MILL VALLEY -- Redwood Trust, Inc. (NYSE: RWT) reported net income of $22 million for the quarter ended Sept. 30, down from $40 million during the same quarter last year.
Redwood Trust, a real estate investment trust, or REIT, that brokers, invests in and securitizes residential and commercial mortgages, attributed that decline to difficult conditions in the mortgage market, particularly rises in interest rates that have spurred large banks to pay more to purchase mortgage loans and add them to their portfolios.
That activity is among those central to Redwood Trust, which is among the buyers of larger "jumbo" mortgages beyond the range accepted by Fannie Mae and Freddie Mac.
Redwood Trust had seen income triple in the prior quarter compared to a year before, at $66 million, but cautioned at the time that some of the lower interest-yielding mortgage-backed securities remaining on its portfolio were likely to generate less income later in the year.
The company completed three residential securitizations totaling $1.2 billion during the third quarter, with $80 million in securities and $13 million of investments in mortgage servicing rights for its own portfolio. Pure loans sales generated $600 million.
Redwood trust has purchased a total of $6.5 billion in loans through the first nine months of the year, and had $4.66 billion in assets among its combined subsidiaries at the end of Sept. 30.
Earnings per share for the quarter were equivalent to 25 cents per diluted share. The company had estimated REIT taxable income of $20 million for the quarter. At September 30, 2013, the company owned $728 million of residential loans held-for-sale and had identified an additional $595 million for purchase.
