Redwood Trust is fully validating expectations that it would keep the private label market of residential mortgage-backed securities (RMBS) alive this year, according to pre-sale reports by Kroll Bond Ratings and Fitch Ratings.

The REIT is in the market with its third deal of 2013 under its Sequoia Mortgage Trust shelf. With several tranches totaling $600 million, the transaction has a legal final maturity of 30 years. Three senior classes of $187 million each are rated triple-A by both Kroll and Fitch.

Credit Suisse is the transaction’s arranger.

Nearly all the collateral consists of fixed-rate thirty-year mortgages. The average loan balance is a hefty $804,571, with a weighted average loan-to-value of 65.3%. Loans originating in California make up 43.2% of the total. The second biggest state in the pool, Massachusetts, accounts for roughly 10.5%.

There is a wide diversity of originators in this particular transaction. First Republic lent 14% of the pool; Cole Taylor, 9.1%; and Union Shore, 8.8%.

In Redwood’s last RMBS First Republic was responsible for about 50% of the underlying pool, carrying a risk of originator concentration that was less pronounced in the last few transactions of 2012.

But the inclusion of new loan sellers into the upcoming transaction is not necessarily a credit strength for the program. Some lack a track record in writing jumbo mortgage loans, according to Kroll.  

The mortgage REIT reported in its 3Q 2012 review that it aimed to ramp up its non-agency loan production over 2013, with the goal of securitizing $300 million or more monthly.  

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.