Redwood Trust To Offer New RMBS In Early 2011


Mill Valley, Calif.-based Redwood Trust is planning a second private-label securitization offering that is scheduled for completion in the first quarter of 2011.

Details on the new securitization package were not made public. The Marin Independent Journal reports that as of late October, Redwood Trust had purchased $160 million of residential mortgage loans and made commitments to purchase an additional $138 million of residential mortgages.

In a letter to its shareholders published online last week, Redwood Trust stated that government financing of the mortgage industry cannot continue indefinitely – but an abrupt switch away from the current model is impossible.

‘Currently, about 90% of all new mortgage originations rely on government support,’ the company said. ‘Given the fact that there is $10.6 trillion of outstanding mortgage debt, this level of public subsidization is simply not sustainable. That being said, reducing the current level of governmental support, whether immediately or gradually over time, will have severe consequences for the housing market if the private sector is not prepared to step in with investment capital to replace a diminished level of government backing.’

In April 2010, Redwood Trust closed a $238 million prime jumbo residential mortgage loan securitization sponsored by its wholly owned subsidiary, RWT Holdings Inc., marking the first private-label residential mortgage-backed securities (RMBS) offering backed by newly originated mortgages since 2008. Redwood issued 48 residential securitizations totaling $35 billion between 1997 and 2007.

Separately, Redwood Trust also announced that it is putting together a team that will create a new commercial real estate portfolio. Martin Hughes, Redwood Trust's president and CEO, states that commercial real estate will play a significant role in the company's future operations.

‘We believe the investment opportunity in commercial real estate could account for a significant portion of the capital we invest in 2011,’ he says, adding there was approximately $1.4 trillion in commercial real estate debt that will need to be financed over the next five years.

SOURCE: Redwood Trust, Marin Independent Journal

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