Redwood Trust plans nearly $1 billion in private RMBS deals
Redwood Trust, the only firm currently issuing private-label residential mortgage-backed securities, said it hopes to close three RMBS deals this year. One of those deals is complete, with the next deal expected in the third quarter. Redwood's Sequoia Mortgage Trust securitization platform closed on the 2011 deal in March— a $295 million RMBS transaction. And, in April of last year, Redwood Trust in partnership with CitiMortgage (C) closed on a $237 million jumbo RMBS. The 2010 deal was the only RMBS transaction closed in the market that year. This week, Redwood Trust also released its earnings, posting a lower first-quarter profit of $18 million, or 22 cents per share, compared to a profit of $47 million, or 58 cents per share, a year earlier. "We are likely to close three securitizations this year (given current market conditions) for an estimated total of $800 million to $1.0 billion in loans securitized," Redwood Trust said in a letter posted on its website. " This is a significant increase from the one securitization of $238 million in loans we completed in 2010." The private label RMBS market has been vacant since the 2008 financial crisis, with Redwood Trust remaining the only deal hunter in the space thus far. In just the first quarter, Redwood acquired $101 million of residential mortgages, originated $12 million of commercial loans and purchased $13 million in residential securities. By the end of March, Redwood had $220 million in cash on hand, according to its earnings report. Despite access to cash, many private investors remain tepid about the secondary residential mortgage market, according to a panel of experts speaking at the Mortgage Bankers Association conference in New York earlier this week. One of the experts, Fred Matera with Redwood Trust Inc. (RWT) said the Federal Reserve's ability to auction off mortgage-backed securities that once belonged to American International Group (AIG) is a positive sign. To get investors back into the private-label residential mortgage backed securitization market, Matera said issuers need to provide transparency on well underwritten mortgages. Write to: Kerri Panchuk.