Bond Group Cautiously Optimistic About New Jumbo Issuance

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MORTGAGE EXPERT
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More than 250 jumbo mortgages for over $0.2 billion are backing the first private-label issuance of mortgage-backed securities in two years. But one group is warning that the return of the non-agency MBS market will be slow and could be burdened with new regulations.

The issuance was reported in a Securities and Exchange Filing today by Redwood Trust Inc. issuer Sequoia Mortgage Trust.

Dubbed Sequoia Mortgage Trust 2010-H1, the transaction includes 255 hybrid jumbo mortgages for $238 million originated by CitiMortgage Inc. The 12-month LIBOR loans are also serviced by Citi.

It is the first private-label securitization since 2008, the American Securitization Forum said in a statement today.

But the trade group warned against opening the champagne bottles yet — as the return to securitizations for consumer loans will be a slow process.

“The market is extremely fragile and we need to be very careful, especially as policymakers consider new regulation, that we act thoughtfully to ensure vitally needed private credit starts flowing again to American consumers,” Tom Deutsch, executive director of the group, said in the statement. “Policymakers and market participants need to work together to ensure the markets are revitalized and are not damaged by perhaps unintended consequences of new policies.”

The transaction is coming at a time when Moody’s Investors Service has been downgrading billions of dollars of jumbo RMBS as the underlying loans are seeing “rapidly deteriorating performance.”

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