Redwood Trust, Inc. announced its preliminary 2016 outlook for its businesses, including the impact of its plans to restructure certain aspects of its conforming residential mortgage loan operations. Redwood plans to restructure its conforming loan operations by discontinuing the acquisition and aggregation of conforming loans for resale to Fannie Mae and Freddie Mac, and instead focus on direct conforming-related investments in mortgage servicing rights and risk-sharing transactions. Redwood also plans to implement a workforce reduction, which primarily impacts employees engaged in and supporting the Company's residential mortgage loan business.

The reduction represents approximately 15% of the company's fixed compensation expense at December 31, 2015 and a headcount reduction of 25%. Redwood expects non-recurring charges of approximately $2 million related to these announcements, with approximately half included in the fourth quarter of 2015 and half in the first quarter of 2016.