Mortgage – HousingWire

Redwood Trust puts red ink in the rearview mirror

Posted: 10 Feb 2022 07:32 AM PST

Mill Valley, California-based Redwood Trust Inc. (NYSE: RWT) on Wednesday reported fourth-quarter 2021 net income of $44 million, or $0.34 per diluted share, matching the Zacks consensus E PS estimate for the quarter.

The earnings were off the company's fourth-quarter 2020 mark of $54.3 million and down from third-quarter 2021 earnings of $88.3 million. Still, the Mill Valley-California real estate investment trust reported net income for the full year of $319.6 million, a major boost compared to a net loss of $582 million recorded in the pandemic-onset year of 2020. The REIT recorded a profit of $169 million i n 2019.

“The fourth quarter of 2021 rounded out a transformative year for our Company where we grew our operating businesses, built out our product and technology offerings, and expanded our strategic investments, while delivering 25% full-year return on equity,” said Chris Abate, CEO of Redwood. "… As we look ahead in 2022, we expect the diversity and composition of our revenue streams to provide us with a notable advantage in a rising rate environment."

Among the results highlighted in the Redwood's earnings release for its fourth quarter ended December 31, 2021, are the following:

The REIT funded $733 million in business-purpose mortgage loans, including bridge loans and single-family rental (SFR) property loans, up 15% from the prior quarter.
For the full year, Redwood funded $2.3 billion in business-purpose loans, up 60% from year over year.

In the fourth quarter, the company sold $202 million of SFR loans to a large institutional investor and completed one SFR-loan securitization valued at $304 million.

On the residential mortgage side for the fourth quarter of 2021, Redwood purchased $3.2 billion worth of jumbo loans and distributed $2.8 billion in jumbo — $1.5 billion through whole-loan sales and $1.3 billion through three securitization deals.

In a l etter to sh areholders, Redwood indicated it had distributed four regular quarterly dividends in 2021 —Q1, $0.16; Q2, $0.18; Q3, $0.21 and Q4, $0.23 — "for a total of $0.78 per share of common stock dividend distributions."

"Our focus remains on delivering for our shareholders and executing the long-term strategic growth plans we outlined at our September 2021 Investor Day," Abated said.

Among those growth plans is a focus on technology investments.

"Since inception, [Redwood has] completed 15 technology venture investments, including five in the fourth quarter of 2021, that reflect the diversity of our operations and include firms that align with opportunities across our businesses," the company's Q4 earnings release n otes.

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Mortgage rates jump to 3.69% as economy normalizes

Posted: 10 Feb 2022 07:00 AM PST

The average 30-year-fixed rate mortgage climbed to 3.69% for the week ending Feb. 3, up eight basis points from the previous week. It’s the highest level since the start of the pandemic, according to the latest Freddie Mac PMMS Mortgage Survey.

Before the uptick, the rates remained flat at 3.55% for three weeks, reflecting the impact of the Omicron variant in the economy.

A year ago, the 30-year fixed-rate mortgage averaged 2.73%. The PMMS report is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20% down and have excellent credit.

"The normalization of the economy continues as mortgage rates jumped to the highest level since the emergence of the pandemic," Sam Khater, Freddie Mac's chief economist, said in a statement.

Mortgage rates usually move in concert with the 10-year Treasury yield, which reached 1.92% yesterday, compared to 1.78% on the previous Wednesday. The 15-year-fixed-rate mortgage averaged 2.93% last week, up from 2.77% the week prior. A year ago at this time, it averaged 2.19%.

Most economists believe rates will climb in the months ahead – but will still be close to record-low levels. The Mortgage Bankers Association (MBA) forecasts that 30-year mortgage rates will reach 4% by the end of 2022.

"Rate increases are expected to continue due to a strong labor market and high inflation, which likely will have an adverse impact on homebuyer demand," Khater said.

The expectation of higher mortgage rates is based on the fact that the Federal Reserve will raise interest rates. The central bank said it will happen "soon," though an exact timetable has not yet been disclosed.

"With inflation well above 2% and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate," the Federal Open Markets Committee said in a statement.

Rising rates are impacting borrowers' appetite.

Mortgage applications decreased 8.1% from the previous week, a response to an uptick in mortgage rates and record houses prices, according to the MBA survey for the week ending Feb. 4. The average loan size again hit another record high at $446,000. The seasonally adjusted refi index fell 7.3% while the purchase index dropped 9.6%.

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Thursday, February 10, 2022