Redwood Trust Announces Pricing of Common Stock Offering

MILL VALLEY, Calif., May 27 /PRNewswire-FirstCall/ -- Redwood Trust, Inc.
(NYSE: RWT) today announced the pricing of a public offering of 15 million
shares of its common stock at a public offering price per share of $14.50.
Redwood Trust has granted the underwriters a 30-day overallotment option to
purchase up to 2.24 million additional shares of common stock. Redwood Trust
will receive estimated net proceeds from the offering of $207 million, or $238
million if the underwriters choose to exercise the overallotment option. The
offering is expected to close on June 2, 2009.

Net proceeds from the offering will be used to acquire residential and
commercial real estate loans and mortgage-backed securities and may also be
used to co-invest with third party investors in investment funds which Redwood
Trust may sponsor and for other general corporate purposes. The offering is
being conducted as a public offering registered under the Securities Act of
1933.

The sole bookrunning manager for the offering is J.P. Morgan Securities Inc.

A copy of the prospectus supplement and prospectus relating to these
securities may be obtained by contacting J.P. Morgan Securities Inc., Attn:
Prospectus Department, 4 Chase Metrotech Center, CS Level, Brooklyn, NY 11245
or by calling 1-718-242-8002.

This press release does not constitute an offer to sell or a solicitation of
an offer to buy any securities, nor shall there be any sale of these
securities in any state or jurisdiction in which such an offer, solicitation
or sale would be unlawful prior to registration or qualification under the
securities laws of any such state or jurisdiction.

CAUTIONARY STATEMENT: This press release contains forward-looking statements
within the meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, such as statements related to the closing date
of the offering and the expected use of the net proceeds. Forward-looking
statements involve numerous risks and uncertainties. Redwood's actual results
may differ from our expectations, estimates, and projections and,
consequently, you should not rely on these forward-looking statements as
predictions of future events. Forward-looking statements are not historical in
nature and can be identified by words such as "anticipate," "estimate,"
"will," "should," "expect," "believe," "intend," "seek," "plan," and similar
expressions or their negative forms, or by references to strategy, plans, or
intentions. These forward-looking statements are subject to risks and
uncertainties, including, among other things, those described in Redwood's
Prospectus Supplement dated May 27, 2009, the accompanying Prospectus dated
November 23, 2007, and the documents incorporated in the Prospectus Supplement
and the Prospectus by reference. We undertake no obligation to update or
revise any forward-looking statements, whether as a result of new information,
future events, or otherwise. Important factors, among others, that may affect
our actual results include: changes in interest rates; changes in mortgage
prepayment rates; the timing of credit losses within our portfolio; our
exposure to adjustable-rate and negative amortization mortgage loans; the
state of the credit markets and other general economic conditions,
particularly as they affect the price of earning assets and the credit status
of borrowers, and the success of government actions aimed at stabilizing them;
the concentration of the credit risks we are exposed to; the ability of
counterparties to satisfy their obligations to us; legislative and regulatory
actions affecting the mortgage industry or our business; the availability of
high quality assets for purchase at attractive prices; declines in home prices
and commercial real estate prices; increases in mortgage payment
delinquencies; changes in the level of liquidity in the capital markets which
may adversely affect our ability to finance our real estate asset portfolio;
changes in liquidity in the market for real estate securities, the re-pricing
of credit risk in the capital markets, inaccurate ratings of securities by
rating agencies, rating agency downgrades of securities, and increases in the
supply of real estate securities available-for-sale, each of which may
adversely affect the values of securities we own; the extent of changes in the
values of securities we own and the impact of adjustments reflecting those
changes on our income statement and balance sheet, including our stockholders'
equity; the effect of changes in accounting principles, conventions and
interpretations on our future reported financial results; our ability to
maintain the positive stockholders' equity necessary to enable us to pay the
dividends required to maintain our status as a real estate investment trust
for tax purposes; our ability to generate the amount of cash flows we expect
from our investment portfolio; changes in our investment, financing, and
hedging strategies and the new risks that those changes may expose us to;
changes in the competitive landscape within our industry, including changes
that may affect our ability to retain or attract personnel; our failure to
manage various operational risks associated with our business; our failure to
maintain appropriate internal controls over financial reporting; our failure
to properly administer and manage our securitization entities; risks we may be
exposed to if we expand our business activities, such as risks relating to
significantly increasing our direct holdings of loans; limitations imposed on
our business due to our REIT status and our status as exempt from registration
under the Investment Company Act of 1940; our ability to successfully deploy
the proceeds from this proposed offering and raise additional capital to fund
our investing activity; and other factors not presently identified.

SOURCE Redwood Trust, Inc.

Martin S. Hughes, +1-415-389-7373, or Mike McMahon, +1-415-384-3805, both for
Redwood Trust, Inc.