Earnings Explode at Jumbo REIT Redwood


Redwood Trust Inc., the nation’s only active securitizer of jumbo residential loans, posted stellar earnings of $30 million in the first quarter, a 66% jump from the same period a year ago.

In the fourth quarter of last year the publicly traded REIT lost $3 million.

In its just-released “Redwood Review” report, the Mill Valley, Calif., company, seems cautiously optimistic about the jumbo business, noting that it is now buying closed mortgages from 22 sellers and hopes to have a stable network of up to 40 lenders by yearend.

Its goal is to buy $2 billion of product in 2012.

Redwood has already come to market with two jumbo MBS bonds this year: one for $416 million in January and a March $328 million offering in March.

“In anticipation of our next securitization, we held $301 million of residential loans at March 31, 2012, and at April 30, 2012, we held $331 million and had identified another $394 million that we plan to purchase,” the firm writes.

Redwood expects its next securitization to occur late in the second quarter or early in the third.

“While our conduit business continues to face headwinds from sustained government involvement in mortgage finance and from commercial banks that are flush with liquidity and bidding aggressively for high-quality jumbo loans, we believe we are gaining momentum,” Redwood says.


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