Newly created Kroll Bond Rating rated its first residential mortgage-backed security, the latest upcoming offering from Redwood Trust (RWT). Kroll began putting together its senior management team in July 2010 and handled its first commercial MBS last summer. The Redwood RMBS is just the fourth privately funded security issued since the credit markets froze in 2007, all four from the San Francisco real estate investment trust. The government, through Fannie Mae, Freddie Mac and Ginnie Mae has financed 95% of the mortgage market since. Like Fitch Ratings, which released a pre-sale report on the latest Redwood deal last week, Kroll plans to rate four classes AAA. Also like Fitch, Kroll raised concerns about the concentration of the collateral in Northern California. However, Kroll analysts said this is offset somewhat by the "substantial financial flexibility" of the borrowers. There were also concerns with one of the lenders of the mortgages, PHH Mortgage. Its parent company PHH Corp. (PHH) faces significant near-term debt maturities, including $250 million coming due in April and another $421 million maturing in March 2013, Kroll noted, which adds some risk. "While PHH Corporation has stated that it is working to address its challenges, financial stress on the company could negatively impact its ability to service the mortgage loans effectively and fulfill its advancing obligations, as well as its capacity to repurchase mortgage loans for which a breach of a representation or warranty is discovered," Kroll analysts said. Still, Redwood disclosed it would back-stop PHH on its repurchase obligations should the company go insolvent. Write to Jon Prior. Follow him on Twitter @JonAPrior.