Redwood Trust, based in Mill Valley, Calif., has announced plans to issue three private-label residential mortgage-backed securities (RMBS) later this year.
The company announced the news in ‘The Redwood Report,’ a quarterly review published on its website. ‘We are targeting our next residential mortgage securitization for the third quarter of 2011, assuming market conditions permit,’ the company wrote. ‘In fact, we believe 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. This is a significant increase from the one securitization of $238 million in loans we completed in 2010.’
While Redwood Trust has been the sole dominant force in private-label RMBS issuance since the September 2008 crash of the U.S. economy, the company believes that other private-label entities will be returning to the sector.
‘Furthermore, there are hopeful, encouraging signs out of Washington, D.C., as both political parties now acknowledge the need to reduce the government's outsized role in mortgage finance in favor of the private sector,’ the company added. ‘The first step could come at the end of September, when the conforming loan limit is scheduled to come down from $729,750 to $625,000 in high-cost areas. We realize it could take until 2012 to get some traction. As a company, we are not just sitting around waiting for the world to change. We continue to actively look for residential portfolio opportunities, and our biggest plan for capital deployment in 2011 is by our commercial group.’