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Investments

Redwood sets RMBS record straight on possible mortgage originations

January 28, 2013

In a blogtalkradio interview on "Capital Markets Today" last week with Louis Amaya, I talked about plenty of things: the qualified mortgage rule, recent Nationstar [stock NSM][/stock] secondary market deals, and the latest Redwood [stock RWT][/stock] Sequoia RMBS. 

In the heat of the interview, I stated the following in regards to Redwood, "In my opinion, if we get to a point where they are able to originate their own loans….that will really be something to talk about.” 

[Broadcast available below or by clicking here, Redwood comment at 05:30]

Well, this earned an email from Mike McMahon, the managing director Redwood Trust, who said never say never on the company seeking to open an mortgage originations platform. But, to be sure, there are no such plans currently.

"We prefer to shift all (or most) of the volatility of origination and servicing off to third parties so they can deal with it while our model is more like the low cost GSEs as we buy closed loans and securitize them and sell the seniors and keep the subs," McMahon said.

"It is true that if we did originate, we could capture additional profit but at this point, we prefer to pass on that extra point of profit and avoid all the volatility related to the operations," he added. 

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[Ed Note: Redwood did not ask for an opportunity to clarify their business model. HousingWire did so, in the interest of transparency.]

jgaffney@housingwire.com

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