Redwood Trust, Inc. (NYSE: RWT) has teamed with the fintech platform Point on what the companies said is the first-ever securitization backed entirely by residential Home Equity Investment (HEI) agreements.
What Happened: The transaction, Point Securitization Trust 2021-1, closed on Sept. 23 with approximately $146 million of asset-backed securities: approximately $120 million of unrated senior class A-1 securities and approximately $26 million of unrated class A-2 securities.
Nomura Securities International Inc., a subsidiary of Nomura Holdings Inc. (NYSE: NMR), was the sole structuring agent and sole bookrunner for the issuance, with Point serving as the originator for the HEIs therein.
Why It Matters: The securitization opens a new market channel for HEIs. The companies noted that investors have traditionally relied on fund vehicles and forward flow purchasing agreements to deploy capital in the HEI asset class.
“This inaugural transaction opens a new door for investors to access one of the largest investable markets in the world, while enabling homeowners to participate in the benefits of home price appreciation without having to sell their homes,” said Bo Stern, head of portfolio strategy and risk for Redwood Trust. “HEIs also represent a sizable new market opportunity for Redwood as we continue to evolve and diversify our revenue sources and disrupt the housing market.”
Eddie Lim, co-founder and CEO of Point, said: “By providing liquidity to existing investors and access to HEIs for new investors, the securitization will be instrumental in making it possible for Point to help more homeowners improve their financial health.”
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