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Another Jumbo Securitization Coming to Market

SEP 10, 2012 1:20pm ET
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Fitch, Kroll and Moody’s Investors Service have issued presale reports on the latest transaction from the only consistent issuer of private-label mortgage-backed securities deals since the downturn.

The Sequoia Mortgage Trust 2012-4 jumbo prime deal is backed by first lien mortgages and has a total principal balance of about $313.2 million, according to Kroll.

Kroll and Moody’s said they are only rating the three senior and three interest-only classes, while Fitch expects to also rate four subordinate classes. There also is a fifth subordinate class that is unrated.

Fitch said it specifically expects to assign investment grade ratings of AAsf, Asf and Bsf to the class B-1 ($9.7 million), B-2 ($5.48 million) and B3 ($2.82 million) subordinate certificates, respectively.

Kroll highlighted the deal’s relatively low loan-to-value and combined first and junior lien LTV ratios, noting that these (66.4% and 67.6%, respectively) provide protection against potential home price declines. The company’s presale report also notes that this reverses a trend toward higher LTVs seen in previous deals.

Moody’s noted that while the LTVs are historically low in this deal, there is a higher concentration in the 75-80% LTVs than in other recent Sequoia deals.

LTVs have proved to be key factors in how jumbo has performed, said Rebecca Walzak, president of industry consultancy Looking Glass Group LLC.

Redwood Trust, which issues securitizations through its Sequoia affiliate, has so far issued deals that appear to have no significant delinquencies of 60-days or more.

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