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North Bay Business Journal

Tuesday, March 1, 2011, 4:32 pm

Redwood Trust announces completion of prime residential mortgage securitization

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    MILL VALLEY – Redwood Trust today announced the closing of a $290 million prime jumbo residential mortgage loan securitization sponsored by its wholly-owned subsidiary, RWT Holdings Inc.

    The securities that were publicly offered in the securitization were sold to institutional investors by the underwriters of the offering, who were Credit Suisse Securities LLC, J.P. Morgan Securities LLC and Jefferies & Company, Inc., with Credit Suisse Securities LLC acting as the lead managing underwriter. The most senior securities issued in the securitization, representing 92.5 percent of the principal amount of the securitization, were rated “AAA” at the time of issuance by Fitch, Inc.

    “This transaction marks another step toward re-opening the private mortgage securitization market and supports the Treasury Department’s recent finance reform proposal that calls for the private market to become the primary source of mortgage credit for the U.S. housing market.  This transaction also supports our belief that triple-A investors will provide attractive financing for prime residential mortgages provided their demands for enhanced disclosure transparency, alignment of interests, high quality collateral, and structural protections are responded to with improvements in these areas,” said Martin Hughes, Redwood’s president and chief executive officer. “We look forward to the potential roll-back at the end of September 2011 of the temporary increase in the conforming loan limits applicable to Fannie Mae and Freddie Mac, which would increase the share of the mortgage market for the private sector and reduce future risk to taxpayers.”

    “This residential mortgage securitization demonstrates that the private sector can finance residential mortgage loans without government backing at levels that are attractive to borrowers and investors.  More specifically, the economics of this transaction support private-sector financing of prime mortgages with rates that are within 0.5% of the rates on mortgages financed through Fannie Mae or Freddie Mac,” said Brett Nicholas, Redwood’s chief operating officer. “The pricing of this securitization transaction suggests that fears of residential mortgage rates rising by 100 to 150 basis points unless there is government backing through Fannie Mae or Freddie Mac appear to be unfounded.”

    Redwood Trust, Inc. (NYSE: RWT) is a publicly traded company structured as a real estate investment trust.  RWT Holdings, Inc., a wholly-owned subsidiary of Redwood Trust, Inc., is the sponsor of the securitization described above and has been a sponsor of securitization transactions since 2002.

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