The sixth residential-mortgage backed securities deal of the year from Redwood Trust (RWT) is expected to close in the fourth quarter. Fitch Ratings pre-rated the transaction.
The company's fifth private label deal came just a few months ago, allowing Redwood to carry on its reputation as one of the few private sector firms engaged in RMBS securitizations.
While the deal has yet to be finalized, Fitch pre-rated the Sequoia Mortgage Trust 2012-6 transaction, giving the majority of the deal's tranches an above 'investment-grade' rating.
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 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 said.
Fitch describes the collateral backing the deal as loans with mostly 30-year, fixed-rate terms that are fully documented and tied to borrowers with strong credit histories. In addition, Fitch says third-party due diligence providers analyzed 93.2% of the pooled loans.
If closed, the transaction will be supported by borrowers with FICOs in the 771-credit score range.
Close to 100% of the borrowers have a FICO score of at least 700. Only three loans are tied to borrowers with FICO scores below 700. Yet, those scores were offset by favorable LTV or debt-to-income ratio scores.
About 44.7% of the borrowers have FICOs above 780.
Many of the loans were made to high net-worth individuals who hold significant assets. Seventy-seven percent of the borrowers have enough cash saved up to cover payments for two years, Fitch noted.
The RMBS mortgage pool is tied to properties in multiple states. Yet, 44.9% of the underlying homes are located in California. The top three MSAs include San Francisco, Oakland and Los Angeles.