Fitch Ratings Affirms Redwood Trust's 'CAM2' CDO Asset Manager Rating.

NEW YORK -- Fitch Ratings affirms the 'CAM2' structured finance CDO asset manager rating for Redwood Trust Inc. (Redwood). Fitch's rating is based on the company's specialized focus in real estate related investments, the experience of senior management and staff, and its robust CDO performance. In addition, the rating reflects Redwood's commitment to its CDO platform as reflected in recent additions to staffing to support the management and administration of its CDOs. The rating also reflects the quality of the match between the company's organizational competencies in real estate related investing and the assets in its CDO portfolios.

Redwood's 'CAM2' rating is based on Redwood's composite score of 1.89, which represents a weighted average score based on the scores assigned for each group of criteria factors summarized as follows:

--Company and Management Experience 1.75;

--Staffing 1.50;

--Procedures and Controls 2.25;

--Portfolio Management 1.75;

--CDO Administration 2.00;

--Technology 2.25;

--CDO Portfolio Performance 2.00.

Redwood's composite score of 1.89 is used to establish a systematically applied quantitative link between its asset manager rating and Fitch's CDO rating criteria, in accordance with the approach outlined in Fitch Research on 'Rating CDO Asset Managers,' dated Feb. 3, 2005, available on the Fitch Rating's web site at www.fitchratings.com.

Redwood Trust, Inc., with its principal executive offices in Mill Valley, California, is a real estate finance company that is primarily engaged in the business of owning, financing, and credit-enhancing real estate related assets, primarily high-quality jumbo residential mortgage loans. Since its incorporation in Maryland on April 11, 1994, Redwood has been structured as a real estate investment trust (REIT). Redwood sources its loan acquisitions primarily from large, well established mortgage originators, larger banks, and thrifts. Through its Acacia CDO program, Redwood has continued its strategy of issuing long-term debt to match-fund a diverse pool of its residential and commercial mortgage securities and REIT debt securities. To date, the company has issued nine CDOs, consisting of eight ABS CDOs Acacia 1-8, and one commercial real estate CDO, Acacia CRE CDO 1.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria, and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance, and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.