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Real estate investment trust Redwood Trust ($19.05 0.44%) could possibly double its production of jumbo-mortgage securitization in 2013, but no official statement has been released. The firm's goal is to issue about once a month in the new year, Redwood Trust told HousingWire.
"Our goal is to ramp up our non-Agency loan production over the next 12-to-18 months so we are able to securitize $300 million or more each month," according to Redwood Trust's third quarter overview.
At the end of the third quarter, the firm owned mortgage-servcing rights on $566 million of prime-quality jumbo residential loans. The capitalized value of the mortgage servicing rights was $2.65 million, or 47 basis points of the mortgage loans. The REIT earned fears from the MSR.s, but outsources the actual servicing.
Click on the graph to view loans identified for purchase and active sells from 2011 to 2012.
The first deal in 2013 is set with Barclays Capital ($18.76 0.21%) on Jan. 15, with a $300 million offering. The REIT’s full year volume is expected to exceed $4 billion.
Redwood Trust closed its sixth residential-mortgage backed securities deal on Nov. 30, allowing the REIT to carry on its reputation as one of the few private sector firms engaged in RMBS securitizations.
The mortgage-backed certificates that will be issued with the SEMT 2012-6 Trust are supported by 358 home loans with a total balance of $301.46 million. The pool largely contains fixed-rate mortgages originated by multiple lenders. First Republic Bank ($38.50 -0.24%) mortgages make up the majority of the transaction, or roughly 12.5% of the loan pool.
Other originators include Fremont Bank, Prime Lending, Flagstar Bank, Shore Financial Services, Cornerstone Mortgage Co., and WJ Bradley Mortgage Capital, Fitch Ratings said.
Of the 17 jumbo-mortgage offerings priced since 2010, nine came from Redwood Trust.
The REIT is responding to a combination of increasing investor demand for private-label mortgage bonds, offering higher yields than agency paper, and a growing supply of collateral.
Rating agencies Fitch Ratings and Moody’s Investors Service said the increasing demand for private-label RMBS is going to be a key player in the market for 2013.
"Investors’ increasing bids for prime jumbo securities drives down their yields, improving the economic benefits for originators to securitize jumbo loans rather than hold them on their balance sheet," Moody’s report said.
Redwood Trust is working with more suppliers outside of its San Francisco Bay Area territory, making deals an easier sell to rating agencies and investors with geographical expansion.
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