Presale reports show a new originator becoming influential in the latest Redwood Trust jumbo mortgage-backed securitization, a Y structure deal with some tweaks.
RWT deals have become significant to the market as it has been the only aggregator to, through Sequoia Mortgage Trust, consistently issue jumbo MBS backed by recent originations in the private-label market.
Its latest transaction introduces EverBank as a “meaningful contributor” to the collateral pool underlying the securities, Roelof Slump, a managing director in Fitch’s residential mortgage-backed securities group, noted.
“Overall, their contribution is 37% for the entire transaction,” he said.
EverBank is even more significant to a particular part of the deal, which is backed by
“The structure of [Sequoia Mortgage Trust 2013-1] is largely similar to the structure of SEMT 2012-1,” Gerard Mazi, an associate analyst in Moody’s asset finance group, said in an email sent in response to questions from this publication.
“Both transactions have two senior groups backed by two pools and shared subordinates.
“The main difference is that the overcollateralization floor in the 2013-1 is higher at 1.2% [than] in the [2012-1 deal], which was at 1.05%.
“Another slight difference is that in the 2013-1 Redwood has cleaned the language of the transactional documents to eliminate ambiguities about the structure,” the executive added.
The Fitch analyst said EverBank’s originations represent 74% of a pool in the transaction backed by relatively shorter-term jumbo loans, compared to roughly 11% of the 30-year fixed-rate loan pool.
“We believe they’re a good quality originator,” Slump said. “We don’t have a lot of performance information on EverBank but…there was 100% due diligence being provided into the transaction, and the loans are high quality, so all of that was factored into our analysis.”
He said Fitch also found what he described as “areas of strength” at the company, including its “experienced senior management, risk management and diversified funding strategy.”
Slump also noted that there were 511 loans in the latest transaction Redwood aggregated loans for, making it larger than other recent Sequoia deals, which he estimated had loan counts in the mid-to-high 300s.
Some originators in the deals have retained servicing while others have not, and Redwood’s continuing use of Wells Fargo as a master servicer “from a financial strength perspective…does help when we consider the risk of servicer interruption,” the executive said.
Slump said Fitch was comfortable with the range of AA (investment grade) to BB (speculative grade) ratings it assigned to some of the subordinate bonds Redwood is retaining.
“Sequoia has generally retained most of the subs” and Fitch has been the one ratings agency to rate them.
There was “not a significant change” in credit enhancement levels in the transaction, he said.
