Jumbo-Mortgage Market Gets Backing From a Big Player
Redwood said it will expand its market share of interest-only loans should competitors become less comfortable with these type of loans once the rules go into effect.
However, Redwood said one caveat would be how the risks related to these non-QM loans are regarded by credit rating agencies who establish the credit ratings for the firm's securitizations.
If rating agencies take a harsh view of the risks, Redwood would find few takers for the loans.
Other lenders -- notably First Republic Bank (FRC) -- have also said they would continue to participate in the interest-only residential mortgage market, which has been a source of extraordinary growth for the bank.
-- Written by Shanthi Bharatwaj in New York
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