Redwood pushes back second jumbo deal to early 2011
Redwood Trust, the only company to securitize jumbo loans during the past two years, has pushed backed its second deal to early 2011 because of a lack of available product. In particular, the Mill Valley, Calif-based REIT pinpoints the cause: "major bank originators are reluctant to sell [jumbo] loans due to their high level of excess liquidity." In other words, depository-based jumbo lenders are keeping the product in portfolio because the yield over their cost of funds is steep, and there's a lack of available good credits out there. Redwood continues to believe there is a major business opportunity in the secondary market because Fannie Mae and Freddie Mac are destined to "shrink."