Sequoia Mortgage Trust 2025-6 (SEMT 2025-6) has issued 60 residential mortgage-backed certificates which are supported by 402 loans with a total balance of $478.8 million.
The pool comprises first lien, fully amortizing fixed-rate mortgages with 15- and 30-year maturity terms, which were acquired by Redwood Residential Acquisition Corp. from various mortgage originators. The collateral is characterized by a weighted average (WA) original credit score of 779 and moderate borrower equity, with a WA original loan-to-value (LTV) of 70.3% and WA original combined LTV of 70.4%, KBRA says.
The sponsor is RWT Holdings, the seller is Redwood Residential Acquisition Corp., the trustee is Wilmington Trust, National Association, and the master servicer is Nationstar Mortgage. Morgan Stanley is the bookrunner.
KBRA says Redwood has been an active contributor in the residential mortgage market for over a decade as a loan aggregator, issuer and investor in RMBS securitizations. Historically, Redwood has generally invested in and securitized high-quality prime jumbo mortgages, which have performed well relative to the universe of non-agency securitizations, it notes.
Fitch says the borrowers have a strong credit profile with a weighted average Fitch model FICO score of 779 and a 36.7% debt-to-income ratio. The borrowers also have moderate leverage, with a 78.9% sustainable loan-to-value ratio (sLTV) and a 69.9% mark-to-market combined LTV ratio (cLTV).
Overall, 93% of the pool loans are for primary residences, while 7% are loans for second homes. Also, 79.4% of the loans were originated through a retail channel, and 100% of the loans are designated as safe-harbor qualified mortgage loans.
Fitch views the pool's home price values as 10.9% above a long-term sustainable level (versus 11.0% on a national level as of 4Q24, down 0.1% since the previous quarter).
The mortgage cash flow and loss allocation are based on a senior-subordinate, shifting-interest structure, whereby the subordinate classes receive only scheduled principal and are locked out from receiving unscheduled principal or prepayments for five years.
The lockout feature helps maintain subordination for a longer period should losses occur later in the transaction's life, Fitch says. The applicable credit support percentage feature redirects subordinate principal to classes of higher seniority if specified credit enhancement levels are not maintained. After the credit support depletion date, principal will be distributed sequentially - first to the super-senior classes (A-9, A-12 and A-18) concurrently on a pro rata basis and then to the senior-support A-21 certificate.
Fitch and KBRA assigned AAA to the A1 through A25 notes and to the A-IO1 through A-I026 notes. They also assigned AA- to the B1, B1A and B1X notes.
While Fitch assigned A to the B2, B2A and B2X notes, KBRA rated them as A-. In addition, Fitch assigned BBB- to the B3 notes, BB to the B4 notes and B to the B5 notes, while KBRA assigned BBB-, BB- and B- to them respectively.
