Exhibit 12.1

Redwood Trust, Inc.
Computation of Earnings to Fixed Charges and
Earnings to Fixed Charges and Preferred Stock Dividends Ratios
(Dollars in thousands)
 
   
Nine Months Ended
  
Years Ended December 31,
  
   
September 30,
2007
 
2006
 
2005
  
2004
  
2003
  
2002
  
 
                          
                           
Earnings
                         
Net income before provision for income taxes
    
($24,533
)
$
137,502
  
$
217,393
  
$
240,632
  
$
137,896
  
$
56,617
  
Add:
                                      
Fixed Charges
    
499,083
    
701,704
    
757,270
    
431,421
    
202,861
    
91,705
  
                                       
Earnings available to cover fixed charges
  
$
474,550
  
$
839,206
  
$
974,663
  
$
672,053
  
$
340,757
  
$
148,322
  
                                       
Fixed charges:
                                      
Interest on indebtedness (including amortization of premiums and financing costs)
    
499,083
    
701,704
    
757,270
    
431,421
    
202,861
    
91,705
  
                                       
Total fixed charges:
  
$
499,083
  
$
701,704
  
$
757,270
  
$
431,421
  
$
202,861
  
$
91,705
  
                                       
Preferred stock dividends
    
0
    
0
    
0
    
0
    
696
    
3,176
  
                                       
Fixed charges and preferred stock dividends
  
$
499,083
  
$
701,704
  
$
757,270
  
$
431,421
  
$
203,557
  
$
94,881
  
                                       
                                       
Ratio of earnings to fixed charges
    
0.95
    
1.20
    
1.29
    
1.56
    
1.68
    
1.62
  
Ratio of earnings to fixed charges and preferred stock
    
0.95
    
1.20
    
1.29
    
1.56
    
1.67
    
1.56
  
                                       
Deficiency amount for ratios less than one:
  
$
24,533
                                
 
The ratio of earnings to fixed charges represents the number of times "fixed charges" are covered by "earnings." "Fixed charges" consist of interest on outstanding asset backed securities issued and debt and amortization of debt premiums and discount.
The proportion deemed representative of the interest factor of operating lease expense has not been deducted as the total operating lease expense in itself was de minimis and did not affect the ratios in a material way. "Earnings" consist of consolidated income before income taxes and fixed charges.