Redwood’s busy year rolls on with 6th prime jumbo RMBS

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Redwood Trust’s nearly unlimited appetite for the securitization market marched on this week with the real estate investment trust rolling out its sixth RMBS deal of the year (and third of the summer) packaging prime jumbo mortgages.

Sequoia Mortgage Trust (SEMT) 2017-6 is a $355.4 million portfolio of 478 30-year fixed-rate jumbo mortgages. It comes less than two weeks after Redwood closed on its $483.9 million SEMT 2017-5 transaction.

Like its previous five transactions this year, and three in 2016, the portfolio is comprised of hundreds of high-balance, prime-quality mortgages aggregated from a wide collection of originators – in this case, 125 lenders, including First Republic Bank, a San Francisco-based bank that caters to private wealth management and high-net worth individuals in the Bay area as well as Southern California and select East Coast markets.

The transaction features a sprawling capital stack of more than four dozen super-senior and senior notes that carry preliminary triple-A ratings from Kroll Bond Rating Agency and Moody's Investors Service. The super-senior notes benefit from 15% credit enhancement, with the senior interest-only notes supported by 5% CE.

The loans in the collateral pool have an average balance of $734,544, with a large section of the homes (35%) located in California with high-quality credit borrowers that possess substantial equity in their properties (a weighted average loan-to-value ratio of 68.4%, with a debt-to-income ratio of 32.6%).

The loans were gathered or purchased by Redwood from 125 different originators including the Federal Home Loan Bank of Chicago and First Republic, which maintains servicing rights on 18.4% of the loan collateral it contributed to the pool.

For the first time this year, Quicken Loans is not one of the primary originators of the loans, contributing less than 5% of the loans.

The 2017 push to securitize loans comes after Redwood acquired $4.7 billion in jumbo residential loans in 2016, as well as $200 million in agency-backed loans, bringing year-end assets in the trust to $5.5 billion.

The company has been an active sponsor and investor in RMBS transactions for over a decade. Besides the eight publicly rated deals since early 2016, Redwood has conducted 32 private RMBS securitizations since 2010 totaling over $12.2 billion, according to KBRA.

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