Mortgage

Redwood Trust: 4 optimistic opportunities ahead for mortgage REITs

Experts weigh in on mREITS at Goldman Sachs Housing Finance Conference

There were mixed reviews on the future of mortgage real estate investment trusts from industry experts at the Goldman Sachs (GS) Housing Finance Conference Thursday.

Although no one predicted a negative future for the mREIT industry, most hesitated to say that 2015 would bring anything special.   

When asked about what’s ahead for 2015, Gary Kain, president and chief investment officer with American Capital Agency (AGNC) said there aren’t a lot of glaring opportunities.

But Marty Hughes, CEO of Redwood Trust (RWT), was the one exception and spoke with a lot of excitement about the upcoming year.

Here are the four areas where Hughes was optimistic about growth in 2015:

  1. The biggest opportunity is in the residential mortgage-backed securities area.
  2. Another big one is risk sharing with government-sponsored enterprises and the business we do with GSEs.
  3. The opportunities in liquidity to self employed borrowers.
  4. Last, on the commercial space, the ability to do mezzanine loans.

This same fervor is shown in the company’s latest earnings report. 

Although Redwood Trust saw its net income drop by $18 million in the fourth quarter, the REIT made “good” financial and operational progress in 2014.

In the earnings, Hughes shared the company’s plans for 2015, specifically saying that the company plans to gain market share by utilizing the broader seller base and strategic relationships the company formed in 2014, while also focusing on increasing the “efficiency and operating leverage” of the company’s platform.

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