Redwood Readies First Jumbo Deal of 2012: $415MM


Redwood Trust is readying a $415 million jumbo MBS deal backed predominately by loans sold to the REIT by First Republic Bank and PHH Mortgage, according to a presale report on the deal prepared by Fitch Ratings.

The bond marks Redwood’s first jumbo security of the new year. Third-party due diligence was performed on 71% of the collateral, Fitch notes.

“The collateral pool consists of fully documented loans to borrowers with strong credit profiles, low leverage on the properties, and large reserve amounts,” writes Fitch analyst Roelof Slump and his staff.

The weighted average LTV is 63%, the average loan size $932,126.

Although FRB and PHH funded a large chunk of the loans, a handful of other lenders sold mortgages to Redwood as well, including Flagstar Bank, PrimeLending, Wintrust, Sterling Savings Bank, Cole Taylor Mortgage, and GuardHill.

Almost 70% of the loans are fixed rate in nature – and almost half come from one state: California.

Fitch had many positive comments about the collateral but noted that “Approximately 48% of the borrowers in the pool have mortgages on two or more properties.”

The bond offering is being managed by Credit Suisse and is expected to price on January 20.

Redwood Trust’s prior three securitizations backed by newly originated jumbo mortgages total close to $900 million.

The company said that along with this deal, it plans to issue more jumbo bonds over the course of 2012. 

“Our investor-friendly governance and structures have set the bar for private-label securitizations going forward,” said Brett Nicholas, executive vice president and chief operating and investment officer at Redwood Trust. “The performance of these past three deals has been excellent and no one’s missed a payment. There are no delinquencies or losses.”

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