Redwood Trust (RWT) will bring a $313 million jumbo residential mortgage-backed security to market, its seventh since 2010.
Three rating agencies Moody’s Investors Service, Fitch Ratings and Kroll Bond Ratings assigned AAA status to six classes.
The Sequoia Mortgage Trust 2012-4 bond is the fourth of the year, and Barclays Capital (BCS) analysts expected it to oversubscribe as investors look for more product after the completion of Maiden Lane sales by the Federal Reserve.
Roughly 87% of the pool is made up of 30-year fixed-rate mortgages. The average FICO score is 771, and the average loan-to-value ratio is 67.6%, according to Moody’s.
One in four loans in the deal were originated by First Republic Bank, but the pool includes more than seven originators. Many subordinated tranches that received no rating include loans written by Flagstar Capital Markets, PrimeLending and others.
Redwood, the leading issuer of private-label mortgage bonds since the credit market locked up in 2007, managed to avoid a single delinquency since 2010.
Moody’s pointed out the latest pool includes a small number of loans with high principal balances, which can force losses on the bond when few loans remain. The largest 20 loans make up more than 10% of the total balance of 372 mortgages.
Like previous Sequoia transactions, a high percentage of loans back collateral in California. In the latest deal, 43% of the properties reside in the Golden State, though that is down from previous transactions.