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Volume 2014 - Number 27

July 11, 2014

Redwood Includes Non-QMs in Its Latest Jumbo Deal, Does Less than 100 Percent Due Diligence

Redwood Trust took three months off from issuing jumbo MBS but came back with something of a doozy this week: a $306.05 million deal that will include some loans that donít meet standards for qualified mortgages and some loans that werenít subject to third-party due diligence reviews. Sequoia Mortgage Trust 2014-2 is set to receive AAA ratings with credit enhancement of 7.75 percent on the top-rated tranche. While the credit enhancement requirements are somewhat high, a jumbo MBS from Redwood in November had even higher credit enhancement levels, suggesting that the non-QMs and lack of full due diligence arenít a major concern. Only three of the 438 mortgages to be included in the deal are...

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This weekly covers the secondary mortgage market, including mortgage-backed securities and asset-backed securities.



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