I agree that the existing commercial portfolio would not seem to pose much of an earnings threat.

My concern about their commercial activity is that I recall RWT diversifying into this commercial segment before. This was in the late 90s. I recall that they had to back out of this segment with significant losses.

While that was some time ago, and some of the RWT players have changed, I am bothered by RWT getting outside of their core competency which is residential MBS. They seem to be successful in that segment. The value of their MBS portfolio continues to rise, validating their strategy of selling impressive amounts of stock and investing the proceeds in bargain priced MBS.

So, my hope is that they keep the majority of their investment in residential and don't stray too far from their core competency.