Sequoia Mortgage returns with $ 510.3 million RMBS deal
Sequoia Mortgage Trust 2021-9 is preparing to issue $ 510 million in Residential Mortgage Backed Securities (RMBS) secured by fixed rate mortgages, all of which have been designated as Qualified Mortgages (QMs).
Wells Fargo Securities is the primary underwriter in the transaction, which is sponsored by RWT Holdings, Inc. Ratings are expected to be rated “AAA” on all four senior categories, while subordinates will most likely be assigned “AA-” to ” BB – ‘ratings.
Classes A-9, A-12 and A-18 have 15% credit enhancement levels, while A-21 classes have 4% credit enhancement level.
The collateral pools consist of 578 loans totaling $ 510 million, and the trust uses a senior subordinated and variable interest structure that helps maintain subordination for a longer period, in the event of losses later in the year. duration of the transaction. Subordinate classes will only receive scheduled principal and will not receive any unscheduled principal or prepayment for five years, Fitch said.
Fitch noted several positive aspects of the deal. The rating agency views Redwood Residential Acquisition Corp., which acquired the underlying pool of loans from a variety of originators, as an above-average aggregator. Fairway Independent Mortgage Corporation, an originator whose loans represent 7.5% of the collateral pool, is the largest recorded originator on the transaction.
Fitch expressed great confidence in Redwood’s operations, saying the company has a strong sourcing strategy and maintains experienced management and staff, as well as strong risk management and corporate governance controls, as well. than a solid due diligence process, said Fitch.
The initial weighted average (WA) LTV of the collateral is 65.2% and the WA model’s FICO score is 773. The debt-to-income ratio is 32.2%, Fitch said.
The vast majority of pool loans are primary residences, while 94.9% are single-family properties. The remainder of the pool, 4.7%, is mainly made up of condominiums.
Fitch noted that California is the state with the largest concentration of loans in the pool, 39.5%.
The Notes have an interest rate of 1.5% and have an expected final maturity of January 2052.