available market quotes. Relevant market indicators factored into the analyses include bid/ask spreads, external spreads, collateral credit losses, interest rates, default rates, loss severities, and collateral prepayment speeds. Estimated fair values are based on applying the market indicators to generate discounted cash flows (Level 3). These liabilities would generally increase in value based upon a decrease in default rates and would generally decrease in value if the prepayment rate or credit support input were to decrease.
As part of our ABS issued valuation process, we also request and consider indications of value from third-party securities dealers. For purposes of pricing our ABS issued at September 30, 2014, we received dealer price indications on 42% of our ABS issued. In the aggregate, our internal valuations of the ABS issued for which we received dealer price indications were within 1% of the aggregate dealer valuations. Once we receive the price indications from dealers, they are compared to other relevant market inputs, such as actual or comparable trades, and the results of our discounted cash flow analysis.
FHLBC Borrowings
FHLBC borrowings include amounts borrowed from the Federal Home Loan Bank of Chicago that are secured by residential mortgage loans or residential mortgage-backed securities. As these borrowings are secured and subject to margin calls and as the rates on these borrowings reset frequently to market rates, we believe that carrying values approximate fair values (Level 1).
Commercial secured borrowings
Commercial secured borrowings represent liabilities recognized as a result of transfers of portions of senior commercial mortgage loans to third parties that do not meet the criteria for sale treatment under GAAP and are accounted for as secured borrowings. Fair values for commercial secured borrowings are based on the fair values of the senior commercial loans associated with the borrowings (Level 3).
Convertible notes
Convertible notes include unsecured convertible senior notes. Fair values are determined using quoted prices in active markets (Level 1).
Trust preferred securities and subordinated notes
Estimated fair values of trust preferred securities and subordinated notes are determined using discounted cash flow analysis valuation techniques. Significant inputs in the valuation analysis are predominantly Level 3, due to the nature of these instruments and the lack of readily available market quotes. Estimated fair values are based on applying the market indicators to generate discounted cash flows (Level 3).

Loans

Loans	9 Months Ended
	Sep. 30, 2014
Loans	'
	Note 6. Residential Loans
	We acquire residential loans from third-party originators. The following table summarizes the classifications and carrying value of the residential loans owned at Redwood and at consolidated Sequoia Entities at September 30, 2014 and December 31, 2013.
	September 30, 2014	Redwood		Sequoia		Total
	(In Thousands)
	Held-for-sale
	Fair value - Conforming	$	399,145	$	-	$	399,145
	Fair value - Jumbo		1,101,782		-		1,101,782
	Lower of cost or fair value		1,502		-		1,502
	Held-for-investment
	Fair value - Jumbo		238,651		-		238,651
	At amortized cost		-		1,546,507		1,546,507
	Total Residential Loans	$	1,741,080	$	1,546,507	$	3,287,587
	December 31, 2013	Redwood		Sequoia		Total
	(In Thousands)
	Held-for-sale
	Fair value - Conforming	$	11,502	$	-	$	11,502
	Fair value - Jumbo		391,100		-		391,100
	Lower of cost or fair value		1,665		-		1,665
	Held-for-investment, at amortized cost		-		1,762,167		1,762,167
	Total Residential Loans	$	404,267	$	1,762,167	$	2,166,434
	As of September 30, 2014, we owned mortgage servicing rights associated with $1.61 billion of consolidated residential loans purchased form third-party originators. The value of these MSRs is included in the carrying value of the associated loans on our balance sheet. We contract with a licensed sub-servicer that performs servicing functions for these loans.
	Residential Loans Held-for-Sale
	Residential Loans at Fair Value
	At September 30, 2014, we held 2,862 residential loans at fair value, with an aggregate outstanding principal balance of $1.46 billion and an aggregate fair value of $1.50 billion. During the three and nine months ended September 30, 2014, we purchased $3.31 billion and $6.12 billion (principal balance) of residential loans, respectively, for which we elected the fair value option. During the three and nine months ended September 30, 2014, we recorded $13 million and $35 million of positive valuation adjustments, respectively, on fair value residential loans through mortgage banking activities, net, a component of our consolidated income statement. At December 31, 2013, we held 537 residential loans at fair value, with an aggregate outstanding principal balance of $399 million and an aggregate fair value of $403 million.
	Residential Loans at Lower of Cost or Fair Value
	At September 30, 2014, we held nine residential loans at lower of cost or fair value with $2 million in outstanding principal balance and a carrying value of $2 million. At December 31, 2013, we held 10 residential loans at lower of cost or fair value with $2 million in outstanding principal balance and a carrying value of $2 million. During the three and nine months ended September 30, 2014, we recorded valuation adjustments for residential loans held-for-sale of positive $43 thousand and $54 thousand, respectively.
	Residential Loans Held-for-Investment
	Residential Loans at Fair Value
	During the three months ended September 30, 2014, we transferred loans with a principal balance of $235 million and a fair value of $241 million from held-for-sale at fair value to held-for-investment at fair value. As of September 30, 2014, these loans were pledged as collateral under the FHLBC borrowing agreement and our current intention is to hold these loans for investment.
	Residential Loans at Amortized Cost
	The following table details the carrying value for residential loans held-for-investment at amortized cost at September 30, 2014 and December 31, 2013. These loans are owned at Sequoia securitization entities that we consolidate for financial reporting purposes.
	(In Thousands)	September 30, 2014		December 31, 2013
	Principal balance	$	1,554,876	$	1,770,803
	Unamortized premium, net		13,540		16,791
	Recorded investment		1,568,416		1,787,594
	Allowance for loan losses		(21,909)		(25,427)
	Carrying Value	$	1,546,507	$	1,762,167
	Of the $1.55 billion of principal balance and $14 million of unamortized premium on loans held-for-investment at September 30, 2014, $629 million of principal balance and $8 million of unamortized premium relate to residential loans acquired prior to July 1, 2004. During the nine months ended September 30, 2014, 14% of these residential loans prepaid and we amortized 23% of the premium based upon the accounting elections we apply. For residential loans acquired after July 1, 2004, the principal balance was $929 million and the unamortized premium was $5 million. During the nine months ended September 30, 2014, 11% of these loans prepaid and we amortized 13% of the premium.
	Of the $1.77 billion of principal balance and $17 million of unamortized premium on loans held-for-investment at December 31, 2013, $731 million of principal balance and $11 million of unamortized premium relate to residential loans acquired prior to July 1, 2004. For residential loans acquired after July 1, 2004, the principal balance was $1 billion and the unamortized premium was $6 million.
	Credit Characteristics of Residential Loans Held-for-Investment
	As a percentage of our recorded investment, 99% of residential loans held-for-investment at September 30, 2014, were first lien, predominately prime-quality loans at the time of origination. The remaining 1% of loans were second lien, home equity lines of credit. The weighted average original LTV ratio for our residential loans held-for-investment outstanding at September 30, 2014, was 66%. The weighted average FICO score for the borrowers of these loans was 733 at the time the loans were originated.
	We consider the year of origination of our residential loans held-for-investment to be a general indicator of credit performance as loans originated in specific years have often possessed similar product and credit characteristics. The following table displays our recorded investment in residential loans held-for-investment at September 30, 2014 and December 31, 2013, organized by year of origination.
	(In Thousands)	September 30, 2014		December 31, 2013
	2003 & Earlier	$	758,768	$	881,364
	2004		459,050		513,458
	2005		59,946		62,675
	2006		138,263		149,776
	2007		-		-
	2008		-		-
	2009		19,273		25,860
	2010		80,209		92,728
	2011		52,907		61,733
	Total Recorded Investment	$	1,568,416	$	1,787,594
	Allowance for Loan Losses on Residential Loans
	For residential loans held-for-investment, we establish and maintain an allowance for loan losses. The allowance includes a component for pools of residential loans owned at Sequoia securitization entities that we collectively evaluated for impairment, and a component for loans individually evaluated for impairment that includes modified residential loans at Sequoia entities that have been determined to be troubled debt restructurings.
	Activity in the Allowance for Loan Losses on Residential Loans
	The following table summarizes the activity in the allowance for loan losses for the three and nine months ended September 30, 2014 and 2013.
		Three Months Ended September 30,				Nine Months Ended September 30,
	(In Thousands)	2014		2013		2014		2013
	Balance at beginning of period	$	23,972	$	23,150	$	25,427	$	28,504
	Charge-offs, net		(1,355)		(818)		(2,833)		(3,363)
	(Reversal of provision) provision for loan losses		(708)		883		(685)		(1,926)
	Balance at End of Period	$	21,909	$	23,215	$	21,909	$	23,215
During each of the three months ended September 30, 2014 and 2013, there were $1 million of charge-offs of residential loans that reduced our allowance for loan losses. These charge-offs were from $6 million and $3 million of defaulted loan principal, respectively. During each of the nine months ended September 30, 2014 and 2013, there were $3 million of charge-offs of residential loans that reduced our allowance for loan losses. These charge-offs arose from $14 million and $10 million of defaulted loan principal, respectively.
Residential Loans Collectively Evaluated for Impairment
We establish the collective component of the allowance for residential loan losses based primarily on the characteristics of the loan pools underlying the securitization entities that own the loans, including loan product types, credit characteristics, and origination years. The collective analysis is further divided into two segments. The first segment reflects our estimate of losses on delinquent loans within each loan pool. These loss estimates are determined by applying the loss factors described in Note 3 to the delinquent loans, including our expectations of the timing of defaults and the loss severities we expect once defaults occur. The second segment relates to our estimate of losses incurred on nondelinquent loans within each loan pool. This estimate is based on losses we expect to realize over a 23 month loss confirmation period, which is based on our historical loss experience as well as consideration of the loss factors described in Note 3.
The following table summarizes the balances for loans collectively evaluated for impairment at September 30, 2014 and December 31, 2013.
(In Thousands)	September 30, 2014		December 31, 2013
Principal balance	$	1,539,330	$	1,762,165
Recorded investment		1,553,147		1,779,161
Related allowance		20,580		24,762
The following table summarizes the recorded investment and past due status of residential loans collectively evaluated for impairment at September 30, 2014 and December 31, 2013.
(In Thousands)	30-59 Days		60-89 Days		90+ Days		Current		Total Loans
	Past Due		Past Due		Past Due
September 30, 2014	$	25,885	$	10,046	$	73,355	$	1,443,861	$	1,553,147
December 31, 2013		34,187		13,248		79,010		1,652,716		1,779,161
Residential Loans Individually Evaluated for Impairment
As part of the loss mitigation efforts undertaken by servicers of residential loans owned at Sequoia securitization entities, a number of loan modifications have been completed to help make mortgage loans more affordable for qualifying borrowers and potentially reduce a future impairment. For the nine months ended September 30, 2014 and 2013, all of the loan modifications determined to be TDRs were either: (i) conversions of a floating rate mortgage loan into a fixed rate mortgage loan; (ii) reductions in the contractual interest rates of a mortgage loan paired with capitalization of accrued interest; or (iii) principal forgiveness paired with interest rate reductions.
The following table presents the details of the loan modifications determined to be TDRs for the three and nine months ended September 30, 2014 and 2013.
	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in Thousands)	2014		2013		2014		2013
TDRs
Number of modifications		8		5		22		12
Pre-modification outstanding recorded investment	$	2,041	$	1,144	$	7,008	$	2,939
Post-modification outstanding recorded investment		2,081		898		7,245		2,838
Loan modification effect on net interest income		(494)		(555)		(1,714)		(863)
after provision and other MVA
TDRs that Subsequently Defaulted
Number of modifications		3		1		9		4
Recorded investment	$	672	$	201	$	3,165	$	788
If we determine that a restructured loan is a TDR, we remove it from the general loan pools used for determining the allowance for residential loan losses and assess it for impairment on an individual basis. This assessment is based primarily on whether an adverse change in the expected future cash flows resulted from the restructuring. The average recorded investment of loans for the three months ended September 30, 2014 and 2013 was $15 million and $8 million, respectively. The average recorded investment of loans individually evaluated for impairment for the nine months ended September 30, 2014 and 2013 was $12 million and $7 million, respectively. For the three months ended September 30, 2014 and 2013, we recorded interest income of $32 thousand and $81 thousand, respectively, on individually impaired loans. For the nine months ended September 30, 2014 and 2013, we recorded interest income of $99 thousand and $102 thousand, respectively, on individually impaired loans.
The following table summarizes the balances for loans individually evaluated for impairment, all of which had an allowance, at September 30, 2014 and December 31, 2013.
(In Thousands)	September 30, 2014		December 31, 2013
Principal balance	$	15,546	$	8,638
Recorded investment		15,269		8,433
Related allowance		1,329		665
The following table summarizes the recorded investment and past due status of residential loans individually evaluated for impairment at September 30, 2014 and December 31, 2013.
(In Thousands)	30-59 Days		60-89 Days		90+ Days		Current		Total Loans
	Past Due		Past Due		Past Due
September 30, 2014	$	1,842	$	1,538	$	544	$	11,345	$	15,269
December 31, 2013		1,560		-		567		6,306		8,433
Commercial Loans	'
Loans	'
	Note 7. Commercial Loans
	We invest in commercial loans that we originate and service as well as loans that we acquire from third-party originators. The following table summarizes the classifications and carrying value of commercial loans at September 30, 2014 and December 31, 2013.
	(In Thousands)	September 30, 2014		December 31, 2013
	Held-for-sale, at fair value	$	104,709	$	89,111
	Held-for-investment
	At fair value		70,712		-
	At amortized cost		322,576		343,344
	Total Commercial Loans	$	497,997	$	432,455
	Of the held-for-investment commercial loans at amortized cost shown above at September 30, 2014 and December 31, 2013, $205 million and $258 million, respectively, were financed through the Commercial Securitization entity, as discussed in Note 4.
	Commercial Loans Held-for-Sale
	Commercial loans held-for-sale include loans we originate and intend to sell to third parties. At September 30, 2014, we held seven commercial loans at fair value, with an aggregate outstanding principal balance of $103 million and an aggregate fair value of $105 million. During the three and nine months ended September 30, 2014, we originated and funded senior commercial loans for $340 million and $578 million, respectively, and recorded $4 million and $14 million, respectively, of positive valuation adjustments on commercial loans held-for-sale through mortgage banking activities, net, a component of our consolidated income statement. At December 31, 2013, we held seven senior commercial loans at fair value, with an aggregate outstanding principal balance of $88 million and an aggregate fair value of $89 million.
	Commercial Loans Held-for-Investment
	Commercial Loans Held-for-Investment, at Fair Value
	Commercial loans held-for-investment at fair value include certain loans we hold for investment for which we have elected the fair value option. At September 30, 2014, we held three of these commercial loans, with an aggregate outstanding principal balance of $68 million and an aggregate fair value of $71 million. During the three months ended September 30, 2014, we did not originate any commercial loans held-for-investment at fair value and recorded $420 thousand of negative valuation adjustments on our existing portfolio. During the nine months ended September 30, 2014, we originated and funded commercial loans for $31 million and recorded $2 million of positive valuation adjustments on commercial loans held-for-investment at fair value through mortgage banking activities, net, a component of our consolidated income statement. We did not have any commercial loans held-for-investment at fair value at December 31, 2013.
	Commercial Loans Held-for-Investment, at Amortized Cost
	Commercial loans held-for-investment at amortized cost include loans we originate and preferred equity investments we make or, in either case, acquire from third parties. Through September 30, 2014, these loans have typically been mezzanine loans that are secured by a borrower’s ownership interest in a single purpose entity that owns commercial property, rather than a lien on the commercial property. The preferred equity investments are typically preferred equity interests in a single purpose entity that owns commercial property and are included within, and referred to herein, as commercial loans held-for-investment due to the fact that their risks and payment characteristics are nearly equivalent to commercial mezzanine loans.
	The following table provides additional information for our commercial loans held-for-investment at amortized cost at September 30, 2014 and December 31, 2013.
	(In Thousands)	September 30, 2014		December 31, 2013
	Principal balance	$	332,258	$	353,331
	Unamortized discount, net		(2,253)		(2,614)
	Recorded investment		330,005		350,717
	Allowance for loan losses		(7,429)		(7,373)
	Carrying Value	$	322,576	$	343,344
	At September 30, 2014, we held 55 commercial loans held-for-investment at amortized cost with an outstanding principal balance of $332 million and a carrying value of $323 million. During the three and nine months ended September 30, 2014, we originated or acquired $26 million and $34 million, respectively, of commercial loans held-for-investment at amortized cost. Of the $330 million of recorded investment in commercial loans held-for-investment at September 30, 2014, 10% was originated in 2014, 20% was originated in 2013, 37% was originated in 2012, 29% was originated in 2011, and 4% was originated in 2010.
	At December 31, 2013, we held 50 commercial loans held-for-investment at amortized cost with an outstanding principal balance of $353 million and a carrying value of $343 million. Of the $351 million of recorded investment in commercial loans held-for-investment at December 31, 2013, 19% was originated in 2013, 43% was originated in 2012, 34% was originated in 2011, and 4% was originated in 2010.
	Allowance for Loan Losses on Commercial Loans
	For commercial loans classified as held-for-investment, we establish and maintain an allowance for loan losses. The allowance includes a component for loans collectively evaluated for impairment and a component for loans individually evaluated for impairment.
	Our methodology for assessing the adequacy of the allowance for loan losses includes a formal review of each commercial loan in the portfolio and the assignment of an internal impairment status. Based on the assigned impairment status, a loan is categorized as “Pass,” “Watch List,” or “Workout.” The following table presents the principal balance of commercial loans held-for-investment by risk category.
	(In Thousands)	September 30, 2014		December 31, 2013
	Pass	$	306,575	$	309,792
	Watch list		25,683		43,539
	Total Commercial Loans Held-for-Investment	$	332,258	$	353,331
	Activity in the Allowance for Loan Losses on Commercial Loans
	The following table summarizes the activity in the allowance for commercial loan losses for the three and nine months ended September 30, 2014 and 2013.
		Three Months Ended September 30,				Nine Months Ended September 30,
	(In Thousands)	2014		2013		2014		2013
	Balance at beginning of period	$	8,317	$	5,660	$	7,373	$	4,084
	Charge-offs, net		-		-		-		-
	Reversal of provision (provision) for loan losses		(888)		844		56		2,420
	Balance at End of Period	$	7,429	$	6,504	$	7,429	$	6,504
	Commercial Loans Collectively Evaluated for Impairment
	At September 30, 2014 and December 31, 2013, all of our commercial loans collectively evaluated for impairment were current. The following table summarizes the balances for loans collectively evaluated for impairment at September 30, 2014 and December 31, 2013.
	(In Thousands)	September 30, 2014		December 31, 2013
	Principal balance	$	332,258	$	353,331
	Recorded investment		330,005		350,717
	Related allowance		7,429		7,373
	Commercial Loans Individually Evaluated for Impairment
	We did not have any commercial loans individually evaluated for impairment at either September 30, 2014 or December 31, 2013.

Real_Estate_Securities

Real Estate Securities	9 Months Ended
	Sep. 30, 2014
Real Estate Securities	'
	Note 8. Real Estate Securities
	We invest in residential mortgage-backed securities. The following table presents the fair values of our real estate securities by type at September 30, 2014 and December 31, 2013.
	(In Thousands)	September 30, 2014			December 31, 2013
	Trading	$	108,750		$	124,555
	Available-for-sale		1,286,235			1,558,306
	Total Real Estate Securities	$	1,394,985		$	1,682,861
	Our real estate securities herein are presented in accordance with their general position within a securitization structure based on their rights to cash flows. Senior securities are those interests in a securitization that generally have the first right to cash flows and are last in line to absorb losses. Re-REMIC securities, as presented herein, were created through the resecuritization of certain senior interests to provide additional credit support to those interests. These re-REMIC securities are therefore subordinate to the remaining senior interest, but senior to any subordinate tranches of the securitization from which they were created. Subordinate securities are all interests below senior and re-REMIC interests.
	Trading Securities
	We elected the fair value option for certain securities and classify them as trading securities. At September 30, 2014, our trading securities included $105 million of interest-only securities, for which there is no principal balance, $3 million of senior securities and less than $1 million of residential subordinate securities. The unpaid principal balance of residential senior and subordinate securities classified as trading was $3 million and $11 million, respectively, at September 30, 2014. The following table presents trading securities by collateral type at September 30, 2014 and December 31, 2013.
	(In Thousands)	September 30, 2014			December 31, 2013
	Senior Securities
	Prime	$	100,612		$	110,505
	Non-prime		7,758			9,070
	Total Senior Securities		108,370			119,575
	Subordinate Securities
	Prime		380			4,980
	Total Subordinate Securities		380			4,980
	Total Trading Securities	$	108,750		$	124,555
	AFS Securities
	The following table presents the fair value of our available-for-sale securities held at Redwood by collateral type at September 30, 2014 and December 31, 2013.
	(In Thousands)	September 30, 2014			December 31, 2013
	Senior Securities
	Prime	$	358,813		$	662,306
	Non-prime		186,223			193,386
	Total Senior Securities		545,036			855,692
	Re-REMIC Securities		176,117			176,376
	Subordinate Securities
	Prime		564,932			526,095
	Non-prime		150			143
	Total Subordinate Securities		565,082			526,238
	Total AFS Securities	$	1,286,235		$	1,558,306
	The senior securities shown above at September 30, 2014 and December 31, 2013, included $111 million and $131 million, respectively, of prime securities, and $122 million and $132 million, respectively, of non-prime securities that were financed through the Residential Resecuritization entity, as discussed in Note 4.
	We often purchase AFS securities at a discount to their outstanding principal balances. To the extent we purchase an AFS security that has a likelihood of incurring a loss, we do not amortize into income the portion of the purchase discount that we do not expect to collect due to the inherent credit risk of the security. We may also expense a portion of our investment in the security to the extent we believe that principal losses will exceed the purchase discount. We designate any amount of unpaid principal balance that we do not expect to receive and thus do not expect to earn or recover as a credit reserve on the security. Any remaining net unamortized discounts or premiums on the security are amortized into income over time using the effective yield method.
	At September 30, 2014, there were $9 million of AFS residential securities with contractual maturities less than five years, $2 million of AFS residential securities with contractual maturities greater than five years but less than 10 years, and the remainder of our real estate securities had contractual maturities greater than 10 years.
	The following table presents the components of carrying value (which equals fair value) of residential AFS securities at September 30, 2014 and December 31, 2013.
	Carrying Value of Residential AFS Securities
	September 30, 2014	Senior
	(In Thousands)	Prime			Non-prime		Re-REMIC		Subordinate		Total
	Principal balance	$	362,902		$	202,812	$	206,212	$	694,308	$	1,466,234
	Credit reserve		(4,082)			(9,894)		(16,553)		(43,346)		(73,875)
	Unamortized discount, net		(41,314)			(33,676)		(80,986)		(143,129)		(299,105)
	Amortized cost		317,506			159,242		108,673		507,833		1,093,254
	Gross unrealized gains		42,113			27,004		67,444		59,427		195,988
	Gross unrealized losses		(805)			(24)		-		(2,178)		(3,007)
	Carrying Value	$	358,814		$	186,222	$	176,117	$	565,082	$	1,286,235
	December 31, 2013	Senior
	(In Thousands)	Prime			Non-prime		Re-REMIC		Subordinate		Total
	Principal balance	$	670,051		$	218,603	$	214,046	$	706,292	$	1,808,992
	Credit reserve		(10,144)			(13,840)		(30,429)		(62,457)		(116,870)
	Unamortized discount, net		(44,133)			(36,882)		(80,188)		(137,266)		(298,469)
	Amortized cost		615,774			167,881		103,429		506,569		1,393,653
	Gross unrealized gains		47,980			25,654		72,947		41,205		187,786
	Gross unrealized losses		(1,448)			(149)		-		(21,536)		(23,133)
	Carrying Value	$	662,306		$	193,386	$	176,376	$	526,238	$	1,558,306
	The following table presents the changes for the three and nine months ended September 30, 2014, in unamortized discount and designated credit reserves on residential AFS securities.
	Changes in Unamortized Discount and Designated Credit Reserves on Residential AFS Securities
		Three Months Ended September 30, 2014
		Credit			Unamortized
	(In Thousands)	Reserve			Discount, Net
	Beginning balance	$	83,276		$	304,293
	Amortization of net discount		-			(10,890)
	Realized credit losses		(1,692)			-
	Acquisitions		1,589			4,404
Sales, calls, other		(1,013)			(7,175)
Impairments		188			-
Transfers to (release of) credit reserves, net		(8,473)			8,473
Ending Balance	$	73,875		$	299,105
	Nine Months Ended September 30, 2014
	Credit			Unamortized
(In Thousands)	Reserve			Discount, Net
Beginning balance	$	116,870		$	298,469
Amortization of net discount		-			(32,774)
Realized credit losses		(9,002)			-
Acquisitions		1,846			7,241
Sales, calls, other		(2,425)			(7,810)
Impairments		565			-
Transfers to (release of) credit reserves, net		(33,979)			33,979
Ending Balance	$	73,875		$	299,105
Residential AFS Securities with Unrealized Losses
The following table presents the components comprising the total carrying value of residential AFS securities that were in a gross unrealized loss position at September 30, 2014 and December 31, 2013.
	Less Than 12 Consecutive Months							12 Consecutive Months or Longer
	Amortized			Unrealized		Fair		Amortized		Unrealized		Fair
(In Thousands)	Cost			Losses		Value		Cost		Losses		Value
30-Sep-14	$	104,118		$	(1,097)	$	103,021	$	75,582	$	(1,910)	$	73,672
31-Dec-13		607,030			(21,195)		585,835		19,828		(1,938)		17,890
At September 30, 2014, after giving effect to purchases, sales, and extinguishments due to credit losses, our consolidated balance sheet included 294 AFS securities, of which 30 were in an unrealized loss position and 12 were in a continuous unrealized loss position for 12 consecutive months or longer. At December 31, 2013, our consolidated balance sheet included 303 AFS securities, of which 76 were in an unrealized loss position and five were in a continuous unrealized loss position for 12 consecutive months or longer.
Evaluating AFS Securities for Other-than-Temporary Impairments
Gross unrealized losses on our AFS securities were $3 million at September 30, 2014. We evaluate all securities in an unrealized loss position to determine if the impairment is temporary or other-than-temporary (resulting in an OTTI). At September 30, 2014, we did not intend to sell any of our AFS securities that were in an unrealized loss position, and it is more likely than not that we will not be required to sell these securities before recovery of their amortized cost basis, which may be at their maturity. We review our AFS securities that are in an unrealized loss position to identify those securities with losses that are other-than-temporary based on an assessment of changes in expected cash flows for such securities, which considers recent security performance and expected future performance of the underlying collateral.
During the three months ended September 30, 2014, we determined that unrealized losses of less than $1 million related to our AFS securities were OTTI, of which less than $1 million was determined to be credit related and recorded in “Other market valuation adjustments” in our consolidated statements of income and none was determined to be non-credit related and recorded through AOCI on our consolidated balance sheets. AFS securities on which OTTI is recognized have experienced, or are expected to experience, credit-related adverse cash flow changes. In determining our estimate of cash flows for AFS securities we may consider factors such as structural credit enhancement, past and expected future performance of underlying mortgage loans, including timing of expected future cash flows, which are informed by prepayment rates, default rates, loss severities, delinquency rates, percentage of non-performing loans, FICO scores at loan origination, year of origination, loan-to-value ratios, and geographic concentrations, as well as general market assessments. Changes in our evaluation of these factors impacted the cash flows expected to be collected at the OTTI assessment date and were used to determine if there were credit-related adverse cash flows and if so, the amount of credit related losses. Significant judgment is used in both our analysis of the expected cash flows for our AFS securities and any determination of the credit loss component of OTTI.
The table below summarizes the significant valuation assumptions we used for our OTTI AFS securities at September 30, 2014.
Significant Valuation Assumptions
	Range for Securities
September 30, 2014	Prime Securities			Non-prime
Prepayment rates		15 - 20	%		10 - 10  %
Loss severity		20 - 52	%		35 - 35  %
Projected default rate		1 - 22	%		15 - 15  %
The following table details the activity related to the credit loss component of OTTI (i.e., OTTI recognized through earnings) for AFS securities held at September 30, 2014 and 2013, for which a portion of an OTTI was recognized in other comprehensive income.
Activity of the Credit Component of Other-than-Temporary Impairments
	Three Months Ended September 30,					Nine Months Ended September 30,
(In Thousands)	2014			2013		2014		2013
Balance at beginning of period	$	34,256		$	42,674	$	37,149	$	50,852
Additions
Initial credit impairments		-			-		261		-
Subsequent credit impairments		-			-		70		-
Reductions
Securities sold, or expected to sell		(18)			(3,288)		(922)		(5,479)
Securities with no outstanding principal at period end		-			(764)		(2,320)		(6,751)
Balance at End of Period	$	34,238		$	38,622	$	34,238	$	38,622
Gross Realized Gains and Losses on AFS Securities
Gains and losses from the sale of AFS securities are recorded as realized gains, net, in our consolidated statements of income. The following table presents the gross realized gains and losses on sales and calls of AFS securities for the three and nine months ended September 30, 2014 and 2013.
	Three Months Ended September 30,					Nine Months Ended September 30,
(In Thousands)	2014			2013		2014		2013
Gross realized gains - sales	$	10,227		$	10,532	$	11,219	$	22,762
Gross realized gains - calls		462			-		1,449		333
Gross realized losses - sales		(2,713)			(214)		(2,713)		(214)
Gross realized losses - calls		-			-		-		-
Total Realized Gains on Sales and Calls	$	7,976		$	10,318	$	9,955	$	22,881
of AFS Securities, net

Mortgage_Servicing_Rights

Mortgage Servicing Rights	9 Months Ended
	Sep. 30, 2014
Mortgage Servicing Rights	'
	Note 9. Mortgage Servicing Rights
	We invest in mortgage servicing rights associated with residential mortgage loans and contract with a licensed sub-servicer to perform all servicing functions for these loans. The following table presents the fair value of MSRs and the aggregate principal amounts of associated loans as of September 30, 2014 and December 31, 2013.
			September 30, 2014				December 31, 2013
					Associated				Associated
	(In Thousands)		MSR Fair Value		Principal		MSR Fair Value		Principal
	Mortgage Servicing Rights
	Conforming Loans		$	73,953	$	6,254,058	$	3,331	$	308,258
	Jumbo Loans			61,199		5,962,758		61,493		5,483,500
	Total Mortgage Servicing Rights		$	135,152	$	12,216,816	$	64,824	$	5,791,758
	The following table presents activity for MSRs for the three and nine months ended September 30, 2014 and 2013.
	MSR Activity
			Three Months Ended September 30,				Nine Months Ended September 30,
	(In Thousands)		2014		2013		2014		2013
	Balance at beginning of period		$	71,225	$	43,098	$	64,824	$	5,315
	Additions			61,606		16,676		76,272		45,291
	Changes in fair value due to:
	Changes in assumptions (1)			4,323		1,444		(318)		11,764
	Other changes (2)			(2,002)		(984)		(5,626)		(2,136)
	Balance at End of Period		$	135,152	$	60,234	$	135,152	$	60,234
	-1	Primarily reflects changes in prepayment assumptions due to changes in market interest rates.
	-2	Represents changes due to realization of expected cash flows.
	We make investments in MSRs through the retention of servicing rights associated with the residential mortgage loans that we have acquired and subsequently transfer to third parties or through the direct acquisition of MSRs sold by third parties. The following table details the retention and purchase of MSRs during the three and nine months ended September 30, 2014.
	MSR Additions
			Three Months Ended				Nine Months Ended
	(In Thousands)		September 30, 2014				September 30, 2014
					Associated				Associated
			MSR Fair Value		Principal		MSR Fair Value		Principal
	Jumbo MSR additions:
	From securitization		$	4,356	$	516,004	$	6,542	$	773,205
	From loan sales			-		-		488		58,793
	Total jumbo MSR additions			4,356		516,004		7,030		831,998
	Conforming MSR additions:
	From loan sales		$	14,630	$	1,352,122	$	23,933	$	2,232,559
	From purchases			42,620		3,497,224		45,309		3,770,566
	Total conforming MSR additions			57,250		4,849,346		69,242		6,003,125
	Total MSR additions		$	61,606	$	5,365,350	$	76,272	$	6,835,123
	MSR Income
	The following table presents the components of our MSR income.
			Three Months Ended September 30,				Nine Months Ended September 30,
	(In Thousands)		2014		2013		2014		2013
	Servicing income, net:
	Income		$	4,590	$	3,008	$	12,287	$	5,820
	Cost of sub-servicer			(437)		(355)		(1,040)		(767)
	Net servicing income			4,153		2,653		11,247		5,053
	Market valuation adjustments			2,321		460		(5,944)		9,628
	MSR provision for repurchases			(653)		-		(653)		-
	Income from MSRs, Net		$	5,821	$	3,113	$	4,650	$	14,681

Derivative_Financial_Instrumen

Derivative Financial Instruments	9 Months Ended
	Sep. 30, 2014
Derivative Financial Instruments	'
	Note 10. Derivative Financial Instruments
	The following table presents the fair value and notional amount of derivative financial instruments held by us at September 30, 2014 and December 31, 2013.
		September 30, 2014				December 31, 2013
		Fair		Notional		Fair		Notional
	(In Thousands)	Value		Amount		Value		Amount
	Assets - Risk Management Derivatives
	Interest rate swaps	$	148	$	60,500	$	5,972	$	268,000
	TBAs		1,496		671,000		1,138		241,000
	Swaptions		2,744		420,000		596		340,000
	Credit default index swaps		2,372		75,000		-		-
	Assets - Other Derivatives
	Loan purchase commitments		933		273,781		-		360
	Loan forward sale commitments		63		128,232		81		10,000
	Total Assets	$	7,756	$	1,628,513	$	7,787	$	859,360
	Liabilities - Cash Flow Hedges
	Interest rate swaps	$	(33,973)	$	139,500	$	(16,519)	$	139,500
	Liabilities - Risk Management Derivatives
	Interest rate swaps		(476)		154,500		(80)		50,500
	TBAs		(3,298)		1,274,500		(661)		235,000
	Futures		(411)		108,000		(528)		162,000
	Liabilities - Other Derivatives
	Loan purchase commitments		(82)		50,439		(379)		42,562
	Loan forward sale commitments		(23)		200,000		-		-
	Total Liabilities	$	(38,263)	$	1,926,939	$	(18,167)	$	629,562
	Total Derivative Financial Instruments, Net	$	(30,507)	$	3,555,452	$	(10,380)	$	1,488,922
	Risk Management Derivatives
	To manage, to varying degrees, risks associated with certain assets and liabilities on our consolidated balance sheet, we may enter into derivative contracts. In order to manage certain risks associated with residential loans, residential securities, and commercial loans we own or plan to acquire, at September 30, 2014, we were party to swaps and swaptions with an aggregate notional amount of $635 million, TBA contracts sold with an aggregate notional amount of $1.9 billion, credit default index swaps with an aggregated notional amount of $75 million, and financial futures contracts with an aggregate notional amount of $108 million. Net market valuation adjustments on risk management derivatives were negative $4 million and negative $29 million for the three and nine months ended September 30, 2014, respectively, and positive less than $1 million and $51 million for the three and nine months ended September 30, 2013, respectively.
	Loan Purchase and Forward Sale Commitments
	LPCs and FSCs that qualify as derivatives are recorded at their estimated fair values. Net valuation adjustments on LPCs and FSCs were positive $2 million and $6 million for the three and nine months ended September 30, 2014, respectively, and are reported through our consolidated statements of income in mortgage banking activities, net.
	Derivatives Designated as Cash Flow Hedges
	To manage the variability in interest expense related to our long-term debt and certain adjustable-rate securitization entity liabilities that are included in our consolidated balance sheets for financial reporting purposes, we designated certain interest rate swaps as cash flow hedges with an aggregate notional balance of $140 million.
	For the three months ended September 30, 2014 and 2013, designated cash flow hedges decreased in value by $3 million and increased in value by $4 million, respectively, which was recorded in accumulated other comprehensive income, a component of equity. For the nine months ended September 30, 2014 and 2013, these cash flow hedges decreased in value by $17 million and increased in value by $25 million, respectively. For interest rate agreements currently or previously designated as cash flow hedges, our total unrealized loss reported in accumulated other comprehensive income was $33 million and $16 million at September 30, 2014 and December 31, 2013, respectively. For both of the three months ended September 30, 2014 and 2013, we reclassified less than $100 thousand of unrealized losses on derivatives to interest expense. For the nine months ended September 30, 2014 and 2013, we reclassified $131 thousand and $219 thousand, respectively, of unrealized losses on derivatives to interest expense. Accumulated other comprehensive loss of less than $1 million will be amortized into interest expense, a component of our consolidated income statements, over the remaining life of the hedge liabilities.
	The following table illustrates the impact on interest expense of our interest rate agreements accounted for as cash flow hedges for the three and nine months ended September 30, 2014 and 2013.
	Impact on Interest Expense of Our Interest Rate Agreements Accounted for as Cash Flow Hedges
		Three Months Ended September 30,				Nine Months Ended September 30,
	(In Thousands)	2014		2013		2014		2013
	Net interest expense on cash flow interest rate	$	(1,487)	$	(1,474)	$	(4,465)	$	(4,406)
	agreements
	Realized income (expense) due to ineffective		-		-		-		-
	portion of hedges
	Realized net losses reclassified from other		(32)		(62)		(131)		(219)
	comprehensive income
	Total Interest Expense	$	(1,519)	$	(1,536)	$	(4,596)	$	(4,625)
	Derivative Counterparty Credit Risk
	We incur credit risk to the extent that counterparties to our derivative financial instruments do not perform their obligations under specified contractual agreements. If a derivative counterparty does not perform, we may not receive the proceeds to which we may be entitled under these agreements. Each of our derivative counterparties that is not a clearinghouse must maintain compliance with International Swaps and Derivatives Association (“ISDA”) agreements or other similar agreements (or receive a waiver of non-compliance after a specific assessment) in order to conduct derivative transactions with us. Additionally, we review non-clearinghouse derivative counterparty credit standings, and in the case of a deterioration of creditworthiness, appropriate remedial action is taken. To further mitigate counterparty risk, we exit derivatives contracts with counterparties that (i) do not maintain compliance with (or obtain a waiver from) the terms of their ISDA or other agreements with us; or (ii) do not meet internally established guidelines regarding creditworthiness. Our ISDA and similar agreements currently require full bilateral collateralization of unrealized loss exposures with our derivative counterparties. Through a margin posting process, our positions are revalued with counterparties each business day and cash margin is generally transferred to either us or our derivative counterparties as collateral based upon the directional changes in fair value of the positions. We also attempt to transact with several different counterparties in order to reduce our specific counterparty exposure. With respect to certain of our derivatives, clearing and settlement is through one or more clearinghouses, which may be substituted as a counterparty. Clearing and settlement of derivative transactions through a clearinghouse is also intended to reduce specific counterparty exposure. We consider counterparty risk as part of our fair value assessments of all derivative financial instruments.
	At September 30, 2014, we were in compliance with ISDA and similar agreements governing our open derivative positions. We assessed the risk associated with these counterparties as remote and did not record a specific valuation adjustment.

Other_Assets_and_Liabilities

Other Assets and Liabilities	9 Months Ended
	Sep. 30, 2014
Other Assets and Liabilities	'
	Note 11. Other Assets and Liabilities
	Other assets at September 30, 2014 and December 31, 2013, are summarized in the following table.
	Other Assets
	(In Thousands)	September 30, 2014		December 31, 2013
	Margin receivable	$	56,217	$	31,149
	Investment receivable		24,814		8,923
	Restricted investments		11,319		-
	Other pledged collateral		5,000		5,000
	FHLBC stock		4,846		-
	REO		3,349		3,661
	Prepaid expenses		2,350		1,850
	Fixed assets and leasehold improvements		2,273		1,232
	Other		2,600		1,825
	Total Other Assets	$	112,768	$	53,640
	Margin receivable resulted from margin calls from our swap, master repurchase agreements, and warehouse facilities counterparties that required us to post collateral. Investment receivable represents amounts due to us related to a commercial loan included in our Commercial Securitization that repaid prior to September 30, 2014, but for which we received the cash proceeds subsequent to quarter-end.
	During the three months ended September 30, 2014, we transferred $11 million of U.S. Treasury securities to a custodial account related to a risk sharing arrangement we entered into during the same period.
	The carrying value of REO at September 30, 2014, was $3 million, which includes the net effect of $5 million related to transfers into REO during the first nine months of 2014, offset by $5 million of REO liquidations. At September 30, 2014 and December 31, 2013, there were 16 and 20 REO properties, respectively, recorded on our consolidated balance sheets, all of which were owned at consolidated Sequoia Entities.
	Our fixed assets included in the table above have a basis of $4 million and accumulated depreciation of $2 million.
	Accrued Expenses and Other Liabilities
	Accrued expenses and other liabilities at September 30, 2014 and December 31, 2013 are summarized in the following table.
	(In Thousands)	September 30, 2014		December 31, 2013
	Accrued compensation	$	12,562	$	22,160
	Legal reserve		10,400		12,000
	MSR holdbacks payable		4,049		-
	Residential repurchase reserve		3,771		1,771
	Income tax payable		3,560		1,337
	Derivative margin payable		2,873		4,700
	Accrued operating expenses		2,170		4,291
	Other		8,854		2,445
	Total Other Liabilities	$	48,239	$	48,704
	See Note 15 for additional information on the legal and residential repurchase reserves.

ShortTerm_Debt

Short-Term Debt	9 Months Ended
	Sep. 30, 2014
Short-Term Debt	'
	Note 12. Short-Term Debt
	We enter into repurchase agreements, bank warehouse agreements, and other forms of collateralized (and generally uncommitted) short-term borrowings with several banks and major investment banking firms. At September 30, 2014, we had outstanding agreements with 17 counterparties and we were in compliance with all of the related covenants. Further information about these financial covenants is set forth in Part I, Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Quarterly Report on Form 10-Q.
	The table below summarizes the facilities that are available to us and the balances of short-term debt at September 30, 2014 and December 31, 2013 by the type of collateral securing the debt.
		September 30, 2014
	(Dollars in Thousands)	Number of		Outstanding		Limit		Maturity
		Facilities
	Collateral Type
	Residential loans		5	$	1,188,179	$	1,550,000		12/2014-8/2015
	Commercial loans		2		52,895		340,000		4/2015-9/2015
	Real estate securities		10		646,614		-		10/2014-12/2014
	Total		17	$	1,887,688
		December 31, 2013
	(Dollars in Thousands)	Number of		Outstanding		Limit		Maturity
		Facilities
	Collateral Type
	Residential loans		5	$	184,789	$	1,400,000		1/2014 - 12/2014
	Commercial loans		1		-		100,000		Apr-14
	Real estate securities		7		677,974		-		1/2014 - 2/2014
	Total		13	$	862,763
	Borrowings under these facilities are generally charged interest based on a specified margin over the one-month LIBOR interest rate. At September 30, 2014, all of these borrowings were under uncommitted facilities except for $100 million that is committed under one commercial facility and were due within 364 days (or less) of the borrowing date. During the quarter, we transferred one commercial loan repurchase facility from long-term to short-term debt, due to its expiration falling within one year as of September 30, 2014.
	The fair value of residential loans, commercial loans, and real estate securities pledged as collateral was $1.32 billion, $85 million, and $812 million, respectively, at September 30, 2014. For the three and nine months ended September 30, 2014, the average balance of short-term debt was $1.87 billion and $1.40 billion, respectively. At September 30, 2014 and December 31, 2013, accrued interest payable on short-term debt was $1.61 million and less than $1 million, respectively.
	We also maintain a $10 million committed line of credit with one financial institution, which is secured by our pledge of certain mortgage-backed securities we own. At both September 30, 2014 and December 31, 2013, we had no outstanding borrowings on this facility.
	Characteristics of Short-Term Debt
	The table below summarizes short-term debt by weighted average interest rates and by collateral type at September 30, 2014 and December 31, 2013.
		September 30, 2014						December 31, 2013
	(Dollars in Thousands)	Amount		Weighted		Weighted		Amount		Weighted		Weighted
		Borrowed		Average		Average		Borrowed		Average		Average
				Interest		Days Until				Interest		Days Until
				Rate		Maturity				Rate		Maturity
	Collateral Type
	Residential loan collateral	$	1,188,179		1.71%		216	$	184,789		1.71%		228
	Commercial loan collateral		52,895		5.15%		359		-		-		-
	Real estate securities collateral		646,614		1.37%		23		677,974		1.34%		15
	Total Short-Term Debt	$	1,887,688		1.69%		154	$	862,763		1.42%		61
	Remaining Maturities of Short-Term Debt
	The following table presents the remaining maturities of short-term debt at September 30, 2014 and December 31, 2013.
	(In Thousands)	September 30, 2014		December 31, 2013
	Within 30 days	$	548,890	$	659,262
	31 to 90 days		213,330		54,434
	Over 90 days		1,125,468		149,067
	Total Short-Term Debt	$	1,887,688	$	862,763

AssetBacked_Securities_Issued

Asset-Backed Securities Issued	9 Months Ended
	Sep. 30, 2014
Asset-Backed Securities Issued	'
	Note 13. Asset-Backed Securities Issued
	Through our Sequoia securitization program, we sponsor securitization transactions in which ABS backed by residential mortgage loans are issued by Sequoia Entities. ABS were also issued by securitization entities in the Residential Resecuritization and the Commercial Securitization. Each securitization entity is independent of Redwood and of each other and the assets and liabilities are not owned by and are not legal obligations of Redwood. Our exposure to these entities is primarily through the financial interests we have retained, although we are also exposed to certain financial risks associated with our role as a sponsor, manager, or depositor of these entities.
	As a general matter, ABS have been issued by these securitization entities to fund the acquisition of assets from us or from third parties. The ABS issued by these entities consist of various classes of securities that pay interest on a monthly or quarterly basis. Substantially all ABS issued pay variable rates of interest, which are indexed to one-, three-, or six-month LIBOR. Some ABS issued pay fixed rates of interest or pay hybrid rates, which are fixed rates that subsequently adjust to variable rates. ABS issued also includes some interest-only classes with coupons set at a fixed rate or a fixed spread to a benchmark rate, or set at a spread to the interest rates earned on the assets less the interest rates paid on the liabilities of a securitization entity.
	The carrying values of ABS issued by consolidated securitization entities we sponsored at September 30, 2014 and December 31, 2013, along with other selected information, are summarized in the following table.
	Asset-Backed Securities Issued
		September 30, 2014
	(Dollars in Thousands)	Sequoia		Residential		Commercial		Total
				Resecuritization		Securitization
	Certificates with principal balance	$	1,495,988	$	56,508	$	114,943	$	1,667,439
	Interest-only certificates		2,318		-		-		2,318
	Unamortized discount		(13,555)		-		-		(13,555)
	Total ABS Issued	$	1,484,751	$	56,508	$	114,943	$	1,656,202
	Range of weighted average interest rates, by series		0.08% to 4.26%		2.16%		5.62%
	Stated maturities		2014 - 2047		2046		2018
	Number of series		24		1		1
		December 31, 2013
	(Dollars in Thousands)	Sequoia		Residential		Commercial		Total
				Resecuritization		Securitization
	Certificates with principal balance	$	1,708,324	$	94,934	$	153,693	$	1,956,951
	Interest-only certificates		3,400		-		-		3,400
	Unamortized discount		(17,389)		-		-		(17,389)
	Total ABS Issued	$	1,694,335	$	94,934	$	153,693	$	1,942,962
	Range of weighted average interest rates, by series		0.24% to 4.23%		2.21%		5.62%
	Stated maturities		2014 - 2047		2046		2018
	Number of series		24		1		1
	The actual maturity of each class of ABS issued is primarily determined by the rate of principal prepayments on the assets of the issuing entity. Each series is also subject to redemption prior to the stated maturity according to the terms of the respective governing documents of each ABS issuing entity. As a result, the actual maturity of ABS issued may occur earlier than its contractual maturity. At September 30, 2014, $1.64 billion of ABS issued ($1.65 billion principal balance) had contractual maturities beyond five years and $18 million of ABS issued ($18 million principal balance) had contractual maturities of less than one year. Amortization of Sequoia, Commercial Securitization, and Residential Resecuritization deferred ABS issuance costs was $2 million and $3 million for the nine months ended September 30, 2014 and 2013, respectively. The following table summarizes the accrued interest payable on ABS issued at September 30, 2014 and December 31, 2013. Interest due on consolidated ABS issued is payable monthly.
	Accrued Interest Payable on Asset-Backed Securities Issued
	(In Thousands)	September 30, 2014		December 31, 2013
	Sequoia	$	1,034	$	1,218
	Residential Resecuritization		7		11
	Commercial Securitization		539		720
	Total Accrued Interest Payable on ABS Issued	$	1,580	$	1,949
	The following table summarizes the carrying value components of the collateral for ABS issued and outstanding at September 30, 2014 and December 31, 2013.
	Collateral for Asset-Backed Securities Issued
		September 30, 2014
	(In Thousands)	Sequoia		Residential		Commercial		Total
				Resecuritization		Securitization
	Residential loans	$	1,546,507	$	-	$	-	$	1,546,507
	Commercial loans		-		-		204,741		204,741
	Real estate securities		-		233,311		-		233,311
	Restricted cash		147		-		138		285
	Accrued interest receivable		1,882		506		1,527		3,915
	Other assets		3,349		-		21,699		25,048
	Total Collateral for ABS Issued	$	1,551,885	$	233,817	$	228,105	$	2,013,807
		December 31, 2013
	(In Thousands)	Sequoia		Residential		Commercial		Total
				Resecuritization		Securitization
	Residential loans	$	1,762,167	$	-	$	-	$	1,762,167
	Commercial loans		-		-		257,741		257,741
	Real estate securities		-		263,204		-		263,204
	Restricted cash		152		-		137		289
	Accrued interest receivable		2,714		627		1,975		5,316
	REO		3,661		-		-		3,661
	Total Collateral for ABS Issued	$	1,768,694	$	263,831	$	259,853	$	2,292,378

LongTerm_Debt

Long-Term Debt	9 Months Ended
	Sep. 30, 2014
Long-Term Debt	'
	Note 14. Long-Term Debt
	FHLBC Borrowings
	In July 2014, we entered into a borrowing agreement with the Federal Home Loan Bank of Chicago. Under this agreement, we may incur borrowings, also referred to as “advances,” from time to time from the FHLBC secured by eligible collateral, including, but not limited to residential mortgage loans and residential mortgage-backed securities. As of September 30, 2014, $204 million of advances were outstanding under this agreement with a weighted average interest rate of 0.2524% and a weighted average maturity of 8.9 years. Advances under this agreement are charged interest based on a specified margin over the FHLBC’s 13-week discount note rate, which resets every 13 weeks. These advances were secured by residential mortgage loans with a fair value of $238 million as of September 30, 2014. This agreement also requires us to purchase and hold stock in the FHLBC in an amount equal to a specified percentage of our advances. As of September 30, 2014, we held $5 million of FHLBC stock that is included in other assets in our consolidated balance sheets.
	Commercial Long-Term Debt
	Commercial long-term debt reported in periods prior to the third quarter of 2014 includes borrowings under a master repurchase agreement that, as of the date reported, expired in more than one year with a financial institution counterparty. Beginning in the third quarter of 2014, amounts previously classified as commercial long-term debt were reclassified to short-term debt due to the associated agreement expiring in less than one year as of September 30, 2014.
	Commercial Secured Borrowing
	At September 30, 2014, we had commercial secured borrowings of $66 million resulting from transfers of portions of senior commercial mortgage loans to third parties that did not meet the criteria for sale treatment under GAAP and were accounted for as financings. We bifurcated certain of our senior commercial mortgage loans into a senior portion that was sold to a third party and a junior portion that we retained as an investment. Although GAAP requires us to record a secured borrowing liability when we receive cash from selling the senior portion of the loan, the liability has no economic substance to us in that it does not require periodic interest payments and has no maturity. For each commercial secured borrowing, at such time that the associated senior portion of the loan is repaid or we sell our retained junior portion, the secured borrowing liability and associated senior portion of the loan would be derecognized from our balance sheet.
	Convertible Notes
	In March 2013, we issued $287.5 million principal amount of 4.625% convertible senior notes due 2018. These convertible notes require semi-annual interest distributions at a fixed coupon rate of 4.625% until maturity or conversion, which will be no later than April 15, 2018. Including amortization of deferred securities issuance costs, the interest expense yield on our convertible notes was 5.49% and 5.44% for the three and nine months ended September 30, 2014, respectively. At September 30, 2014, the accrued interest payable balance on this debt was $6 million.
	At September 30, 2014, our convertible senior notes were convertible at the option of the holder at a conversion rate of 41.1320 common shares per $1,000 principal amount of convertible senior notes (equivalent to a conversion price of $24.31 per common share). Upon conversion of these convertible senior notes by a holder, the holder will receive shares of our common stock.
	Trust Preferred Securities and Subordinated Notes
	At September 30, 2014, we had trust preferred securities and subordinated notes outstanding of $100 million and $40 million, respectively. The interest expense yield on both our trust preferred securities and subordinated notes was 2.58% and 2.65% for the nine months ended September 30, 2014 and 2013, respectively. Including hedging costs and amortization of deferred securities issuance costs, the interest expense yield on both our trust preferred securities and subordinated notes was 6.88% and 6.90% for the nine months ended September 30, 2014 and 2013, respectively.
	At both September 30, 2014 and December 31, 2013, the accrued interest payable balance on our trust preferred securities and subordinated notes was less than $1 million. Under the terms of this long-term debt, we covenant, among other things, to use our best efforts to continue to qualify as a REIT. If an event of default were to occur in respect of this long-term debt, we would generally be restricted under its terms (subject to certain exceptions) from making dividend distributions to stockholders, from repurchasing common stock or repurchasing or redeeming any other then-outstanding equity securities, and from making any other payments in respect of any equity interests in us or in respect of any then-outstanding debt that is pari passu or subordinate to this long-term debt.

Commitments_and_Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2014
Commitments and Contingencies	'
	Note 15. Commitments and Contingencies
	Lease Commitments
	At September 30, 2014, we were obligated under eight non-cancelable operating leases with expiration dates through 2021 for $14 million. Operating lease expense was $2 million and $1 million for the nine months ended September 30, 2014 and 2013, respectively.
	The following table presents our future lease commitments at September 30, 2014.
	Future Lease Commitments by Year
	(In Thousands)	September 30, 2014
	2014 (3 months)	$	751
	2015		3,061
	2016		2,832
	2017		2,879
	2018		1,827
	2019 and thereafter		2,683
	Total	$	14,033
	Loss Contingencies — Residential Repurchase Reserve
	We maintain a repurchase reserve for potential obligations arising from representation and warranty violations related to the residential loans we have sold to securitization trusts or third parties and for conforming residential loans associated with MSRs that we have purchased from third parties. We do not originate residential loans and we believe the initial risk of loss due to loan repurchases (i.e., due to a breach of representations and warranties) would generally be a contingency to the companies from whom we acquired the loans. However, in some cases, for example, where loans were acquired from companies that have since become insolvent, repurchase claims may result in our being liable for a repurchase obligation.
	At September 30, 2014 and December 31, 2013, our repurchase reserve associated with our residential loans and MSRs was $4 million and $1.8 million, respectively. This liability is recorded in accrued expenses and other liabilities in our consolidated balance sheets and the provision for repurchase expense is included in mortgage banking activities, net and MSR income, net in our consolidated statements of income.
	Loss Contingencies — Litigation
	On or about December 23, 2009, the Federal Home Loan Bank of Seattle (the “FHLB-Seattle”) filed a complaint in the Superior Court for the State of Washington (case number 09-2-46348-4 SEA) against Redwood Trust, Inc., our subsidiary, Sequoia Residential Funding, Inc. (“SRF”), Morgan Stanley & Co., and Morgan Stanley Capital I, Inc. (collectively, the “FHLB-Seattle Defendants”) alleging that the FHLB-Seattle Defendants made false or misleading statements in offering materials for a mortgage pass-through certificate (the “Seattle Certificate”) issued in the Sequoia Mortgage Trust 2005-4 securitization transaction (the “2005-4 RMBS”) and purchased by the FHLB-Seattle. Specifically, the complaint alleges that the alleged misstatements concern the (1) loan-to-value ratio of mortgage loans and the appraisals of the properties that secured loans supporting the 2005-4 RMBS, (2) occupancy status of the properties, (3) standards used to underwrite the loans, and (4) ratings assigned to the Seattle Certificate. The FHLB-Seattle alleges claims under the Securities Act of Washington (Section 21.20.005, et seq.) and seeks to rescind the purchase of the Seattle Certificate and to collect interest on the original purchase price at the statutory interest rate of 8% per annum from the date of original purchase (net of interest received) as well as attorneys’ fees and costs. The Seattle Certificate was issued with an original principal amount of approximately $133 million, and, as of September 30, 2014, the FHLB-Seattle has received approximately $115.4 million of principal and $11.1 million of interest payments in respect of the Seattle Certificate. The claims were subsequently dismissed for lack of personal jurisdiction as to Redwood Trust and SRF. Redwood agreed to indemnify the underwriters of the 2005-4 RMBS for certain losses and expenses they might incur as a result of claims made against them relating to this RMBS, including, without limitation, certain legal expenses. The FHLB-Seattle’s claims against the underwriters of this RMBS were not dismissed and remain pending. Regardless of the outcome of this litigation, Redwood could incur a loss as a result of these indemnities.
	On or about July 15, 2010, The Charles Schwab Corporation (“Schwab”) filed a complaint in the Superior Court for the State of California in San Francisco (case number CGC-10-501610) against SRF and 26 other defendants (collectively, the “Schwab Defendants”) alleging that the Schwab Defendants made false or misleading statements in offering materials for various residential mortgage-backed securities sold or issued by the Schwab Defendants. With respect to SRF, Schwab alleges that SRF made false or misleading statements in offering materials for a mortgage pass-through certificate (the “Schwab Certificate”) issued in the 2005-4 RMBS and purchased by Schwab. Specifically, the complaint alleges that the misstatements for the 2005-4 RMBS concern the (1) loan-to-value ratio of mortgage loans and the appraisals of the properties that secured loans supporting the 2005-4 RMBS, (2) occupancy status of the properties, (3) standards used to underwrite the loans, and (4) ratings assigned to the Schwab Certificate. Schwab alleges a claim for negligent misrepresentation under California state law and seeks unspecified damages and attorneys’ fees and costs. The Schwab Certificate was issued with an original principal amount of approximately $14.8 million, and, as of September 30, 2014, Schwab has received approximately $12.8 million of principal and $1.3 million of interest payments in respect of the Schwab Certificate. SRF has denied Schwab’s allegations. This case is in discovery, and no trial date has been set. We intend to defend the action vigorously. Redwood agreed to indemnify the underwriters of the 2005-4 RMBS, which underwriters were also named as defendants in this action, for certain losses and expenses they might incur as a result of claims made against them relating to this RMBS, including, without limitation, certain legal expenses. Regardless of the outcome of this litigation, Redwood could incur a loss as a result of these indemnities.
	In October 2010, a complaint was filed in Illinois state court against SRF and more than 45 other named defendants alleging that the defendants made false or misleading statements in offering materials for various RMBS sold or issued by the defendants or entities controlled by them. The plaintiff subsequently amended the complaint to name Redwood Trust, Inc. and another one of our subsidiaries, RWT Holdings, Inc., as defendants. With respect to Redwood Trust, Inc., RWT Holdings, Inc., and SRF (the “Redwood Defendants”), the plaintiff alleged that there were false or misleading statements in the offering materials for two mortgage pass-through certificates issued in the Sequoia Mortgage Trust 2006-1 securitization transaction. In October 2014, the plaintiff and the Redwood Defendants agreed to settle the complaint on mutually satisfactory terms. The terms of the agreed-upon settlement remain confidential.
	In accordance with GAAP, we review the need for any loss contingency reserves and establish reserves when, in the opinion of management, it is probable that a matter would result in a liability and the amount of loss, if any, can be reasonably estimated. Additionally, we record receivables for insurance recoveries relating to litigation-related losses and expenses if and when such amounts are covered by insurance and recovery of such losses or expenses are due. At September 30, 2014, the aggregate amount of loss contingency reserves established in respect of the three above-referenced litigation matters was $10.4 million. Included within this aggregate reserve is the amount the Redwood Defendants agreed to pay pursuant to the confidential settlement reached in October 2014, which amount was paid subsequent to September 30, 2014. We review our litigation matters each quarter to assess these loss contingency reserves and make adjustments in these reserves, upwards or downwards, as appropriate, in accordance with GAAP based on our review.
	In the ordinary course of any litigation matter, including certain of the above-referenced matters, we have engaged and may continue to engage in formal or informal settlement communications with the plaintiffs. Settlement communications we have engaged in relating to certain of the above-referenced litigation matters are one of the factors that have resulted in our determination to establish the loss contingency reserves described above. We cannot be certain that any of these matters will be resolved through a settlement prior to trial and we cannot be certain that the resolution of these matters, whether through trial or settlement, will not have a material adverse effect on our financial condition or results of operations in any future period.
	Future developments (including resolution of substantive pre-trial motions relating to these matters, receipt of additional information and documents relating to these matters (such as through pre-trial discovery), new or additional settlement communications with plaintiffs relating to these matters, or resolutions of similar claims against other defendants in these matters) could result in our concluding in the future to establish additional loss contingency reserves or to disclose an estimate of reasonably possible losses in excess of our established reserves with respect to these matters. Our actual losses with respect to the above-referenced litigation matters may be materially higher than the aggregate amount of loss contingency reserves we have established in respect of these litigation matters, including in the event that any of these matters proceeds to trial and the plaintiff prevails. Other factors that could result in our concluding to establish additional loss contingency reserves or estimate additional reasonably possible losses, or could result in our actual losses with respect to the above-referenced litigation matters being materially higher than the aggregate amount of loss contingency reserves we have established in respect of these litigation matters include that: there are significant factual and legal issues to be resolved; information obtained or rulings made during the lawsuits could affect the methodology for calculation of the available remedies; and we may have additional obligations pursuant to indemnity agreements, representations and warranties, and other contractual provisions with other parties relating to these litigation matters that could increase our potential losses.

Equity

Equity	9 Months Ended
	Sep. 30, 2014
Equity	'
	Note 16. Equity
	The following table provides a summary of changes to accumulated other comprehensive income by component for the three and nine months ended September 30, 2014 and 2013.
	Changes in Accumulated Other Comprehensive Income by Component
		Three Months Ended September 30, 2014								Three Months Ended September 30, 2013
	(In Thousands)	Net unrealized gains on				Net unrealized losses				Net unrealized gains on		Net unrealized losses
		available-for-sale				on interest rate				available-for-sale		on interest rate
		securities				agreements accounted				securities		agreements accounted
						for as cash flow hedges						for as cash flow hedges
	Balance at beginning of period	$	197,542			$	(29,985)			$	145,349	$	(27,066)
	Other comprehensive income (loss) before reclassifications		1,849				(3,258)				(633)		4,018
	Amounts reclassified from other accumulated comprehensive income		(6,409)				32				(6,962)		62
	Net current-period other comprehensive (loss) income		(4,560)				(3,226)				(7,595)		4,080
	Balance at End of Period	$	192,982			$	(33,211)			$	137,754	$	(22,986)
		Nine Months Ended September 30, 2014								Nine Months Ended September 30, 2013
	(In Thousands)	Net unrealized gains on				Net unrealized losses				Net unrealized gains on		Net unrealized losses
		available-for-sale				on interest rate				available-for-sale		on interest rate
		securities				agreements accounted				securities		agreements accounted
						for as cash flow hedges						for as cash flow hedges
	Balance at beginning of period	$	164,654			$	(15,888)			$	186,580	$	(48,248)
	Other comprehensive income (loss) before reclassifications		35,078				(17,454)				(29,615)		25,043
	Amounts reclassified from other accumulated comprehensive income		(6,750)				131				(19,211)		219
	Net current-period other comprehensive (loss) income		28,328				(17,323)				(48,826)		25,262
	Balance at End of Period	$	192,982			$	(33,211)			$	137,754	$	(22,986)
	The following table provides a summary of reclassifications out of accumulated other comprehensive income for three and nine months ended September 30, 2014 and 2013.
	Reclassifications Out of Accumulated Other Comprehensive Income
		Affected Line Item in the		Amount reclassified from accumulated other
				comprehensive income
				Three Months Ended  September 30,
	(In Thousands)	Income Statement		2014				2013
	Net realized gains (losses) on AFS securities
	Other than temporary impairment	Other market valuations, net		$	188			$	-
	Gain on sale of AFS securities	Realized gains, net			(6,597)				(6,962)
				$	(6,409)			$	(6,962)
	Net realized gains on interest rate agreements designated as cash flow hedges
	Amortization of deferred loss	Interest expense		$	32			$	62
				$	32			$	62
		Affected Line Item in the		Amount reclassified from accumulated other
				comprehensive income
				Nine Months Ended September 30,
	(In Thousands)	Income Statement		2014				2013
	Net realized gains (losses) on AFS securities
	Other than temporary impairment	Other market valuations, net		$	565			$	(124)
	Gain on sale of AFS securities	Realized gains, net			(7,315)				(19,087)
				$	(6,750)			$	(19,211)
	Net realized gains on interest rate agreements designated as cash flow hedges
	Amortization of deferred loss	Interest expense		$	131			$	219
				$	131			$	219
	Earnings Per Common Share
	The following table provides the basic and diluted earnings per common share computations for the three and nine months ended September 30, 2014 and 2013.
	Basic and Diluted Earnings Per Common Share
		Three Months Ended September 30,								Nine Months Ended September 30,
	(In Thousands, Except Share Data)	2014				2013				2014		2013
	Basic Earnings Per Common Share:
	Net income attributable to Redwood	$	45,097			$	21,929			$	73,447	$	148,112
	Less: Dividends and undistributed earnings allocated to participating securities		(1,054)				(565)				(1,819)		(4,209)
	Net income allocated to common shareholders	$	44,043			$	21,364			$	71,628	$	143,903
	Basic weighted average common shares outstanding		83,017,534				82,201,473				82,722,079		81,888,231
	Basic Earnings Per Common Share	$	0.53			$	0.26			$	0.87	$	1.76
	Diluted Earnings Per Common Share:
	Net income attributable to Redwood	$	45,097			$	21,929			$	73,447	$	148,112
	Less: Dividends and undistributed earnings allocated to participating securities		(756)				(565)				(1,784)		(3,030)
	Add back: Interest expense on convertible notes		3,855				-				-		8,790
	Net income allocated to common shareholders	$	48,196			$	21,364			$	71,663	$	153,872
Weighted average common shares outstanding		83,017,534				82,201,473				82,722,079		81,888,231
Net effect of dilutive equity awards		2,113,248				2,220,566				2,309,051		2,292,451
Net effect of assumed convertible notes conversion to common shares		11,825,450				-				-		9,053,183
Diluted weighted average common shares outstanding		96,956,232				84,422,039				85,031,130		93,233,865
Diluted Earnings Per Common Share	$	0.50			$	0.25			$	0.84	$	1.65
For the three and nine months ended September 30, 2014, there were 2,113,248 and 2,309,051 of dilutive equity awards, respectively, determined under the two-class method. For the three and nine months ended September 30, 2013, there were 2,220,566 and 2,292,451 of dilutive equity awards, respectively, determined under the two-class method. We included participating securities in the calculation of diluted earnings per common share as we determined that the two-class method was more dilutive than the alternative treasury stock method. Dividends and undistributed earnings allocated to participating securities under the basic and diluted earnings per share calculations require specific shares to be included that may differ in certain circumstances. For the three and nine months ended September 30, 2014, common shares related to the assumed conversion of the convertible notes, totaling 11,825,450 and zero, respectively, were included in the calculation of diluted earnings per share. For the three and nine months ended September 30, 2013, common shares related to the assumed conversion of the convertible notes, totaling zero and 9,053,183, respectively, were included in the calculation of the diluted earnings per share.
For the nine months ended September 30, 2014, as well as for the three months ended September 30, 2013, 11,825,450 common shares related to the assumed conversion of the convertible notes were antidilutive and were excluded in the calculation of diluted earnings per share. For the three months ended September 30, 2014 and 2013, the number of outstanding equity awards that were antidilutive totaled 57,514 and 190,627, respectively. For the nine months ended September 30, 2014 and 2013, the number of outstanding equity awards that were antidilutive totaled 66,129 and 244,174 respectively, under the two-class method. There were no other participating securities during these periods.
Stock Repurchases
We announced a stock repurchase authorization in November 2007 for the repurchase of up to 5,000,000 common shares. This plan replaced all previous share repurchase plans and has no expiration date. During the nine months ended September 30, 2014, there were no shares acquired under the plan. At September 30, 2014, there remained 4,005,985 shares available for repurchase under this plan.

Equity_Compensation_Plans

Equity Compensation Plans	9 Months Ended
	Sep. 30, 2014
Equity Compensation Plans	'
	Note 17. Equity Compensation Plans
	At September 30, 2014 and December 31, 2013, 2,603,630 and 1,683,956 shares of common stock, respectively, were available for grant under our Incentive Plan. The unamortized compensation cost of awards issued under the Incentive Plan and purchases under the Employee Stock Purchase Plan totaled $14 million at September 30, 2014, as shown in the following table.
		Nine Months Ended September 30, 2014
	(In Thousands)	Stock		Restricted		Deferred		Performance		Employee Stock		Total
		Options		Stock		Stock Units		Stock Units		Purchase Plan
	Unrecognized compensation cost at beginning of period	$	-	$	1,869	$	13,044	$	5,817	$	-	$	20,730
	Equity grants		-		94		1,187		-		215		1,496
	Equity grant forfeitures		-		(213)		(150)		-		-		(363)
	Equity compensation expense		-		(509)		(4,549)		(2,196)		(161)		(7,415)
	Unrecognized Compensation Cost at End of Period	$	-	$	1,241	$	9,532	$	3,621	$	54	$	14,448
	At September 30, 2014, the weighted average amortization period remaining for all of our equity awards was less than two years.
	Stock Options
	At September 30, 2014 and December 31, 2013, there were 57,514 and 79,535 fully vested stock options outstanding, respectively. There was no aggregate intrinsic value for the options outstanding and exercisable at September 30, 2014. For both the nine months ended September 30, 2014 and 2013, there were no stock options exercised. For the nine months ended September 30, 2014, 22,021 stock options expired.
	Restricted Stock
	At September 30, 2014 and December 31, 2013, there were 110,948 and 166,941 shares, respectively, of restricted stock awards outstanding. Restrictions on these shares lapse through 2018. During the nine months ended September 30, 2014, there were 2,574 restricted stock awards granted, 42,725 restricted stock awards that vested and were distributed, and 15,842 restricted stock awards forfeited.
	Deferred Stock Units (“DSUs”)
	At September 30, 2014 and December 31, 2013, there were 1,961,038 and 2,266,473 DSUs, respectively, outstanding of which 1,218,012 and 1,263,420, respectively, had vested. There were 142,983 DSUs granted and 7,870 DSUs forfeited related to employee departures during the nine months ended September 30, 2014. During the nine months ended September 30, 2014, there were 440,548 of DSU distributions and cash distributions of less than $1 million to participants in the EDCP. Unvested DSUs at September 30, 2014 vest through 2018.
	Performance Stock Units (“PSUs”)
	At both September 30, 2014 and December 31, 2013, the target number of PSUs that were unvested was 779,871. PSUs do not vest until the third anniversary of their grant date, with the level of vesting at that time contingent on total stockholder return (defined as the change in our common stock price plus dividends paid on our common stock relative to the per share price of our common stock on the date of the PSU grant) over the three-year vesting period (“Three-Year TSR”). The number of underlying shares of our common stock that will vest during 2014 and in future years will vary between 0% (if Three-Year TSR is negative) and 200% (if Three-Year TSR is greater than or equal to 125%) of the target number of PSUs originally granted, adjusted upward (if vesting is greater than 0%) to reflect the value of dividends paid during the three-year vesting period. During the nine months ended September 30, 2014, 351,640 shares of common stock underlying vested PSUs were distributed.
	Employee Stock Purchase Plan
	The ESPP allows a maximum of 450,000 shares of common stock to be purchased in aggregate for all employees. At September 30, 2014 and December 31, 2013, 266,463 and 243,020 shares had been purchased, respectively, and there remained a negligible amount of uninvested employee contributions in the ESPP.

Mortgage_Banking_Activities

Mortgage Banking Activities	9 Months Ended
	Sep. 30, 2014
Mortgage Banking Activities	'
	Note 18. Mortgage Banking Activities
	The following table presents the components of mortgage banking activities, net, recorded in our consolidated income statements for the three and nine months ended September 30, 2014 and 2013.
	Components of Mortgage Banking Activities, Net
			Three Months Ended September 30,				Nine Months Ended September 30,
	(In Thousands)		2014		2013		2014		2013
	Residential mortgage banking activities:
	Changes in fair value of:
	Residential loans, at fair value		$	13,446	$	(10,804)	$	34,554	$	(17,339)
	Sequoia IO securities			(1,332)		(1,866)		(14,419)		36,399
	Risk management derivatives (1)			(4,297)		75		(16,433)		48,583
	Loan purchase and forward sale commitments			2,487		-		6,077		-
	Other (2)			1,082		359		1,871		1,635
	Total residential mortgage banking activities:			11,386		(12,236)		11,650		69,278
	Commercial mortgage banking activities:
	Changes in fair value of:
	Commercial loans, at fair value			4,305		3,171		13,644		2,826
	Risk management derivatives (1)			1,892		367		(1,726)		2,426
	Other (2)			289		-		382		1
	Net gains on commercial loan originations and sales			-		-		-		11,031
	Total commercial mortgage banking activities:			6,486		3,538		12,300		16,284
	Mortgage Banking Activities, Net		$	17,872	$	(8,698)	$	23,950	$	85,562
	-1	Represents market valuation changes of derivatives that are used to manage risks associated with our accumulation of residential and commercial loans.
	-2	Amounts in this line item include other fee income and the provision for repurchase expenses, presented net.

Operating_Expenses

Operating Expenses	9 Months Ended
	Sep. 30, 2014
Operating Expenses	'
	Note 19. Operating Expenses
	Components of our operating expenses for the three and nine months ended September 30, 2014 and 2013 are presented in the following table.
	Operating Expenses
		Three Months Ended September 30,				Nine Months Ended September 30,
	(In Thousands)	2014		2013		2014		2013
	Fixed compensation expense	$	7,445	$	5,808	$	21,109	$	17,524
	Variable compensation expense		2,418		5,621		8,170		14,418
	Equity compensation expense		2,261		1,997		7,415		7,880
	Severance expense		4		445		226		3,879
	Total compensation expense		12,128		13,871		36,920		43,701
	Systems and consulting		3,463		2,780		10,906		6,840
	Accounting and legal		1,223		2,066		4,039		5,118
	Office costs		1,282		829		3,437		2,444
	Corporate costs		569		508		1,679		1,545
	Other operating expenses		2,741		2,266		6,679		7,289
	Total Operating Expenses	$	21,406	$	22,320	$	63,660	$	66,937

Taxes

Taxes	9 Months Ended
	Sep. 30, 2014
Taxes	'
	Note 20. Taxes
	For the nine months ended September 30, 2014 and 2013, we recognized a provision for income taxes of $4 million and $9 million, respectively. The following is a reconciliation of the statutory federal and state tax rates to our projected annual effective rate at September 30, 2014 and 2013.
	Reconciliation of Statutory Tax Rate to Effective Tax Rate
		September 30, 2014		September 30, 2013
	Federal statutory rate		34.0 %		34.0 %
	State statutory rate, net of Federal tax effect		7.2 %		7.2 %
	Differences in taxable (loss) income from GAAP income		-10.00%		-2.10%
	Change in valuation allowance		-1.00%		-18.50%
	Dividends paid deduction		-25.40%		-14.80%
	Effective Tax Rate		4.8 %		5.8 %
	We assessed our tax positions for all open tax years (Federal — years 2011 to 2014, State — years 2010 to 2014) and, at September 30, 2014 and December 31, 2013, concluded that we had no uncertain tax positions that resulted in material unrecognized tax benefits.

Segment_Information

Segment Information	9 Months Ended
	Sep. 30, 2014
Segment Information	'
	Note 21. Segment Information
	Redwood operates in three segments: residential mortgage banking, residential investments, and commercial mortgage banking and investments. Our segments are based on our organizational and management structure, which aligns with how our results are monitored and performance is assessed. The accounting policies of the reportable segments are the same as those described in Note 3—Summary of Significant Accounting Policies. For a full description of our segments, see Note 1—Redwood Trust.
	Segment contribution represents the measure of profit that management uses to assess the performance of our business segments and make resource allocation and operating decisions. Certain expenses not directly assigned or allocated to one of the three primary segments, as well as activity from certain legacy Sequoia entities consolidated for GAAP financial reporting purposes, are included in the Corporate/Other column as reconciling items to our consolidated financial statements. These unallocated expenses primarily include interest expense associated with certain long-term debt, indirect operating expenses, and other expense.
	The following tables present financial information by segment for the three and nine months ended September 30, 2014 and 2013.
	Business Segment Financial Information
		Three Months Ended September 30, 2014
	(In Thousands)	Residential		Residential		Commercial		Corporate/		Total
		Mortgage		Investments		Mortgage		Other
		Banking				Banking and
						Investments
	Interest income	$	16,911	$	27,600	$	12,603	$	6,237	$	63,351
	Interest expense		(4,192)		(3,142)		(4,526)		(11,490)		(23,350)
	Net interest income (loss)		12,719		24,458		8,077		(5,253)		40,001
	Reversal of provision (provision) for loan losses		-		-		888		708		1,596
	Mortgage banking activities, net		11,386		-		6,486		-		17,872
	MSR income (loss), net		-		5,821		-		-		5,821
	Other market valuation adjustments, net		43		(3,371)		-		(378)		(3,706)
	Realized gains, net		-		7,836		-		696		8,532
	Operating expenses		(9,982)		(802)		(2,279)		(8,343)		(21,406)
	Other income		-		-		-		1,600		1,600
	(Provision for) benefit from income taxes		(3,352)		150		(1,764)		(247)		(5,213)
	Segment Contribution	$	10,814	$	34,092	$	11,408	$	(11,217)
	Net Income									$	45,097
	Non-cash amortization income (expense)		(43)		10,890		(191)		(2,049)		8,607
		Three Months Ended September 30, 2013
	(In Thousands)	Residential		Residential		Commercial		Corporate/		Total
		Mortgage		Investments		Mortgage		Other
		Banking				Banking and
						Investments
	Interest income	$	15,954	$	22,887	$	10,740	$	7,839	$	57,420
	Interest expense		(3,501)		(2,229)		(3,560)		(12,435)		(21,725)
	Net interest income (loss)		12,453		20,658		7,180		(4,596)		35,695
	Reversal of provision (provision) for loan losses		-		-		(844)		(883)		(1,727)
	Mortgage banking activities, net		(12,236)		-		3,538		-		(8,698)
	MSR income (loss), net		-		3,113		-		-		3,113
	Other market valuation adjustments, net		(11)		549		-		(76)		462
	Realized gains, net		-		10,469		-		-		10,469
	Operating expenses		(7,874)		(229)		(2,176)		(12,041)		(22,320)
	(Provision for) benefit from income taxes		4,867		377		29		(338)		4,935
	Segment Contribution	$	(2,801)	$	34,937	$	7,727	$	(17,934)
	Net Income									$	21,929
	Non-cash amortization income (expense)		(13)		8,702		(228)		(2,256)		6,205
		Nine Months Ended September 30, 2014
	(In Thousands)	Residential		Residential		Commercial		Corporate/		Total
		Mortgage		Investments		Mortgage		Other
		Banking				Banking and
						Investments
	Interest income	$	40,015	$	83,120	$	34,204	$	19,481	$	176,820
	Interest expense		(7,674)		(9,106)		(12,234)		(34,546)		(63,560)
	Net interest income (loss)		32,341		74,014		21,970		(15,065)		113,260
	Provision for loan losses		-		-		(56)		685		629
	Mortgage banking activities, net		11,650		-		12,300		-		23,950
	MSR income (loss), net		-		4,650		-		-		4,650
	Other market valuation adjustments, net		54		(13,117)		-		(903)		(13,966)
	Realized gains, net		-		9,815		-		872		10,687
	Operating expenses		(26,577)		(2,667)		(7,085)		(27,330)		(63,660)
	Other income		-		-		-		1,600		1,600
	(Provision for) benefit from income taxes		(3,258)		1,826		(2,159)		(112)		(3,703)
	Segment Contribution	$	14,210	$	74,521	$	24,970	$	(40,253)
	Net Income									$	73,447
	Non-cash amortization income (expense)		(131)		32,724		(579)		(6,068)		25,946
		Nine Months Ended September 30, 2013
	(In Thousands)	Residential		Residential		Commercial		Corporate/		Total
Mortgage		Investments		Mortgage		Other
Banking				Banking and
				Investments
Interest income	$	40,869	$	70,420	$	30,534	$	26,841	$	168,664
Interest expense		(8,631)		(7,448)		(8,928)		(36,437)		(61,444)
Net interest income (loss)		32,238		62,972		21,606		(9,596)		107,220
Reversal of provision (provision) for loan losses		-		-		(2,419)		1,926		(493)
Mortgage banking activities, net		69,278		-		16,284		-		85,562
MSR income (loss), net		-		14,681		-		-		14,681
Other market valuation adjustments, net		67		(5,759)		-		(407)		(6,099)
Realized gains, net		-		23,032		210		49		23,291
Operating expenses		(18,565)		(3,768)		(8,026)		(36,578)		(66,937)
(Provision for) benefit from income taxes		(6,447)		(1,284)		(1,689)		307		(9,113)
Segment Contribution	$	76,571	$	89,874	$	25,966	$	(44,299)
Net Income									$	148,112
Non-cash amortization income (expense)		(132)		24,348		(639)		(5,637)		17,940
The following tables present the components of Corporate/Other for the three and nine months ended September 30, 2014 and 2013.
	Three Months Ended September 30,
	2014						2013
(In Thousands)	Legacy		Other		Total		Legacy		Other		Total
	Consolidated						Consolidated
	VIEs						VIEs
Interest income	$	6,233	$	4	$	6,237	$	7,835	$	4	$	7,839
Interest expense		(5,250)		(6,240)		(11,490)		(6,190)		(6,245)		(12,435)
Net interest income (loss)		983		(6,236)		(5,253)		1,645		(6,241)		(4,596)
Reversal of provision for loan losses		708		-		708		(883)		-		(883)
Mortgage banking activities, net		-		-		-		-		-		-
MSR income, net		-		-		-		-		-		-
Other market valuation adjustments, net		(361)		(17)		(378)		(76)		-		(76)
Realized gains, net		696		-		696		-		-		-
Operating expenses		(26)		(8,317)		(8,343)		(51)		(11,990)		(12,041)
Other income		-		1,600		1,600		-		-		-
(Provision for) benefit from income taxes		-		(247)		(247)		-		(338)		(338)
Total	$	2,000	$	(13,217)	$	(11,217)	$	635	$	(18,569)	$	(17,934)
Non-cash amortization expense		(1,412)		(637)		(2,049)		(1,724)		(532)		(2,256)
	Nine Months Ended September 30,
	2014						2013
(In Thousands)	Legacy		Other		Total		Legacy		Other		Total
	Consolidated						Consolidated
	VIEs						VIEs
Interest income	$	19,473	$	8	$	19,481	$	26,688	$	153	$	26,841
Interest expense		(15,950)		(18,596)		(34,546)		(20,188)		(16,249)		(36,437)
Net interest income (loss)		3,523		(18,588)		(15,065)		6,500		(16,096)		(9,596)
Reversal of provision (provision) for loan losses		685		-		685		1,926		-		1,926
Mortgage banking activities, net		-		-		-		-		-		-
MSR income, net		-		-		-		-		-		-
Other market valuation adjustments, net		(825)		(78)		(903)		(407)		-		(407)
Realized gains, net		872		-		872		49		-		49
Operating expenses		(120)		(27,210)		(27,330)		(158)		(36,420)		(36,578)
Other income		-		1,600		1,600		-		-		-
(Provision for) benefit from income taxes		-		(112)		(112)		-		307		307
Total	$	4,135	$	(44,388)	$	(40,253)	$	7,910	$	(52,209)	$	(44,299)
Non-cash amortization expense		(4,207)		(1,861)		(6,068)		(4,388)		(1,249)		(5,637)
The following table presents supplemental information by segment at September 30, 2014 and December 31, 2013.
Supplemental Disclosures
(In Thousands)	Residential		Residential		Commercial		Corporate/		Total
	Mortgage		Investments		Mortgage		Other
	Banking				Banking and
					Investments
September 30, 2014
Residential loans, held-for-sale	$	1,502,429	$	-	$	-	$	-	$	1,502,429
Residential loans, held-for-investment		-		238,651		-		1,546,507		1,785,158
Commercial loans		-		-		497,997		-		497,997
Real estate securities		100,613		1,294,372		-		-		1,394,985
Mortgage servicing rights		-		135,152		-		-		135,152
Total assets		1,635,463		1,696,343		527,094		1,752,868		5,611,768
December 31, 2013
Residential loans, held-for-sale	$	404,267	$	-	$	-	$	-	$	404,267
Residential loans, held-for-investment		-		-		-		1,762,167		1,762,167
Commercial loans		-		-		432,455		-		432,455
Real estate securities		110,505		1,572,356		-		-		1,682,861
Mortgage servicing rights		-		64,824		-		-		64,824
Total assets		531,092		1,655,209		439,139		1,983,088		4,608,528

Subsequent_Events

Subsequent Events	9 Months Ended
	Sep. 30, 2014
Subsequent Events	'
	Note 22. Subsequent Events
	At September 30, 2014, we had identified for purchase $1.3 billion of jumbo residential mortgage loans that were in various stages of the origination process with third-party originators. Some of these loans may not ultimately close and, therefore, would not be available for purchase. Since September 30, 2014, and through November 2, 2014, $597 million of these loans closed and were purchased by us. We expect the purchase of an additional amount of these loans to occur during the fourth quarter of 2014, subject to loan availability and delivery.

Summary_of_Significant_Account1

Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2014

Use of Estimates

'

Use of Estimates

The preparation of financial statements requires us to make a number of significant estimates. These include estimates of fair value of certain assets and liabilities, amounts and timing of credit losses, prepayment rates, and other estimates that affect the reported amounts of certain assets and liabilities as of the date of the consolidated financial statements and the reported amounts of certain revenues and expenses during the reported period. It is likely that changes in these estimates (e.g., valuation changes due to supply and demand, credit performance, prepayments, interest rates, or other reasons) will occur in the near term. Our estimates are inherently subjective in nature and actual results could differ from our estimates and the differences could be material.

Fair Value Measurements

'

Fair Value Measurements

Our financial statements include assets and liabilities that are measured at their estimated fair values in accordance with GAAP. A fair value measurement represents the price at which an orderly transaction would occur between willing market participants at the measurement date. We develop fair values for financial assets or liabilities based on available inputs and pricing that is observed in the marketplace. Examples of market information that we attempt to obtain include the following:

—

Quoted prices for the same or similar securities;

—

Relevant reports issued by analysts and rating agencies;

—

The current level of interest rates and any directional movements in relevant indices, such as credit risk indices;

—

Information about the performance of mortgage loans, such as delinquency and foreclosure rates, loss experience, and prepayment rates;

—

Indicative prices or yields from broker/dealers (including prices from counterparties under securities repurchase and whole-loan warehouse agreements); and,

—

Other relevant observable inputs, including nonperformance risk and liquidity premiums.

After considering all available indications of the appropriate rate of return that market participants would require, we consider the reasonableness of the range indicated by the results to determine an estimate that is most representative of fair value.

The markets for many of the loans and securities that we invest in and issue are generally illiquid. Establishing fair values for illiquid assets and liabilities is inherently subjective and is often dependent upon our estimates and modeling assumptions. If we determine that either the volume and/or level of trading activity for an asset or liability has significantly decreased from normal market conditions, or price quotations or observable inputs are not associated with orderly transactions, the market inputs that we obtain might not be relevant. For example, broker or pricing service quotes might not be relevant if an active market does not exist for the financial asset or liability. The nature of the quote (for example, whether the quote is an indicative price or a binding offer) is also evaluated.

In circumstances where relevant market inputs cannot be obtained, increased analysis and management judgment are required to estimate fair value. This generally requires us to establish internal assumptions about future cash flows and appropriate risk-adjusted discount rates. Regardless of the valuation inputs we apply, the objective of fair value measurement is unchanged from what it would be if markets were operating at normal activity levels and/or transactions were orderly; that is, to determine the current exit price.

See Note 5 for further discussion on fair value measurements.

Fair Value Option

'

Fair Value Option

We have the option to measure eligible financial assets, financial liabilities, and commitments at fair value on an instrument-by-instrument basis. This option is available when we first recognize a financial asset or financial liability or enter into a firm commitment. Subsequent changes in the fair value of assets, liabilities, and commitments where we have elected the fair value option are recorded in our consolidated statements of income.

We elect the fair value option for certain residential and commercial loans, Sequoia IO securities, and MSRs. We generally elect the fair value option for residential and commercial loans that are held-for-sale, due to our intent to sell or securitize the loans in the near-term. We generally elect the fair value option for Sequoia IO securities as we use these in part to hedge certain risks associated with our residential loans held-for-sale. We elect the fair value option for our MSRs in order to reflect the current value of these investments in our financial position and results each period. We also elect the fair value option for certain secured borrowings we may recognize when the sale of commercial loans do not meet the sale criteria in ASC 860.

See Note 5 for further discussion on the fair value option.

Real Estate Loans

'

Real Estate Loans

Residential and Commercial Loans — Held-for-Sale at Fair Value

Residential and commercial loans held-for-sale include loans that we are marketing for sale to third parties, including transfers to securitization entities that we plan to sponsor and expect to be accounted for as sales for financial reporting purposes. We generally elect the fair value option for residential and commercial loans that we purchase with the intent to sell to third parties or transfer to Sequoia securitizations. Coupon interest is recognized as revenue when earned and deemed collectible or until a loan becomes more than 90 days past due. Changes in fair value are recurring and are reported through our consolidated statements of income in mortgage banking activities, net.

Residential and Commercial Loans — Held-for-Investment

Residential Loans — At Fair Value

Certain loans that were originally purchased with the intent to sell as part of our residential mortgage banking operations, and for which we elected the fair value option at acquisition, were subsequently reclassified to held-for-investment when the loans were pledged as collateral for borrowings made from the Federal Home Loan Bank of Chicago (“FHLBC”). As of September 30, 2014, our current intention is to hold these loans for longer-term investment while they are financed by the FHLBC. Coupon interest is recognized as revenue when earned and deemed collectible or until a loan becomes more than 90 days past due. Changes in fair value are recurring and are reported through our consolidated statements of income in other market valuation adjustments, net.

Commercial Loans — At Fair Value

We may elect the fair value option for senior commercial mortgage loans that we originate or acquire that are bifurcated into a senior portion that is sold to a third party and a junior portion that we retain as an investment. When the transfer of the senior portion does not meet the criteria for sale treatment under GAAP, the entire loan (the senior and junior portions) remains on our consolidated balance sheet, and we account for the transfer of the senior portion as a secured borrowing liability. Coupon interest is recognized as revenue when earned and deemed collectible or until a loan becomes more than 90 days past due. Changes in fair value are recurring and are reported through our consolidated statements of income in mortgage banking activities, net.

Residential and Commercial Loans — At Amortized Cost

Loans held-for-investment include residential loans owned at Consolidated Sequoia Entities and commercial loans owned at the Commercial Securitization entity and by us, net of any allowance for loan losses. Coupon interest is recognized as revenue when earned and deemed collectible or until a loan becomes more than 90 days past due or has been individually impaired, at which point the loan is placed on nonaccrual status. Interest previously accrued for loans that have become greater than 90 days past due or individually impaired is reserved for in the allowance for loan losses. Residential loans delinquent more than 90 days or in foreclosure are characterized as a serious delinquency. Cash principal and interest that is advanced from servicers subsequent to a loan becoming greater than 90 days past due or individually impaired is accounted for as a reduction in the outstanding loan principal balance. When a seriously delinquent loan previously placed on nonaccrual status has cured, meaning all delinquent principal and interest have been remitted by the borrower, the loan is placed back on accrual status. Alternately, loans that have been individually impaired may be placed back on accrual status if restructured and after the loan is considered reperforming. A restructured loan is considered reperforming when the loan has been current for at least 12 months.

We use the interest method to determine an effective yield to amortize the premium or discount on real estate loans held-for-investment. For residential loans acquired prior to July 1, 2004, we use coupon interest rates as they change over time and anticipated principal payments to determine periodic amortization. For residential and commercial loans acquired after July 1, 2004, we use the initial coupon interest rate of the loans (without regard to future changes in the underlying indices) and anticipated principal payments, if any, to determine periodic amortization.

We reclassify loans held-for-investment as loans held-for-sale if we determine that these loans will be sold or transferred to third parties. This may occur, for example, if we exercise our right to call ABS issued by a Sequoia securitization trust and decide to subsequently sell the underlying loans to third parties.

See Note 6 for further discussion on residential loans. See Note 7 for further discussion on commercial loans.

Residential Loans — Allowance for Loan Losses

For residential loans classified as held-for-investment, we establish and maintain an allowance for loan losses based on our estimate of credit losses inherent in our loan portfolios at the reporting date. To calculate the allowance for loan losses, we assess inherent losses by determining loss factors (defaults, the timing of defaults, and loss severities upon defaults) that can be specifically applied to each loan or pool of loans.

We consider the following factors in evaluating the allowance for loan losses:

—

Ongoing analyses of loans, including, but not limited to, the age of loans and year of origination, underwriting standards, business climate, economic conditions, and other observable data;

—

Historical loss rates and past performance of similar loans;

—

Relevant market research and publicly available third-party reference loss rates;

—

Trends in delinquencies and charge-offs;

—

Effects and changes in credit concentrations;

—

Information supporting a borrower’s ability to meet obligations;

—

Ongoing evaluations of fair values of collateral using current appraisals and other valuations; and,

—

Discounted cash flow analyses.

Once we determine the amount of defaults, the timing of the defaults, and severity of losses upon the defaults, we estimate expected losses for each individual loan or pool of loans over its expected life. We then estimate the timing of these losses and the losses probable to occur over an appropriate loss confirmation period. This period is defined as the range of time between the occurrence of a credit loss (such as the initial deterioration of the borrower’s financial condition) and the confirmation of that loss (the actual impairment or charge-off of the loan). The losses expected to occur within the estimated loss confirmation period are the basis of our allowance for loan losses, since we believe these losses exist at the reported date of the financial statements. We re-evaluate the adequacy of our allowance for loan losses quarterly.

As part of the loss mitigation efforts undertaken by servicers of residential loans owned at Sequoia securitization entities, certain delinquent loans have been modified and additional loans may be modified in the future. Loan modifications may include, but are not limited to: (i) conversion of a floating rate mortgage loan into a fixed rate mortgage loan; (ii) reduction in the contractual interest rate of a mortgage loan; (iii) forgiveness of a portion of the contractual interest and/or principal amounts owed on a mortgage loan; and, (iv) extension of the contractual maturity of a mortgage loan. We evaluate all loan modifications performed by servicers to determine if they constitute troubled debt restructurings (“TDRs”) according to GAAP. If a loan is determined to be a TDR, it is removed from the general loan pools used for calculating allowances for loan losses and assessed for impairment on an individual basis based upon any adverse change in the expected future cash flows resulting from the modification. This difference is recorded to the provision for loan losses in our consolidated statements of income.

When foreclosed property is received in full satisfaction for a defaulted loan, we estimate the fair value of the property, based on estimated net proceeds from the sale of the property (including servicer advances and other costs). To the extent that the fair value of the property is below the recorded investment of the loan, we record a charge against the allowance for loan losses for the difference. Foreclosed property is subsequently recorded as real estate owned (“REO”), a component of other assets on our consolidated balance sheets. Actual losses incurred on loans liquidated through a short-sale are also charged against the allowance for loan losses.

See Note 6 for further discussion on the allowance for loan losses for residential loans.

Commercial Loans — Allowance for Loan Losses

For commercial loans classified as held-for-investment, we establish and maintain a general allowance for loan losses inherent in our portfolio at the reporting date and, where appropriate, a specific allowance for loan losses for loans we have determined to be impaired at the reporting date. An individual loan is considered impaired when it is deemed probable that we will not be able to collect all amounts due according to the contractual terms of the loan.

Our methodology for assessing the adequacy of the allowance for loan losses begins with a formal review of each commercial loan in the portfolio and the assignment of an internal impairment status. Reviews are performed at least quarterly. We consider the following factors in evaluating each loan:

—

Loan to value ratios upon origination or acquisition of the loan;

—

The most recent financial information available for each loan and associated properties, including net operating income, debt service coverage ratios, occupancy rates, rent rolls, as well as any other loss factors we consider relevant, such as, but not limited to, specific loan trigger events that would indicate an adverse change in expected cash flows or payment delinquency;

—

Economic trends, both macroeconomic as well as those directly affecting the properties associated with our loans, and the supply and demand of competing projects in the sub-market in which the subject property is located; and,

—

The loan sponsor or borrowing entity’s ability to ensure that properties associated with the loan are managed and operated sufficiently.

Loan reviews are completed by asset management and finance personnel and reviewed and approved by senior management.

Based on the assigned internal impairment status, a loan is categorized as “Pass,” “Watch List,” or “Workout.” Pass loans are defined as loans that are performing in accordance with the contractual terms of the loan agreement. Watch List loans are defined as performing loans for which the timing of cost recovery is under review. Workout loans are defined as loans that we believe have a credit impairment that may lead to a realized loss. Workout loans are typically assessed for impairment on an individual basis. Where an individual commercial loan is impaired, we record an allowance to reduce the carrying value of the loan to the current present value of expected future cash flows discounted at the loan’s effective rate or if a loan is collateral dependent, we reduce the carrying value to the estimated fair market value of the loan, with a corresponding charge to provision for loan losses on our consolidated statements of income.

For all commercial loans that are not individually impaired, we assess the commercial loan portfolio in aggregate for loan losses based on our expectation of credit losses inherent in the portfolio at the reporting date. Our expectation of credit losses is informed by, among other things:

—

Historical loss rates and past performance of similar loans in our own portfolio, if any;

—

Publicly available third-party reference loss rates on similar loans; and,

—

Trends in delinquencies and charge-offs in our own portfolio and among industry participants.

See Note 7 for further discussion on the allowance for loan losses for commercial loans.

Repurchase Reserves

We sell residential mortgage loans to various parties, including (1) securitization trusts, (2) the Agencies, and (3) banks and other financial institutions that purchase mortgage loans. We also purchase mortgage servicing rights. We may be required to repurchase residential mortgage loans we have sold, or loans associated with MSRs we own, in the event of a breach of specified contractual representations and warranties made in connection with these sales and purchases. We do not originate residential mortgage loans and believe the initial risk of loss due to loan repurchases (i.e., due to a breach of representations and warranties) would generally be a contingency to the companies from whom we acquired the loans. However, in some cases, such as where loans were acquired from companies that have since become insolvent, we may be required to repurchase loans.

We establish reserves for mortgage repurchase liabilities related to various representations and warranties that reflect management’s estimate of losses for loans for which we could have a repurchase obligation, based on a combination of factors. Such factors can include estimated future defaults and loan repurchase rates, the potential severity of loss in the event of defaults, and the probability of our being liable for a repurchase obligation. We establish a reserve at the time loans are sold and continually update our reserve estimate during its life. The reserve for mortgage loan repurchase losses is included in other liabilities on our consolidated balance sheets and the related expense is included as a component of mortgage banking activities, net on our consolidated statements of income.

We have originated and sold commercial mortgage loans and have made standard representations and warranties upon sale of the loans to the loan purchasers, and in some cases, to securitization trusts. We review the need for a repurchase reserve related to these commercial loans on an ongoing basis and are not aware of any breaches of representations and warranties related to these loans.

See Note 15 for further discussion on the residential repurchase reserve.

Real Estate Securities, at Fair Value

'

Real Estate Securities, at Fair Value

We classify our real estate securities as trading or available-for-sale securities. We use the “prime” or “non-prime” designation to categorize our residential securities based upon the general credit characteristics of the residential loans underlying each security at the time of origination. For example, prime residential loans are generally characterized by lower loan-to-value (“LTV”) ratios at the time the loans were originated, and are made to borrowers with higher Fair Isaac Corporation (“FICO”) scores. Non-prime residential loans are generally characterized by higher LTV ratios at the time the loans were originated and may have been made to borrowers with lower credit scores or impaired credit histories (while exhibiting the ability to repay their loans) at the time the loan was originated. Regardless of whether or not the loans underlying a residential security were designated as prime or non-prime at origination, there is a risk that the borrower may not be able to repay the loan.

Trading Securities

We primarily denote trading securities as those securities where we have adopted the fair value option. Trading securities are carried at their estimated fair values and coupon interest is recognized as interest income when earned and deemed collectible. Changes in the fair value of Sequoia IO and senior securities designated as trading securities are reported in mortgage banking activities, net, a component of our consolidated statements of income. Changes in the fair value of other trading securities are reported through our consolidated statements of income in other market valuation adjustments, net.

Available-for-Sale Securities

AFS securities primarily consist of non-agency residential mortgage backed securities (“RMBS”) and may include other residential and commercial securities. Non-Agency RMBS are not issued or guaranteed by a federally chartered corporation, such as Fannie Mae or Freddie Mac, or any agency of the U.S. Government. AFS securities are carried at their estimated fair value with unrealized gains and losses excluded from earnings (except when an other-than-temporary impairment (“OTTI”) is recognized, as discussed below) and reported in accumulated other comprehensive income (“AOCI”), a component of stockholders’ equity.

Interest income on AFS securities is accrued based on their outstanding principal balance and contractual terms and interest income is recognized based on the security’s effective interest rate. In order to calculate the effective interest rate, we must project cash flows over the remaining life of each security and make assumptions with regards to interest rates, prepayment rates, the timing and amount of credit losses, and other factors. On at least a quarterly basis, we review and, if appropriate, make adjustments to our cash flow projections based on input and analysis received from external sources, internal models, and our own judgments about interest rates, prepayment rates, the timing and amount of credit losses, and other factors. Changes in cash flows from those originally projected, or from those estimated at the last evaluation, may result in a prospective change in the yield and interest income recognized on these securities or in the recognition of OTTI as discussed below.

For AFS securities purchased and held at a discount, a portion of the discount may be designated as non-accretable purchase discount (“credit reserve”), based on the cash flows we have projected for the security. The amount designated as credit reserve may be adjusted over time, based on our periodic evaluation of projected cash flows. If the performance of a security with a credit reserve is more favorable than previously forecasted, a portion of the credit reserve may be reallocated to accretable discount and recognized into interest income over time. Conversely, if the performance of a security with a credit reserve is less favorable than forecasted, the amount designated as credit reserve may be increased, or impairment charges and write-downs of such securities to a new cost basis could result.

When the fair value of an AFS security is less than its amortized cost at the reporting date, the security is considered impaired. We assess our impaired securities at least quarterly to determine if the impairment is temporary or other-than-temporary (resulting in an OTTI). If we either — (i) intend to sell the impaired security; (ii) will more likely than not be required to sell the impaired security before it recovers in value; or (iii) if there has been an adverse change in cash flows — the impairment is deemed an OTTI. In the case of criteria (i) and (ii), we record the entire difference between the security’s estimated fair value and its amortized cost at the reporting date in our consolidated statements of income. If there has been an adverse change in cash flows, only the portion of the OTTI related to “credit” losses is recognized through other market valuation adjustments, net on our consolidated statements of income, with the remaining “non-credit” portion recognized through AOCI on our consolidated balance sheet. If the first two criteria are not met and there has not been an adverse change in cash flows, the impairment is considered temporary and the entire unrealized loss is recognized through AOCI on our consolidated balance sheets.

For impaired AFS securities, to determine if there has been an adverse change in cash flows and if any portion of a resulting OTTI is related to credit losses, we compare the present value of the cash flows expected to be collected as of the current financial reporting date to the amortized cost basis of the security. The discount rate used to calculate the present value of expected future cash flows is the current yield used for income recognition purposes. If the present value of the current expected cash flows is less than the amortized cost basis, there has been an adverse change and the security is considered OTTI with the difference between these two amounts representing the credit loss. The determination as to whether an OTTI exists and, if so, the amount of credit impairment recognized in earnings is subjective, and based on information available at the time of the assessment as well as our estimates of future performance and cash flows. As a result, the timing and amount of OTTI constitute a material estimate that is susceptible to significant change.

See Note 8 for further discussion on real estate securities.

MSRs

'

MSRs

We recognize MSRs through the retention of servicing rights associated with residential mortgage loans that we have acquired and subsequently transferred to third parties (including the Agencies) or through the direct acquisition of MSRs sold by third parties. Typically, our MSRs are created through the transfer of loans to a third party or to a Sequoia residential mortgage securitization sponsored by us that meets the GAAP criteria for sale accounting.

Our MSRs are held and managed at Redwood Residential Acquisition Corporation, a wholly-owned subsidiary of RWT Holdings, Inc., which is a taxable REIT subsidiary of ours. We contract with a licensed sub-servicer to perform servicing functions for loans associated with our MSRs. We have elected the fair value option for all of our MSRs, and they are initially recognized and carried at their estimated fair values. Income from MSRs and changes in the estimated fair value of MSRs are reported in MSR income, net, a component of our consolidated statements of income.

See Note 9 for further discussion on MSRs.

Cash and Cash Equivalents

'

Cash and Cash Equivalents

Cash and cash equivalents include non-restricted cash and highly liquid investments with original maturities of three months or less.

Restricted Cash

'

Restricted Cash

Restricted cash primarily includes principal and interest payments that are collateral for, or payable to, owners of ABS issued by consolidated securitization entities. Restricted cash may also include cash retained in the Sequoia securitization entities or in the Residential Resecuritization or Commercial Securitization entities prior to the payments on or redemptions of outstanding ABS issued.

Accrued Interest Receivable

'

Accrued Interest Receivable

Accrued interest receivable includes interest that is due and payable to us and deemed collectible. Cash interest is generally received within thirty days of recording the receivable. For financial assets where we have elected the fair value option, the associated accrued interest receivable on these assets is measured at fair value. For financial assets where we have not elected the fair value option, the associated accrued interest carrying values approximate fair values.

Derivative Financial Instruments

'

Derivative Financial Instruments

Derivative financial instruments we typically utilize include swaps, swaptions, financial futures contracts, CMBX credit default index swaps, and “To Be Announced” (“TBA”) contracts. These derivatives are primarily used to manage interest rate risk associated with our operations. In addition, we enter into certain residential loan purchase commitments (“LPCs”) and residential loan forward sale commitments (“FSCs”) that are treated as derivatives for financial reporting purposes. All derivative financial instruments are recorded at their estimated fair values on our consolidated balance sheets. Derivatives with positive fair values to us are reported as assets and derivatives with negative fair values to us are reported as liabilities. We classify each derivative as either (i) a trading instrument (no specific hedging designation for financial reporting purposes) or (ii) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge).

Changes in the fair values of derivatives accounted for as trading instruments, including any associated interest income or expense, are recorded in our consolidated statements of income through other market valuation adjustments, net, to the extent they are used to manage risks associated with our residential investment portfolio. Derivatives used to manage certain risks associated with our residential and commercial mortgage banking activities, including valuation changes related to residential LPCs and FSCs, are included in mortgage banking activities, net, on our consolidated statements of income.

Changes in the fair values of derivatives accounted for as cash flow hedges, to the extent they are effective, are recorded in accumulated other comprehensive income, a component of equity on our consolidated balance sheets. Interest income or expense, and any ineffectiveness associated with these derivatives, are recorded as a component of net interest income in our consolidated statements of income. We measure the effective portion of cash flow hedges by comparing the change in fair value of the expected future variable cash flows of the derivative hedging instruments with the change in fair value of the expected future variable cash flows of the hedged item.

We will discontinue a designated cash flow hedging relationship if (i) we determine that the hedging derivative is no longer expected to be effective in offsetting changes in the cash flows of the designated hedged item; (ii) the derivative expires or is sold, terminated, or exercised; (iii) the derivative is de-designated as a cash flow hedge; or, (iv) it is probable that a forecasted transaction associated with the hedged item will not occur by the end of the originally specified time period. To the extent we de-designate or terminate a cash flow hedging relationship and the associated hedged item continues to exist, any unrealized gain or loss of the cash flow hedge at the time of de-designation remains in accumulated other comprehensive income and is amortized using the straight-line method through interest expense over the remaining life of the hedged item.

Swaps and Swaptions

Interest rate swaps are agreements in which (i) one counterparty exchanges a stream of fixed interest payments for another counterparty’s stream of variable interest cash flows; or, (ii) each counterparty exchanges variable interest cash flows that are referenced to different indices. Interest rate swaptions are agreements that provide the owner the right but not the obligation to enter into an underlying interest rate swap with a counterparty in the future. Interest rate caps are agreements in which the owner receives payments at the end of each period for which the prevailing interest rate exceeds an agreed upon strike price. We enter into interest rate agreements primarily to reduce significant changes in our income or equity caused by interest rate volatility. Certain of these interest rate agreements may be designated as cash flow hedges.

Eurodollar Futures and Financial Futures

Eurodollar futures are futures contracts on time deposits denominated in U.S. dollars at banks outside the United States. Eurodollar futures, unlike our other derivatives, have maturities of only three months. Therefore, in order to achieve the desired interest rate offset necessary to manage our risk, consecutively maturing contracts are required, resulting in a stated notional amount that is typically higher than our other derivatives. Financial futures are futures contracts on benchmark U.S. Treasury rates.

TBA Contracts

TBA contracts are forward contracts to purchase mortgage-backed securities that will be issued by a U.S. government sponsored enterprise in the future. We purchase or sell these derivatives to offset — to varying degrees — changes in the values of mortgage products for which we have exposure to interest rate volatility.

CMBX Credit Default Index Swaps

CMBX credit default index swaps are derivative instruments that reference an index reflecting the performance of specified tranches from selected commercial mortgage-backed securities (“CMBS”) transactions. Transacting in CMBX credit default index swaps enables us to hedge certain financial risks we are exposed to as we originate senior commercial mortgage loans in anticipation of the sale of these loans into CMBS transactions.

Loan Purchase and Forward Sale Commitments

We use the term LPCs to refer to agreements with third-party residential loan originators to purchase residential loans at a future date that qualify as a derivative under GAAP and we use the term FSCs to refer to agreements with third-parties to sell residential loans at a future date that also qualify as derivatives under GAAP. LPCs and FSCs are recorded at their estimated fair values on our consolidated balance sheets and changes in fair value are recurring and are reported through our consolidated statements of income in mortgage banking activities, net.

See Note 10 for further discussion on derivative financial instruments.

Deferred Tax Assets and Liabilities

'

Deferred Tax Assets and Liabilities

Our deferred tax assets/liabilities are generated by temporary differences in GAAP and taxable income at our taxable subsidiaries. These differences generally reflect differing accounting treatments for GAAP and tax, such as accounting for mortgage servicing rights, discount and premium amortization, credit losses, asset impairments, and certain valuation estimates. As a result of these differences, we may recognize taxable income in periods prior to when we recognize income for GAAP. When this occurs, we pay the tax liability as required and establish a deferred tax asset. As the income is subsequently realized in future periods under GAAP, the deferred tax asset is reduced. We may also recognize income under GAAP in periods prior to when we recognize the income for tax. When this occurs, we establish a deferred tax liability. As the income is subsequently realized in future periods for tax, the deferred tax liability is reduced.

In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We consider historical and projected future taxable income and capital gains as well as tax planning strategies in making this assessment. We determine the extent to which realization of this deferred asset is not assured and establish a valuation allowance accordingly. The estimate of net deferred tax assets could change in future periods to the extent that actual or revised estimates of future taxable income during the carryforward periods change from current expectations.

Deferred Securities Issuance Costs

'

Deferred Securities Issuance Costs

Securities issuance costs are expenses associated with the issuance of long-term debt, and the ABS issued from the Residential Resecuritization, the Commercial Securitization, and Sequoia securitization entities we sponsor and consolidate for financial reporting purposes. These expenses typically include underwriting, rating agency, legal, accounting, and other fees. ABS issuance costs associated with liabilities reported at cost are deferred. Deferred securities issuance costs are reported on our consolidated balance sheets as deferred charges (an asset) and are amortized as an adjustment to interest expense using the interest method, based upon the actual and estimated repayment schedules of the related securities issued.

Other Assets

'

Other Assets

Other assets include margin and investment receivable, REO, income tax receivables, fixed assets, principal receivable, and other prepaid expenses and receivables.

REO property acquired through, or in lieu of, foreclosure is initially recorded at fair value, and subsequently reported at the lower of its carrying amount or fair value (less estimated cost to sell). Changes in the fair value of an REO property that has a fair value at or below its carrying amount are recorded in our consolidated statements of income as a component of other market valuation adjustments, net. Margin receivable reflects cash collateral we have posted with various counterparties relating to our derivative and lending agreements with those counterparties, as applicable.

See Note 11 for further discussion on other assets.

Short-Term Debt

'

Short-Term Debt

Short-term debt includes borrowings under master repurchase agreements, loan warehouse facilities, and other forms of borrowings that expire within one year with various counterparties. These borrowings may be unsecured or collateralized by cash, loans, or securities. If the value (as determined by the applicable counterparty) of the collateral securing those borrowings decreases, we may be subject to margin calls during the period the borrowings are outstanding. In instances where we do not satisfy the margin calls within the required time frame, the counterparty may retain the collateral and pursue any outstanding debt amount from us.

See Note 12 for further discussion on short-term debt.

Accrued Interest Payable

'

Accrued Interest Payable

Accrued interest payable includes interest that is due and payable to third parties. Interest is generally paid within one to three months of recording the payable, based upon our remittance requirements, and is paid semi-annually for our convertible debt. For borrowings where we have elected the fair value option, the associated accrued interest on these liabilities is measured at fair value. For financial liabilities where we have not elected the fair value option, the associated accrued interest carrying values approximate fair values.

Asset-Backed Securities Issued

'

Asset-Backed Securities Issued

ABS issued represents asset-backed securities issued by bankruptcy-remote entities sponsored and consolidated by Redwood. These entities include certain Sequoia entities, the Residential Resecuritization, and the Commercial Securitization. Assets at these entities are held in the custody of securitization trustees and are not owned by Redwood. These trustees collect principal and interest payments (less servicing and related fees) from the assets and make corresponding principal and interest payments to the ABS investors.

ABS issued are carried at their unpaid principal balances net of any unamortized discount or premium.

See Note 13 for further discussion on ABS issued.

Long-Term Debt

'

Long-Term Debt

FHLBC Borrowings

FHLBC borrowings include amounts borrowed, also referred to as “advances,” from the Federal Home Loan Bank of Chicago that are secured by eligible collateral, including, but not limited to, residential mortgage loans and residential mortgage-backed securities. FHLBC borrowings are carried at their unpaid principal balance and interest on advances is paid every 13 weeks from when each respective advance is made. If the value (as determined by the FHLBC) of the collateral securing those borrowings decreases, we may be subject to margin calls during the period the borrowings are outstanding. In instances where we do not satisfy the margin calls within the required time frame, the FHLBC may foreclose upon the collateral and pursue any outstanding debt amount from us. Individual advances can be made with maturities ranging from one day to 30 years.

Commercial Long-term Debt

Commercial long-term debt includes borrowings under a master repurchase agreement that, as of the date reported, expires in more than one year with a financial institution counterparty. Beginning in the third quarter of 2014, amounts previously classified as commercial long-term debt were reclassified to short-term debt due to the associated agreement expiring in less than one year as of September 30, 2014.

Commercial Secured Borrowings

Commercial secured borrowings represent liabilities recognized in association with cash received from transfers of portions of senior commercial mortgage loans to third parties that did not meet the criteria for sale treatment under ASC 860 and were accounted for as financings. We elect the fair value option for these secured borrowings and they are held at their estimated fair value on our consolidated balance sheets. These amounts do not represent legal obligations of Redwood and we are not required to make interest payments on these borrowings.

Convertible Notes

Convertible notes include unsecured convertible senior notes and are carried at their unpaid principal balance. Interest on the notes is payable semiannually and the notes mature on April 15, 2018. If converted by a holder, upon conversion the holder of the notes would receive shares of our common stock.

Trust Preferred Securities and Subordinated Notes

Trust preferred securities and subordinated notes are carried at their unpaid principal balance. This long-term debt is unsecured and interest is paid quarterly until it is redeemed in whole or matures at a future date.

See Note 14 for further discussion on long-term debt.

Equity

'

Equity

Accumulated Other Comprehensive Income

Net unrealized gains and losses on real estate securities available-for-sale and interest rate agreements designated as cash flow hedges are reported as components of accumulated other comprehensive income on our consolidated statements of changes in equity and our consolidated balance sheets. Net unrealized gains and losses on securities and interest rate agreements held by our taxable subsidiaries that are reported in other comprehensive income are adjusted for the effects of taxation and may create deferred tax assets or liabilities.

Earnings Per Common Share

Basic earnings per common share (“EPS”) is computed by dividing net income allocated to common shareholders by the weighted average common shares outstanding. Net income allocated to common shareholders represents net income less income allocated to participating securities (as described herein). Diluted EPS is computed by dividing income allocated to common shareholders by the weighted average common shares outstanding plus amounts representing the dilutive effect of share-based payment awards. In addition, if the assumed conversion of convertible notes to common shares is dilutive, diluted EPS is adjusted by adding back the periodic interest expense associated with dilutive convertible debt to net income and adding the shares issued in an assumed conversion to the diluted share count.

The two-class method is an earnings allocation formula under which EPS is calculated for common stock and participating securities according to dividends declared and participating rights in undistributed earnings. Under this method, all earnings (distributed and undistributed) are allocated between participating securities and common shares based on their respective rights to receive dividends or dividend equivalents. Accounting guidance on EPS defines vested and unvested share-based payment awards containing nonforfeitable rights to dividends or dividend equivalents as participating securities that are included in computing EPS under the two-class method.

See Note 16 for further discussion on equity.

Incentive Plans

'

Incentive Plans

In May 2014, our shareholders approved the 2014 Redwood Trust, Inc. Incentive Plan (“Incentive Plan”) for executive officers, employees, and non-employee directors, which replaced the 2002 Redwood Trust, Inc. Incentive Plan. The Incentive Plan provides for the grant of restricted stock, deferred stock, deferred stock units, performance-based awards (including performance stock units), dividend equivalents, stock payments, restricted stock units, and other types of awards to eligible participants. Long-term incentive awards granted under the Incentive Plan generally vest over a three- or four-year period. Awards made under the Incentive Plan to officers and other employees in lieu of the payment in cash of a portion of annual bonuses earned generally vest immediately, but are subject to a three-year mandatory holding period. Non-employee directors are also provided annual awards under the Incentive Plan that generally vest immediately. The cost of the awards is amortized over the vesting period on a straight-line basis.

Employee Stock Purchase Plan

In May 2013, our shareholders approved an amendment to our previously amended 2002 Redwood Trust, Inc. Employee Stock Purchase Plan (“ESPP”) to increase the number of shares available under the ESPP. The purpose of the ESPP is to give our employees an opportunity to acquire an equity interest in the Company through the purchase of shares of common stock at a discount. The ESPP allows eligible employees to purchase common stock at 85% of its fair value, subject to certain limits. Fair value as defined under the ESPP is the lesser of the closing market price of the common stock on the first day of the calendar year or the last day of the calendar quarter.

Executive Deferred Compensation Plan

In November 2013, our Board of Directors approved an amendment to our 2002 Executive Deferred Compensation Plan (“EDCP”) to allow non-employee directors to defer certain cash payments and dividends into Deferred Stock Units (“DSUs”). The EDCP allows eligible employees and directors to defer portions of current salary and certain other forms of compensation. The Company matches some deferrals. Compensation deferred under the EDCP is recorded as a liability on our consolidated balance sheets. The EDCP allows for the investment of deferrals in either an interest crediting account or DSUs.

401(k) Plan

We offer a tax-qualified 401(k) Plan to all employees for retirement savings. Under this Plan, employees are allowed to defer and invest up to 100% of their cash earnings, subject to the maximum 401(k) Plan contribution limit set forth by the Internal Revenue Service. We match some employee contributions to encourage participation and to provide a retirement planning benefit to employees. Vesting of the 401(k) Plan matching contributions is based on the employee’s tenure at the Company, and over time an employee becomes increasingly vested in both prior and new matching contributions.

See Note 17 for further discussion on equity compensation plans.

Taxes

'

Taxes

We have elected to be taxed as a REIT under the Internal Revenue Code and the corresponding provisions of state law. To qualify as a REIT we must distribute at least 90% of our annual REIT taxable income to shareholders (not including taxable income retained in our taxable subsidiaries) within the time frame set forth in the tax code and also meet certain other requirements related to assets, income, and stock ownership. We assess our tax positions for all open tax years and record tax benefits only if tax positions meet a more-likely-than-not threshold in accordance with FASB guidance on accounting for uncertainty in income taxes. We classify interest and penalties on material uncertain tax positions as interest expense and operating expense, respectively, in our consolidated statements of income.

See Note 20 for further discussion on taxes.

Recent Accounting Pronouncements

'

Recent Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers.” ASU 2014-09 supersedes the revenue recognition requirements in “Topic 605, Revenue Recognition” and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective retrospectively for annual or interim reporting periods beginning after December 15, 2016, with early application not permitted. We are currently evaluating the new standard.

Balance Sheet Netting

'

Balance Sheet Netting

Certain of our derivatives and short-term debt are subject to master netting arrangements or similar agreements. Under GAAP, in certain circumstances we may elect to present certain financial assets, liabilities and related collateral subject to master netting arrangements in a net position on our consolidated balance sheets. However, we do not report any of these financial assets or liabilities on a net basis, and instead present them on a gross basis on our consolidated balance sheets.

The table below presents financial assets and liabilities that are subject to master netting arrangements or similar agreements categorized by financial instrument, together with corresponding financial instruments and corresponding collateral received or pledged at September 30, 2014 and December 31, 2013.

Offsetting of Financial Assets, Liabilities, and Collateral

Gross

Gross

Net Amounts of

Gross Amounts Not Offset

Amounts of

Amounts

Assets

in Consolidated

Recognized

Offset in

(Liabilities)

Balance Sheet (1)

Assets

Consolidated

Presented in

(Liabilities)

Balance

Consolidated

September 30, 2014

Sheet

Balance Sheet

Financial

Cash

Net Amount

(In Thousands)

Instruments

Collateral

(Received)

Pledged

Assets (2)

Interest rate agreements

$

2,892

$

-

$

2,892

$

(1,033)

$

(1,150)

$

709

Credit default index swaps

2,372

-

2,372

-

(375)

1,997

TBAs

1,496

-

1,496

(1,484)

-

12

Total Assets

$

6,760

$

-

$

6,760

$

(2,517)

$

(1,525)

$

2,718

Liabilities (2)

Interest rate agreements

$

(34,449)

$

-

$

(34,449)

$

1,033

$

33,416

$

-

TBAs

(3,298)

-

(3,298)

1,484

1,267

(547)

Futures

(411)

-

(411)

-

411

-

Loan warehouse debt

(1,241,074)

-

(1,241,074)

1,241,074

-

-

Security repurchase agreements

(646,614)

-

(646,614)

646,614

-

-

Total Liabilities

$

(1,925,846)

$

-

$

(1,925,846)

$

1,890,205

$

35,094

$

(547)

Gross

Gross

Net Amounts of

Gross Amounts Not Offset

Amounts of

Amounts

Assets

in Consolidated

Recognized

Offset in

(Liabilities)

Balance Sheet (1)

Assets

Consolidated

Presented in

(Liabilities)

Balance

Consolidated

December 31, 2013

Sheet

Balance Sheet

Financial

Cash

Net Amount

(In Thousands)

Instruments

Collateral

(Received)

Pledged

Assets (2)

Interest rate agreements

$

6,566

$

-

$

6,566

$

(5,402)

$

-

$

1,164

TBAs

1,138

-

1,138

(656)

(482)

-

Total Assets

$

7,704

$

-

$

7,704

$

(6,058)

$

(482)

$

1,164

Liabilities (2)

Interest rate agreements

$

(16,599)

$

-

$

(16,599)

$

5,402

$

11,197

$

-

TBAs

(661)

-

(661)

656

5

-

Futures

(528)

-

(528)

-

528

-

Loan warehouse debt

(184,789)

-

(184,789)

184,789

-

-

Security repurchase agreements

(677,974)

-

(677,974)

677,974

-

-

Commercial borrowings

(49,467)

-

(49,467)

49,467

-

-

Total Liabilities

$

(930,018)

$

-

$

(930,018)

$

918,288

$

11,730

$

-

-1

Amounts presented in these columns are limited in total to the net amount of assets or liabilities presented in the prior column by instrument. In certain cases, there is excess cash collateral or financial assets we have pledged to a counterparty (which may, in certain circumstances, be a clearinghouse) that exceed the financial liabilities subject to a master netting arrangement or similar agreement. Additionally, in certain cases, counterparties may have pledged excess cash collateral to us that exceeds our corresponding financial assets. In each case, any of these excess amounts are excluded from the table although they are separately reported in our consolidated balance sheets as assets or liabilities, respectively.

-2

Interest rate agreements, TBAs, and futures are components of derivatives instruments on our consolidated balances sheets. Loan warehouse debt, which is secured by residential and commercial mortgage loans, and security repurchase agreements are components of short-term debt on our consolidated balance sheets.

For each category of financial instrument set forth in the table above, the assets and liabilities resulting from individual transactions within that category between us and a counterparty are subject to a master netting arrangement or similar agreement with that counterparty that provides for individual transactions to be treated as a single transaction. For certain categories of these instruments, some of our transactions are cleared and settled through one or more clearinghouses that are substituted as our counterparty and references herein to master netting arrangements or similar agreements include the arrangements and agreements governing the clearing and settlement of these transactions through the clearinghouses. In the event of the termination and close-out of any of those transactions, the corresponding master netting arrangement or similar agreement provides for settlement on a net basis and for settlement to include the proceeds of the liquidation of any corresponding collateral, subject to certain limitations on termination, settlement, and liquidation of collateral that may apply in the event of the bankruptcy or insolvency of a party that should not inhibit the eventual practical realization of the principal benefits of those transactions or the corresponding master netting arrangement or similar agreement and any corresponding collateral.

Summary_of_Significant_Account2

Summary of Significant Accounting Policies (Tables)	9 Months Ended
	Sep. 30, 2014
Offsetting of Financial Assets, Liabilities, and Collateral	'
	The table below presents financial assets and liabilities that are subject to master netting arrangements or similar agreements categorized by financial instrument, together with corresponding financial instruments and corresponding collateral received or pledged at September 30, 2014 and December 31, 2013.
	Offsetting of Financial Assets, Liabilities, and Collateral
			Gross		Gross		Net Amounts of		Gross Amounts Not Offset
			Amounts of		Amounts		Assets		in Consolidated
			Recognized		Offset in		(Liabilities)		Balance Sheet (1)
			Assets		Consolidated		Presented in
			(Liabilities)		Balance		Consolidated
	September 30, 2014				Sheet		Balance Sheet		Financial		Cash		Net Amount
	(In Thousands)								Instruments		Collateral
											(Received)
											Pledged
	Assets (2)
	Interest rate agreements		$	2,892	$	-	$	2,892	$	(1,033)	$	(1,150)	$	709
	Credit default index swaps			2,372		-		2,372		-		(375)		1,997
	TBAs			1,496		-		1,496		(1,484)		-		12
	Total Assets		$	6,760	$	-	$	6,760	$	(2,517)	$	(1,525)	$	2,718
	Liabilities (2)
	Interest rate agreements		$	(34,449)	$	-	$	(34,449)	$	1,033	$	33,416	$	-
	TBAs			(3,298)		-		(3,298)		1,484		1,267		(547)
	Futures			(411)		-		(411)		-		411		-
	Loan warehouse debt			(1,241,074)		-		(1,241,074)		1,241,074		-		-
	Security repurchase agreements			(646,614)		-		(646,614)		646,614		-		-
	Total Liabilities		$	(1,925,846)	$	-	$	(1,925,846)	$	1,890,205	$	35,094	$	(547)
			Gross		Gross		Net Amounts of		Gross Amounts Not Offset
			Amounts of		Amounts		Assets		in Consolidated
			Recognized		Offset in		(Liabilities)		Balance Sheet (1)
			Assets		Consolidated		Presented in
			(Liabilities)		Balance		Consolidated
	December 31, 2013				Sheet		Balance Sheet		Financial		Cash		Net Amount
	(In Thousands)								Instruments		Collateral
											(Received)
											Pledged
	Assets (2)
	Interest rate agreements		$	6,566	$	-	$	6,566	$	(5,402)	$	-	$	1,164
	TBAs			1,138		-		1,138		(656)		(482)		-
	Total Assets		$	7,704	$	-	$	7,704	$	(6,058)	$	(482)	$	1,164
	Liabilities (2)
	Interest rate agreements		$	(16,599)	$	-	$	(16,599)	$	5,402	$	11,197	$	-
	TBAs			(661)		-		(661)		656		5		-
	Futures			(528)		-		(528)		-		528		-
	Loan warehouse debt			(184,789)		-		(184,789)		184,789		-		-
	Security repurchase agreements			(677,974)		-		(677,974)		677,974		-		-
	Commercial borrowings			(49,467)		-		(49,467)		49,467		-		-
	Total Liabilities		$	(930,018)	$	-	$	(930,018)	$	918,288	$	11,730	$	-
	-1	Amounts presented in these columns are limited in total to the net amount of assets or liabilities presented in the prior column by instrument. In certain cases, there is excess cash collateral or financial assets we have pledged to a counterparty (which may, in certain circumstances, be a clearinghouse) that exceed the financial liabilities subject to a master netting arrangement or similar agreement. Additionally, in certain cases, counterparties may have pledged excess cash collateral to us that exceeds our corresponding financial assets. In each case, any of these excess amounts are excluded from the table although they are separately reported in our consolidated balance sheets as assets or liabilities, respectively.
	-2	Interest rate agreements, TBAs, and futures are components of derivatives instruments on our consolidated balances sheets. Loan warehouse debt, which is secured by residential and commercial mortgage loans, and security repurchase agreements are components of short-term debt on our consolidated balance sheets.

Principles_of_Consolidation_Ta

Principles of Consolidation (Tables)	9 Months Ended
	Sep. 30, 2014
Securitization Activity Related to Unconsolidated Variable Interest Entity's Sponsored by Redwood	'
	The following table presents information related to securitization transactions that occurred during the three and nine months ended September 30, 2014 and 2013.
	Securitization Activity Related to Unconsolidated VIEs Sponsored by Redwood
			Three Months Ended September 30,				Nine Months Ended September 30,
	(In Thousands)		2014		2013		2014		2013
	Principal balance of loans transferred		$	635,608	$	1,210,604	$	982,913	$	5,253,314
	Trading securities retained, at fair value			1,680		8,702		71,243		100,552
	AFS securities retained, at fair value			39,330		71,527		59,757		278,622
	MSRs recognized			4,356		12,514		6,542		41,128
Cash Flows Related to Unconsolidated Variable Interest Entity's Sponsored by Redwood	'
	The following table summarizes the cash flows between us and the unconsolidated VIEs sponsored by us during the three and nine months ended September 30, 2014 and 2013.
	Cash Flows Related to Unconsolidated VIEs Sponsored by Redwood
			Three Months Ended September 30,				Nine Months Ended September 30,
	(In Thousands)		2014		2013		2014		2013
	Cash proceeds		$	610,167	$	507,202	$	877,943	$	4,366,556
	MSR fees received			3,571		3,160		10,618		6,235
	Funding of compensating interest			(68)		(152)		(144)		(415)
	Cash flows received on retained securities			16,190		15,656		44,417		30,606
MSR Assumptions Related to Unconsolidated Variable Interest Entity's Sponsored by Redwood	'
	The following table presents the key weighted-average assumptions to measure MSRs at the date of securitization.
	MSR Assumptions Related to Unconsolidated VIEs Sponsored by Redwood
			Issued During
			Three Months Ended September 30,				Nine Months Ended September 30,
	At Date of Securitization		2014		2013		2014		2013
	Prepayment speeds			5 - 16      %		5 - 8  %		5 - 16      %		5 - 13  %
	Discount rates			11      %		12  %		11      %		12  %
Unconsolidated Variable Interest Entity's Sponsored by Redwood Summary	'
	The following table presents additional information at September 30, 2014 and December 31, 2013, related to unconsolidated securitizations accounted for as sales since 2012.
	Unconsolidated VIEs Sponsored by Redwood
	(In Thousands)		September 30, 2014		December 31, 2013
	On-balance sheet assets, at fair value:
	Interest-only and senior securities, classified as trading		$	100,613	$	110,505
	Senior and subordinate securities, classified as AFS			441,835		405,415
	Maximum loss exposure (1)			542,448		515,920
	Assets transferred:
	Principal balance of loans outstanding			7,173,303		6,627,874
	Principal balance of delinquent loans 30+ days delinquent			16,482		14,587
	-1	Maximum loss exposure from our involvement with unconsolidated VIEs pertains to the carrying value of our securities retained from these VIEs and represents estimated losses that would be incurred under severe, hypothetical circumstances, such as if the value of our interests and any associated collateral declines to zero. This does not include, for example, any potential exposure to representation and warranty claims associated with our initial transfer of loans into a securitization.
Key Assumptions and Sensitivity Analysis for Assets Retained from Unconsolidated Variable Interest Entity's Sponsored by Redwood	'
	The following table presents key economic assumptions for assets retained from unconsolidated VIEs and the sensitivity of their fair values to immediate adverse changes in those assumptions at September 30, 2014 and December 31, 2013.
	Key Assumptions and Sensitivity Analysis for Assets Retained from Unconsolidated VIEs Sponsored by Redwood
	September 30, 2014		MSRs		Senior Securities		Subordinate
	(Dollars in Thousands)						Securities
	Fair value at June 30, 2014		$	59,890	$	100,613	$	441,835
	Expected life (in years) (1)			7		6		10
	Prepayment speed assumption (annual CPR) (1)			12   %		9   %		10   %
	Decrease in fair value from:
	10% adverse change		$	2,454	$	4,552	$	404
	25% adverse change			5,589		10,470		2,058
	Discount rate assumption (1)			11   %		7   %		9   %
	Decrease in fair value from:
	100 basis point increase		$	2,381	$	4,444	$	33,310
	200 basis point increase			4,568		8,528		62,862
	Credit loss assumption (1)			N/A		0.25   %		0.25   %
	Decrease in fair value from:
	10% higher losses			N/A	$	144	$	3,132
	25% higher losses			N/A		349		7,779
	December 31, 2013		MSRs		Senior Securities		Subordinate
	(Dollars in Thousands)						Securities
	Fair value at December 31, 2013		$	60,318	$	110,505	$	405,415
	Expected life (in years) (1)			8		7		11
	Prepayment speed assumption (annual CPR) (1)			8   %		10   %		11   %
	Decrease in fair value from:
	10% adverse change		$	1,649	$	5,773	$	1,658
	25% adverse change			4,218		13,555		4,354
	Discount rate assumption (1)			11   %		5   %		6   %
	Decrease in fair value from:
	100 basis point increase		$	2,468	$	5,632	$	30,644
	200 basis point increase			4,828		10,757		57,836
	Credit loss assumption (1)			N/A		0.23   %		0.23   %
	Decrease in fair value from:
	10% higher losses			N/A	$	70	$	1,369
	25% higher losses			N/A		175		3,420
	-1	Expected life, prepayment speed assumption, discount rate assumption, and credit loss assumption presented in the tables above represent weighted averages.
Loan Transfers Accounted for as Secured Borrowings	'
	The following table presents a summary of our interests in third-party VIEs at September 30, 2014, grouped by collateral type.
	Third-Party Sponsored VIE Summary
	(In Thousands)		September 30, 2014
	Residential real estate securities at Redwood
	Senior		$	552,793
	Re-REMIC			176,117
	Subordinate			123,626
	Total Investments in Third-Party Real Estate Securities		$	852,536
Variable Interest Entity, Primary Beneficiary	'
Schedule of Variable Interest Entities	'
	The following table presents a summary of the assets and liabilities of these VIEs. Intercompany balances have been eliminated for purposes of this presentation.
	Assets and Liabilities of Consolidated VIEs at September 30, 2014
	September 30, 2014		Sequoia		Residential		Commercial		Total
	(Dollars in Thousands)		Entities		Resecuritization		Securitization
	Residential loans, held-for-investment		$	1,546,507	$	-	$	-	$	1,546,507
	Commercial loans, held-for-investment			-		-		204,741		204,741
	Real estate securities, at fair value			-		233,311		-		233,311
	Restricted cash			147		-		138		285
	Accrued interest receivable			1,882		506		1,527		3,915
	Other assets			3,349		-		21,699		25,048
	Total Assets		$	1,551,885	$	233,817	$	228,105	$	2,013,807
	Accrued interest payable		$	1,034	$	7	$	539	$	1,580
	Asset-backed securities issued			1,484,751		56,508		114,943		1,656,202
	Total Liabilities		$	1,485,785	$	56,515	$	115,482	$	1,657,782
	Number of VIEs			24		1		1		26
Variable Interest Entity, Not Primary Beneficiary	'
Schedule of Variable Interest Entities	'
	The following table presents commercial loan transfers accounted for as secured borrowings for the three and nine months ended September 30, 2014.
	Loan Transfers Accounted for as Secured Borrowings
	(In Thousands)		Three Months Ended		Nine Months Ended
			September 30, 2014		September 30, 2014
	Principal balance		$	-	$	63,375
	Cash proceeds			-		65,048

Fair_Value_of_Financial_Instru1

Fair Value of Financial Instruments (Tables)	9 Months Ended
	Sep. 30, 2014
Carrying Values and Estimated Fair Values of Assets and Liabilities	'
	The following table presents the carrying values and estimated fair values of assets and liabilities that are required to be recorded or disclosed at fair value at September 30, 2014 and December 31, 2013.
			September 30, 2014						December 31, 2013
	(In Thousands)		Carrying		Fair				Carrying				Fair
			Value		Value				Value				Value
	Assets
	Residential loans, held-for-sale
	At fair value		$	1,501,252	$	1,501,252			$	402,602			$	402,602
	At lower of cost or fair value			1,502		1,662				1,665				1,817
	Residential loans, held-for-investment, at fair value			238,326		238,326				-				-
	Residential loans, held-for-investment			1,546,507		1,447,463				1,762,167				1,610,024
	Commercial loans, held-for-sale			175,421		175,421				89,111				89,111
	Commercial loans, held-for-investment
	At fair value			70,712		70,712				-				-
	At amortized cost			322,576		328,076				343,344				348,305
	Trading securities			108,750		108,750				124,555				124,555
	Available-for-sale securities			1,286,235		1,286,235				1,558,306				1,558,306
	MSRs			135,152		135,152				64,824				64,824
	Cash and cash equivalents			149,617		149,617				173,201				173,201
	Restricted cash			455		455				398				398
	Accrued interest receivable			15,261		15,261				13,475				13,475
	Derivative assets			7,756		7,756				7,787				7,787
	REO (1)			3,349		3,407				3,661				4,084
	Margin receivable (1)			56,217		56,217				31,149				31,149
	Other collateral posted (1)			5,000		5,000				5,000				5,000
	Liabilities
	Short-term debt		$	1,887,688	$	1,887,688			$	862,763			$	862,763
	Accrued interest payable			10,480		10,480				6,366				6,366
	Derivative liabilities			38,263		38,263				18,167				18,167
	ABS issued			1,656,202		1,548,795				1,942,962				1,746,906
	FHLBC Borrowings			203,756		203,756				-				-
	Commercial long-term debt			-		-				49,467				49,467
	Commercial secured borrowings			66,146		66,146				-				-
	Convertible notes			287,500		285,344				287,500				299,719
	Other long-term debt			139,500		101,835				139,500				111,600
	-1	These assets are included in Other Assets on our consolidated balance sheets.
Assets and Liabilities Measured at Fair Value on Recurring Basis	'
	The following table presents the assets and liabilities that are reported at fair value on our consolidated balance sheets on a recurring basis at September 30, 2014, as well as the fair value hierarchy of the valuation inputs used to measure fair value.
	Assets and Liabilities Measured at Fair Value on a Recurring Basis at September 30, 2014
	September 30, 2014		Carrying		Fair Value Measurements Using
	(In Thousands)		Value		Level 1				Level 2				Level 3
	Assets
	Residential loans, at fair value		$	1,739,578	$	-			$	399,145			$	1,340,433
	Commercial loans, at fair value			175,421		-				-				175,421
	Trading securities			108,750		-				-				108,750
	Available-for-sale securities			1,286,235		-				-				1,286,235
	MSRs			135,152		-				-				135,152
	Derivative assets			7,756		1,496				5,327				933
	Liabilities
	Derivative liabilities			38,263		3,709				34,472				82
	Commercial secured borrowings			66,146		-				-				66,146
Changes in Level 3 Assets and Liabilities Measured at Fair Value on Recurring Basis	'
	The following table presents additional information about Level 3 assets and liabilities measured at fair value on a recurring basis for the nine months ended September 30, 2014.
	Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis
			Assets																Liabilities
	(In Thousands)		Residential		Commercial				Trading				AFS		MSRs		Derivatives (1)		Commercial
			Loans		Loans				Securities				Securities						Secured
																			Borrowings
	Beginning balance - December 31, 2013		$	391,100	$	89,111			$	124,555			$	1,558,306	$	64,824	$	(379)	$	-
	Principal paydowns			(20,728)		(3,684)				(5,848)				(138,751)		-		-		(1,081)
	Discount accretion			-		-				-				32,774		-		-		-
	Gains (losses) in net income, net			35,971		14,986				(15,041)				9,389		(5,944)		6,434		2,179
	Unrealized gains in OCI, net			-		-				-				28,328		-		-		-
	Acquisitions			3,557,753		611,624				66,253				192,151		76,272		-		65,048
	Sales			(2,621,349)		(536,671)				(61,169)				(395,962)		-		-		-
	Other settlements, net			(2,314)		55				-				-		-		(5,204)		-
	Ending balance - September 30, 2014		$	1,340,433	$	175,421			$	108,750			$	1,286,235	$	135,152	$	851	$	66,146
	(1) For the purpose of this presentation, derivative assets and liabilities, which consist of loan purchase commitments, are presented net.
Portion of Net Gains (Losses) Attributable to Level 3 Assets and Liabilities Still Held and Included in Net Income	'
	The following table presents the portion of gains or losses included in our consolidated statements of income that were attributable to Level 3 assets and liabilities recorded at fair value on a recurring basis and held at September 30, 2014 and 2013. Gains or losses incurred on assets or liabilities sold, matured, called, or fully written down during the three and nine months ended September 30, 2014 and 2013 are not included in this presentation.
	Portion of Net Gains (Losses) Attributable to Level 3 Assets and Liabilities Still Held at September 30, 2014 and 2013 Included in Net Income
			Included in Net Income
			Three Months Ended September 30,						Nine Months Ended September 30,
	(In Thousands)		2014		2013				2014				2013
	Assets
	Residential loans, at fair value		$	7,280	$	(1,864)			$	8,524			$	(3,088)
	Commercial loans, at fair value			2,009		831				2,009				831
	Trading securities			(1,882)		(1,525)				(16,033)				28,491
	Available-for-sale securities			(188)		-				(434)				940
	MSRs			3,509		1,344				(3,184)				12,561
	Liabilities
	Loan purchase commitments			932		-				932				-
	Commercial secured borrowing			(420)		-				1,339				-
Assets and Liabilities Measured at Fair Value on Non-Recurring Basis	'
	The following table presents information on assets recorded at fair value on a non-recurring basis at September 30, 2014. This table does not include the carrying value and gains or losses associated with the asset types below that were not recorded at fair value on our balance sheet at September 30, 2014.
	Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis at September 30, 2014
															Gain (Loss) for
	September 30, 2014		Carrying		Fair Value Measurements Using										Three Months Ended		Nine Months Ended
	(In Thousands)		Value		Level 1				Level 2				Level 3		September 30, 2014		September 30, 2014
	Assets
	Residential loans, at lower of cost or fair value		$	1,106	$	-			$	-			$	1,106	$	1	$	(1)
	REO			1,944		-				-				1,994		0		(133)
Market Valuation Adjustments, Net	'
	The following table presents the components of market valuation adjustments, net, recorded in our consolidated statements of income for the three and nine months ended September 30, 2014 and 2013.
	Market Valuation Adjustments, Net
			Three Months Ended September 30,						Nine Months Ended September 30,
	(In Thousands)		2014		2013				2014				2013
	Mortgage banking activities
	Residential loans, at fair value		$	13,446	$	(10,804)			$	34,554			$	(17,339)
	Commercial loans, at fair value			4,305		3,171				13,644				2,826
	Trading securities			(1,332)		(1,866)				(14,419)				36,399
	Derivative instruments, net			(2,404)		442				(18,159)				51,009
	Loan purchase and forward sale commitments			2,487		-				6,077				-
	Total mortgage banking activites (1)			16,502		(9,057)				21,697				72,895
	MSRs			2,321		460				(5,944)				9,628
	Other
	Residential loans, at lower of cost or fair value			43		(11)				54				68
	Held-for-investment loans at fair value			(991)		-				(991)				-
	Trading securities			(577)		540				(653)				(4,168)
	Impairments on AFS securities			(188)		-				(565)				(1,666)
	REO			(361)		(76)				(825)				(407)
	Other derivative instruments, net			(1,632)		9				(10,986)				74
	Total other			(3,706)		462				(13,966)				(6,099)
	Total Market Valuation Adjustments, Net		$	15,117	$	(8,135)			$	1,787			$	76,425
	-1	Income from mortgage banking activities presented above does not include fee income or provisions for repurchases that is a component of mortgage banking income presented on our consolidated statements of income as these amounts do not represent a market valuation adjustment.
Quantitative Information about Significant Unobservable Inputs Used in Valuation of Level 3 Assets and Liabilities Measured at Fair Value	'
	The following table provides quantitative information about the significant unobservable inputs used in the valuation of our Level 3 assets and liabilities measured at fair value.
	Fair Value Methodology for Level 3 Financial Instruments
	September 30, 2014		Fair		Unobservable Input		Range				Weighted
	(Dollars in Thousands)		Value								Average
	Assets
	Residential loans, at fair value:
	Loans priced to securitization or priced to whole loan market and uncommitted to sell		$	758,501	Discount rate			4 - 5    %				4    %
					Prepayment rate			8 - 8    %				8    %
					Default rate			1 - 1    %				1    %
					Loss severity			20 - 20    %				20    %
					Credit support			8 - 8    %				8    %
					Spread to securitization			38 - 38    bps				38    bps
					Credit spread			118 - 173    bps				129    bps
	Loans priced to whole loan market, committed to sell			581,932	Pool fallout assumption			10 bps - 10 bps				10    bps
	Residential loans, at lower of cost or fair value			1,106	Loss severity			15-28    %				21    %
	Commercial loans, at fair value			175,421	Credit spread			152 bps - 152 bps				152    bps
					Credit support			24 - 24    %				24    %
	Trading and AFS securities			1,394,985	Discount rate			4 - 12    %				6    %
					Prepayment speed			1 - 35    %				12    %
					Default rate			0 - 35    %				8    %
					Loss severity			20 - 64    %				35    %
					Credit support			0 - 88    %				6    %
	MSRs			135,152	Discount rate			8 - 11    %				10    %
					Prepayment rate			4 - 60    %				10    %
	REO			1,994	Loss severity			13 - 96    %				34    %
	Loan purchase commitments, net (1)			851	MSR Multiple			1 - 5x				4x
					Pullthrough rate			58 - 99    %				82    %
	Liabilities
	Commercial secured financing			66,146	Credit spread			152 bps - 152 bps				152    bps
					Credit support			24 - 24    %				24    %
	(1) For the purpose of this presentation loan purchase commitment assets and liabilities are presented net.

Loans_Tables

Loans (Tables)	9 Months Ended
	Sep. 30, 2014
Residential Loans	'
Summary of Classifications and Carrying Value of Loans	'
	The following table summarizes the classifications and carrying value of the residential loans owned at Redwood and at consolidated Sequoia Entities at September 30, 2014 and December 31, 2013.
	September 30, 2014	Redwood		Sequoia		Total
	(In Thousands)
	Held-for-sale
	Fair value - Conforming	$	399,145	$	-	$	399,145
	Fair value - Jumbo		1,101,782		-		1,101,782
	Lower of cost or fair value		1,502		-		1,502
	Held-for-investment
	Fair value - Jumbo		238,651		-		238,651
	At amortized cost		-		1,546,507		1,546,507
	Total Residential Loans	$	1,741,080	$	1,546,507	$	3,287,587
	December 31, 2013	Redwood		Sequoia		Total
	(In Thousands)
	Held-for-sale
	Fair value - Conforming	$	11,502	$	-	$	11,502
	Fair value - Jumbo		391,100		-		391,100
	Lower of cost or fair value		1,665		-		1,665
	Held-for-investment, at amortized cost		-		1,762,167		1,762,167
	Total Residential Loans	$	404,267	$	1,762,167	$	2,166,434
Carrying Value for Loans Held-for-Investment	'
	The following table details the carrying value for residential loans held-for-investment at amortized cost at September 30, 2014 and December 31, 2013. These loans are owned at Sequoia securitization entities that we consolidate for financial reporting purposes.
	(In Thousands)	September 30, 2014		December 31, 2013
	Principal balance	$	1,554,876	$	1,770,803
	Unamortized premium, net		13,540		16,791
	Recorded investment		1,568,416		1,787,594
	Allowance for loan losses		(21,909)		(25,427)
	Carrying Value	$	1,546,507	$	1,762,167
Recorded Investment in Residential Loans Held-For-Investment Organized by Year of Origination	'
	The following table displays our recorded investment in residential loans held-for-investment at September 30, 2014 and December 31, 2013, organized by year of origination.
	(In Thousands)	September 30, 2014		December 31, 2013
	2003 & Earlier	$	758,768	$	881,364
	2004		459,050		513,458
	2005		59,946		62,675
	2006		138,263		149,776
	2007		-		-
	2008		-		-
	2009		19,273		25,860
	2010		80,209		92,728
	2011		52,907		61,733
	Total Recorded Investment	$	1,568,416	$	1,787,594
Summary of Activity in Allowance for Loans Losses	'
	The following table summarizes the activity in the allowance for loan losses for the three and nine months ended September 30, 2014 and 2013.
		Three Months Ended September 30,				Nine Months Ended September 30,
	(In Thousands)	2014		2013		2014		2013
	Balance at beginning of period	$	23,972	$	23,150	$	25,427	$	28,504
	Charge-offs, net		(1,355)		(818)		(2,833)		(3,363)
	(Reversal of provision) provision for loan losses		(708)		883		(685)		(1,926)
	Balance at End of Period	$	21,909	$	23,215	$	21,909	$	23,215
Loan Modifications Determined to be Troubled Debt Restructuring	'
	The following table presents the details of the loan modifications determined to be TDRs for the three and nine months ended September 30, 2014 and 2013.
		Three Months Ended September 30,				Nine Months Ended September 30,
	(Dollars in Thousands)	2014		2013		2014		2013
	TDRs
	Number of modifications		8		5		22		12
	Pre-modification outstanding recorded investment	$	2,041	$	1,144	$	7,008	$	2,939
	Post-modification outstanding recorded investment		2,081		898		7,245		2,838
	Loan modification effect on net interest income		(494)		(555)		(1,714)		(863)
	after provision and other MVA
	TDRs that Subsequently Defaulted
	Number of modifications		3		1		9		4
	Recorded investment	$	672	$	201	$	3,165	$	788
Commercial Loans	'
Summary of Classifications and Carrying Value of Loans	'
	The following table summarizes the classifications and carrying value of commercial loans at September 30, 2014 and December 31, 2013.
	(In Thousands)	September 30, 2014		December 31, 2013
	Held-for-sale, at fair value	$	104,709	$	89,111
	Held-for-investment
	At fair value		70,712		-
	At amortized cost		322,576		343,344
	Total Commercial Loans	$	497,997	$	432,455
Carrying Value for Loans Held-for-Investment	'
	The following table provides additional information for our commercial loans held-for-investment at amortized cost at September 30, 2014 and December 31, 2013.
	(In Thousands)	September 30, 2014		December 31, 2013
	Principal balance	$	332,258	$	353,331
	Unamortized discount, net		(2,253)		(2,614)
	Recorded investment		330,005		350,717
	Allowance for loan losses		(7,429)		(7,373)
	Carrying Value	$	322,576	$	343,344
Summary of Activity in Allowance for Loans Losses	'
	The following table summarizes the activity in the allowance for commercial loan losses for the three and nine months ended September 30, 2014 and 2013.
		Three Months Ended September 30,				Nine Months Ended September 30,
	(In Thousands)	2014		2013		2014		2013
	Balance at beginning of period	$	8,317	$	5,660	$	7,373	$	4,084
	Charge-offs, net		-		-		-		-
	Reversal of provision (provision) for loan losses		(888)		844		56		2,420
	Balance at End of Period	$	7,429	$	6,504	$	7,429	$	6,504
Commercial Loans Held For Investment	'
Commercial Loans Held-for-Investment by Risk Category	'
	The following table presents the principal balance of commercial loans held-for-investment by risk category.
	(In Thousands)	September 30, 2014		December 31, 2013
	Pass	$	306,575	$	309,792
	Watch list		25,683		43,539
	Total Commercial Loans Held-for-Investment	$	332,258	$	353,331
Collectively Evaluated for Impairment | Residential Loans	'
Loans Evaluated for Impairment	'
	The following table summarizes the balances for loans collectively evaluated for impairment at September 30, 2014 and December 31, 2013.
	(In Thousands)	September 30, 2014		December 31, 2013
	Principal balance	$	1,539,330	$	1,762,165
	Recorded investment		1,553,147		1,779,161
	Related allowance		20,580		24,762
Recorded Investment and Past Due Status of Loans	'
	The following table summarizes the recorded investment and past due status of residential loans collectively evaluated for impairment at September 30, 2014 and December 31, 2013.
	(In Thousands)	30-59 Days		60-89 Days		90+ Days		Current		Total Loans
		Past Due		Past Due		Past Due
	September 30, 2014	$	25,885	$	10,046	$	73,355	$	1,443,861	$	1,553,147
	December 31, 2013		34,187		13,248		79,010		1,652,716		1,779,161
Collectively Evaluated for Impairment | Commercial Loans	'
Loans Evaluated for Impairment	'
	The following table summarizes the balances for loans collectively evaluated for impairment at September 30, 2014 and December 31, 2013.
	(In Thousands)	September 30, 2014		December 31, 2013
	Principal balance	$	332,258	$	353,331
	Recorded investment		330,005		350,717
	Related allowance		7,429		7,373
Individually Evaluated for Impairment | Residential Loans	'
Recorded Investment and Past Due Status of Loans	'
	The following table summarizes the recorded investment and past due status of residential loans individually evaluated for impairment at September 30, 2014 and December 31, 2013.
	(In Thousands)	30-59 Days		60-89 Days		90+ Days		Current		Total Loans
		Past Due		Past Due		Past Due
	September 30, 2014	$	1,842	$	1,538	$	544	$	11,345	$	15,269
	December 31, 2013		1,560		-		567		6,306		8,433
Loans Evaluated for Impairment	'
	The following table summarizes the balances for loans individually evaluated for impairment, all of which had an allowance, at September 30, 2014 and December 31, 2013.
	(In Thousands)	September 30, 2014		December 31, 2013
	Principal balance	$	15,546	$	8,638
	Recorded investment		15,269		8,433
	Related allowance		1,329		665

Real_Estate_Securities_Tables

Real Estate Securities (Tables)	9 Months Ended
	Sep. 30, 2014
Fair Values of Real Estate Securities	'
	The following table presents the fair values of our real estate securities by type at September 30, 2014 and December 31, 2013.
	(In Thousands)	September 30, 2014			December 31, 2013
	Trading	$	108,750		$	124,555
	Available-for-sale		1,286,235			1,558,306
	Total Real Estate Securities	$	1,394,985		$	1,682,861
Trading Securities by Collateral Type	'
	The following table presents trading securities by collateral type at September 30, 2014 and December 31, 2013.
	(In Thousands)	September 30, 2014			December 31, 2013
	Senior Securities
	Prime	$	100,612		$	110,505
	Non-prime		7,758			9,070
	Total Senior Securities		108,370			119,575
	Subordinate Securities
	Prime		380			4,980
	Total Subordinate Securities		380			4,980
	Total Trading Securities	$	108,750		$	124,555
Available for Sale Securities by Collateral Type	'
	The following table presents the fair value of our available-for-sale securities held at Redwood by collateral type at September 30, 2014 and December 31, 2013.
	(In Thousands)	September 30, 2014			December 31, 2013
	Senior Securities
	Prime	$	358,813		$	662,306
	Non-prime		186,223			193,386
	Total Senior Securities		545,036			855,692
	Re-REMIC Securities		176,117			176,376
	Subordinate Securities
	Prime		564,932			526,095
	Non-prime		150			143
	Total Subordinate Securities		565,082			526,238
	Total AFS Securities	$	1,286,235		$	1,558,306
Components of Carrying Value (Which Equals Fair Value) of Residential Available for Sale Securities	'
	The following table presents the components of carrying value (which equals fair value) of residential AFS securities at September 30, 2014 and December 31, 2013.
	Carrying Value of Residential AFS Securities
	September 30, 2014	Senior
	(In Thousands)	Prime			Non-prime		Re-REMIC		Subordinate		Total
	Principal balance	$	362,902		$	202,812	$	206,212	$	694,308	$	1,466,234
	Credit reserve		(4,082)			(9,894)		(16,553)		(43,346)		(73,875)
	Unamortized discount, net		(41,314)			(33,676)		(80,986)		(143,129)		(299,105)
	Amortized cost		317,506			159,242		108,673		507,833		1,093,254
	Gross unrealized gains		42,113			27,004		67,444		59,427		195,988
	Gross unrealized losses		(805)			(24)		-		(2,178)		(3,007)
	Carrying Value	$	358,814		$	186,222	$	176,117	$	565,082	$	1,286,235
	December 31, 2013	Senior
	(In Thousands)	Prime			Non-prime		Re-REMIC		Subordinate		Total
	Principal balance	$	670,051		$	218,603	$	214,046	$	706,292	$	1,808,992
	Credit reserve		(10,144)			(13,840)		(30,429)		(62,457)		(116,870)
	Unamortized discount, net		(44,133)			(36,882)		(80,188)		(137,266)		(298,469)
	Amortized cost		615,774			167,881		103,429		506,569		1,393,653
	Gross unrealized gains		47,980			25,654		72,947		41,205		187,786
	Gross unrealized losses		(1,448)			(149)		-		(21,536)		(23,133)
	Carrying Value	$	662,306		$	193,386	$	176,376	$	526,238	$	1,558,306
Changes of Unamortized Discount and Designated Credit Reserves on Residential Available for Sale Securities	'
	The following table presents the changes for the three and nine months ended September 30, 2014, in unamortized discount and designated credit reserves on residential AFS securities.
	Changes in Unamortized Discount and Designated Credit Reserves on Residential AFS Securities
		Three Months Ended September 30, 2014
		Credit			Unamortized
	(In Thousands)	Reserve			Discount, Net
	Beginning balance	$	83,276		$	304,293
	Amortization of net discount		-			(10,890)
	Realized credit losses		(1,692)			-
	Acquisitions		1,589			4,404
	Sales, calls, other		(1,013)			(7,175)
	Impairments		188			-
	Transfers to (release of) credit reserves, net		(8,473)			8,473
	Ending Balance	$	73,875		$	299,105
		Nine Months Ended September 30, 2014
		Credit			Unamortized
	(In Thousands)	Reserve			Discount, Net
	Beginning balance	$	116,870		$	298,469
	Amortization of net discount		-			(32,774)
	Realized credit losses		(9,002)			-
	Acquisitions		1,846			7,241
	Sales, calls, other		(2,425)			(7,810)
	Impairments		565			-
	Transfers to (release of) credit reserves, net		(33,979)			33,979
	Ending Balance	$	73,875		$	299,105
Components of Carrying Value of Available for Sale Securities in Unrealized Loss Position	'
	The following table presents the components comprising the total carrying value of residential AFS securities that were in a gross unrealized loss position at September 30, 2014 and December 31, 2013.
		Less Than 12 Consecutive Months							12 Consecutive Months or Longer
		Amortized			Unrealized		Fair		Amortized		Unrealized		Fair
	(In Thousands)	Cost			Losses		Value		Cost		Losses		Value
	30-Sep-14	$	104,118		$	(1,097)	$	103,021	$	75,582	$	(1,910)	$	73,672
	31-Dec-13		607,030			(21,195)		585,835		19,828		(1,938)		17,890
Summary of Significant Valuation Assumptions for Available for Sale Securities	'
	The table below summarizes the significant valuation assumptions we used for our OTTI AFS securities at September 30, 2014.
	Significant Valuation Assumptions
		Range for Securities
	September 30, 2014	Prime Securities			Non-prime
	Prepayment rates		15 - 20	%		10 - 10  %
	Loss severity		20 - 52	%		35 - 35  %
	Projected default rate		1 - 22	%		15 - 15  %
Activity of Credit Component of Other-than-Temporary Impairments	'
	The following table details the activity related to the credit loss component of OTTI (i.e., OTTI recognized through earnings) for AFS securities held at September 30, 2014 and 2013, for which a portion of an OTTI was recognized in other comprehensive income.
	Activity of the Credit Component of Other-than-Temporary Impairments
		Three Months Ended September 30,					Nine Months Ended September 30,
	(In Thousands)	2014			2013		2014		2013
	Balance at beginning of period	$	34,256		$	42,674	$	37,149	$	50,852
	Additions
	Initial credit impairments		-			-		261		-
	Subsequent credit impairments		-			-		70		-
	Reductions
	Securities sold, or expected to sell		(18)			(3,288)		(922)		(5,479)
	Securities with no outstanding principal at period end		-			(764)		(2,320)		(6,751)
	Balance at End of Period	$	34,238		$	38,622	$	34,238	$	38,622
Gross Realized Gains and Losses on Sales and Calls of Available for Sale Securities	'
	The following table presents the gross realized gains and losses on sales and calls of AFS securities for the three and nine months ended September 30, 2014 and 2013.
		Three Months Ended September 30,					Nine Months Ended September 30,
	(In Thousands)	2014			2013		2014		2013
	Gross realized gains - sales	$	10,227		$	10,532	$	11,219	$	22,762
	Gross realized gains - calls		462			-		1,449		333
	Gross realized losses - sales		(2,713)			(214)		(2,713)		(214)
	Gross realized losses - calls		-			-		-		-
	Total Realized Gains on Sales and Calls	$	7,976		$	10,318	$	9,955	$	22,881
	of AFS Securities, net

Mortgage_Servicing_Rights_Tabl

Mortgage Servicing Rights (Tables)	9 Months Ended
	Sep. 30, 2014
Schedule of Fair Value of MSRs and Aggregate Principal Amounts of Associated Loans	'
	The following table presents the fair value of MSRs and the aggregate principal amounts of associated loans as of September 30, 2014 and December 31, 2013.
			September 30, 2014				December 31, 2013
					Associated				Associated
	(In Thousands)		MSR Fair Value		Principal		MSR Fair Value		Principal
	Mortgage Servicing Rights
	Conforming Loans		$	73,953	$	6,254,058	$	3,331	$	308,258
	Jumbo Loans			61,199		5,962,758		61,493		5,483,500
	Total Mortgage Servicing Rights		$	135,152	$	12,216,816	$	64,824	$	5,791,758
Activity for Residential First-Lien Mortgage Servicing Rights	'
	The following table presents activity for MSRs for the three and nine months ended September 30, 2014 and 2013.
	MSR Activity
			Three Months Ended September 30,				Nine Months Ended September 30,
	(In Thousands)		2014		2013		2014		2013
	Balance at beginning of period		$	71,225	$	43,098	$	64,824	$	5,315
	Additions			61,606		16,676		76,272		45,291
	Changes in fair value due to:
	Changes in assumptions (1)			4,323		1,444		(318)		11,764
	Other changes (2)			(2,002)		(984)		(5,626)		(2,136)
	Balance at End of Period		$	135,152	$	60,234	$	135,152	$	60,234
	-1	Primarily reflects changes in prepayment assumptions due to changes in market interest rates.
	-2	Represents changes due to realization of expected cash flows.
Details of Retention and Purchase of MSRs	'
	The following table details the retention and purchase of MSRs during the three and nine months ended September 30, 2014.
	MSR Additions
			Three Months Ended				Nine Months Ended
	(In Thousands)		September 30, 2014				September 30, 2014
					Associated				Associated
			MSR Fair Value		Principal		MSR Fair Value		Principal
	Jumbo MSR additions:
	From securitization		$	4,356	$	516,004	$	6,542	$	773,205
	From loan sales			-		-		488		58,793
	Total jumbo MSR additions			4,356		516,004		7,030		831,998
	Conforming MSR additions:
	From loan sales		$	14,630	$	1,352,122	$	23,933	$	2,232,559
	From purchases			42,620		3,497,224		45,309		3,770,566
	Total conforming MSR additions			57,250		4,849,346		69,242		6,003,125
	Total MSR additions		$	61,606	$	5,365,350	$	76,272	$	6,835,123
Components of Mortgage Servicing Rights Income	'
	The following table presents the components of our MSR income.
			Three Months Ended September 30,				Nine Months Ended September 30,
	(In Thousands)		2014		2013		2014		2013
	Servicing income, net:
	Income		$	4,590	$	3,008	$	12,287	$	5,820
	Cost of sub-servicer			(437)		(355)		(1,040)		(767)
	Net servicing income			4,153		2,653		11,247		5,053
	Market valuation adjustments			2,321		460		(5,944)		9,628
	MSR provision for repurchases			(653)		-		(653)		-
	Income from MSRs, Net		$	5,821	$	3,113	$	4,650	$	14,681

Derivative_Financial_Instrumen1

Derivative Financial Instruments (Tables)	9 Months Ended
	Sep. 30, 2014
Aggregate Fair Value and Notional Amount of Derivative Financial Instruments	'
	The following table presents the fair value and notional amount of derivative financial instruments held by us at September 30, 2014 and December 31, 2013.
		September 30, 2014				December 31, 2013
		Fair		Notional		Fair		Notional
	(In Thousands)	Value		Amount		Value		Amount
	Assets - Risk Management Derivatives
	Interest rate swaps	$	148	$	60,500	$	5,972	$	268,000
	TBAs		1,496		671,000		1,138		241,000
	Swaptions		2,744		420,000		596		340,000
	Credit default index swaps		2,372		75,000		-		-
	Assets - Other Derivatives
	Loan purchase commitments		933		273,781		-		360
	Loan forward sale commitments		63		128,232		81		10,000
	Total Assets	$	7,756	$	1,628,513	$	7,787	$	859,360
	Liabilities - Cash Flow Hedges
	Interest rate swaps	$	(33,973)	$	139,500	$	(16,519)	$	139,500
	Liabilities - Risk Management Derivatives
	Interest rate swaps		(476)		154,500		(80)		50,500
	TBAs		(3,298)		1,274,500		(661)		235,000
	Futures		(411)		108,000		(528)		162,000
	Liabilities - Other Derivatives
	Loan purchase commitments		(82)		50,439		(379)		42,562
	Loan forward sale commitments		(23)		200,000		-		-
	Total Liabilities	$	(38,263)	$	1,926,939	$	(18,167)	$	629,562
	Total Derivative Financial Instruments, Net	$	(30,507)	$	3,555,452	$	(10,380)	$	1,488,922
Impact on Interest Expense of Interest Rate Agreements Accounted for as Cash Flow Hedges	'
	The following table illustrates the impact on interest expense of our interest rate agreements accounted for as cash flow hedges for the three and nine months ended September 30, 2014 and 2013.
	Impact on Interest Expense of Our Interest Rate Agreements Accounted for as Cash Flow Hedges
		Three Months Ended September 30,				Nine Months Ended September 30,
	(In Thousands)	2014		2013		2014		2013
	Net interest expense on cash flow interest rate	$	(1,487)	$	(1,474)	$	(4,465)	$	(4,406)
	agreements
	Realized income (expense) due to ineffective		-		-		-		-
	portion of hedges
	Realized net losses reclassified from other		(32)		(62)		(131)		(219)
	comprehensive income
	Total Interest Expense	$	(1,519)	$	(1,536)	$	(4,596)	$	(4,625)

Other_Assets_and_Liabilities_T

Other Assets and Liabilities (Tables)	9 Months Ended
	Sep. 30, 2014
Summary of Other Assets	'
	Other assets at September 30, 2014 and December 31, 2013, are summarized in the following table.
	Other Assets
	(In Thousands)	September 30, 2014		December 31, 2013
	Margin receivable	$	56,217	$	31,149
	Investment receivable		24,814		8,923
	Restricted investments		11,319		-
	Other pledged collateral		5,000		5,000
	FHLBC stock		4,846		-
	REO		3,349		3,661
	Prepaid expenses		2,350		1,850
	Fixed assets and leasehold improvements		2,273		1,232
	Other		2,600		1,825
	Total Other Assets	$	112,768	$	53,640
Summary of Accrued Expenses and Other Liabilities	'
	Accrued expenses and other liabilities at September 30, 2014 and December 31, 2013 are summarized in the following table.
	(In Thousands)	September 30, 2014		December 31, 2013
	Accrued compensation	$	12,562	$	22,160
	Legal reserve		10,400		12,000
	MSR holdbacks payable		4,049		-
	Residential repurchase reserve		3,771		1,771
	Income tax payable		3,560		1,337
	Derivative margin payable		2,873		4,700
	Accrued operating expenses		2,170		4,291
	Other		8,854		2,445
	Total Other Liabilities	$	48,239	$	48,704

ShortTerm_Debt_Tables

Short-Term Debt (Tables)	9 Months Ended
	Sep. 30, 2014
Outstanding Balances of Short-Term Debt by Type of Collateral Securing Debt	'
	The table below summarizes the facilities that are available to us and the balances of short-term debt at September 30, 2014 and December 31, 2013 by the type of collateral securing the debt.
		September 30, 2014
	(Dollars in Thousands)	Number of		Outstanding		Limit		Maturity
		Facilities
	Collateral Type
	Residential loans		5	$	1,188,179	$	1,550,000		12/2014-8/2015
	Commercial loans		2		52,895		340,000		4/2015-9/2015
	Real estate securities		10		646,614		-		10/2014-12/2014
	Total		17	$	1,887,688
		December 31, 2013
	(Dollars in Thousands)	Number of		Outstanding		Limit		Maturity
		Facilities
	Collateral Type
	Residential loans		5	$	184,789	$	1,400,000		1/2014 - 12/2014
	Commercial loans		1		-		100,000		Apr-14
	Real estate securities		7		677,974		-		1/2014 - 2/2014
	Total		13	$	862,763
Short-Term Debt by Weighted Average Interest Rates and Collateral Type	'
	The table below summarizes short-term debt by weighted average interest rates and by collateral type at September 30, 2014 and December 31, 2013.
		September 30, 2014						December 31, 2013
	(Dollars in Thousands)	Amount		Weighted		Weighted		Amount		Weighted		Weighted
		Borrowed		Average		Average		Borrowed		Average		Average
				Interest		Days Until				Interest		Days Until
				Rate		Maturity				Rate		Maturity
	Collateral Type
	Residential loan collateral	$	1,188,179		1.71%		216	$	184,789		1.71%		228
	Commercial loan collateral		52,895		5.15%		359		-		-		-
	Real estate securities collateral		646,614		1.37%		23		677,974		1.34%		15
	Total Short-Term Debt	$	1,887,688		1.69%		154	$	862,763		1.42%		61
Remaining Maturities of Short Term Debt	'
	The following table presents the remaining maturities of short-term debt at September 30, 2014 and December 31, 2013.
	(In Thousands)	September 30, 2014		December 31, 2013
	Within 30 days	$	548,890	$	659,262
	31 to 90 days		213,330		54,434
	Over 90 days		1,125,468		149,067
	Total Short-Term Debt	$	1,887,688	$	862,763

AssetBacked_Securities_Issued_

Asset-Backed Securities Issued (Tables)	9 Months Ended
	Sep. 30, 2014
Carrying Value of ABS Issued by Consolidated Securitization Entities Sponsored, along with Other Selected Information	'
	The carrying values of ABS issued by consolidated securitization entities we sponsored at September 30, 2014 and December 31, 2013, along with other selected information, are summarized in the following table.
	Asset-Backed Securities Issued
		September 30, 2014
	(Dollars in Thousands)	Sequoia		Residential		Commercial		Total
				Resecuritization		Securitization
	Certificates with principal balance	$	1,495,988	$	56,508	$	114,943	$	1,667,439
	Interest-only certificates		2,318		-		-		2,318
	Unamortized discount		(13,555)		-		-		(13,555)
	Total ABS Issued	$	1,484,751	$	56,508	$	114,943	$	1,656,202
	Range of weighted average interest rates, by series		0.08% to 4.26%		2.16%		5.62%
	Stated maturities		2014 - 2047		2046		2018
	Number of series		24		1		1
		December 31, 2013
	(Dollars in Thousands)	Sequoia		Residential		Commercial		Total
				Resecuritization		Securitization
	Certificates with principal balance	$	1,708,324	$	94,934	$	153,693	$	1,956,951
	Interest-only certificates		3,400		-		-		3,400
	Unamortized discount		(17,389)		-		-		(17,389)
	Total ABS Issued	$	1,694,335	$	94,934	$	153,693	$	1,942,962
	Range of weighted average interest rates, by series		0.24% to 4.23%		2.21%		5.62%
	Stated maturities		2014 - 2047		2046		2018
	Number of series		24		1		1
Summary of Accrued Interest Payable on ABS Issued	'
	The following table summarizes the accrued interest payable on ABS issued at September 30, 2014 and December 31, 2013. Interest due on consolidated ABS issued is payable monthly.
	Accrued Interest Payable on Asset-Backed Securities Issued
	(In Thousands)	September 30, 2014		December 31, 2013
	Sequoia	$	1,034	$	1,218
	Residential Resecuritization		7		11
	Commercial Securitization		539		720
	Total Accrued Interest Payable on ABS Issued	$	1,580	$	1,949
Summary of Carrying Value Components of Collateral for ABS Issued and Outstanding	'
	The following table summarizes the carrying value components of the collateral for ABS issued and outstanding at September 30, 2014 and December 31, 2013.
	Collateral for Asset-Backed Securities Issued
		September 30, 2014
	(In Thousands)	Sequoia		Residential		Commercial		Total
				Resecuritization		Securitization
	Residential loans	$	1,546,507	$	-	$	-	$	1,546,507
	Commercial loans		-		-		204,741		204,741
	Real estate securities		-		233,311		-		233,311
	Restricted cash		147		-		138		285
	Accrued interest receivable		1,882		506		1,527		3,915
	Other assets		3,349		-		21,699		25,048
	Total Collateral for ABS Issued	$	1,551,885	$	233,817	$	228,105	$	2,013,807
		December 31, 2013
	(In Thousands)	Sequoia		Residential		Commercial		Total
				Resecuritization		Securitization
	Residential loans	$	1,762,167	$	-	$	-	$	1,762,167
	Commercial loans		-		-		257,741		257,741
	Real estate securities		-		263,204		-		263,204
	Restricted cash		152		-		137		289
	Accrued interest receivable		2,714		627		1,975		5,316
	REO		3,661		-		-		3,661
	Total Collateral for ABS Issued	$	1,768,694	$	263,831	$	259,853	$	2,292,378

Commitments_and_Contingencies_

Commitments and Contingencies (Tables)	9 Months Ended
	Sep. 30, 2014
Future Lease Commitments	'
	The following table presents our future lease commitments at September 30, 2014.
	Future Lease Commitments by Year
	(In Thousands)	September 30, 2014
	2014 (3 months)	$	751
	2015		3,061
	2016		2,832
	2017		2,879
	2018		1,827
	2019 and thereafter		2,683
	Total	$	14,033

Equity_Tables

Equity (Tables)	9 Months Ended
	Sep. 30, 2014
Changes to Accumulated Other Comprehensive Income (Loss) by Component	'
	The following table provides a summary of changes to accumulated other comprehensive income by component for the three and nine months ended September 30, 2014 and 2013.
	Changes in Accumulated Other Comprehensive Income by Component
		Three Months Ended September 30, 2014								Three Months Ended September 30, 2013
	(In Thousands)	Net unrealized gains on				Net unrealized losses				Net unrealized gains on		Net unrealized losses
		available-for-sale				on interest rate				available-for-sale		on interest rate
		securities				agreements accounted				securities		agreements accounted
						for as cash flow hedges						for as cash flow hedges
	Balance at beginning of period	$	197,542			$	(29,985)			$	145,349	$	(27,066)
	Other comprehensive income (loss) before reclassifications		1,849				(3,258)				(633)		4,018
	Amounts reclassified from other accumulated comprehensive income		(6,409)				32				(6,962)		62
	Net current-period other comprehensive (loss) income		(4,560)				(3,226)				(7,595)		4,080
	Balance at End of Period	$	192,982			$	(33,211)			$	137,754	$	(22,986)
		Nine Months Ended September 30, 2014								Nine Months Ended September 30, 2013
	(In Thousands)	Net unrealized gains on				Net unrealized losses				Net unrealized gains on		Net unrealized losses
		available-for-sale				on interest rate				available-for-sale		on interest rate
		securities				agreements accounted				securities		agreements accounted
						for as cash flow hedges						for as cash flow hedges
	Balance at beginning of period	$	164,654			$	(15,888)			$	186,580	$	(48,248)
	Other comprehensive income (loss) before reclassifications		35,078				(17,454)				(29,615)		25,043
	Amounts reclassified from other accumulated comprehensive income		(6,750)				131				(19,211)		219
	Net current-period other comprehensive (loss) income		28,328				(17,323)				(48,826)		25,262
	Balance at End of Period	$	192,982			$	(33,211)			$	137,754	$	(22,986)
Reclassifications out of Accumulated Other Comprehensive Income (Loss)	'
	The following table provides a summary of reclassifications out of accumulated other comprehensive income for three and nine months ended September 30, 2014 and 2013.
	Reclassifications Out of Accumulated Other Comprehensive Income
		Affected Line Item in the		Amount reclassified from accumulated other
				comprehensive income
				Three Months Ended  September 30,
	(In Thousands)	Income Statement		2014				2013
	Net realized gains (losses) on AFS securities
	Other than temporary impairment	Other market valuations, net		$	188			$	-
	Gain on sale of AFS securities	Realized gains, net			(6,597)				(6,962)
				$	(6,409)			$	(6,962)
	Net realized gains on interest rate agreements designated as cash flow hedges
	Amortization of deferred loss	Interest expense		$	32			$	62
				$	32			$	62
		Affected Line Item in the		Amount reclassified from accumulated other
				comprehensive income
				Nine Months Ended September 30,
	(In Thousands)	Income Statement		2014				2013
	Net realized gains (losses) on AFS securities
	Other than temporary impairment	Other market valuations, net		$	565			$	(124)
	Gain on sale of AFS securities	Realized gains, net			(7,315)				(19,087)
				$	(6,750)			$	(19,211)
	Net realized gains on interest rate agreements designated as cash flow hedges
	Amortization of deferred loss	Interest expense		$	131			$	219
				$	131			$	219
Basic and Diluted Earnings (Loss) Per Common Share	'
	The following table provides the basic and diluted earnings per common share computations for the three and nine months ended September 30, 2014 and 2013.
	Basic and Diluted Earnings Per Common Share
		Three Months Ended September 30,								Nine Months Ended September 30,
	(In Thousands, Except Share Data)	2014				2013				2014		2013
	Basic Earnings Per Common Share:
	Net income attributable to Redwood	$	45,097			$	21,929			$	73,447	$	148,112
	Less: Dividends and undistributed earnings allocated to participating securities		(1,054)				(565)				(1,819)		(4,209)
	Net income allocated to common shareholders	$	44,043			$	21,364			$	71,628	$	143,903
	Basic weighted average common shares outstanding		83,017,534				82,201,473				82,722,079		81,888,231
	Basic Earnings Per Common Share	$	0.53			$	0.26			$	0.87	$	1.76
	Diluted Earnings Per Common Share:
	Net income attributable to Redwood	$	45,097			$	21,929			$	73,447	$	148,112
	Less: Dividends and undistributed earnings allocated to participating securities		(756)				(565)				(1,784)		(3,030)
	Add back: Interest expense on convertible notes		3,855				-				-		8,790
	Net income allocated to common shareholders	$	48,196			$	21,364			$	71,663	$	153,872
	Weighted average common shares outstanding		83,017,534				82,201,473				82,722,079		81,888,231
	Net effect of dilutive equity awards		2,113,248				2,220,566				2,309,051		2,292,451
	Net effect of assumed convertible notes conversion to common shares		11,825,450				-				-		9,053,183
	Diluted weighted average common shares outstanding		96,956,232				84,422,039				85,031,130		93,233,865
	Diluted Earnings Per Common Share	$	0.50			$	0.25			$	0.84	$	1.65

Equity_Compensation_Plans_Tabl

Equity Compensation Plans (Tables)	9 Months Ended
	Sep. 30, 2014
Equity Compensation Plans	'
	The unamortized compensation cost of awards issued under the Incentive Plan and purchases under the Employee Stock Purchase Plan totaled $14 million at September 30, 2014, as shown in the following table.
		Nine Months Ended September 30, 2014
	(In Thousands)	Stock		Restricted		Deferred		Performance		Employee Stock		Total
		Options		Stock		Stock Units		Stock Units		Purchase Plan
	Unrecognized compensation cost at beginning of period	$	-	$	1,869	$	13,044	$	5,817	$	-	$	20,730
	Equity grants		-		94		1,187		-		215		1,496
	Equity grant forfeitures		-		(213)		(150)		-		-		(363)
	Equity compensation expense		-		(509)		(4,549)		(2,196)		(161)		(7,415)
	Unrecognized Compensation Cost at End of Period	$	-	$	1,241	$	9,532	$	3,621	$	54	$	14,448

Mortgage_Banking_Activities_Ta

Mortgage Banking Activities (Tables)	9 Months Ended
	Sep. 30, 2014
Components of Mortgage Banking Activities, Net	'
	The following table presents the components of mortgage banking activities, net, recorded in our consolidated income statements for the three and nine months ended September 30, 2014 and 2013.
	Components of Mortgage Banking Activities, Net
			Three Months Ended September 30,				Nine Months Ended September 30,
	(In Thousands)		2014		2013		2014		2013
	Residential mortgage banking activities:
	Changes in fair value of:
	Residential loans, at fair value		$	13,446	$	(10,804)	$	34,554	$	(17,339)
	Sequoia IO securities			(1,332)		(1,866)		(14,419)		36,399
	Risk management derivatives (1)			(4,297)		75		(16,433)		48,583
	Loan purchase and forward sale commitments			2,487		-		6,077		-
	Other (2)			1,082		359		1,871		1,635
	Total residential mortgage banking activities:			11,386		(12,236)		11,650		69,278
	Commercial mortgage banking activities:
	Changes in fair value of:
	Commercial loans, at fair value			4,305		3,171		13,644		2,826
	Risk management derivatives (1)			1,892		367		(1,726)		2,426
	Other (2)			289		-		382		1
	Net gains on commercial loan originations and sales			-		-		-		11,031
	Total commercial mortgage banking activities:			6,486		3,538		12,300		16,284
	Mortgage Banking Activities, Net		$	17,872	$	(8,698)	$	23,950	$	85,562
	-1	Represents market valuation changes of derivatives that are used to manage risks associated with our accumulation of residential and commercial loans.
	-2	Amounts in this line item include other fee income and the provision for repurchase expenses, presented net.

Operating_Expenses_Tables

Operating Expenses (Tables)	9 Months Ended
	Sep. 30, 2014
Components of Operating Expenses	'
	Components of our operating expenses for the three and nine months ended September 30, 2014 and 2013 are presented in the following table.
	Operating Expenses
		Three Months Ended September 30,				Nine Months Ended September 30,
	(In Thousands)	2014		2013		2014		2013
	Fixed compensation expense	$	7,445	$	5,808	$	21,109	$	17,524
	Variable compensation expense		2,418		5,621		8,170		14,418
	Equity compensation expense		2,261		1,997		7,415		7,880
	Severance expense		4		445		226		3,879
	Total compensation expense		12,128		13,871		36,920		43,701
	Systems and consulting		3,463		2,780		10,906		6,840
	Accounting and legal		1,223		2,066		4,039		5,118
	Office costs		1,282		829		3,437		2,444
	Corporate costs		569		508		1,679		1,545
	Other operating expenses		2,741		2,266		6,679		7,289
	Total Operating Expenses	$	21,406	$	22,320	$	63,660	$	66,937

Taxes_Tables

Taxes (Tables)	9 Months Ended
	Sep. 30, 2014
Reconciliation of Statutory Tax Rate to Effective Tax Rate	'
	The following is a reconciliation of the statutory federal and state tax rates to our projected annual effective rate at September 30, 2014 and 2013.
	Reconciliation of Statutory Tax Rate to Effective Tax Rate
		September 30, 2014		September 30, 2013
	Federal statutory rate		34.0 %		34.0 %
	State statutory rate, net of Federal tax effect		7.2 %		7.2 %
	Differences in taxable (loss) income from GAAP income		-10.00%		-2.10%
	Change in valuation allowance		-1.00%		-18.50%
	Dividends paid deduction		-25.40%		-14.80%
	Effective Tax Rate		4.8 %		5.8 %

Segment_Information_Tables

Segment Information (Tables)	9 Months Ended
	Sep. 30, 2014
Financial Information by Segment	'
	The following tables present financial information by segment for the three and nine months ended September 30, 2014 and 2013.
	Business Segment Financial Information
		Three Months Ended September 30, 2014
	(In Thousands)	Residential		Residential		Commercial		Corporate/		Total
		Mortgage		Investments		Mortgage		Other
		Banking				Banking and
						Investments
	Interest income	$	16,911	$	27,600	$	12,603	$	6,237	$	63,351
	Interest expense		(4,192)		(3,142)		(4,526)		(11,490)		(23,350)
	Net interest income (loss)		12,719		24,458		8,077		(5,253)		40,001
	Reversal of provision (provision) for loan losses		-		-		888		708		1,596
	Mortgage banking activities, net		11,386		-		6,486		-		17,872
	MSR income (loss), net		-		5,821		-		-		5,821
	Other market valuation adjustments, net		43		(3,371)		-		(378)		(3,706)
	Realized gains, net		-		7,836		-		696		8,532
	Operating expenses		(9,982)		(802)		(2,279)		(8,343)		(21,406)
	Other income		-		-		-		1,600		1,600
	(Provision for) benefit from income taxes		(3,352)		150		(1,764)		(247)		(5,213)
	Segment Contribution	$	10,814	$	34,092	$	11,408	$	(11,217)
	Net Income									$	45,097
	Non-cash amortization income (expense)		(43)		10,890		(191)		(2,049)		8,607
		Three Months Ended September 30, 2013
	(In Thousands)	Residential		Residential		Commercial		Corporate/		Total
		Mortgage		Investments		Mortgage		Other
		Banking				Banking and
						Investments
	Interest income	$	15,954	$	22,887	$	10,740	$	7,839	$	57,420
	Interest expense		(3,501)		(2,229)		(3,560)		(12,435)		(21,725)
	Net interest income (loss)		12,453		20,658		7,180		(4,596)		35,695
	Reversal of provision (provision) for loan losses		-		-		(844)		(883)		(1,727)
	Mortgage banking activities, net		(12,236)		-		3,538		-		(8,698)
	MSR income (loss), net		-		3,113		-		-		3,113
	Other market valuation adjustments, net		(11)		549		-		(76)		462
	Realized gains, net		-		10,469		-		-		10,469
	Operating expenses		(7,874)		(229)		(2,176)		(12,041)		(22,320)
	(Provision for) benefit from income taxes		4,867		377		29		(338)		4,935
	Segment Contribution	$	(2,801)	$	34,937	$	7,727	$	(17,934)
	Net Income									$	21,929
	Non-cash amortization income (expense)		(13)		8,702		(228)		(2,256)		6,205
		Nine Months Ended September 30, 2014
	(In Thousands)	Residential		Residential		Commercial		Corporate/		Total
		Mortgage		Investments		Mortgage		Other
		Banking				Banking and
						Investments
	Interest income	$	40,015	$	83,120	$	34,204	$	19,481	$	176,820
	Interest expense		(7,674)		(9,106)		(12,234)		(34,546)		(63,560)
	Net interest income (loss)		32,341		74,014		21,970		(15,065)		113,260
	Provision for loan losses		-		-		(56)		685		629
	Mortgage banking activities, net		11,650		-		12,300		-		23,950
	MSR income (loss), net		-		4,650		-		-		4,650
	Other market valuation adjustments, net		54		(13,117)		-		(903)		(13,966)
	Realized gains, net		-		9,815		-		872		10,687
	Operating expenses		(26,577)		(2,667)		(7,085)		(27,330)		(63,660)
	Other income		-		-		-		1,600		1,600
	(Provision for) benefit from income taxes		(3,258)		1,826		(2,159)		(112)		(3,703)
	Segment Contribution	$	14,210	$	74,521	$	24,970	$	(40,253)
	Net Income									$	73,447
	Non-cash amortization income (expense)		(131)		32,724		(579)		(6,068)		25,946
		Nine Months Ended September 30, 2013
	(In Thousands)	Residential		Residential		Commercial		Corporate/		Total
		Mortgage		Investments		Mortgage		Other
		Banking				Banking and
						Investments
Interest income	$	40,869	$	70,420	$	30,534	$	26,841	$	168,664
Interest expense		(8,631)		(7,448)		(8,928)		(36,437)		(61,444)
Net interest income (loss)		32,238		62,972		21,606		(9,596)		107,220
Reversal of provision (provision) for loan losses		-		-		(2,419)		1,926		(493)
Mortgage banking activities, net		69,278		-		16,284		-		85,562
MSR income (loss), net		-		14,681		-		-		14,681
Other market valuation adjustments, net		67		(5,759)		-		(407)		(6,099)
Realized gains, net		-		23,032		210		49		23,291
Operating expenses		(18,565)		(3,768)		(8,026)		(36,578)		(66,937)
(Provision for) benefit from income taxes		(6,447)		(1,284)		(1,689)		307		(9,113)
Segment Contribution	$	76,571	$	89,874	$	25,966	$	(44,299)
Net Income									$	148,112
Non-cash amortization income (expense)		(132)		24,348		(639)		(5,637)		17,940
Supplemental Information by Segment	'
	The following table presents supplemental information by segment at September 30, 2014 and December 31, 2013.
	Supplemental Disclosures
	(In Thousands)	Residential		Residential		Commercial		Corporate/		Total
		Mortgage		Investments		Mortgage		Other
		Banking				Banking and
						Investments
	September 30, 2014
	Residential loans, held-for-sale	$	1,502,429	$	-	$	-	$	-	$	1,502,429
	Residential loans, held-for-investment		-		238,651		-		1,546,507		1,785,158
	Commercial loans		-		-		497,997		-		497,997
	Real estate securities		100,613		1,294,372		-		-		1,394,985
	Mortgage servicing rights		-		135,152		-		-		135,152
	Total assets		1,635,463		1,696,343		527,094		1,752,868		5,611,768
	December 31, 2013
	Residential loans, held-for-sale	$	404,267	$	-	$	-	$	-	$	404,267
	Residential loans, held-for-investment		-		-		-		1,762,167		1,762,167
	Commercial loans		-		-		432,455		-		432,455
	Real estate securities		110,505		1,572,356		-		-		1,682,861
	Mortgage servicing rights		-		64,824		-		-		64,824
	Total assets		531,092		1,655,209		439,139		1,983,088		4,608,528
Corporate and Other	'
Financial Information by Segment	'
	The following tables present the components of Corporate/Other for the three and nine months ended September 30, 2014 and 2013.
		Three Months Ended September 30,
		2014						2013
	(In Thousands)	Legacy		Other		Total		Legacy		Other		Total
		Consolidated						Consolidated
		VIEs						VIEs
	Interest income	$	6,233	$	4	$	6,237	$	7,835	$	4	$	7,839
	Interest expense		(5,250)		(6,240)		(11,490)		(6,190)		(6,245)		(12,435)
	Net interest income (loss)		983		(6,236)		(5,253)		1,645		(6,241)		(4,596)
	Reversal of provision for loan losses		708		-		708		(883)		-		(883)
	Mortgage banking activities, net		-		-		-		-		-		-
	MSR income, net		-		-		-		-		-		-
	Other market valuation adjustments, net		(361)		(17)		(378)		(76)		-		(76)
	Realized gains, net		696		-		696		-		-		-
	Operating expenses		(26)		(8,317)		(8,343)		(51)		(11,990)		(12,041)
	Other income		-		1,600		1,600		-		-		-
	(Provision for) benefit from income taxes		-		(247)		(247)		-		(338)		(338)
	Total	$	2,000	$	(13,217)	$	(11,217)	$	635	$	(18,569)	$	(17,934)
	Non-cash amortization expense		(1,412)		(637)		(2,049)		(1,724)		(532)		(2,256)
		Nine Months Ended September 30,
		2014						2013
	(In Thousands)	Legacy		Other		Total		Legacy		Other		Total
		Consolidated						Consolidated
		VIEs						VIEs
	Interest income	$	19,473	$	8	$	19,481	$	26,688	$	153	$	26,841
	Interest expense		(15,950)		(18,596)		(34,546)		(20,188)		(16,249)		(36,437)
	Net interest income (loss)		3,523		(18,588)		(15,065)		6,500		(16,096)		(9,596)
	Reversal of provision (provision) for loan losses		685		-		685		1,926		-		1,926
	Mortgage banking activities, net		-		-		-		-		-		-
	MSR income, net		-		-		-		-		-		-
	Other market valuation adjustments, net		(825)		(78)		(903)		(407)		-		(407)
	Realized gains, net		872		-		872		49		-		49
	Operating expenses		(120)		(27,210)		(27,330)		(158)		(36,420)		(36,578)
	Other income		-		1,600		1,600		-		-		-
	(Provision for) benefit from income taxes		-		(112)		(112)		-		307		307
	Total	$	4,135	$	(44,388)	$	(40,253)	$	7,910	$	(52,209)	$	(44,299)
	Non-cash amortization expense		(4,207)		(1,861)		(6,068)		(4,388)		(1,249)		(5,637)

Redwood_Trust_Additional_Infor

Redwood Trust - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2014
	Segment
Nature Of Operations [Line Items]	'
Number of operating segments	3

Basis_of_Presentation_Addition

Basis of Presentation - Additional Information (Detail)	Sep. 30, 2014
Basis of Presentation [Line Items]	'
Minimum percentage of taxable income distribution to shareholders to be taxed as a REIT	90.00%

Summary_of_Significant_Account3

Summary of Significant Accounting Policies - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2014
Significant Accounting Policies [Line Items]	'
Debt instrument maturity date	15-Apr-18
Incentive Plan, mandatory holding period before awards vest	'3 years
Employee Stock Purchase Plan, percentage of common stock fair value that employees can purchase	85.00%
Employees maximum 401(k) contribution	100.00%
Minimum percentage of taxable income distribution to shareholders to be taxed as a REIT	90.00%
Minimum	'
Significant Accounting Policies [Line Items]	'
Incentive Plan, awards vesting period	'3 years
Maximum	'
Significant Accounting Policies [Line Items]	'
Incentive Plan, awards vesting period	'4 years

Offsetting_of_Financial_Assets

Offsetting of Financial Assets, Liabilities, and Collateral (Detail) (USD $)	Sep. 30, 2014		Dec. 31, 2013
In Thousands, unless otherwise specified
Offsetting Asset and Liabilities [Line Items]	'		'
Gross Amounts of Recognized Assets	$6,760	[1]	$7,704	[1]
Gross Amounts Offset in Consolidated Balance Sheet	'	[1]	'	[1]
Net Amounts of Assets Presented in Consolidated Balance Sheet	6,760	[1]	7,704	[1]
Gross Amounts Not Offset in Consolidated Balance Sheet, Financial Instruments	-2,517	[1],[2]	-6,058	[1],[2]
Gross Amounts Not Offset in Consolidated Balance Sheet, Cash Collateral Received	-1,525	[1],[2]	-482	[1],[2]
Net Amount	2,718	[1]	1,164	[1]
Gross Amounts of Recognized Liabilities	-1,925,846	[1]	-930,018	[1]
Gross Amounts Offset in Consolidated Balance Sheet	'	[1]	'	[1]
Net Amounts of Liabilities Presented in Consolidated Balance Sheet	-1,925,846	[1]	-930,018	[1]
Gross Amounts Not Offset in Consolidated Balance Sheet, Financial Instruments	1,890,205	[1],[2]	918,288	[1],[2]
Gross Amounts Not Offset in Consolidated Balance Sheet, Cash Collateral Pledged	35,094	[1],[2]	11,730	[1],[2]
Net Amount	-547	[1]	'	[1]
Interest Rate Swaps	'		'
Offsetting Asset and Liabilities [Line Items]	'		'
Gross Amounts of Recognized Assets	2,892	[1]	6,566	[1]
Gross Amounts Offset in Consolidated Balance Sheet	'	[1]	'	[1]
Net Amounts of Assets Presented in Consolidated Balance Sheet	2,892	[1]	6,566	[1]
Gross Amounts Not Offset in Consolidated Balance Sheet, Financial Instruments	-1,033	[1],[2]	-5,402	[1],[2]
Gross Amounts Not Offset in Consolidated Balance Sheet, Cash Collateral Received	-1,150	[1],[2]	'
Net Amount	709	[1]	1,164	[1]
Gross Amounts of Recognized Liabilities	-34,449	[1]	-16,599	[1]
Gross Amounts Offset in Consolidated Balance Sheet	'	[1]	'	[1]
Net Amounts of Liabilities Presented in Consolidated Balance Sheet	-34,449	[1]	-16,599	[1]
Gross Amounts Not Offset in Consolidated Balance Sheet, Financial Instruments	1,033	[1],[2]	5,402	[1],[2]
Gross Amounts Not Offset in Consolidated Balance Sheet, Cash Collateral Pledged	33,416	[1],[2]	11,197	[1],[2]
Net Amount	'		'	[1]
Credit Default Index Swaps	'		'
Offsetting Asset and Liabilities [Line Items]	'		'
Gross Amounts of Recognized Assets	2,372	[1]	'
Gross Amounts Offset in Consolidated Balance Sheet	'	[1]	'
Net Amounts of Assets Presented in Consolidated Balance Sheet	2,372	[1]	'
Gross Amounts Not Offset in Consolidated Balance Sheet, Cash Collateral Received	-375	[1],[2]	'
Net Amount	1,997	[1]	'
TBAs	'		'
Offsetting Asset and Liabilities [Line Items]	'		'
Gross Amounts of Recognized Assets	1,496	[1]	1,138	[1]
Gross Amounts Offset in Consolidated Balance Sheet	'	[1]	'	[1]
Net Amounts of Assets Presented in Consolidated Balance Sheet	1,496	[1]	1,138	[1]
Gross Amounts Not Offset in Consolidated Balance Sheet, Financial Instruments	-1,484	[1],[2]	-656	[1],[2]
Gross Amounts Not Offset in Consolidated Balance Sheet, Cash Collateral Received	'		-482	[1],[2]
Net Amount	12	[1]	'
Gross Amounts of Recognized Liabilities	-3,298	[1]	-661	[1]
Gross Amounts Offset in Consolidated Balance Sheet	'	[1]	'	[1]
Net Amounts of Liabilities Presented in Consolidated Balance Sheet	-3,298	[1]	-661	[1]
Gross Amounts Not Offset in Consolidated Balance Sheet, Financial Instruments	1,484	[1],[2]	656	[1],[2]
Gross Amounts Not Offset in Consolidated Balance Sheet, Cash Collateral Pledged	1,267	[1],[2]	5	[1],[2]
Net Amount	-547	[1]	'	[1]
Futures	'		'
Offsetting Asset and Liabilities [Line Items]	'		'
Gross Amounts of Recognized Liabilities	-411	[1]	-528	[1]
Gross Amounts Offset in Consolidated Balance Sheet	'	[1]	'	[1]
Net Amounts of Liabilities Presented in Consolidated Balance Sheet	-411	[1]	-528	[1]
Gross Amounts Not Offset in Consolidated Balance Sheet, Cash Collateral Pledged	411	[1],[2]	528	[1],[2]
Net Amount	'		'	[1]
Loan warehouse debt	'		'
Offsetting Asset and Liabilities [Line Items]	'		'
Gross Amounts of Recognized Liabilities	-1,241,074	[1]	-184,789	[1]
Gross Amounts Offset in Consolidated Balance Sheet	'	[1]	'	[1]
Net Amounts of Liabilities Presented in Consolidated Balance Sheet	-1,241,074	[1]	-184,789	[1]
Gross Amounts Not Offset in Consolidated Balance Sheet, Financial Instruments	1,241,074	[1],[2]	184,789	[1],[2]
Net Amount	'		'	[1]
Security repurchase agreements	'		'
Offsetting Asset and Liabilities [Line Items]	'		'
Gross Amounts of Recognized Liabilities	-646,614	[1]	-677,974	[1]
Gross Amounts Offset in Consolidated Balance Sheet	'	[1]	'	[1]
Net Amounts of Liabilities Presented in Consolidated Balance Sheet	-646,614	[1]	-677,974	[1]
Gross Amounts Not Offset in Consolidated Balance Sheet, Financial Instruments	646,614	[1],[2]	677,974	[1],[2]
Net Amount	'		'	[1]
Commercial borrowings	'		'
Offsetting Asset and Liabilities [Line Items]	'		'
Gross Amounts of Recognized Liabilities	'		-49,467	[1]
Gross Amounts Offset in Consolidated Balance Sheet	'		'	[1]
Net Amounts of Liabilities Presented in Consolidated Balance Sheet	'		-49,467	[1]
Gross Amounts Not Offset in Consolidated Balance Sheet, Financial Instruments	'		49,467	[1],[2]
Net Amount	'		'	[1]
[1]	Interest rate agreements, TBAs, and futures are components of derivatives instruments on our consolidated balances sheets. Loan warehouse debt, which is secured by residential and commercial mortgage loans, and security repurchase agreements are components of short-term debt on our consolidated balance sheets.
[2]	Amounts presented in these columns are limited in total to the net amount of assets or liabilities presented in the prior column by instrument. In certain cases, there is excess cash collateral or financial assets we have pledged to a counterparty (which may, in certain circumstances, be a clearinghouse) that exceed the financial liabilities subject to a master netting arrangement or similar agreement. Additionally, in certain cases, counterparties may have pledged excess cash collateral to us that exceeds our corresponding financial assets. In each case, any of these excess amounts are excluded from the table although they are separately reported in our consolidated balance sheets as assets or liabilities, respectively.

Assets_and_Liabilities_of_Cons

Assets and Liabilities of Consolidated Variable Interest Entity's (Detail) (USD $)	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
	Entity
Variable Interest Entity [Line Items]	'	'
Assets	$2,013,807	$2,299,576
Liabilities	1,657,782	1,944,911
Number of VIEs	26	'
Residential Loans Held for Investment	'	'
Variable Interest Entity [Line Items]	'	'
Assets	1,546,507	'
Commercial Loans Held For Investment	'	'
Variable Interest Entity [Line Items]	'	'
Assets	204,741	'
Real Estate Securities	'	'
Variable Interest Entity [Line Items]	'	'
Assets	233,311	'
Restricted Cash	'	'
Variable Interest Entity [Line Items]	'	'
Assets	285	'
Accrued Interest Receivable	'	'
Variable Interest Entity [Line Items]	'	'
Assets	3,915	'
Other Assets	'	'
Variable Interest Entity [Line Items]	'	'
Assets	25,048	'
Accrued Interest Payable	'	'
Variable Interest Entity [Line Items]	'	'
Liabilities	1,580	'
Asset-backed Securities	'	'
Variable Interest Entity [Line Items]	'	'
Liabilities	1,656,202	'
Sequoia	'	'
Variable Interest Entity [Line Items]	'	'
Assets	1,551,885	'
Liabilities	1,485,785	'
Number of VIEs	24	'
Sequoia | Residential Loans Held for Investment	'	'
Variable Interest Entity [Line Items]	'	'
Assets	1,546,507	'
Sequoia | Restricted Cash	'	'
Variable Interest Entity [Line Items]	'	'
Assets	147	'
Sequoia | Accrued Interest Receivable	'	'
Variable Interest Entity [Line Items]	'	'
Assets	1,882	'
Sequoia | Other Assets	'	'
Variable Interest Entity [Line Items]	'	'
Assets	3,349	'
Sequoia | Accrued Interest Payable	'	'
Variable Interest Entity [Line Items]	'	'
Liabilities	1,034	'
Sequoia | Asset-backed Securities	'	'
Variable Interest Entity [Line Items]	'	'
Liabilities	1,484,751	'
Residential Resecuritization	'	'
Variable Interest Entity [Line Items]	'	'
Assets	233,817	'
Liabilities	56,515	'
Number of VIEs	1	'
Residential Resecuritization | Real Estate Securities	'	'
Variable Interest Entity [Line Items]	'	'
Assets	233,311	'
Residential Resecuritization | Accrued Interest Receivable	'	'
Variable Interest Entity [Line Items]	'	'
Assets	506	'
Residential Resecuritization | Accrued Interest Payable	'	'
Variable Interest Entity [Line Items]	'	'
Liabilities	7	'
Residential Resecuritization | Asset-backed Securities	'	'
Variable Interest Entity [Line Items]	'	'
Liabilities	56,508	'
Commercial Securitization	'	'
Variable Interest Entity [Line Items]	'	'
Assets	228,105	'
Liabilities	115,482	'
Number of VIEs	1	'
Commercial Securitization | Commercial Loans Held For Investment	'	'
Variable Interest Entity [Line Items]	'	'
Assets	204,741	'
Commercial Securitization | Restricted Cash	'	'
Variable Interest Entity [Line Items]	'	'
Assets	138	'
Commercial Securitization | Accrued Interest Receivable	'	'
Variable Interest Entity [Line Items]	'	'
Assets	1,527	'
Commercial Securitization | Other Assets	'	'
Variable Interest Entity [Line Items]	'	'
Assets	21,699	'
Commercial Securitization | Accrued Interest Payable	'	'
Variable Interest Entity [Line Items]	'	'
Liabilities	539	'
Commercial Securitization | Asset-backed Securities	'	'
Variable Interest Entity [Line Items]	'	'
Liabilities	$114,943	'

Principles_of_Consolidation_Ad

Principles of Consolidation - Additional Information (Detail) (Variable Interest Entity, Not Primary Beneficiary)	33 Months Ended
	Sep. 30, 2014
	Entity
Variable Interest Entity, Not Primary Beneficiary	'
Variable Interest Entity [Line Items]	'
Number of securitization entities to which asset transferred	21

Securitization_Activity_Relate

Securitization Activity Related to Unconsolidated Variable Interest Entity's Sponsored by Redwood (Detail) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Variable Interest Entity [Line Items]	'	'	'	'
MSRs recognized	'	'	$30,962	$41,128
Variable Interest Entity, Not Primary Beneficiary	'	'	'	'
Variable Interest Entity [Line Items]	'	'	'	'
Principal balance of loans transferred	635,608	1,210,604	982,913	5,253,314
MSRs recognized	4,356	12,514	6,542	41,128
Variable Interest Entity, Not Primary Beneficiary | Trading Securities	'	'	'	'
Variable Interest Entity [Line Items]	'	'	'	'
Securities retained, at fair value	1,680	8,702	71,243	100,552
Variable Interest Entity, Not Primary Beneficiary | Available-for-sale Securities	'	'	'	'
Variable Interest Entity [Line Items]	'	'	'	'
Securities retained, at fair value	$39,330	$71,527	$59,757	$278,622

Cash_Flows_Related_to_Unconsol

Cash Flows Related to Unconsolidated Variable Interest Entity's Sponsored by Redwood (Detail) (Variable Interest Entity, Not Primary Beneficiary, USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Variable Interest Entity, Not Primary Beneficiary	'	'	'	'
Variable Interest Entity [Line Items]	'	'	'	'
Cash proceeds	$610,167	$507,202	$877,943	$4,366,556
MSR fees received	3,571	3,160	10,618	6,235
Funding of compensating interest	-68	-152	-144	-415
Cash flows received on retained securities	$16,190	$15,656	$44,417	$30,606

Mortgage_Servicing_Rights_Assu

Mortgage Servicing Rights Assumptions Related to Unconsolidated Variable Interest Entity's Sponsored by Redwood (Detail) (Variable Interest Entity, Not Primary Beneficiary)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Fair Value Assumption, Date of Securitization or Asset-backed Financing Arrangement, Transferor's Continuing Involvement, Servicing Assets or Liabilities [Line Items]	'	'	'	'
Discount rates	11.00%	12.00%	11.00%	12.00%
Minimum	'	'	'	'
Fair Value Assumption, Date of Securitization or Asset-backed Financing Arrangement, Transferor's Continuing Involvement, Servicing Assets or Liabilities [Line Items]	'	'	'	'
Prepayment speeds	5.00%	5.00%	5.00%	5.00%
Maximum	'	'	'	'
Fair Value Assumption, Date of Securitization or Asset-backed Financing Arrangement, Transferor's Continuing Involvement, Servicing Assets or Liabilities [Line Items]	'	'	'	'
Prepayment speeds	16.00%	8.00%	16.00%	13.00%

Summary_of_Unconsolidated_Vari

Summary of Unconsolidated Variable Interest Entity's Sponsored by Redwood (Detail) (Variable Interest Entity, Not Primary Beneficiary, USD $)	Sep. 30, 2014		Dec. 31, 2013
In Thousands, unless otherwise specified
On-balance sheet assets, at fair value:	'		'
Maximum loss exposure	$542,448	[1]	$515,920	[1]
Principal balance of loans outstanding	7,173,303		6,627,874
Principal balance of delinquent loans 30+ days delinquent	16,482		14,587
Interest-Only and Senior Securities	'		'
On-balance sheet assets, at fair value:	'		'
Securities	100,613		110,505
Senior and Subordinate Securities	'		'
On-balance sheet assets, at fair value:	'		'
Securities	$441,835		$405,415
[1]	Maximum loss exposure from our involvement with unconsolidated VIEs pertains to the carrying value of our securities retained from these VIEs and represents estimated losses that would be incurred under severe, hypothetical circumstances, such as if the value of our interests and any associated collateral declines to zero. This does not include, for example, any potential exposure to representation and warranty claims associated with our initial transfer of loans into a securitization.

Key_Assumptions_and_Sensitivit

Key Assumptions and Sensitivity Analysis for Assets Retained from Unconsolidated Variable Interest Entity's Sponsored by Redwood (Detail) (Variable Interest Entity, Not Primary Beneficiary, USD $)	9 Months Ended		12 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014		Dec. 31, 2013
Mortgage Servicing Rights	'		'
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items]	'		'
Fair value	$59,890		$60,318
Expected life (in years)	'7 years	[1]	'8 years	[1]
Prepayment speed assumption (annual CPR)	12.00%	[1]	8.00%	[1]
Decrease in fair value from:	'		'
10% adverse change	2,454		1,649
25% adverse change	5,589		4,218
Discount rate assumption	11.00%	[1]	11.00%	[1]
Decrease in fair value from:	'		'
100 basis point increase	2,381		2,468
200 basis point increase	4,568		4,828
Interest-only Securities	'		'
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items]	'		'
Fair value	100,613		110,505
Expected life (in years)	'6 years	[1]	'7 years	[1]
Prepayment speed assumption (annual CPR)	9.00%	[1]	10.00%	[1]
Decrease in fair value from:	'		'
10% adverse change	4,552		5,773
25% adverse change	10,470		13,555
Discount rate assumption	7.00%	[1]	5.00%	[1]
Decrease in fair value from:	'		'
100 basis point increase	4,444		5,632
200 basis point increase	8,528		10,757
Credit loss assumption	0.25%	[1]	0.23%	[1]
Decrease in fair value from:	'		'
10% higher losses	144		70
25% higher losses	349		175
Subordinate Securities	'		'
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items]	'		'
Fair value	441,835		405,415
Expected life (in years)	'10 years	[1]	'11 years	[1]
Prepayment speed assumption (annual CPR)	10.00%	[1]	11.00%	[1]
Decrease in fair value from:	'		'
10% adverse change	404		1,658
25% adverse change	2,058		4,354
Discount rate assumption	9.00%	[1]	6.00%	[1]
Decrease in fair value from:	'		'
100 basis point increase	33,310		30,644
200 basis point increase	62,862		57,836
Credit loss assumption	0.25%	[1]	0.23%	[1]
Decrease in fair value from:	'		'
10% higher losses	3,132		1,369
25% higher losses	$7,779		$3,420
[1]	Expected life, prepayment speed assumption, discount rate assumption, and credit loss assumption presented in the tables above represent weighted averages.

Summary_of_Redwoods_Interest_i

Summary of Redwood's Interest in Third-Party Variable Interest Entity's (Detail) (Real Estate Securities, USD $)	Sep. 30, 2014
In Thousands, unless otherwise specified
Variable Interest Entity [Line Items]	'
Assets	$852,536
Senior Securities	'
Variable Interest Entity [Line Items]	'
Assets	552,793
Re-REMIC	'
Variable Interest Entity [Line Items]	'
Assets	176,117
Subordinate Securities	'
Variable Interest Entity [Line Items]	'
Assets	$123,626

Loan_Transfers_Accounted_as_Se

Loan Transfers Accounted as Secured Borrowings (Detail) (USD $)	3 Months Ended	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2014
Loan Transferred As Secured Borrowings [Line Items]	'	'
Principal balance	'	$63,375
Cash proceeds	'	$65,048

Carrying_Values_and_Estimated_

Carrying Values and Estimated Fair Values of Assets and Liabilities (Detail) (USD $)	Sep. 30, 2014		Dec. 31, 2013
In Thousands, unless otherwise specified
Assets	'		'
Trading securities	$108,750		$124,555
Available-for-sale securities	1,286,235		1,558,306
MSRs	135,152		64,824
Derivative assets	7,756		7,787
Liabilities	'		'
Derivative liabilities	38,263		18,167
Long/Other Long-term debt	66,146		0
Carrying Value	'		'
Assets	'		'
Trading securities	108,750		124,555
Available-for-sale securities	1,286,235		1,558,306
MSRs	135,152		64,824
Cash and cash equivalents	149,617		173,201
Restricted cash	455		398
Accrued interest receivable	15,261		13,475
Derivative assets	7,756		7,787
REO	3,349	[1]	3,661	[1]
Margin receivable	56,217	[1]	31,149	[1]
Other collateral posted	5,000	[1]	5,000	[1]
Liabilities	'		'
Short-term debt	1,887,688		862,763
Accrued interest payable	10,480		6,366
Derivative liabilities	38,263		18,167
ABS issued	1,656,202		1,942,962
FHLBC Borrowings	203,756		'
Commercial long-term debt	'		49,467
Convertible notes	287,500		287,500
Long/Other Long-term debt	139,500		139,500
Carrying Value | Residential Loans at Fair Value	'		'
Assets	'		'
Loans, held-for-sale	1,501,252		402,602
Carrying Value | Residential Loans at Lower of Cost or Fair Value	'		'
Assets	'		'
Loans, held-for-sale	1,502		1,665
Carrying Value | Residential Loans Held For Investment at Fair Value	'		'
Assets	'		'
Loans, held-for-investment	238,326		'
Carrying Value | Residential Loans Held for Investment	'		'
Assets	'		'
Loans, held-for-investment	1,546,507		1,762,167
Carrying Value | Commercial Loans at Fair Value	'		'
Assets	'		'
Loans, held-for-sale	175,421		89,111
Carrying Value | Commercial Loans Held For Investment	'		'
Assets	'		'
Loans, held-for-investment	70,712		'
Carrying Value | Commercial Loans Held-for-Investment, at Amortized Cost	'		'
Assets	'		'
Loans, held-for-investment	322,576		343,344
Carrying Value | Commercial Secured Borrowings	'		'
Liabilities	'		'
Long/Other Long-term debt	66,146		'
Fair Value	'		'
Assets	'		'
Trading securities	108,750		124,555
Available-for-sale securities	1,286,235		1,558,306
MSRs	135,152		64,824
Cash and cash equivalents	149,617		173,201
Restricted cash	455		398
Accrued interest receivable	15,261		13,475
Derivative assets	7,756		7,787
REO	3,407	[1]	4,084	[1]
Margin receivable	56,217	[1]	31,149	[1]
Other collateral posted	5,000	[1]	5,000	[1]
Liabilities	'		'
Short-term debt	1,887,688		862,763
Accrued interest payable	10,480		6,366
Derivative liabilities	38,263		18,167
ABS issued	1,548,795		1,746,906
FHLBC Borrowings	203,756		'
Commercial long-term debt	'		49,467
Convertible notes	285,344		299,719
Long/Other Long-term debt	101,835		111,600
Fair Value | Residential Loans at Fair Value	'		'
Assets	'		'
Loans, held-for-sale	1,501,252		402,602
Fair Value | Residential Loans at Lower of Cost or Fair Value	'		'
Assets	'		'
Loans, held-for-sale	1,662		1,817
Fair Value | Residential Loans Held For Investment at Fair Value	'		'
Assets	'		'
Loans, held-for-investment	238,326		'
Fair Value | Residential Loans Held for Investment	'		'
Assets	'		'
Loans, held-for-investment	1,447,463		1,610,024
Fair Value | Commercial Loans at Fair Value	'		'
Assets	'		'
Loans, held-for-sale	175,421		89,111
Fair Value | Commercial Loans Held For Investment	'		'
Assets	'		'
Loans, held-for-investment	70,712		'
Fair Value | Commercial Loans Held-for-Investment, at Amortized Cost	'		'
Assets	'		'
Loans, held-for-investment	328,076		348,305
Fair Value | Commercial Secured Borrowings	'		'
Liabilities	'		'
Long/Other Long-term debt	$66,146		'
[1]	These assets are included in Other Assets on our consolidated balance sheets.

Fair_Value_of_Financial_Instru2

Fair Value of Financial Instruments - Additional Information (Detail) (USD $)	3 Months Ended	9 Months Ended
In Millions, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2014
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]	'	'
Dealer marks of securities	81.00%	81.00%
Percentage of carrying value for which dealer quotes have been received	94.00%	94.00%
Percentage difference of internal valuation than dealer marks	2.00%	2.00%
Commercial Loans	'	'
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]	'	'
Fair value option elected aggregate carrying amount, asset	$340	$609
Commercial Secured Borrowings	'	'
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]	'	'
Fair value option elected aggregate carrying amount, asset	'	65
Asset-backed Securities	'	'
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]	'	'
Dealer marks of securities	42.00%	42.00%
Percentage difference of internal valuation than dealer marks	1.00%	1.00%
Senior Securities | Residential	'	'
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]	'	'
Fair value option elected aggregate carrying amount, asset	$3,310	$6,120
Mortgage Servicing Rights | Maximum	'	'
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]	'	'
Percentage difference of internal valuation than dealer marks	1.00%	1.00%

Assets_and_Liabilities_Measure

Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Assets	'	'
Trading securities	$108,750	$124,555
Available-for-sale securities	1,286,235	1,558,306
MSRs	135,152	64,824
Derivative assets	7,756	7,787
Liabilities	'	'
Derivative liabilities	38,263	18,167
Commercial secured borrowings	66,146	0
Fair Value, Measurements, Recurring	'	'
Assets	'	'
Trading securities	108,750	'
Available-for-sale securities	1,286,235	'
MSRs	135,152	'
Derivative assets	7,756	'
Liabilities	'	'
Derivative liabilities	38,263	'
Commercial secured borrowings	66,146	'
Fair Value, Measurements, Recurring | Residential Loans at Fair Value	'	'
Assets	'	'
Loans at fair value	1,739,578	'
Fair Value, Measurements, Recurring | Commercial Loans at Fair Value	'	'
Assets	'	'
Loans at fair value	175,421	'
Fair Value, Measurements, Recurring | Level 1	'	'
Assets	'	'
Derivative assets	1,496	'
Liabilities	'	'
Derivative liabilities	3,709	'
Fair Value, Measurements, Recurring | Level 2	'	'
Assets	'	'
Derivative assets	5,327	'
Liabilities	'	'
Derivative liabilities	34,472	'
Fair Value, Measurements, Recurring | Level 2 | Residential Loans at Fair Value	'	'
Assets	'	'
Loans at fair value	399,145	'
Fair Value, Measurements, Recurring | Level 3	'	'
Assets	'	'
Trading securities	108,750	'
Available-for-sale securities	1,286,235	'
MSRs	135,152	'
Derivative assets	933	'
Liabilities	'	'
Derivative liabilities	82	'
Commercial secured borrowings	66,146	'
Fair Value, Measurements, Recurring | Level 3 | Residential Loans at Fair Value	'	'
Assets	'	'
Loans at fair value	1,340,433	'
Fair Value, Measurements, Recurring | Level 3 | Commercial Loans at Fair Value	'	'
Assets	'	'
Loans at fair value	$175,421	'

Changes_in_Level_3_Assets_and_

Changes in Level 3 Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) (USD $)	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014
Derivatives	'
Beginning balance	($379)	[1]
Principal paydowns	'	[1]
Discount accretion	'	[1]
Gains (losses) in net income, net	6,434	[1]
Unrealized gains in OCI, net	'	[1]
Acquisitions	'	[1]
Sales	'	[1]
Other settlements, net	-5,204	[1]
Ending balance	851	[1]
Commercial Secured Borrowings	'
Liabilities	'
Principal paydowns	-1,081
Discount accretion	'
Gains (losses) in net income, net	2,179
Unrealized gains in OCI, net	'
Acquisitions	65,048
Sales	'
Other settlements, net	'
Ending balance	66,146
Residential Loans at Fair Value	'
Assets	'
Beginning balance	391,100
Principal paydowns	-20,728
Gains (losses) in net income, net	35,971
Acquisitions	3,557,753
Sales	-2,621,349
Other settlements, net	-2,314
Ending balance	1,340,433
Commercial Loans	'
Assets	'
Beginning balance	89,111
Principal paydowns	-3,684
Gains (losses) in net income, net	14,986
Acquisitions	611,624
Sales	-536,671
Other settlements, net	55
Ending balance	175,421
Trading Securities	'
Assets	'
Beginning balance	124,555
Principal paydowns	-5,848
Gains (losses) in net income, net	-15,041
Acquisitions	66,253
Sales	-61,169
Ending balance	108,750
Available-for-sale Securities	'
Assets	'
Beginning balance	1,558,306
Principal paydowns	-138,751
Discount accretion	32,774
Gains (losses) in net income, net	9,389
Unrealized gains in OCI, net	28,328
Acquisitions	192,151
Sales	-395,962
Ending balance	1,286,235
Mortgage Servicing Rights	'
Assets	'
Beginning balance	64,824
Gains (losses) in net income, net	-5,944
Acquisitions	76,272
Ending balance	$135,152
[1]	For the purpose of this presentation, derivative assets and liabilities, which consist of loan purchase commitments, are presented net.

Portion_of_Net_Gains_Losses_At

Portion of Net Gains (Losses) Attributable to Level 3 Assets and Liabilities Still Held Included in Net Income (Detail) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Residential Loans at Fair Value	'	'	'	'
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]	'	'	'	'
Net gains (losses) attributable to level 3 assets still held included in net income	$7,280	($1,864)	$8,524	($3,088)
Commercial Loans at Fair Value	'	'	'	'
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]	'	'	'	'
Net gains (losses) attributable to level 3 assets still held included in net income	2,009	831	2,009	831
Trading Securities	'	'	'	'
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]	'	'	'	'
Net gains (losses) attributable to level 3 assets still held included in net income	-1,882	-1,525	-16,033	28,491
Available-for-sale Securities	'	'	'	'
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]	'	'	'	'
Net gains (losses) attributable to level 3 assets still held included in net income	-188	'	-434	940
Mortgage Servicing Rights	'	'	'	'
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]	'	'	'	'
Net gains (losses) attributable to level 3 assets still held included in net income	3,509	1,344	-3,184	12,561
Loan Purchase Commitments	'	'	'	'
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]	'	'	'	'
Net gains (losses) attributable to level 3 liabilities still held included in net income	932	'	932	'
Commercial Secured Borrowings	'	'	'	'
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]	'	'	'	'
Net gains (losses) attributable to level 3 liabilities still held included in net income	($420)	'	$1,339	'

Assets_and_Liabilities_Measure1

Assets and Liabilities Measured at Fair Value on Non-Recurring Basis (Detail) (Fair Value, Measurements, Nonrecurring, USD $)	3 Months Ended	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2014
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]	'	'
Residential loans, at lower of cost or fair value	$1,106	$1,106
REO	1,944	1,944
Level 3	'	'
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]	'	'
Residential loans, at lower of cost or fair value	1,106	1,106
REO	1,994	1,994
Residential Loans at Lower of Cost or Fair Value	'	'
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]	'	'
Gain (Loss) on assets measured at fair value on a non-recurring basis	1	-1
REO	'	'
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]	'	'
Gain (Loss) on assets measured at fair value on a non-recurring basis	$0	($133)

Market_Valuation_Adjustments_N

Market Valuation Adjustments, Net (Detail) (USD $)	3 Months Ended				9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014		Sep. 30, 2013		Sep. 30, 2014		Sep. 30, 2013
Mortgage banking activities market valuation adjustments	'		'		'		'
Trading securities	($1,332)		($1,866)		($14,419)		$36,399
Derivative instruments, net	-2,404		442		-18,159		51,009
Loan purchase and forward sale commitments	2,487		'		6,077		'
Total mortgage banking activities market valuation adjustments, net	16,502	[1]	-9,057	[1]	21,697	[1]	72,895	[1]
MSRs	2,321		460		-5,944		9,628
Other market valuation adjustments	'		'		'		'
Other market valuation adjustments, net	-3,706	[2]	462	[2]	-13,966	[2]	-6,099	[2]
Total Market Valuation Adjustments, Net	15,117		-8,135		1,787		76,425
Residential Loans at Fair Value	'		'		'		'
Mortgage banking activities market valuation adjustments	'		'		'		'
Loans, at fair value	13,446		-10,804		34,554		-17,339
Commercial Loans at Fair Value	'		'		'		'
Mortgage banking activities market valuation adjustments	'		'		'		'
Loans, at fair value	4,305		3,171		13,644		2,826
Residential Loans at Lower of Cost or Fair Value	'		'		'		'
Other market valuation adjustments	'		'		'		'
Other market valuation adjustments, net	43		-11		54		68
Held For Investment Loans At Fair Value	'		'		'		'
Other market valuation adjustments	'		'		'		'
Other market valuation adjustments, net	-991		'		-991		'
Trading Securities	'		'		'		'
Other market valuation adjustments	'		'		'		'
Other market valuation adjustments, net	-577		540		-653		-4,168
Impairments on AFS Securities	'		'		'		'
Other market valuation adjustments	'		'		'		'
Other market valuation adjustments, net	-188		'		-565		-1,666
REO	'		'		'		'
Other market valuation adjustments	'		'		'		'
Other market valuation adjustments, net	-361		-76		-825		-407
Other Derivative Instruments	'		'		'		'
Other market valuation adjustments	'		'		'		'
Other market valuation adjustments, net	($1,632)		$9		($10,986)		$74
[1]	Income from mortgage banking activities presented above does not include fee income or provisions for repurchases that is a component of mortgage banking income presented on our consolidated statements of income as these amounts do not represent a market valuation adjustment.
[2]	For the three months ended September 30, 2014, other-than-temporary impairments were $188, all of which was recognized through the income statement. For the three months ended September 30, 2013, there were no other-than-temporary impairments. For the nine months ended September 30, 2014, other-than-temporary impairments were $4,774, of which $565 were recognized through the Income Statement and $4,209 were recognized in Accumulated Other Comprehensive Income. For the nine months ended September 30, 2013, other-than-temporary impairments were $1,666, all of which was recognized through the income statement.

Quantitative_Information_about

Quantitative Information about Significant Unobservable Inputs Used in Valuation of Level 3 Assets and Liabilities Measured at Fair Value (Detail) (USD $)

Sep. 30, 2014

Dec. 31, 2013

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

In Thousands, unless otherwise specified

Residential Loans Priced To Securitization or Priced to Whole Loan Market, Uncommitted to Sell

Residential Loans Priced To Securitization or Priced to Whole Loan Market, Uncommitted to Sell

Residential Loans Priced To Securitization or Priced to Whole Loan Market, Uncommitted to Sell

Residential Loans Priced To Securitization or Priced to Whole Loan Market, Uncommitted to Sell

Residential Loans Priced To Whole Loan Market, Committed to Sell

Residential Loans Priced To Whole Loan Market, Committed to Sell

Residential Loans Priced To Whole Loan Market, Committed to Sell

Residential Loans Priced To Whole Loan Market, Committed to Sell

Residential Loans at Lower of Cost or Fair Value

Residential Loans at Lower of Cost or Fair Value

Residential Loans at Lower of Cost or Fair Value

Residential Loans at Lower of Cost or Fair Value

Commercial Loans at Fair Value

Commercial Loans at Fair Value

Commercial Loans at Fair Value

Commercial Loans at Fair Value

Trading and AFS securities

Trading and AFS securities

Trading and AFS securities

Trading and AFS securities

Mortgage Servicing Rights

Mortgage Servicing Rights

Mortgage Servicing Rights

Mortgage Servicing Rights

REO

REO

REO

REO

Loan Purchase Commitments

Loan Purchase Commitments

Loan Purchase Commitments

Loan Purchase Commitments

Commercial Secured Borrowings

Commercial Secured Borrowings

Commercial Secured Borrowings

Commercial Secured Borrowings

Minimum

Maximum

Weighted Average

Minimum

Maximum

Weighted Average

Minimum

Maximum

Weighted Average

Minimum

Maximum

Weighted Average

Minimum

Maximum

Weighted Average

Minimum

Maximum

Weighted Average

Minimum

Maximum

Weighted Average

Minimum

Maximum

Weighted Average

Minimum

Maximum

Weighted Average

Fair Value Inputs, Assets, Quantitative Information [Line Items]

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Fair Value

($851)

[1]

$379

[1]

$758,501

'

'

'

$581,932

'

'

'

$1,106

'

'

'

$175,421

'

'

'

$1,394,985

'

'

'

$135,152

'

'

'

$1,994

'

'

'

$851

[2]

'

'

'

$66,146

'

'

'

Discount rate

'

'

'

4.00%

5.00%

4.00%

'

'

'

'

'

'

'

'

'

'

'

'

'

4.00%

12.00%

6.00%

'

8.00%

11.00%

10.00%

'

'

'

'

'

'

'

'

'

'

'

'

Prepayment rate

'

'

'

8.00%

8.00%

8.00%

'

'

'

'

'

'

'

'

'

'

'

'

'

1.00%

35.00%

12.00%

'

4.00%

60.00%

10.00%

'

'

'

'

'

'

'

'

'

'

'

'

Default rate

'

'

'

1.00%

1.00%

1.00%

'

'

'

'

'

'

'

'

'

'

'

'

'

0.00%

35.00%

8.00%

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Loss severity

'

'

'

20.00%

20.00%

20.00%

'

'

'

'

'

15.00%

28.00%

21.00%

'

'

'

'

'

20.00%

64.00%

35.00%

'

'

'

'

'

13.00%

96.00%

34.00%

'

'

'

'

'

'

'

'

Credit support

'

'

'

8.00%

8.00%

8.00%

'

'

'

'

'

'

'

'

'

24.00%

24.00%

24.00%

'

0.00%

88.00%

6.00%

'

'

'

'

'

'

'

'

'

'

'

'

'

24.00%

24.00%

24.00%

MSR Multiple

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

1

[2]

5

[2]

4

[2]

'

'

'

'

Spread to securitization

'

'

'

0.38%

0.38%

0.38%

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Pullthrough rate

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

58.00%

[2]

99.00%

[2]

82.00%

[2]

'

'

'

'

Credit spread

'

'

'

1.18%

1.73%

1.29%

'

'

'

'

'

'

'

'

'

1.52%

1.52%

1.52%

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

1.52%

1.52%

1.52%

Pool fallout assumption

'

'

'

'

'

'

'

0.10%

0.10%

0.10%

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

[1]

For the purpose of this presentation, derivative assets and liabilities, which consist of loan purchase commitments, are presented net.

[2]

For the purpose of this presentation loan purchase commitment assets and liabilities are presented net.

Summary_of_Classifications_and

Summary of Classifications and Carrying Value of Residential Loans (Detail) (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Mortgage Loans on Real Estate [Line Items]	'	'
Residential loans	$3,287,587	$2,166,434
Residential Loans at Fair Value	'	'
Mortgage Loans on Real Estate [Line Items]	'	'
Residential loans	1,500,000	403,000
Residential Loans at Fair Value | Conforming Loan	'	'
Mortgage Loans on Real Estate [Line Items]	'	'
Residential loans	399,145	11,502
Residential Loans at Fair Value | Jumbo Loan	'	'
Mortgage Loans on Real Estate [Line Items]	'	'
Residential loans	1,101,782	391,100
Residential Loans at Lower of Cost or Fair Value	'	'
Mortgage Loans on Real Estate [Line Items]	'	'
Residential loans	1,502	1,665
Residential Loans Held For Investment at Fair Value	'	'
Mortgage Loans on Real Estate [Line Items]	'	'
Residential loans	238,651	'
Residential Loans Held For Investment At Amortized Cost	'	'
Mortgage Loans on Real Estate [Line Items]	'	'
Residential loans	1,546,507	1,762,167
Redwood	'	'
Mortgage Loans on Real Estate [Line Items]	'	'
Residential loans	1,741,080	404,267
Redwood | Residential Loans at Fair Value | Conforming Loan	'	'
Mortgage Loans on Real Estate [Line Items]	'	'
Residential loans	399,145	11,502
Redwood | Residential Loans at Fair Value | Jumbo Loan	'	'
Mortgage Loans on Real Estate [Line Items]	'	'
Residential loans	1,101,782	391,100
Redwood | Residential Loans at Lower of Cost or Fair Value	'	'
Mortgage Loans on Real Estate [Line Items]	'	'
Residential loans	1,502	1,665
Redwood | Residential Loans Held For Investment at Fair Value	'	'
Mortgage Loans on Real Estate [Line Items]	'	'
Residential loans	238,651	'
Sequoia	'	'
Mortgage Loans on Real Estate [Line Items]	'	'
Residential loans	1,546,507	1,762,167
Sequoia | Residential Loans Held For Investment At Amortized Cost	'	'
Mortgage Loans on Real Estate [Line Items]	'	'
Residential loans	$1,546,507	$1,762,167

Residential_Loans_Additional_I

Residential Loans - Additional Information (Detail) (USD $)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
			Contract		Contract
Mortgage Loans on Real Estate [Line Items]	'	'	'	'	'
Carrying value	$3,287,587,000	'	$3,287,587,000	'	$2,166,434,000
Residential Loans Held for Investment	'	'	'	'	'
Mortgage Loans on Real Estate [Line Items]	'	'	'	'	'
Carrying value	1,546,507,000	'	1,546,507,000	'	1,762,167,000
Principal value	1,554,876,000	'	1,554,876,000	'	1,770,803,000
Unamortized premium, net	13,540,000	'	13,540,000	'	16,791,000
Weighted average original loan-to-value (LTV)	66.00%	'	66.00%	'	'
Weighted average original Fair Isaac Corporation (FICO) score	733	'	733	'	'
Charge-offs, net	1,000,000	1,000,000	3,000,000	3,000,000	'
Principal value	6,000,000	3,000,000	14,000,000	10,000,000	'
Residential Loans Held for Investment | Residential Loans Acquired Prior To July 1st 2004	'	'	'	'	'
Mortgage Loans on Real Estate [Line Items]	'	'	'	'	'
Principal value	629,000,000	'	629,000,000	'	731,000,000
Unamortized premium, net	8,000,000	'	8,000,000	'	11,000,000
Percentage of loans prepaid	'	'	14.00%	'	'
Percentage of premiums amortized	'	'	23.00%	'	'
Residential Loans Held for Investment | Residential Loans Acquired After July 1st 2004	'	'	'	'	'
Mortgage Loans on Real Estate [Line Items]	'	'	'	'	'
Principal value	929,000,000	'	929,000,000	'	1,000,000,000
Unamortized premium, net	5,000,000	'	5,000,000	'	6,000,000
Percentage of loans prepaid	'	'	11.00%	'	'
Percentage of premiums amortized	'	'	13.00%	'	'
Residential Loans Held for Investment | First Mortgage	'	'	'	'	'
Mortgage Loans on Real Estate [Line Items]	'	'	'	'	'
Percentage of loan portfolio	99.00%	'	99.00%	'	'
Residential Loans Held for Investment | Second Mortgage	'	'	'	'	'
Mortgage Loans on Real Estate [Line Items]	'	'	'	'	'
Percentage of loan portfolio	1.00%	'	1.00%	'	'
Residential Loans	'	'	'	'	'
Mortgage Loans on Real Estate [Line Items]	'	'	'	'	'
Charge-offs, net	1,355,000	818,000	2,833,000	3,363,000	'
Loss confirmation period	'	'	'23 months	'	'
Average recorded investment of loans individually evaluated for impairment	15,000,000	8,000,000	12,000,000	7,000,000	'
Interest income recognized on impaired loans	32,000	81,000	99,000	102,000	'
Residential Loans at Fair Value	'	'	'	'	'
Mortgage Loans on Real Estate [Line Items]	'	'	'	'	'
Carrying value	1,500,000,000	'	1,500,000,000	'	403,000,000
Number of loans	'	'	2,862	'	537
Principal value	1,460,000,000	'	1,460,000,000	'	399,000,000
Principal value	3,310,000,000	'	6,120,000,000	'	'
Positive Valuation adjustments	13,446,000	-10,804,000	34,554,000	-17,339,000	'
Residential Loans at Lower of Cost or Fair Value	'	'	'	'	'
Mortgage Loans on Real Estate [Line Items]	'	'	'	'	'
Carrying value	1,502,000	'	1,502,000	'	1,665,000
Number of loans	'	'	9	'	10
Principal value	2,000,000	'	2,000,000	'	2,000,000
Valuation adjustments	43,000	'	54,000	'	'
Residential Loans Held For Investment at Fair Value	'	'	'	'	'
Mortgage Loans on Real Estate [Line Items]	'	'	'	'	'
Carrying value	238,651,000	'	238,651,000	'	'
Principal balance of loans transferred	235,000,000	'	'	'	'
Fair value of loans transferred	241,000,000	'	'	'	'
Residential Loans Held For Sale	'	'	'	'	'
Mortgage Loans on Real Estate [Line Items]	'	'	'	'	'
Carrying value	1,502,429,000	'	1,502,429,000	'	404,267,000
Residential Loans Held For Sale | Mortgage Servicing Rights	'	'	'	'	'
Mortgage Loans on Real Estate [Line Items]	'	'	'	'	'
Carrying value	$1,610,000,000	'	$1,610,000,000	'	'

Carrying_Value_for_Residential

Carrying Value for Residential Loans Held-for-Investment at Amortized Cost (Detail) (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Mortgage Loans on Real Estate [Line Items]	'	'
Carrying Value	$3,287,587	$2,166,434
Residential Loans Held For Investment At Amortized Cost	'	'
Mortgage Loans on Real Estate [Line Items]	'	'
Principal balance	1,554,876	1,770,803
Unamortized premium, net	13,540	16,791
Recorded investment	1,568,416	1,787,594
Allowance for loan losses	-21,909	-25,427
Carrying Value	$1,546,507	$1,762,167

Recorded_Investment_in_Residen

Recorded Investment in Residential Loans Held-For-Investment Organized by Year of Origination (Detail) (Residential Loans Held for Investment, USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Financing Receivable, Recorded Investment [Line Items]	'	'
Residential loans	$1,568,416	$1,787,594
2003 & Earlier	'	'
Financing Receivable, Recorded Investment [Line Items]	'	'
Residential loans	758,768	881,364
2004	'	'
Financing Receivable, Recorded Investment [Line Items]	'	'
Residential loans	459,050	513,458
2005	'	'
Financing Receivable, Recorded Investment [Line Items]	'	'
Residential loans	59,946	62,675
2006	'	'
Financing Receivable, Recorded Investment [Line Items]	'	'
Residential loans	138,263	149,776
2009	'	'
Financing Receivable, Recorded Investment [Line Items]	'	'
Residential loans	19,273	25,860
2010	'	'
Financing Receivable, Recorded Investment [Line Items]	'	'
Residential loans	80,209	92,728
2011	'	'
Financing Receivable, Recorded Investment [Line Items]	'	'
Residential loans	$52,907	$61,733

Summary_of_Activity_in_Allowan

Summary of Activity in Allowance for Losses on Residential Loans (Detail) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Financing Receivable, Allowance for Credit Losses [Line Items]	'	'	'	'
(Reversal of provision) provision for loan losses	($1,596)	$1,727	($629)	$493
Residential Loans	'	'	'	'
Financing Receivable, Allowance for Credit Losses [Line Items]	'	'	'	'
Balance at beginning of period	23,972	23,150	25,427	28,504
Charge-offs, net	-1,355	-818	-2,833	-3,363
(Reversal of provision) provision for loan losses	-708	883	-685	-1,926
Balance at End of Period	$21,909	$23,215	$21,909	$23,215

Loans_Collectively_Evaluated_f

Loans Collectively Evaluated for Impairment (Detail) (Residential Loans, USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Residential Loans	'	'
Financing Receivable, Impaired [Line Items]	'	'
Principal balance	$1,539,330	$1,762,165
Recorded investment	1,553,147	1,779,161
Related allowance	$20,580	$24,762

Recorded_Investment_and_Past_D

Recorded Investment and Past Due Status of Residential Loans Collectively Evaluated for Impairment (Detail) (Residential Loans, USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Financing Receivable, Recorded Investment, Past Due [Line Items]	'	'
Total Loans	$1,553,147	$1,779,161
Collectively Evaluated for Impairment	'	'
Financing Receivable, Recorded Investment, Past Due [Line Items]	'	'
30-59 Days Past Due	25,885	34,187
60-89 Days Past Due	10,046	13,248
90+ Days Past Due	73,355	79,010
Current	$1,443,861	$1,652,716

Loan_Modifications_Determined_

Loan Modifications Determined to be Troubled Debt Restructuring (Detail) (Residential Loans, USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
	Contract	Contract	Contract	Contract
Residential Loans	'	'	'	'
Financing Receivable, Modifications [Line Items]	'	'	'	'
Number of modifications	8	5	22	12
Pre-modification outstanding recorded investment	$2,041	$1,144	$7,008	$2,939
Post-modification outstanding recorded investment	2,081	898	7,245	2,838
Loan modification effect on net interest income after provision and other MVA	-494	-555	-1,714	-863
Number of modifications	3	1	9	4
Recorded investment	$672	$201	$3,165	$788

Loans_Individually_Evaluated_f

Loans Individually Evaluated for Impairment (Detail) (Residential Loans, USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Residential Loans	'	'
Financing Receivable, Impaired [Line Items]	'	'
Principal balance	$15,546	$8,638
Recorded investment	15,269	8,433
Related allowance	$1,329	$665

Recorded_Investment_and_Past_D1

Recorded Investment and Past Due Status of Residential Loans Individually Evaluated for Impairment (Detail) (Residential Loans, USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Financing Receivable, Recorded Investment, Past Due [Line Items]	'	'
Total Loans	$15,269	$8,433
Individually Evaluated for Impairment	'	'
Financing Receivable, Recorded Investment, Past Due [Line Items]	'	'
30-59 Days Past Due	1,842	1,560
60-89 Days Past Due	1,538	'
90+ Days Past Due	544	567
Current	$11,345	$6,306

Summary_of_Classifications_and1

Summary of Classifications and Carrying Value of Commercial Loans (Detail) (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Commercial Loans [Line Items]	'	'
Commercial loans	$497,997	$432,455
Commercial Loans at Fair Value	'	'
Commercial Loans [Line Items]	'	'
Commercial loans	104,709	89,111
Commercial Loans Held-for-Investment, at Fair Value	'	'
Commercial Loans [Line Items]	'	'
Commercial loans	70,712	'
Commercial Loans Held-for-Investment, at Amortized Cost	'	'
Commercial Loans [Line Items]	'	'
Commercial loans	$322,576	$343,344

Commercial_Loans_Additional_In

Commercial Loans - Additional Information (Detail) (USD $)

9 Months Ended

3 Months Ended

9 Months Ended

12 Months Ended

3 Months Ended

9 Months Ended

12 Months Ended

3 Months Ended

9 Months Ended

Sep. 30, 2014

Sep. 30, 2013

Dec. 31, 2013

Sep. 30, 2014

Dec. 31, 2013

Sep. 30, 2014

Sep. 30, 2014

Dec. 31, 2013

Sep. 30, 2014

Sep. 30, 2014

Dec. 31, 2013

Sep. 30, 2014

Sep. 30, 2014

Dec. 31, 2013

Sep. 30, 2014

Dec. 31, 2013

Sep. 30, 2014

Dec. 31, 2013

Sep. 30, 2014

Dec. 31, 2013

Sep. 30, 2014

Sep. 30, 2014

Commercial Loans Held For Investment

Commercial Loans Held For Investment

Commercial Loans Held For Sale

Commercial Loans Held For Sale

Commercial Loans Held For Sale

Commercial Loans Held-for-Investment, at Amortized Cost

Commercial Loans Held-for-Investment, at Amortized Cost

Commercial Loans Held-for-Investment, at Amortized Cost

Commercial Loans Held-for-Investment, at Amortized Cost

Commercial Loans Held-for-Investment, at Amortized Cost

Commercial Loans Held-for-Investment, at Amortized Cost

Commercial Loans Held-for-Investment, at Amortized Cost

Commercial Loans Held-for-Investment, at Amortized Cost

Commercial Loans Held-for-Investment, at Amortized Cost

Commercial Loans Held-for-Investment, at Amortized Cost

Commercial Loans Held-for-Investment, at Amortized Cost

Commercial Loans Held-for-Investment, at Amortized Cost

Commercial Loans Held-for-Investment, at Fair Value

Commercial Loans Held-for-Investment, at Fair Value

Contract

Contract

Contract

Contract

Originated During 2014

Originated During 2013

Originated During 2013

Originated During 2012

Originated During 2012

Originated During 2011

Originated During 2011

Originated During 2010

Originated During 2010

Contract

Commercial Loans [Line Items]

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Commercial loans financed through Commercial Securitization entity

'

'

'

$205,000,000

$258,000,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Number of loans

'

'

'

'

'

'

7

7

'

55

50

'

'

'

'

'

'

'

'

'

'

3

Principal value

'

'

'

'

'

103,000,000

103,000,000

88,000,000

'

'

'

'

'

'

'

'

'

'

'

'

68,000,000

68,000,000

Carrying Value

497,997,000

'

432,455,000

393,288,000

343,344,000

104,709,000

104,709,000

89,111,000

322,576,000

322,576,000

343,344,000

'

'

'

'

'

'

'

'

'

70,712,000

70,712,000

Senior commercial loans, held for sale

6,844,403,000

6,864,921,000

'

'

'

340,000,000

578,000,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

31,000,000

Valuation adjustments

'

'

'

'

'

4,000,000

14,000,000

'

'

'

'

'

'

'

'

'

'

'

'

'

-420,000

2,000,000

Principal balance

'

'

'

'

'

'

'

'

332,258,000

332,258,000

353,331,000

'

'

'

'

'

'

'

'

'

'

'

Senior commercial loans, held for Investment

'

'

'

'

'

'

'

'

26,000,000

34,000,000

'

'

'

'

'

'

'

'

'

'

'

'

Recorded investment

'

'

'

'

'

'

'

'

$330,005,000

$330,005,000

$350,717,000

'

'

'

'

'

'

'

'

'

'

'

Percentage of loan portfolio

'

'

'

'

'

'

'

'

'

'

'

10.00%

20.00%

19.00%

37.00%

43.00%

29.00%

34.00%

4.00%

4.00%

'

'

Commercial_Loans_HeldForInvest

Commercial Loans Held-For-Investment at Amortized Cost (Detail) (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Commercial Loans [Line Items]	'	'
Carrying Value	$497,997	$432,455
Commercial Loans Held-for-Investment, at Amortized Cost	'	'
Commercial Loans [Line Items]	'	'
Principal balance	332,258	353,331
Unamortized discount, net	-2,253	-2,614
Recorded investment	330,005	350,717
Allowance for loan losses	-7,429	-7,373
Carrying Value	$322,576	$343,344

Commercial_Loans_Held_for_Inve

Commercial Loans Held for Investment by Risk Category (Detail) (Commercial Loans Held For Investment, USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Commercial Loans [Line Items]	'	'
Commercial loans held for investment	$332,258	$353,331
Pass	'	'
Commercial Loans [Line Items]	'	'
Commercial loans held for investment	306,575	309,792
Watch List	'	'
Commercial Loans [Line Items]	'	'
Commercial loans held for investment	$25,683	$43,539

Summary_of_Activity_in_Allowan1

Summary of Activity in Allowance for Commercial Loan Losses (Detail) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Financing Receivable, Allowance for Credit Losses [Line Items]	'	'	'	'
Reversal of provision (provision) for loan losses	($1,596)	$1,727	($629)	$493
Commercial Loans	'	'	'	'
Financing Receivable, Allowance for Credit Losses [Line Items]	'	'	'	'
Balance at beginning of period	8,317	5,660	7,373	4,084
Charge-offs, net	'	'	'	'
Reversal of provision (provision) for loan losses	-888	844	56	2,420
Balance at End of Period	$7,429	$6,504	$7,429	$6,504

Commercial_Loans_Collectively_

Commercial Loans Collectively Evaluated for Impairment (Detail) (Commercial Loans, USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Commercial Loans	'	'
Financing Receivable, Impaired [Line Items]	'	'
Principal balance	$332,258	$353,331
Recorded investment	330,005	350,717
Related allowance	$7,429	$7,373

Fair_Values_of_Real_Estate_Sec

Fair Values of Real Estate Securities (Detail) (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Investment Holdings [Line Items]	'	'
Trading	$108,750	$124,555
Available-for-sale	1,286,235	1,558,306
Real Estate Securities	$1,394,985	$1,682,861

Real_Estate_Securities_Additio

Real Estate Securities - Additional Information (Detail) (USD $)	3 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
	Investment	Investment		Investment
Investment Holdings [Line Items]	'	'	'	'
Trading securities	$108,750,000	$108,750,000	'	$124,555,000
Number of AFS securities	294	294	'	303
Number of securities in unrealized loss position	30	30	'	76
Number of securities in a continuous unrealized loss position for twelve consecutive months or longer	12	12	'	5
Gross unrealized losses on AFS securities	3,000,000	3,000,000	'	'
Income Statement, other-than-temporary impairments	188,000	565,000	1,666,000	'
Accumulated other comprehensive income, other-than-temporary impairments	0	4,209,000	'	'
Maximum	'	'	'	'
Investment Holdings [Line Items]	'	'	'	'
Other than temporary impairment loss on AFS securities	1,000,000	'	'	'
Income Statement, other-than-temporary impairments	1,000,000	'	'	'
Senior Securities	'	'	'	'
Investment Holdings [Line Items]	'	'	'	'
Trading securities	108,370,000	108,370,000	'	119,575,000
Interest Only Securities	'	'	'	'
Investment Holdings [Line Items]	'	'	'	'
Trading securities	105,000,000	105,000,000	'	'
Residential Senior and Subordinate Securities	'	'	'	'
Investment Holdings [Line Items]	'	'	'	'
Trading securities	3,000,000	3,000,000	'	'
Residential Subordinate Securities | Maximum	'	'	'	'
Investment Holdings [Line Items]	'	'	'	'
Trading securities	1,000,000	1,000,000	'	'
Prime | Senior Securities	'	'	'	'
Investment Holdings [Line Items]	'	'	'	'
Trading securities	100,612,000	100,612,000	'	110,505,000
Securities financed through non-recourse resecuritization entity	111,000,000	111,000,000	'	131,000,000
Non-prime | Senior Securities	'	'	'	'
Investment Holdings [Line Items]	'	'	'	'
Trading securities	7,758,000	7,758,000	'	9,070,000
Securities financed through non-recourse resecuritization entity	122,000,000	122,000,000	'	132,000,000
Residential	'	'	'	'
Investment Holdings [Line Items]	'	'	'	'
Marketable securities, due from five to ten years	2,000,000	2,000,000	'	'
Marketable securities, less than five years	9,000,000	9,000,000	'	'
Trading Securities | Residential Senior and Subordinate Securities	'	'	'	'
Investment Holdings [Line Items]	'	'	'	'
Unpaid principal balance	3,000,000	3,000,000	'	'
Trading Securities | Residential Subordinate Securities	'	'	'	'
Investment Holdings [Line Items]	'	'	'	'
Unpaid principal balance	$11,000,000	$11,000,000	'	'

Trading_Securities_by_Collater

Trading Securities by Collateral Type (Detail) (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Investment Holdings [Line Items]	'	'
Trading securities	$108,750	$124,555
Senior Securities	'	'
Investment Holdings [Line Items]	'	'
Trading securities	108,370	119,575
Senior Securities | Prime	'	'
Investment Holdings [Line Items]	'	'
Trading securities	100,612	110,505
Senior Securities | Non-prime	'	'
Investment Holdings [Line Items]	'	'
Trading securities	7,758	9,070
Subordinate Securities	'	'
Investment Holdings [Line Items]	'	'
Trading securities	380	4,980
Subordinate Securities | Prime	'	'
Investment Holdings [Line Items]	'	'
Trading securities	$380	$4,980

Available_for_Sale_Securities_

Available for Sale Securities by Collateral Type (Detail) (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Investment Holdings [Line Items]	'	'
Available-for-sale securities	$1,286,235	$1,558,306
Senior Securities	'	'
Investment Holdings [Line Items]	'	'
Available-for-sale securities	545,036	855,692
Senior Securities | Prime	'	'
Investment Holdings [Line Items]	'	'
Available-for-sale securities	358,813	662,306
Senior Securities | Non-prime	'	'
Investment Holdings [Line Items]	'	'
Available-for-sale securities	186,223	193,386
Re-REMIC	'	'
Investment Holdings [Line Items]	'	'
Available-for-sale securities	176,117	176,376
Subordinate Securities	'	'
Investment Holdings [Line Items]	'	'
Available-for-sale securities	565,082	526,238
Subordinate Securities | Prime	'	'
Investment Holdings [Line Items]	'	'
Available-for-sale securities	564,932	526,095
Subordinate Securities | Non-prime	'	'
Investment Holdings [Line Items]	'	'
Available-for-sale securities	$150	$143

Components_of_Carrying_Value_W

Components of Carrying Value (Which Equals Fair Value) of Residential Available for Sale Securities (Detail) (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Schedule of Available-for-sale Securities [Line Items]	'	'
Carrying Value	$1,286,235	$1,558,306
Senior Securities	'	'
Schedule of Available-for-sale Securities [Line Items]	'	'
Carrying Value	545,036	855,692
Senior Securities | Prime	'	'
Schedule of Available-for-sale Securities [Line Items]	'	'
Carrying Value	358,813	662,306
Senior Securities | Non-prime	'	'
Schedule of Available-for-sale Securities [Line Items]	'	'
Carrying Value	186,223	193,386
Re-REMIC	'	'
Schedule of Available-for-sale Securities [Line Items]	'	'
Carrying Value	176,117	176,376
Subordinate Securities	'	'
Schedule of Available-for-sale Securities [Line Items]	'	'
Carrying Value	565,082	526,238
Subordinate Securities | Prime	'	'
Schedule of Available-for-sale Securities [Line Items]	'	'
Carrying Value	564,932	526,095
Subordinate Securities | Non-prime	'	'
Schedule of Available-for-sale Securities [Line Items]	'	'
Carrying Value	150	143
Residential	'	'
Schedule of Available-for-sale Securities [Line Items]	'	'
Principal balance	1,466,234	1,808,992
Credit reserve	-73,875	-116,870
Unamortized discount, net	-299,105	-298,469
Amortized cost	1,093,254	1,393,653
Amortized cost	1,093,254	1,393,653
Gross unrealized gains	195,988	187,786
Gross unrealized losses	-3,007	-23,133
Carrying Value	1,286,235	1,558,306
Residential | Senior Securities | Prime	'	'
Schedule of Available-for-sale Securities [Line Items]	'	'
Principal balance	362,902	670,051
Credit reserve	-4,082	-10,144
Unamortized discount, net	-41,314	-44,133
Amortized cost	317,506	615,774
Amortized cost	317,506	615,774
Gross unrealized gains	42,113	47,980
Gross unrealized losses	-805	-1,448
Carrying Value	358,814	662,306
Residential | Senior Securities | Non-prime	'	'
Schedule of Available-for-sale Securities [Line Items]	'	'
Principal balance	202,812	218,603
Credit reserve	-9,894	-13,840
Unamortized discount, net	-33,676	-36,882
Amortized cost	159,242	167,881
Amortized cost	159,242	167,881
Gross unrealized gains	27,004	25,654
Gross unrealized losses	-24	-149
Carrying Value	186,222	193,386
Residential | Re-REMIC	'	'
Schedule of Available-for-sale Securities [Line Items]	'	'
Principal balance	206,212	214,046
Credit reserve	-16,553	-30,429
Unamortized discount, net	-80,986	-80,188
Amortized cost	108,673	103,429
Amortized cost	108,673	103,429
Gross unrealized gains	67,444	72,947
Carrying Value	176,117	176,376
Residential | Subordinate Securities	'	'
Schedule of Available-for-sale Securities [Line Items]	'	'
Principal balance	694,308	706,292
Credit reserve	-43,346	-62,457
Unamortized discount, net	-143,129	-137,266
Amortized cost	507,833	506,569
Amortized cost	507,833	506,569
Gross unrealized gains	59,427	41,205
Gross unrealized losses	-2,178	-21,536
Carrying Value	$565,082	$526,238

Changes_of_Unamortized_Discoun

Changes of Unamortized Discount and Designated Credit Reserves on Residential Available for Sale Securities (Detail) (Residential, USD $)	3 Months Ended	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2014
Residential	'	'
Credit Reserve	'	'
Beginning balance	$83,276	$116,870
Amortization of net discount	'	'
Realized credit losses	-1,692	-9,002
Acquisitions	1,589	1,846
Sales, calls, other	-1,013	-2,425
Impairments	188	565
Transfers to (release of) credit reserves, net	-8,473	-33,979
Ending Balance	73,875	73,875
Unamortized Discount Net	'	'
Beginning balance	304,293	298,469
Amortization of net discount	-10,890	-32,774
Realized credit losses	'	'
Acquisitions	4,404	7,241
Sales, calls, other	-7,175	-7,810
Impairments	'	'
Transfers to (release of) credit reserves, net	8,473	33,979
Ending Balance	$299,105	$299,105

Components_of_Carrying_Value_o

Components of Carrying Value of Residential Available for Sale Securities in Unrealized Loss Position (Detail) (Residential, USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Residential	'	'
Schedule of Available-for-sale Securities [Line Items]	'	'
Less Than 12 Consecutive Months Amortized Cost	$104,118	$607,030
Less Than 12 Consecutive Months Gross Unrealized Losses	-1,097	-21,195
Less Than 12 Consecutive Months Fair Value	103,021	585,835
12 Consecutive Months or Longer Amortized Cost	75,582	19,828
12 Consecutive Months or Longer Gross Unrealized Losses	-1,910	-1,938
12 Consecutive Months or Longer Fair Value	$73,672	$17,890

Summary_of_Significant_Valuati

Summary of Significant Valuation Assumptions for Available for Sale Securities (Detail)	9 Months Ended
	Sep. 30, 2014
Prime | Minimum	'
Schedule of Available-for-sale Securities [Line Items]	'
Prepayment rates	15.00%
Loss severity	20.00%
Projected default rate	1.00%
Prime | Maximum	'
Schedule of Available-for-sale Securities [Line Items]	'
Prepayment rates	20.00%
Loss severity	52.00%
Projected default rate	22.00%
Non-prime | Minimum	'
Schedule of Available-for-sale Securities [Line Items]	'
Prepayment rates	10.00%
Loss severity	35.00%
Projected default rate	15.00%
Non-prime | Maximum	'
Schedule of Available-for-sale Securities [Line Items]	'
Prepayment rates	10.00%
Loss severity	35.00%
Projected default rate	15.00%

Activity_of_Credit_Component_o

Activity of Credit Component of Other-than-Temporary Impairments (Detail) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]	'	'	'	'
Balance at beginning of period	$34,256	$42,674	$37,149	$50,852
Initial credit impairments	'	'	261	'
Subsequent credit impairments	'	'	70	'
Securities sold, or expected to sell	-18	-3,288	-922	-5,479
Securities with no outstanding principal at period end	'	-764	-2,320	-6,751
Balance at End of Period	$34,238	$38,622	$34,238	$38,622

Gross_Realized_Gains_and_Losse

Gross Realized Gains and Losses on Sales and Calls of Available for Sale Securities (Detail) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Schedule of Available-for-sale Securities [Line Items]	'	'	'	'
Gross realized gains	$10,227	$10,532	$11,219	$22,762
Gross realized losses	-2,713	-214	-2,713	-214
Total Realized Gains on Sales and Calls of AFS Securities, Net	7,976	10,318	9,955	22,881
Call Option	'	'	'	'
Schedule of Available-for-sale Securities [Line Items]	'	'	'	'
Gross realized gains	462	'	1,449	333
Gross realized losses	'	'	'	'

Schedule_of_Fair_Value_of_MSRs

Schedule of Fair Value of MSRs and Aggregate Principal Amounts of Associated Loans (Detail) (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Servicing Assets at Fair Value [Line Items]	'	'
MSR Fair Value	$135,152	$64,824
Associated Principal	12,216,816	5,791,758
Conforming Loan	'	'
Servicing Assets at Fair Value [Line Items]	'	'
MSR Fair Value	73,953	3,331
Associated Principal	6,254,058	308,258
Jumbo Loan	'	'
Servicing Assets at Fair Value [Line Items]	'	'
MSR Fair Value	61,199	61,493
Associated Principal	$5,962,758	$5,483,500

Activity_for_Residential_First

Activity for Residential First-Lien Mortgage Servicing Rights (Detail) (USD $)	3 Months Ended				9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014		Sep. 30, 2013		Sep. 30, 2014		Sep. 30, 2013
Servicing Assets at Fair Value [Line Items]	'		'		'		'
Balance at beginning of period	'		'		$64,824		'
Additions	'		'		30,962		41,128
Balance at End of Period	135,152		'		135,152		'
Mortgage Servicing Rights	'		'		'		'
Servicing Assets at Fair Value [Line Items]	'		'		'		'
Balance at beginning of period	71,225		43,098		64,824		5,315
Additions	61,606		16,676		76,272		45,291
Changes in assumptions	4,323	[1]	1,444	[1]	-318	[1]	11,764	[1]
Other changes	-2,002	[2]	-984	[2]	-5,626	[2]	-2,136	[2]
Balance at End of Period	$135,152		$60,234		$135,152		$60,234
[1]	Primarily reflects changes in prepayment assumptions due to changes in market interest rates.
[2]	Represents changes due to realization of expected cash flows.

Details_of_Retention_and_Purch

Details of Retention and Purchase of MSRs (Detail) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Mortgage Servicing Rights [Line Items]	'	'	'	'
MSR Fair Value	'	'	$30,962	$41,128
Mortgage Servicing Rights	'	'	'	'
Mortgage Servicing Rights [Line Items]	'	'	'	'
MSR Fair Value	61,606	16,676	76,272	45,291
Associated Principal	5,365,350	'	6,835,123	'
Mortgage Servicing Rights | Jumbo MSR Additions	'	'	'	'
Mortgage Servicing Rights [Line Items]	'	'	'	'
MSR Fair Value	4,356	'	7,030	'
Associated Principal	516,004	'	831,998	'
Mortgage Servicing Rights | Jumbo MSR Additions | Securitization	'	'	'	'
Mortgage Servicing Rights [Line Items]	'	'	'	'
MSR Fair Value	4,356	'	6,542	'
Associated Principal	516,004	'	773,205	'
Mortgage Servicing Rights | Jumbo MSR Additions | Loan Sales	'	'	'	'
Mortgage Servicing Rights [Line Items]	'	'	'	'
MSR Fair Value	'	'	488	'
Associated Principal	'	'	58,793	'
Mortgage Servicing Rights | Conforming MSR Additions	'	'	'	'
Mortgage Servicing Rights [Line Items]	'	'	'	'
MSR Fair Value	57,250	'	69,242	'
Associated Principal	4,849,346	'	6,003,125	'
Mortgage Servicing Rights | Conforming MSR Additions | Loan Sales	'	'	'	'
Mortgage Servicing Rights [Line Items]	'	'	'	'
MSR Fair Value	14,630	'	23,933	'
Associated Principal	1,352,122	'	2,232,559	'
Mortgage Servicing Rights | Conforming MSR Additions | From purchases	'	'	'	'
Mortgage Servicing Rights [Line Items]	'	'	'	'
MSR Fair Value	42,620	'	45,309	'
Associated Principal	$3,497,224	'	$3,770,566	'

Components_of_Mortgage_Servici

Components of Mortgage Servicing Rights Income (Detail) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Servicing income, net:	'	'	'	'
Income	$4,590	$3,008	$12,287	$5,820
Cost of sub-servicer	-437	-355	-1,040	-767
Net servicing income	4,153	2,653	11,247	5,053
Market valuation adjustments	2,321	460	-5,944	9,628
MSR provision for repurchases	-653	'	-653	'
Income from MSRs, Net	$5,821	$3,113	$4,650	$14,681

Aggregate_Fair_Value_and_Notio

Aggregate Fair Value and Notional Amount of Derivative Financial Instruments (Detail) (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Derivative [Line Items]	'	'
Fair Value	($30,507)	($10,380)
Notional Amount	3,555,452	1,488,922
Derivative Assets	'	'
Derivative [Line Items]	'	'
Fair Value	7,756	7,787
Notional Amount	1,628,513	859,360
Derivative Assets | Interest Rate Swaps	'	'
Derivative [Line Items]	'	'
Fair Value	148	5,972
Notional Amount	60,500	268,000
Derivative Assets | TBAs	'	'
Derivative [Line Items]	'	'
Fair Value	1,496	1,138
Notional Amount	671,000	241,000
Derivative Assets | Swaptions	'	'
Derivative [Line Items]	'	'
Fair Value	2,744	596
Notional Amount	420,000	340,000
Derivative Assets | Credit Default Index Swaps	'	'
Derivative [Line Items]	'	'
Fair Value	2,372	'
Notional Amount	75,000	'
Derivative Assets | Loan Purchase Commitments	'	'
Derivative [Line Items]	'	'
Fair Value	933	'
Notional Amount	273,781	360
Derivative Assets | Loan forward Sales Commitments	'	'
Derivative [Line Items]	'	'
Fair Value	63	81
Notional Amount	128,232	10,000
Derivative Liabilities	'	'
Derivative [Line Items]	'	'
Fair Value	-38,263	-18,167
Notional Amount	1,926,939	629,562
Derivative Liabilities | Interest Rate Swaps	'	'
Derivative [Line Items]	'	'
Fair Value	-476	-80
Notional Amount	154,500	50,500
Derivative Liabilities | TBAs	'	'
Derivative [Line Items]	'	'
Fair Value	-3,298	-661
Notional Amount	1,274,500	235,000
Derivative Liabilities | Loan Purchase Commitments	'	'
Derivative [Line Items]	'	'
Fair Value	-82	-379
Notional Amount	50,439	42,562
Derivative Liabilities | Loan forward Sales Commitments	'	'
Derivative [Line Items]	'	'
Fair Value	-23	'
Notional Amount	200,000	'
Derivative Liabilities | Futures	'	'
Derivative [Line Items]	'	'
Fair Value	-411	-528
Notional Amount	108,000	162,000
Derivative Liabilities | Cash Flow Hedging | Interest Rate Swaps	'	'
Derivative [Line Items]	'	'
Fair Value	-33,973	-16,519
Notional Amount	$139,500	$139,500

Derivative_Financial_Instrumen2

Derivative Financial Instruments - Additional Information (Detail) (USD $)

Sep. 30, 2014

Dec. 31, 2013

Sep. 30, 2014

Sep. 30, 2013

Sep. 30, 2014

Sep. 30, 2013

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2013

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2013

Sep. 30, 2014

Sep. 30, 2013

Sep. 30, 2014

Sep. 30, 2013

Cash Flow Hedging

Cash Flow Hedging

Cash Flow Hedging

Cash Flow Hedging

Loan Purchase and Forward Sales Commitments

Loan Purchase and Forward Sales Commitments

Unsecuritized Residential and Commercial Loans

Unsecuritized Residential and Commercial Loans

Unsecuritized Residential and Commercial Loans

Unsecuritized Residential and Commercial Loans

Unsecuritized Residential and Commercial Loans

Unsecuritized Residential and Commercial Loans

Unsecuritized Residential and Commercial Loans

Maximum

Maximum

Maximum

Maximum

Maximum

Maximum

Interest Rate Swaps

Interest Rate Swaps

Interest Rate Swaps

Interest Rate Swaps

Interest Rate Contract

Futures

TBAs

Credit Default Index Swaps

Interest Rate Swaps

Unsecuritized Residential and Commercial Loans

Derivative [Line Items]

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Notional Amount

$3,555,452,000

$1,488,922,000

$140,000,000

'

$140,000,000

'

'

'

'

'

'

$635,000,000

$108,000,000

$1,900,000,000

$75,000,000

'

'

'

'

'

'

Valuation adjustments on derivatives

'

'

-3,000,000

4,000,000

-17,000,000

25,000,000

2,000,000

6,000,000

-4,000,000

-29,000,000

51,000,000

'

'

'

'

'

'

'

'

'

1,000,000

Net unrealized losses on interest rate agreements accounted for as cash flow hedges

33,000,000

16,000,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Hedges decreased in value recorded as a component of interest expense

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

100,000

100,000

131,000

219,000

'

'

Accumulated other comprehensive loss that will be amortized into interest expense

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

($1,000,000)

'

Impact_on_Interest_Expense_of_

Impact on Interest Expense of Interest Rate Agreements Accounted for as Cash Flow Hedges (Detail) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Derivative [Line Items]	'	'	'	'
Total interest expense	($23,350)	($21,725)	($63,560)	($61,444)
Cash Flow Hedging | Interest Rate Contract	'	'	'	'
Derivative [Line Items]	'	'	'	'
Net interest expense on cash flow interest rate agreements	-1,487	-1,474	-4,465	-4,406
Realized income (expense) due to ineffective portion of hedges	'	'	'	'
Realized net losses reclassified from other comprehensive income	-32	-62	-131	-219
Total interest expense	($1,519)	($1,536)	($4,596)	($4,625)

Summary_of_Other_Assets_Detail

Summary of Other Assets (Detail) (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Line Items]	'	'
Margin receivable	$56,217	$31,149
Investment receivable	24,814	8,923
Restricted investments	11,319	'
Other pledged collateral	5,000	5,000
FHLBC stock	4,846	'
REO	3,349	3,661
Prepaid expenses	2,350	1,850
Fixed assets and leasehold improvements	2,273	1,232
Other	2,600	1,825
Total Other Assets	$112,768	$53,640

Other_Assets_and_Accrued_Expen

Other Assets and Accrued Expense and Other Liabilities - Additional Information (Detail) (USD $)	3 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2014	Dec. 31, 2013
Other Assets and Other Liabilities [Line Items]	'	'	'
U.S. Treasury securities transferred to custodial account related to risk sharing arrangement	$11,000,000	'	'
Real estate owned (REO)	3,349,000	3,349,000	3,661,000
Amount related to transfers into REO	'	5,000,000	'
REO liquidations	'	5,000,000	'
Accumulated depreciation	2,000,000	2,000,000	'
Fixed assets	$4,000,000	$4,000,000	'
Sequoia	'	'	'
Other Assets and Other Liabilities [Line Items]	'	'	'
Number of REO properties recorded on balance sheet	16	16	20

Accrued_Expenses_and_Other_Lia

Accrued Expenses and Other Liabilities (Detail) (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Accrued Expenses And Other Liabilities [Line Items]	'	'
Accrued compensation	$12,562	$22,160
Legal reserve	10,400	12,000
MSR holdbacks payable	4,049	'
Residential repurchase reserve	3,771	1,771
Income tax payable	3,560	1,337
Derivative margin payable	2,873	4,700
Accrued operating expenses	2,170	4,291
Other	8,854	2,445
Total Other Liabilities	$48,239	$48,704

ShortTerm_Debt_Additional_Info

Short-Term Debt - Additional Information (Detail) (USD $)	3 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2014	Dec. 31, 2013
Short-term Debt [Line Items]	'	'	'
Committed line of credit	$10,000,000	$10,000,000	'
Securities pledged as collateral	812,000,000	812,000,000	'
Average balance of short-term debt	1,870,000,000	1,400,000,000	'
Accrued interest payable on short-term debt	1,610,000	1,610,000	1,000,000
Committed line of credit with financial institutions, outstanding	0	0	0
Residential Loans	'	'	'
Short-term Debt [Line Items]	'	'	'
Loan pledged as collateral	1,320,000,000	1,320,000,000	'
Commercial Loans	'	'	'
Short-term Debt [Line Items]	'	'	'
Committed line of credit	100,000,000	100,000,000	'
Loan pledged as collateral	$85,000,000	$85,000,000	'
Credit Agreement	'	'	'
Short-term Debt [Line Items]	'	'	'
Number of bank counterparties	17	17	'

Outstanding_Balances_of_ShortT

Outstanding Balances of Short-Term Debt by Type of Collateral Securing Debt (Detail) (USD $)	9 Months Ended	12 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
	Contract	Contract
Short-term Debt [Line Items]	'	'
Number of Facilities	17	13
Outstanding	$1,887,688	$862,763
Residential Loans	'	'
Short-term Debt [Line Items]	'	'
Number of Facilities	5	5
Outstanding	1,188,179	184,789
Limit	1,550,000	1,400,000
Residential Loans | Minimum	'	'
Short-term Debt [Line Items]	'	'
Maturity	'2014-12	'2014-01
Residential Loans | Maximum	'	'
Short-term Debt [Line Items]	'	'
Maturity	'2015-08	'2014-12
Commercial Loans	'	'
Short-term Debt [Line Items]	'	'
Number of Facilities	2	1
Outstanding	52,895	'
Limit	340,000	100,000
Maturity	'	'2014-04
Commercial Loans | Minimum	'	'
Short-term Debt [Line Items]	'	'
Maturity	'2015-04	'
Commercial Loans | Maximum	'	'
Short-term Debt [Line Items]	'	'
Maturity	'2015-09	'
Real Estate Securities	'	'
Short-term Debt [Line Items]	'	'
Number of Facilities	10	7
Outstanding	$646,614	$677,974
Real Estate Securities | Minimum	'	'
Short-term Debt [Line Items]	'	'
Maturity	'2014-10	'2014-01
Real Estate Securities | Maximum	'	'
Short-term Debt [Line Items]	'	'
Maturity	'2014-12	'2014-02

ShortTerm_Debt_by_Weighted_Ave

Short-Term Debt by Weighted Average Interest Rates and Collateral Type (Detail) (USD $)	9 Months Ended	12 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Short-term Debt [Line Items]	'	'
Amount Borrowed	$1,887,688	$862,763
Weighted Average Interest Rate	1.69%	1.42%
Weighted Average Days Until Maturity	'154 days	'61 days
Residential Loans	'	'
Short-term Debt [Line Items]	'	'
Amount Borrowed	1,188,179	184,789
Weighted Average Interest Rate	1.71%	1.71%
Weighted Average Days Until Maturity	'216 days	'228 days
Commercial Loans	'	'
Short-term Debt [Line Items]	'	'
Amount Borrowed	52,895	'
Weighted Average Interest Rate	5.15%	'
Weighted Average Days Until Maturity	'359 days	'
Real Estate Securities	'	'
Short-term Debt [Line Items]	'	'
Amount Borrowed	$646,614	$677,974
Weighted Average Interest Rate	1.37%	1.34%
Weighted Average Days Until Maturity	'23 days	'15 days

Remaining_Maturities_of_Short_

Remaining Maturities of Short Term Debt (Detail) (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Short-term Debt [Line Items]	'	'
Short-term debt	$1,887,688	$862,763
Within 30 Days	'	'
Short-term Debt [Line Items]	'	'
Short-term debt	548,890	659,262
31 to 90 Days	'	'
Short-term Debt [Line Items]	'	'
Short-term debt	213,330	54,434
Over 90 Days	'	'
Short-term Debt [Line Items]	'	'
Short-term debt	$1,125,468	$149,067

AssetBacked_Securities_Issued_1

Asset-Backed Securities Issued - Additional Information (Detail) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Debt Instrument [Line Items]	'	'	'
Description of interest rate	'Substantially all ABS issued pay variable rates of interest, which are indexed to one-, three-, or six-month LIBOR.	'	'
Asset-backed Securities	'	'	'
Debt Instrument [Line Items]	'	'	'
ABS issued	$1,656,202,000	'	$1,942,962,000
Amortization of deferred ABS issuance costs	2,000,000	3,000,000	'
Asset-backed Securities | Contractual maturities of over five years	'	'	'
Debt Instrument [Line Items]	'	'	'
ABS issued	1,640,000,000	'	'
Contractual maturities of ABS (in years)	'5 years	'	'
Asset-backed Securities | Maturity Less Than One Year	'	'	'
Debt Instrument [Line Items]	'	'	'
ABS issued	18,000,000	'	'
Contractual maturities of ABS, maximum (in years)	'1 year	'	'
Asset-backed Securities | Certificates With Principal Value	'	'	'
Debt Instrument [Line Items]	'	'	'
Principal value	1,667,439,000	'	1,956,951,000
Asset-backed Securities | Certificates With Principal Value | Contractual maturities of over five years	'	'	'
Debt Instrument [Line Items]	'	'	'
Principal value	1,650,000,000	'	'
Asset-backed Securities | Certificates With Principal Value | Maturity Less Than One Year	'	'	'
Debt Instrument [Line Items]	'	'	'
Principal value	$18,000,000	'	'

Components_of_AssetBacked_Secu

Components of Asset-Backed Securities Issued by Consolidated Securitization Entities Sponsored, Along With Other Selected Information (Detail) (USD $)

3 Months Ended

9 Months Ended

12 Months Ended

9 Months Ended

12 Months Ended

9 Months Ended

12 Months Ended

9 Months Ended

12 Months Ended

In Thousands, unless otherwise specified

Mar. 31, 2013

Sep. 30, 2014

Dec. 31, 2013

Sep. 30, 2014

Dec. 31, 2013

Sep. 30, 2014

Dec. 31, 2013

Sep. 30, 2014

Dec. 31, 2013

Sep. 30, 2014

Dec. 31, 2013

Sep. 30, 2014

Dec. 31, 2013

Sep. 30, 2014

Dec. 31, 2013

Sep. 30, 2014

Dec. 31, 2013

Sep. 30, 2014

Dec. 31, 2013

Sep. 30, 2014

Dec. 31, 2013

Sep. 30, 2014

Dec. 31, 2013

Sep. 30, 2014

Dec. 31, 2013

Asset-backed Securities

Asset-backed Securities

Asset-backed Securities

Asset-backed Securities

Asset-backed Securities

Asset-backed Securities

Asset-backed Securities

Asset-backed Securities

Asset-backed Securities

Asset-backed Securities

Asset-backed Securities

Asset-backed Securities

Asset-backed Securities

Asset-backed Securities

Asset-backed Securities

Asset-backed Securities

Asset-backed Securities

Asset-backed Securities

Asset-backed Securities

Asset-backed Securities

Asset-backed Securities

Asset-backed Securities

Asset-backed Securities

Asset-backed Securities

Certificates With Principal Value

Certificates With Principal Value

Interest Only Certificates

Interest Only Certificates

Sequoia

Sequoia

Sequoia

Sequoia

Sequoia

Sequoia

Sequoia

Sequoia

Sequoia

Sequoia

Residential Resecuritization

Residential Resecuritization

Residential Resecuritization

Residential Resecuritization

Commercial Securitization

Commercial Securitization

Commercial Securitization

Commercial Securitization

Contract

Contract

Minimum

Minimum

Maximum

Maximum

Certificates With Principal Value

Certificates With Principal Value

Interest Only Certificates

Interest Only Certificates

Contract

Contract

Certificates With Principal Value

Certificates With Principal Value

Contract

Contract

Certificates With Principal Value

Certificates With Principal Value

Debt Instrument [Line Items]

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Principal value

'

'

'

$1,667,439

$1,956,951

$2,318

$3,400

'

'

'

'

'

'

$1,495,988

$1,708,324

$2,318

$3,400

'

'

$56,508

$94,934

'

'

$114,943

$153,693

Unamortized discount

'

-13,555

-17,389

'

'

'

'

-13,555

-17,389

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Total ABS Issued

'

$1,656,202

$1,942,962

'

'

'

'

$1,484,751

$1,694,335

'

'

'

'

'

'

'

'

$56,508

$94,934

'

'

$114,943

$153,693

'

'

Weighted average interest rates, by series

'

'

'

'

'

'

'

'

'

0.08%

0.24%

4.26%

4.23%

'

'

'

'

2.16%

2.21%

'

'

5.62%

5.62%

'

'

Stated maturities

'2018

'

'

'

'

'

'

'

'

'2014

'2014

'2047

'2047

'

'

'

'

'2046

'2046

'

'

'2018

'2018

'

'

Number of series

'

'

'

'

'

'

'

24

24

'

'

'

'

'

'

'

'

1

1

'

'

1

1

'

'

Summary_of_Accrued_Interest_Pa

Summary of Accrued Interest Payable on Asset-Backed Securities Issued (Detail) (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Debt Instrument [Line Items]	'	'
Accrued interest payable	$10,480	$6,366
Asset-backed Securities | Variable Interest Entity, Primary Beneficiary	'	'
Debt Instrument [Line Items]	'	'
Accrued interest payable	1,580	1,949
Asset-backed Securities | Variable Interest Entity, Primary Beneficiary | Sequoia	'	'
Debt Instrument [Line Items]	'	'
Accrued interest payable	1,034	1,218
Asset-backed Securities | Variable Interest Entity, Primary Beneficiary | Residential Resecuritization	'	'
Debt Instrument [Line Items]	'	'
Accrued interest payable	7	11
Asset-backed Securities | Variable Interest Entity, Primary Beneficiary | Commercial Securitization	'	'
Debt Instrument [Line Items]	'	'
Accrued interest payable	$539	$720

Summary_of_Carrying_Value_Comp

Summary of Carrying Value Components of Collateral for Asset-Backed Securities Issued and Outstanding (Detail) (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Financial Instruments Owned and Pledged as Collateral [Line Items]	'	'
Collateral for ABS Issued	$2,013,807	$2,292,378
Residential Loans	'	'
Financial Instruments Owned and Pledged as Collateral [Line Items]	'	'
Collateral for ABS Issued	1,546,507	1,762,167
Commercial Loans	'	'
Financial Instruments Owned and Pledged as Collateral [Line Items]	'	'
Collateral for ABS Issued	204,741	257,741
Real Estate Securities	'	'
Financial Instruments Owned and Pledged as Collateral [Line Items]	'	'
Collateral for ABS Issued	233,311	263,204
Restricted Cash	'	'
Financial Instruments Owned and Pledged as Collateral [Line Items]	'	'
Collateral for ABS Issued	285	289
Accrued Interest Receivable	'	'
Financial Instruments Owned and Pledged as Collateral [Line Items]	'	'
Collateral for ABS Issued	3,915	5,316
REO	'	'
Financial Instruments Owned and Pledged as Collateral [Line Items]	'	'
Collateral for ABS Issued	'	3,661
Other Assets	'	'
Financial Instruments Owned and Pledged as Collateral [Line Items]	'	'
Collateral for ABS Issued	25,048	'
Sequoia	'	'
Financial Instruments Owned and Pledged as Collateral [Line Items]	'	'
Collateral for ABS Issued	1,551,885	1,768,694
Sequoia | Residential Loans	'	'
Financial Instruments Owned and Pledged as Collateral [Line Items]	'	'
Collateral for ABS Issued	1,546,507	1,762,167
Sequoia | Restricted Cash	'	'
Financial Instruments Owned and Pledged as Collateral [Line Items]	'	'
Collateral for ABS Issued	147	152
Sequoia | Accrued Interest Receivable	'	'
Financial Instruments Owned and Pledged as Collateral [Line Items]	'	'
Collateral for ABS Issued	1,882	2,714
Sequoia | REO	'	'
Financial Instruments Owned and Pledged as Collateral [Line Items]	'	'
Collateral for ABS Issued	'	3,661
Sequoia | Other Assets	'	'
Financial Instruments Owned and Pledged as Collateral [Line Items]	'	'
Collateral for ABS Issued	3,349	'
Residential Resecuritization	'	'
Financial Instruments Owned and Pledged as Collateral [Line Items]	'	'
Collateral for ABS Issued	233,817	263,831
Residential Resecuritization | Real Estate Securities	'	'
Financial Instruments Owned and Pledged as Collateral [Line Items]	'	'
Collateral for ABS Issued	233,311	263,204
Residential Resecuritization | Accrued Interest Receivable	'	'
Financial Instruments Owned and Pledged as Collateral [Line Items]	'	'
Collateral for ABS Issued	506	627
Commercial Securitization	'	'
Financial Instruments Owned and Pledged as Collateral [Line Items]	'	'
Collateral for ABS Issued	228,105	259,853
Commercial Securitization | Commercial Loans	'	'
Financial Instruments Owned and Pledged as Collateral [Line Items]	'	'
Collateral for ABS Issued	204,741	257,741
Commercial Securitization | Restricted Cash	'	'
Financial Instruments Owned and Pledged as Collateral [Line Items]	'	'
Collateral for ABS Issued	138	137
Commercial Securitization | Accrued Interest Receivable	'	'
Financial Instruments Owned and Pledged as Collateral [Line Items]	'	'
Collateral for ABS Issued	1,527	1,975
Commercial Securitization | Other Assets	'	'
Financial Instruments Owned and Pledged as Collateral [Line Items]	'	'
Collateral for ABS Issued	$21,699	'

LongTerm_Debt_Additional_Infor

Long-Term Debt - Additional Information (Detail) (USD $)

3 Months Ended

9 Months Ended

9 Months Ended

9 Months Ended

Sep. 30, 2014

Mar. 31, 2013

Sep. 30, 2014

Dec. 31, 2013

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2014

Dec. 31, 2013

Sep. 30, 2014

Sep. 30, 2014

Sep. 30, 2013

Sep. 30, 2014

Sep. 30, 2013

FHLB Chicago

Residential Loans Held For Investment at Fair Value

Senior Notes due 2018

Long-term Debt

Long-term Debt

Commercial Secured Borrowings

Trust Preferred Securities

Trust Preferred Securities

Subordinated Notes

Subordinated Notes

FHLB Chicago

Maximum

Maximum

Debt Instrument [Line Items]

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Federal home loan bank advances

'

'

'

'

$204,000,000

'

'

'

'

'

'

'

'

'

Weighted average interest rate

'

'

'

'

0.25%

'

'

'

'

'

'

'

'

'

Weighted average maturity

'

'

'

'

'8 years 10 months 24 days

'

'

'

'

'

'

'

'

'

Federal home loan bank advances, Maturity period, Rate

'

'

'

'

'91 days

'

'

'

'

'

'

'

'

'

Amount on advances secured by residential mortgage loans

'

'

'

'

'

238,326,000

'

'

'

'

'

'

'

'

Federal home loan bank stock

4,846,000

'

4,846,000

'

4,846,000

'

'

'

'

'

'

'

'

'

Commercial mortgage loans

'

'

'

'

'

'

'

'

'

66,000,000

'

'

'

'

Convertible notes

'

287,500,000

'

'

'

'

'

'

'

'

'

'

'

'

Debt Instrument interest rate

'

4.63%

'

'

'

'

'

'

'

'

'

'

'

'

Debt instrument maturity year

'

'2018

'

'

'

'

'

'

'

'

'

'

'

'

Debt instrument redemption date

'

15-Apr-18

'

'

'

'

'

'

'

'

'

'

'

'

Interest expense yield

5.49%

'

5.44%

'

'

'

'

'

'

'

2.58%

2.65%

2.58%

2.65%

Accrued interest payable

1,610,000

'

1,610,000

1,000,000

'

'

6,000,000

'

'

'

'

'

'

'

Convertible senior notes conversion rate

'

'

41.132

'

'

'

'

'

'

'

'

'

'

'

Debt instrument convertible base principal amount of conversion

1,000

'

1,000

'

'

'

'

'

'

'

'

'

'

'

Convertible senior notes conversion per share

$24.31

'

$24.31

'

'

'

'

'

'

'

'

'

'

'

Debt instrument face amount

'

'

'

'

'

'

'

'

'

'

100,000,000

'

40,000,000

'

Percentage of yield of debt securities

'

'

'

'

'

'

'

'

'

'

6.88%

6.90%

6.88%

6.90%

Accrued interest payable balance on long-term debt

$10,480,000

'

$10,480,000

$6,366,000

'

'

'

$1,000,000

$1,000,000

'

'

'

'

'

Commitments_and_Contingencies_1

Commitments and Contingencies - Additional Information (Detail) (USD $)	9 Months Ended		0 Months Ended	1 Months Ended	9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Jul. 15, 2010	Oct. 31, 2010	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2014
			Schwab	Minimum	Maximum	Maximum	Sequoia	Sequoia
			Plaintiff	Plaintiff			FHLB Seattle	Schwab
							Residential	Residential
Loss Contingencies [Line Items]	'	'	'	'	'	'	'	'
Future lease commitments with expiration date	$14,033,000	'	'	'	'	'	'	'
Operating lease expiration dates	'	'	'	'	'2021	'	'	'
Operating lease expense	2,000,000	'	'	'	'	1,000,000	'	'
Residential repurchase reserve	3,771,000	1,771,000	'	'	'	'	'	'
Statutory interest rate per annum	'	'	'	'	'	'	8.00%	'
Original principal amount of securities	'	'	'	'	'	'	133,000,000	14,800,000
Debt instrument principal payment amount	'	'	'	'	'	'	115,400,000	'
Debt instrument interest payment amount	'	'	'	'	'	'	11,100,000	'
Number of other named defendants along with SRF	'	'	26	45	'	'	'	'
Principal balance of securities	'	'	'	'	'	'	'	12,800,000
Debt instrument interest amount	'	'	'	'	'	'	'	1,300,000
Aggregate amount of loss contingency reserves	$10,400,000	$12,000,000	'	'	'	'	'	'

Future_Lease_Commitments_Detai

Future Lease Commitments (Detail) (USD $)	Sep. 30, 2014
In Thousands, unless otherwise specified
Operating Leased Assets [Line Items]	'
2014 (3 months)	$751
2015	3,061
2016	2,832
2017	2,879
2018	1,827
2019 and thereafter	2,683
Total	$14,033

Changes_to_Accumulated_Other_C

Changes to Accumulated Other Comprehensive Income (Loss) by Component (Detail) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Accumulated Other Comprehensive Income (Loss) [Line Items]	'	'	'	'
Balance at beginning of period	'	'	$148,766	'
Total other comprehensive income (loss)	-7,786	-3,515	11,005	-23,564
Balance at End of Period	159,771	'	159,771	'
Net unrealized gains on available-for-sale securities	'	'	'	'
Accumulated Other Comprehensive Income (Loss) [Line Items]	'	'	'	'
Balance at beginning of period	197,542	145,349	164,654	186,580
Other comprehensive income (loss) before reclassifications	1,849	-633	35,078	-29,615
Amounts reclassified from other accumulated comprehensive income	-6,409	-6,962	-6,750	-19,211
Total other comprehensive income (loss)	-4,560	-7,595	28,328	-48,826
Balance at End of Period	192,982	137,754	192,982	137,754
Net unrealized losses on interest rate agreements accounted for as cash flow hedges	'	'	'	'
Accumulated Other Comprehensive Income (Loss) [Line Items]	'	'	'	'
Balance at beginning of period	-29,985	-27,066	-15,888	-48,248
Other comprehensive income (loss) before reclassifications	-3,258	4,018	-17,454	25,043
Amounts reclassified from other accumulated comprehensive income	32	62	131	219
Total other comprehensive income (loss)	-3,226	4,080	-17,323	25,262
Balance at End of Period	($33,211)	($22,986)	($33,211)	($22,986)

Reclassifications_out_of_Accum

Reclassifications out of Accumulated Other Comprehensive Income (Loss) (Detail) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]	'	'	'	'
Other than temporary impairment	($188)	'	($565)	($1,666)
Realized gains, net	8,532	10,469	10,687	23,291
Total interest expense	23,350	21,725	63,560	61,444
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Investment Gain (Loss)	'	'	'	'
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]	'	'	'	'
Other than temporary impairment	188	'	565	-124
Realized gains, net	-6,409	-6,962	-6,750	-19,211
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Investment Gain (Loss) | Gain on sale of AFS securities	'	'	'	'
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]	'	'	'	'
Gain on sale of AFS securities	-6,597	-6,962	-7,315	-19,087
Reclassification out of Accumulated Other Comprehensive Income | Net unrealized losses on interest rate agreements accounted for as cash flow hedges	'	'	'	'
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]	'	'	'	'
Total interest expense	32	62	131	219
Reclassification out of Accumulated Other Comprehensive Income | Net unrealized losses on interest rate agreements accounted for as cash flow hedges | Unrealized Gain Loss On Derivatives	'	'	'	'
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]	'	'	'	'
Total interest expense	$32	$62	$131	$219

Basic_and_Diluted_Earnings_Per

Basic and Diluted Earnings Per Common Share (Detail) (USD $)	3 Months Ended		9 Months Ended
In Thousands, except Share data, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Earnings Per Share Disclosure [Line Items]	'	'	'	'
Basic earnings per common share	$0.53	$0.26	$0.87	$1.76
Net income attributable to Redwood	$45,097	$21,929	$73,447	$148,112
Basic weighted average common shares outstanding	83,017,534	82,201,473	82,722,079	81,888,231
Net effect of dilutive equity awards	2,113,248	2,220,566	2,309,051	2,292,451
Net effect of assumed convertible notes conversion to common shares	11,825,450	0	0	9,053,183
Diluted weighted average common shares outstanding	96,956,232	84,422,039	85,031,130	93,233,865
Diluted earnings per common share	$0.50	$0.25	$0.84	$1.65
Basic Earnings (Loss) Per Common Share	'	'	'	'
Earnings Per Share Disclosure [Line Items]	'	'	'	'
Net income attributable to Redwood	45,097	21,929	73,447	148,112
Less: Dividends and undistributed earnings allocated to participating securities	-1,054	-565	-1,819	-4,209
Net income allocated to common shareholders	44,043	21,364	71,628	143,903
Basic weighted average common shares outstanding	83,017,534	82,201,473	82,722,079	81,888,231
Diluted Earnings (Loss) Per Common Share	'	'	'	'
Earnings Per Share Disclosure [Line Items]	'	'	'	'
Net income attributable to Redwood	45,097	21,929	73,447	148,112
Less: Dividends and undistributed earnings allocated to participating securities	-756	-565	-1,784	-3,030
Add back: Interest expense on convertible notes	3,855	'	'	8,790
Net income allocated to common shareholders	$48,196	$21,364	$71,663	$153,872
Basic weighted average common shares outstanding	83,017,534	82,201,473	82,722,079	81,888,231
Net effect of dilutive equity awards	2,113,248	2,220,566	2,309,051	2,292,451
Net effect of assumed convertible notes conversion to common shares	11,825,450	'	'	9,053,183
Diluted weighted average common shares outstanding	96,956,232	84,422,039	85,031,130	93,233,865

Equity_Additional_Information_

Equity - Additional Information (Detail)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Nov. 30, 2007
Stockholders Equity Note [Line Items]	'	'	'	'	'
Net effect of dilutive equity awards	2,113,248	2,220,566	2,309,051	2,292,451	'
Dilutive common shares outstanding, assuming conversion of convertible notes to common shares	11,825,450	0	0	9,053,183	'
Stock repurchase program authorized number of shares to be repurchased	'	'	'	'	5,000,000
Stock acquired during the period	'	'	0	'	'
Stock repurchase program authorized number of shares remained for repurchase	4,005,985	'	4,005,985	'	'
Convertible notes	'	'	'	'	'
Stockholders Equity Note [Line Items]	'	'	'	'	'
Securities excluded in the calculation of diluted earnings per share	'	11,825,450	11,825,450	'	'
Equity awards	'	'	'	'	'
Stockholders Equity Note [Line Items]	'	'	'	'	'
Securities excluded in the calculation of diluted earnings per share	57,514	190,627	66,129	244,174	'

Equity_Compensation_Plans_Addi

Equity Compensation Plans - Additional Information (Detail) (USD $)	9 Months Ended		12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]	'	'	'
Shares of common stock available for grant under Redwood's Incentive Plan	2,603,630	'	1,683,956
Unrecognized compensation cost	$14,448,000	'	$20,730,000
Number of fully vested stock options outstanding	57,514	'	79,535
Aggregate intrinsic value options outstanding	0	'	'
Aggregate intrinsic value options exercisable	0	'	'
Stock options exercised during period	0	0	'
Options Expired	22,021	'	'
Number of shares purchased by employees	266,463	'	243,020
Performance Stock Units	'	'	'
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]	'	'	'
Unvested outstanding stock awards	779,871	'	779,871
Stock unit distributions	351,640	'	'
Share-based compensation, vesting period	'3 years	'	'
Underlying shares of vesting common stock vesting description	'The number of underlying shares of our common stock that will vest during 2014 and in future years will vary between 0% (if Three-Year TSR is negative) and 200% (if Three-Year TSR is greater than or equal to 125%) of the target number of PSUs originally granted, adjusted upward (if vesting is greater than 0%) to reflect the value of dividends paid during the three-year vesting period.	'	'
Share-based compensation, vesting year	'2014 and in future years	'	'
Restricted Stock	'	'	'
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]	'	'	'
Unvested outstanding stock awards	110,948	'	166,941
Number of stock awards granted	2,574	'	'
Number of stock awards vested	42,725	'	'
Number of stock awards forfeited	15,842	'	'
Deferred Stock Units	'	'	'
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]	'	'	'
Unvested outstanding stock awards	1,961,038	'	2,266,473
Number of stock awards granted	142,983	'	'
Number of stock awards vested	1,218,012	'	1,263,420
Number of stock awards forfeited	7,870	'	'
Stock unit distributions	440,548	'	'
Maximum	'	'	'
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]	'	'	'
Weighted average amortization period remaining for equity awards	'2 years	'	'
Share-based compensation, vesting period	'4 years	'	'
Shares of common stock to be purchased in aggregate for all employees	450,000	'	'
Maximum | Performance Stock Units	'	'	'
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]	'	'	'
Equity awards, vesting percentage	200.00%	'	'
Maximum | Deferred Stock Units	'	'	'
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]	'	'	'
Cash distributions to participants in the Executive Deferred Compensation Plan	$1,000,000	'	'
Minimum	'	'	'
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]	'	'	'
Share-based compensation, vesting period	'3 years	'	'
Minimum | Performance Stock Units	'	'	'
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]	'	'	'
Equity awards, vesting percentage	0.00%	'	'

Unrecognized_Compensation_Cost

Unrecognized Compensation Cost (Detail) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]	'	'	'	'
Unrecognized compensation cost at beginning of period	'	'	$20,730	'
Equity grants	'	'	1,496	'
Equity grant forfeitures	'	'	-363	'
Equity compensation expense	-2,261	-1,997	-7,415	-7,880
Unrecognized Compensation Cost at End of Period	14,448	'	14,448	'
Incentive Plans | Restricted Stock	'	'	'	'
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]	'	'	'	'
Unrecognized compensation cost at beginning of period	'	'	1,869	'
Equity grants	'	'	94	'
Equity grant forfeitures	'	'	-213	'
Equity compensation expense	'	'	-509	'
Unrecognized Compensation Cost at End of Period	1,241	'	1,241	'
Incentive Plans | Deferred Stock Units	'	'	'	'
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]	'	'	'	'
Unrecognized compensation cost at beginning of period	'	'	13,044	'
Equity grants	'	'	1,187	'
Equity grant forfeitures	'	'	-150	'
Equity compensation expense	'	'	-4,549	'
Unrecognized Compensation Cost at End of Period	9,532	'	9,532	'
Incentive Plans | Performance Stock Units	'	'	'	'
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]	'	'	'	'
Unrecognized compensation cost at beginning of period	'	'	5,817	'
Equity compensation expense	'	'	-2,196	'
Unrecognized Compensation Cost at End of Period	3,621	'	3,621	'
Employee Stock Purchase Plan	'	'	'	'
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]	'	'	'	'
Equity grants	'	'	215	'
Equity compensation expense	'	'	-161	'
Unrecognized Compensation Cost at End of Period	$54	'	$54	'

Components_of_Mortgage_Banking

Components of Mortgage Banking Activities, Net (Detail) (USD $)	3 Months Ended				9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014		Sep. 30, 2013		Sep. 30, 2014		Sep. 30, 2013
Mortgage Loans on Real Estate [Line Items]	'		'		'		'
Sequoia IO securities	($1,332)		($1,866)		($14,419)		$36,399
Risk management derivatives	-2,404		442		-18,159		51,009
Mortgage banking activities, net	17,872		-8,698		23,950		85,562
Mortgage Banking Activities	'		'		'		'
Mortgage Loans on Real Estate [Line Items]	'		'		'		'
Sequoia IO securities	-1,332		-1,866		-14,419		36,399
Loan purchase and forward sale commitments	2,487		'		6,077		'
Net gains on commercial loan originations and sales	'		'		'		11,031
Mortgage banking activities, net	17,872		-8,698		23,950		85,562
Mortgage Banking Activities | Residential Mortgage Banking Activities	'		'		'		'
Mortgage Loans on Real Estate [Line Items]	'		'		'		'
Loans, at fair value	13,446		-10,804		34,554		-17,339
Risk management derivatives	-4,297	[1]	75	[1]	-16,433	[1]	48,583	[1]
Other	1,082		359		1,871		1,635
Mortgage banking activities, net	11,386		-12,236		11,650		69,278
Mortgage Banking Activities | Commercial Mortgage Banking Activities	'		'		'		'
Mortgage Loans on Real Estate [Line Items]	'		'		'		'
Loans, at fair value	4,305		3,171		13,644		2,826
Risk management derivatives	1,892	[1]	367	[1]	-1,726	[1]	2,426	[1]
Other	289	[2]	'		382	[2]	1	[2]
Mortgage banking activities, net	$6,486		$3,538		$12,300		$16,284
[1]	Represents market valuation changes of derivatives that are used to manage risks associated with our accumulation of residential and commercial loans.
[2]	Amounts in this line item include other fee income and the provision for repurchase expenses, presented net.

Components_of_Operating_Expens

Components of Operating Expenses (Detail) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Component of Operating Other Cost and Expense [Abstract]	'	'	'	'
Fixed compensation expense	$7,445	$5,808	$21,109	$17,524
Variable compensation expense	2,418	5,621	8,170	14,418
Equity compensation expense	2,261	1,997	7,415	7,880
Severance expense	4	445	226	3,879
Total compensation expense	12,128	13,871	36,920	43,701
Systems and consulting	3,463	2,780	10,906	6,840
Accounting and legal	1,223	2,066	4,039	5,118
Office costs	1,282	829	3,437	2,444
Corporate costs	569	508	1,679	1,545
Other operating expenses	2,741	2,266	6,679	7,289
Total Operating Expenses	$21,406	$22,320	$63,660	$66,937

Taxes_Additional_Information_D

Taxes - Additional Information (Detail) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Income Taxes [Line Items]	'	'	'	'
Provision from income taxes	$5,213	($4,935)	$3,703	$9,113

Reconciliation_of_Statutory_Ta

Reconciliation of Statutory Tax Rate to Effective Tax Rate (Detail)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Income Taxes [Line Items]	'	'
Federal statutory rate	34.00%	34.00%
State statutory rate, net of Federal tax effect	7.20%	7.20%
Differences in taxable (loss) income from GAAP income	-10.00%	-2.10%
Change in valuation allowance	-1.00%	-18.50%
Dividends paid deduction	-25.40%	-14.80%
Effective Tax Rate	4.80%	5.80%

Segment_Information_Additional

Segment Information - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2014
	Segment
Segment Reporting Information [Line Items]	'
Number of operating segments	3

Financial_Information_by_Segme

Financial Information by Segment (Detail) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Segment Reporting Information [Line Items]	'	'	'	'
Interest income	$63,351	$57,420	$176,820	$168,664
Interest expense	-23,350	-21,725	-63,560	-61,444
Net interest income (loss)	40,001	35,695	113,260	107,220
Provision for loan losses	1,596	-1,727	629	-493
Mortgage banking activities, net	17,872	-8,698	23,950	85,562
MSR income (loss), net	5,821	3,113	4,650	14,681
Other market valuation adjustments, net	-3,706	462	-13,966	-6,099
Realized gains, net	8,532	10,469	10,687	23,291
Operating expenses	-21,406	-22,320	-63,660	-66,937
Other income	1,600	'	1,600	'
(Provision for) benefit from income taxes	-5,213	4,935	-3,703	-9,113
Net Income	45,097	21,929	73,447	148,112
Non-cash amortization income (expense)	8,607	6,205	25,946	17,940
Operating Segments | Residential Mortgage Banking	'	'	'	'
Segment Reporting Information [Line Items]	'	'	'	'
Interest income	16,911	15,954	40,015	40,869
Interest expense	-4,192	-3,501	-7,674	-8,631
Net interest income (loss)	12,719	12,453	32,341	32,238
Mortgage banking activities, net	11,386	-12,236	11,650	69,278
Other market valuation adjustments, net	43	-11	54	67
Operating expenses	-9,982	-7,874	-26,577	-18,565
(Provision for) benefit from income taxes	-3,352	4,867	-3,258	-6,447
Segment Contribution	10,814	-2,801	14,210	76,571
Non-cash amortization income (expense)	-43	-13	-131	-132
Operating Segments | Residential Investments	'	'	'	'
Segment Reporting Information [Line Items]	'	'	'	'
Interest income	27,600	22,887	83,120	70,420
Interest expense	-3,142	-2,229	-9,106	-7,448
Net interest income (loss)	24,458	20,658	74,014	62,972
MSR income (loss), net	5,821	3,113	4,650	14,681
Other market valuation adjustments, net	-3,371	549	-13,117	-5,759
Realized gains, net	7,836	10,469	9,815	23,032
Operating expenses	-802	-229	-2,667	-3,768
(Provision for) benefit from income taxes	150	377	1,826	-1,284
Segment Contribution	34,092	34,937	74,521	89,874
Non-cash amortization income (expense)	10,890	8,702	32,724	24,348
Operating Segments | Commercial Mortgage Banking and Investments	'	'	'	'
Segment Reporting Information [Line Items]	'	'	'	'
Interest income	12,603	10,740	34,204	30,534
Interest expense	-4,526	-3,560	-12,234	-8,928
Net interest income (loss)	8,077	7,180	21,970	21,606
Provision for loan losses	888	-844	-56	-2,419
Mortgage banking activities, net	6,486	3,538	12,300	16,284
Realized gains, net	'	'	'	210
Operating expenses	-2,279	-2,176	-7,085	-8,026
(Provision for) benefit from income taxes	-1,764	29	-2,159	-1,689
Segment Contribution	11,408	7,727	24,970	25,966
Non-cash amortization income (expense)	-191	-228	-579	-639
Corporate/Other	'	'	'	'
Segment Reporting Information [Line Items]	'	'	'	'
Interest income	6,237	7,839	19,481	26,841
Interest expense	-11,490	-12,435	-34,546	-36,437
Net interest income (loss)	-5,253	-4,596	-15,065	-9,596
Provision for loan losses	708	-883	685	1,926
Mortgage banking activities, net	'	'	'	'
MSR income (loss), net	'	'	'	'
Other market valuation adjustments, net	-378	-76	-903	-407
Realized gains, net	696	'	872	49
Operating expenses	-8,343	-12,041	-27,330	-36,578
Other income	1,600	'	1,600	'
(Provision for) benefit from income taxes	-247	-338	-112	307
Segment Contribution	-11,217	-17,934	-40,253	-44,299
Net Income	-11,217	-17,934	-40,253	-44,299
Non-cash amortization income (expense)	($2,049)	($2,256)	($6,068)	($5,637)

Components_of_CorporateOther_D

Components of Corporate/Other (Detail) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Segment Reporting Information [Line Items]	'	'	'	'
Interest income	$63,351	$57,420	$176,820	$168,664
Interest expense	-23,350	-21,725	-63,560	-61,444
Net interest income (loss)	40,001	35,695	113,260	107,220
Reversal of provision (provision) for loan losses	1,596	-1,727	629	-493
Mortgage banking activities, net	17,872	-8,698	23,950	85,562
MSR income, net	5,821	3,113	4,650	14,681
Other market valuation adjustments, net	-3,706	462	-13,966	-6,099
Realized gains, net	8,532	10,469	10,687	23,291
Operating expenses	-21,406	-22,320	-63,660	-66,937
Other income	1,600	'	1,600	'
(Provision for) benefit from income taxes	-5,213	4,935	-3,703	-9,113
Net Income	45,097	21,929	73,447	148,112
Non-cash amortization expense	8,607	6,205	25,946	17,940
Legacy Consolidated VIEs	'	'	'	'
Segment Reporting Information [Line Items]	'	'	'	'
Interest income	6,233	7,835	19,473	26,688
Interest expense	-5,250	-6,190	-15,950	-20,188
Net interest income (loss)	983	1,645	3,523	6,500
Reversal of provision (provision) for loan losses	708	-883	685	1,926
Mortgage banking activities, net	'	'	'	'
MSR income, net	'	'	'	'
Other market valuation adjustments, net	-361	-76	-825	-407
Realized gains, net	696	'	872	49
Operating expenses	-26	-51	-120	-158
Net Income	2,000	635	4,135	7,910
Non-cash amortization expense	-1,412	-1,724	-4,207	-4,388
Other	'	'	'	'
Segment Reporting Information [Line Items]	'	'	'	'
Interest income	4	4	8	153
Interest expense	-6,240	-6,245	-18,596	-16,249
Net interest income (loss)	-6,236	-6,241	-18,588	-16,096
Mortgage banking activities, net	'	'	'	'
MSR income, net	'	'	'	'
Other market valuation adjustments, net	-17	'	-78	'
Operating expenses	-8,317	-11,990	-27,210	-36,420
Other income	1,600	'	1,600	'
(Provision for) benefit from income taxes	-247	-338	-112	307
Net Income	-13,217	-18,569	-44,388	-52,209
Non-cash amortization expense	-637	-532	-1,861	-1,249
Corporate/Other	'	'	'	'
Segment Reporting Information [Line Items]	'	'	'	'
Interest income	6,237	7,839	19,481	26,841
Interest expense	-11,490	-12,435	-34,546	-36,437
Net interest income (loss)	-5,253	-4,596	-15,065	-9,596
Reversal of provision (provision) for loan losses	708	-883	685	1,926
Mortgage banking activities, net	'	'	'	'
MSR income, net	'	'	'	'
Other market valuation adjustments, net	-378	-76	-903	-407
Realized gains, net	696	'	872	49
Operating expenses	-8,343	-12,041	-27,330	-36,578
Other income	1,600	'	1,600	'
(Provision for) benefit from income taxes	-247	-338	-112	307
Net Income	-11,217	-17,934	-40,253	-44,299
Non-cash amortization expense	($2,049)	($2,256)	($6,068)	($5,637)

Supplemental_Information_by_Se

Supplemental Information by Segment (Detail) (USD $)	Sep. 30, 2014		Dec. 31, 2013
In Thousands, unless otherwise specified
Segment Reporting Information [Line Items]	'		'
Residential loans	$3,287,587		$2,166,434
Commercial loans	497,997		432,455
Real estate securities	1,394,985		1,682,861
Mortgage servicing rights	135,152		64,824
Total assets	5,611,768	[1]	4,608,528	[1]
Residential Loans Held For Sale	'		'
Segment Reporting Information [Line Items]	'		'
Residential loans	1,502,429		404,267
Residential Loans Held For Investment at Fair Value	'		'
Segment Reporting Information [Line Items]	'		'
Residential loans	238,651		'
Residential Loans Held for Investment	'		'
Segment Reporting Information [Line Items]	'		'
Residential loans	1,546,507		1,762,167
Residential Loans Held For Investment At Amortized Cost And Fair Value	'		'
Segment Reporting Information [Line Items]	'		'
Residential loans	1,785,158		'
Operating Segments | Residential Mortgage Banking	'		'
Segment Reporting Information [Line Items]	'		'
Real estate securities	100,613		110,505
Total assets	1,635,463		531,092
Operating Segments | Residential Investments	'		'
Segment Reporting Information [Line Items]	'		'
Real estate securities	1,294,372		1,572,356
Mortgage servicing rights	135,152		64,824
Total assets	1,696,343		1,655,209
Operating Segments | Commercial Mortgage Banking and Investments	'		'
Segment Reporting Information [Line Items]	'		'
Commercial loans	497,997		432,455
Total assets	527,094		439,139
Operating Segments | Residential Loans Held For Sale | Residential Mortgage Banking	'		'
Segment Reporting Information [Line Items]	'		'
Residential loans	1,502,429		404,267
Operating Segments | Residential Loans Held For Investment at Fair Value | Residential Investments	'		'
Segment Reporting Information [Line Items]	'		'
Residential loans	238,651		'
Corporate/Other	'		'
Segment Reporting Information [Line Items]	'		'
Total assets	1,752,868		1,983,088
Corporate/Other | Residential Loans Held for Investment	'		'
Segment Reporting Information [Line Items]	'		'
Residential loans	$1,546,507		$1,762,167
[1]	Our consolidated balance sheets include assets of consolidated variable interest entities ("VIEs") that can only be used to settle obligations of these VIEs and liabilities of consolidated VIEs for which creditors do not have recourse to the primary beneficiary (Redwood Trust, Inc.). At September 30, 2014 and December 31, 2013, assets of consolidated VIEs totaled $2,013,807 and $2,299,576, respectively, and liabilities of consolidated VIEs totaled $1,657,782 and $1,944,911, respectively. See Note 4 for further discussion.

Subsequent_Events_Additional_I

Subsequent Events - Additional Information (Detail) (Residential Loans, USD $)	Sep. 30, 2014	Nov. 02, 2014
		Subsequent Event
Subsequent Event [Line Items]	'	'
Amount of loans planned to be purchased	$1,300,000,000	'
Residential mortgage loans closed and purchased	'	$597,000,000