Sequoia Mortgage Trust 2010-H1, the first securitization of recently originated jumbo loans since 2008, has been priced in the public market.
Issued by Redwood Trust, the deal includes $222 million (principal balance) of class A-1 certificates carrying Moody's Investors Service's top 'Aaa' rating.
The notes are being offered with an initial interest rate of 3.75% per annum, subject to adjustments. The deal is currently expected to close on April 28. The lead managing underwriter is Citigroup Global Markets. JPMorgan Securities also is acting as an underwriter on the offering.
The prospectus and supplemental documents indicate the deal has an interest-only class and several other subordinate tranches that are not being offered. "Without seeing the subs sold, we can't really say whether this deal is a valid template for securitization going forward," said one hedge fund manager who is also working on a jumbo securitization deal.
The documents also indicate there is one unrated class that is not being offered and one or more REMIC elections for federal income tax purposes. The five-year hybrid adjustable-rate mortgages backing the transaction have an average balance of about $933,000 and range from about $300,000 to $2.5 million in size. They have an average of eight months of seasoning.
Seventy-three percent of the loans had no second liens, which the hedge fund manager said suggests "the issuer may have done a post-origination title search to verify the nonexistence of seconds, which might account for the loans' seasoning."
Forty-six percent of the loans are from California and 28% of the deal comes from self-employed borrowers, but the borrowers appear to be extremely wealthy, with their average monthly income being $54,000 and their average verified assets at $1.2 million, the hedge fund manager noted.