Note 14. Commitments and Contingencies Lease Commitments At June 30, 2012, we were obligated under non-cancelable operating leases with expiration dates through 2018 for $10 million. Operating lease expense was less than $1 million for both the six months ended June 30, 2012 and 2011. The following table presents our future lease commitments at June 30, 2012. Future Lease Commitments by Year (In Thousands) June 30, 2012 2012 (six months) $ 868 2013 1,779 2014 1,820 2015 1,776 2016 1,518 2017 and thereafter 2,213 Total $ 9,974 In the third quarter of 2011, we entered into a new lease agreement for our executive office. The new lease, which went into effect during the second quarter of 2012, recast our previous lease obligations and expires in 2018. The payments required under the new lease will be recognized as office rent expense on a straight-line basis over the lease term. In the fourth quarter of 2011, we also relocated our New York office and entered into a new lease agreement. This lease expires in 2015 and accounts for approximately ten percent of our future lease obligation. Leasehold improvements for our offices are amortized into expense over the prior lease term, expiring in 2012. There were no unamortized leasehold improvements at June 30, 2012. For both the six months ended June 30, 2012 and 2011, we recognized leasehold amortization expense of $1 million. Loss Contingencies   Litigation On December 23, 2009, the Federal Home Loan Bank of Seattle (the  FHLB-Seattle ) filed a claim in Superior Court for the State of Washington (case number 09-2-46348-4 SEA) against Redwood Trust, Inc., our subsidiary, Sequoia Residential Funding, Inc. ( SRF ), Morgan Stanley &amp; Co., and Morgan Stanley Capital I, Inc. (collectively, the  FHLB-Seattle Defendants ). The FHLB-Seattle alleges claims under the Securities Act of Washington (Section 21.20.005, et seq.) and seeks to rescind the purchase of a mortgage pass-through certificate (or, residential mortgage backed securities,  RMBS ) issued through our Sequoia RMBS