Redwood Trust is preparing its fourth private-label residential mortgage backed securitization, according to a presale report published today by Fitch Ratings.
The certificates, which are issued off of the REIT’s Sequoia Mortgage Trust shelf, are backed by 716 primarily 30-year, fixed-rate loans with a total balance of approximately $576.4 million.
As in other recent Redwood transactions rated by Fitch, the latest deal contains binding arbitration provisions that may serve to provide timely resolution to representation and warranty disputes.
Fitch said the overall geographic diversity is in line with other recent transactions, with the top three metropolitan statistical areas representing 25% of collateral.
However, a higher percentage of loans, 89%, were originated by smaller lenders with limited experience originating prime jumbo loans, a factor Fitch considers a credit risk. By comparison, in one of Redwood’s first deals of 2011, just 5% of loans were originated by these types of lenders.
Sequoia Mortgage Trust 2013-4 consists of six tranches with a preliminary ‘AAA’ rating from Fitch. There is also a $10.95 million, ‘AA’-rated tranche; a $9.51 million, ‘A’-rated tranche; a $6.34 million, ‘BBB’-rated tranche; a $3.17 million, ‘BB’-rated tranche; and a $6.05 million unrated tranche.