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Not surprisingly, given how standoffish investors have recently been about mortgage credit risk, the underlying loan pool is by most measures pristine.
April 21 -
Jumbo mortgage lending is beginning to show nascent signs of a recovery, or at least a stabilization of sorts.
June 21 -
Redwood Trust Inc. of Mill Valley, Calif., will likely come to market with a $300 million jumbo mortgage-backed security in the fourth quarter.
September 7
Redwood Trust on Tuesday
The deal marks Redwood's
The REIT does not fund mortgages directly and instead must rely on correspondent loan purchases from jumbo originators, including depositories.
Its first jumbo deal — which was oversubscribed — was comprised mostly of loans originated by Citigroup. This time around it's unclear which lenders have been upstreaming product to the Mill Valley, Calif.-based firm.
The shelf registration was filed by the company's Redwood Residential Acquisition Corp. and is part of its Sequoia Mortgage Passthrough Certificates program (Series 2011-1).
Credit Suisse is the underwriter and lead manager on the deal with JPMorgan Securities and Jefferies & Co. acting as co-managers. Citibank is the deal's trustee while Wells Fargo Bank is the master servicer and the securities administrator.
The offering comprises five tranches of offered certificates worth $290 million and four parts that are not going to be offered.
The RMBS will be backed by 303 fully amortizing fixed rate mortgage loans (comprising around 57.32% of the mortgage pool) and hybrid mortgage loans (representing about 42.68% of the mortgage pool).
The hybrid mortgage loans generally offer interest at a fixed rate in the initial period of ten years from their origination and at an adjustable rate thereafter.
The mortgages also provide payments of interest at the related mortgage rate, but no payments of principal, for ten years after they were originated, according to the SEC filing.
All of the mortgages are backed by first liens on one-to two-family residential properties, condominiums, cooperative units, planned unit developments and townhouses.
Redwood had hoped to issue a jumbo bond in the fourth quarter, but in the fall the company said in its 'Redwood Review' publication that the secondary market at the time was "constrained by headwinds" — in particular what it called the government's (Fannie Mae and Freddie Mac) "outsized role" in the mortgage market.
In the review, Redwood complained that the GSEs were snatching up 'conforming jumbos' (mortgages that are $417,000 to $725,750 in size) when instead these loans should be going to private sector buyers.
In the Spring of 2010 Redwood came to market with a $238 million jumbo MBS. At the time it was the first private label deal in 18 months.
Other players in the mortgage market are contemplating entering the jumbo MBS space, including Goldman Sachs.
