Real estate investment trust Redwood Trust (RWT) continues to meet its goal of monthly issuance as the firm sets out on its third private-label residential-mortgage backed securitization deal of 2013.
Kroll Bond Ratings pre-rated Sequoia Mortgage Trust 2013-3, giving the majority of the deal’s tranches AAA ratings.
Click on the chart to view the expected KBRA ratings.
Fitch Ratings also pre-rated Sequoia Mortgage Trust 2013-3, with the expected outlook slated as ‘stable’ and the majority of the tranches also reaching AAA ratings.
Click on the chart to view the capital structure.
The platform will contain 746 loans in the deal with more than 99% of the loans in the pool classified as 30-year, fixed-rate mortgages. The remaining loans are 20-year fixed mortgages. About 2.4% of the loans are interest-only for the first 10 years while the remainder are fully amortizing.
The total balance of the deal is roughly $600 million.
The pool mainly contains fixed-rate mortgages, with First Republic Bank making up the majority of the transaction, or roughly 14% of the loan pool.
Other originators include Cole Taylor Bank, United Shore Financial, PrimeLending with and Flagstar Capital Markets.
Geographic concentration was a primary risk posted within the deal – similar to Redwood’s first and second deals of the year, Kroll noted.
“Non-conforming prime mortgages are most frequently originated in those regions of the country where home prices are highest. As a result, the geographic concentration of the pool is high, with a significant exposure to assets located in California as well as a number of major metropolitan areas,” the credit rating agency noted.
However, Fitch Ratings noted that a key driver for this deal was the improvement of geographic mix.
The overall geographic diversity improved from the last transaction, noting that the percentage of the top three metropolitan statistical areas is the lowest to date at 23%.
In addition, the weighted average borrower credit score is 772, higher than average for recent Sequoia Mortgage Trust transactions as well within the ‘prime’ mortgage range.
Another positive aspect of the mortgage pool is the documentation of each borrower’s income and assets. Of the loans in the pool, 2% are not fully amortizing.
