This past week Karen Sibayan of our staff broke the news about Redwood Trust’s second jumbo deal. But there's an interesting follow-up to the initial news that has not been reported on. Here's the long and short of it: Redwood engaged both Fitch and Moody's to rate the $290 million bond, but ultimately chose the former. According to an offering prospectus it seems as though the sponsor of the deal (Redwood) disagreed with "Moody's preliminary assessment of the risks attributable to the mortgage loans," namely the "geographic concentration" of the loans. OK, but then Moody's issued a report warning about the "earthquake" risks on the deal. Many of the loans are collateralized by homes in San Francisco, which is also known as “Earthquake Central.” The earthquake risk, of course, explains why home values in the Bay Area have always been so low and why no one wants to live in that hilly city by that big ugly red (or is it orange?) bridge—and why no one ever holds conventions there. I mean, really, the only thing good to come out of S.F. is Willie Mays (OK, he started in New York) and Jefferson Airplane (and Hot Tuna and Green Day). But seriously: tongues were wagging in certain circles. One source at Fitch told me, "A warning about earthquakes? I've never seen anything like that." Maybe it was a slow day at Moody's…
The Redwood deal, which will be sold by early March, is expected to be oversubscribed, just like the REIT's last jumbo deal of 10 months ago. And now for the big question: When will we see someone else besides Redwood issue a deal? What's the hold up?...
CAN GOLDMAN HIT A HOME RUN IN MI? You have to hand it to Goldman Sachs. The white shoe firm mostly avoided the subprime crisis by staying out of the nonconforming origination during the boom years, though toward the “beginning of the end” it eventually purchased a small shop of little consequence. (Of course, there was that nasty little subprime “short” the firm did with John Paulson.) And then when the market cracked up Goldman bought Litton Loan Servicing at a steep discount. (Litton's former owners, C-BASS, eventually went bankrupt.) Today, Goldman Sachs is one of a handful of backers behind an up and coming mortgage insurance firm called Essent, which, so far, isn't disclosing much about its MI writing business. But we know that Essent is well capitalized and it has no “legacy” issues to deal with, which counts for a lot. The reason we mention all this it appears the Obama White House, in its new budget, is giving the thumbs up to all things private including “private mortgage insurance.” But don't expect current MI players like RMIC, MGIC and Genworth to roll over and play dead. For our analysis of the MI sector read the Monday print edition of National Mortgage News. Don't subscribe? Call 800-221-1809…
CALLING ALL LOAN OFFICERS: We want to know how you did in 2010 and your outlook for this year. NMN's new LO survey can be found at
On Friday it was 70 degrees in the nation's capital and it sure as heck feels like the “Spring Home Buying Season” is upon us. Realtors and mortgage bankers and brokers can only hope. So, tell me: Do you expect the application flow to pick up in the next month? Drop me a line (on or off the record) at
WASHINGTON NEWS: Ginnie Mae has experienced unprecedented growth in the past few years and now it wants to nearly triple its allotment for salaries to $30 million so it can hire more staff and reduce its dependence on contractors. The secondary market agency market guaranteed $413 billion in mortgage-backed securities in FY 2010 with a staff of 77 and a payroll of $11.1 million, including benefit expenses. (Reporting by NMN's own Brian Collins.)
DATA STUFF: Although the mortgage origination sector faces challenges this year, there's plenty of money to be made in servicing. A ranking of the nation's top 100 servicers can be found in the Quarterly Data Report, an Excel spreadsheet and database product offered by NMN. The QDR also ranks certain firms by their cost to service. To order the QDR send an e-mail to
A MUST ATTEND SERVICING SHOW: The MBA's servicing show starts in Texas this coming week, but if you miss that event try the SourceMedia show. The publisher of NMN and American Banker will hold its fifth annual servicing show in Dallas April 5-7. Top servicing and subservicing executives will be there. For more information e-mail
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THE LAST WORD: Happy President's Day. Pitchers and catchers have reported!
