What would the market of private label mortgage-backed securities do without Redwood Trust?
The REIT is on its twelfth deal this year under the Sequoia label, according to a presale report from Kroll Bond Ratings.
The collateral behind this $325 million transaction consists of 410 first-lien, 30-year, fixed-rate jumbo mortgage loans.
The deal is split into several tranches with different ratings. The senior-most piece amounts to about $298 million and enjoys a credit enhancement of 8.35%. Kroll expects to rate that tranche ‘AAA(sf).’ The B-4 notes are the lowest rated. Totaling $3.4 million, they have a grade of ‘BB(sf)’ and a credit enhancement of 1.05%.
Kroll said that on average the borrowers in the pool have substantial equity in their homes, as reflected by a weighted average loan-to-value ratio of 70%. The weighted average FICO score is also exceptional, at 766.
On the downside, as with previous Sequoia deals, there a number of originators behind the collateralized loans and some of these do not have a long track record originating jumbo mortgages.
“In addition, some of the sellers may lack sufficient financial resources to fulfill their repurchase obligations if there was a breach of a loan representation and warranty (R&W),” Kroll said in its release.
In line with so many RMBS in the post crisis era, the biggest chunk — 40% — of underlying loans is secured by homes in California. Texas comes in second, with a 7.8% share.
Cenlar FSB will service nearly 82% of the loans. CitiMortgage is the transaction’s master servicer.
