A prime jumbo residential mortgage-backed security (RMBS) deal being structured in the private-label market appears ready to thaw the long freeze of credit in securitization, according to sources.

The deal, Sequoia Mortgage Trust 2010-H1, will consists of 255 first lien mortgages secured by single-family residential properties –110 in California alone — according to a preliminary term sheet filed today with the Securities and Exchange Commission (SEC).

The loans bear approximately $222.38m of principal balance, with an average $932,700 principal balance per loan. The loans bear a weighted average seasoning of eight months, and a weighted average original loan-to-value ratio of 56.57%. The weighted average original credit score for the borrowers is 768.

There is no loan level data available in the filing, though the deal is set to be publicly-placed and closed by April 28, and more information may be available then, sources tell HousingWire.

CitiMortgage acts as the originator and servicer, while Wells Fargo Bank is listed on the preliminary term sheet as the trustee on the deal. Redwood Trust is named as the seller and sponsor, while Sequoia Residential Funding is the depositor. Moody's Investors Service is expected to assign a triple-A rating on the bonds, which bear an initial subordination of 6.5%, according to the term sheet.

The American Securitization Forum (ASF) was quick to comment on what would be the first private-label security backed by newly originated mortgage loans to be issued since 2008. The ASF issued a statement to "welcome" the deal being structured by Redwood Trust. A spokesperson for Redwood declined to comment.

“Today’s transaction signals that the private RMBS market is beginning to return, but it does not signal that RMBS has returned,” said ASF executive director Tom Deutsch, in an e-mailed statement. “The market is extremely fragile and we need to be very careful, especially as policymakers consider new regulation, that we act thoughtfully to ensure vitally needed private credit starts flowing again to American consumers.”

In the email, the ASF said the new deal appears to follow a few Project RESTART principles, an initiative designed to rebuild investor confidence in MBS and restore the flow of capital to the securitization markets. The detailed information required under the initiative aims to provide securities investors with the data needed to monitor the deal's performance.

Write to Diana Golobay.

Additional reporting by Jacob Gaffney

The Federal Deposit Insurance Corp. (FDIC) closed on two offerings of structured notes for $2bn. The notes are backed by performing and non-performing mortgages, real estate owned (REO) assets and construction loans.

The timely payment of the notes is guaranteed by the FDIC and backed by the full faith and credit of the United States.

The assets were seized from failed Chicago-based Corus Bank and Houston-based Franklin Bank. The FDIC, acting as receiver of both banks, conducted the sale of the notes through private offerings and has kept details tightly under wraps.

FDIC said the $1.38bn of Corus notes are backed by performing and non-performing construction loans and REO assets with an aggregate unpaid balance of $4.5bn. The notes were originally issued in October 2009 to the Corus Bank receivership in connection with a limited liability company (LLC) formed to hold the related assets.

The FDIC retains its 60% equity interest in the LLC, and ST Residential — an entity formed by a consortium of investors led by Starwood Capital Group — still owns its 40% equity interest purchased in October 2009.

The sale of the Corus notes includes three classes of notes with maturities of 1.5, 2.5 and 3.5 years from the closing date. Rather than accruing interest or making payment prior to maturity, the notes are sold at a discount to their principal balance and allow investors to earn the difference between the sale price and the principal balance paid at maturity, FDIC said in a statement.

The $653m of Franklin notes are backed by performing and non-performing mortgages and REO assets with an aggregate unpaid balance of $1.22bn. The notes were originally issued in September 2009 to the Franklin Bank receivership in connection with the LLC created to hold the assets in the pilot funding mechanism of the Legacy Loans Program. The FDIC still retains its 50% equity interest issued by the LLC, while the RCS Franklin Venture still owns the 50% equity interest bought in September 2009.

The $1.31bn of proceeds generated from the sale of the Corus notes will go to the Corus Bank receivership, while the $652m of proceeds from the sale of the Franklin notes will go to the Franklin Bank receivership, FDIC said. This will help recover "substantial funds" paid out from the FDIC's Deposit Insurance Fund (DIF) to take over the banks.

Write to Diana Golobay.