Sequoia Mortgage Trust 2025-6 (SEMT 2025-6) has issued 60 residential mortgage-backed certificates that are supported by 402 loans with a complete stability of $478.8 million.
The pool includes first lien, absolutely amortizing fixed-rate mortgages with 15- and 30-year maturity phrases, which have been acquired by Redwood Residential Acquisition Corp. from numerous mortgage originators. The collateral is characterised by a weighted common (WA) unique credit score rating of 779 and average borrower fairness, with a WA unique loan-to-value (LTV) of 70.3% and WA unique mixed LTV of 70.4%, KBRA says.
The sponsor is RWT Holdings, the vendor is Redwood Residential Acquisition Corp., the trustee is Wilmington Trust, National Association, and the grasp servicer is Nationstar Mortgage. Morgan Stanley is the bookrunner.
KBRA says Redwood has been an lively contributor in the residential mortgage marketplace for over a decade as a mortgage aggregator, issuer and investor in RMBS securitizations. Historically, Redwood has typically invested in and securitized high-quality prime jumbo mortgages, which have carried out nicely relative to the universe of non-agency securitizations, it notes.
Fitch says the debtors have a robust credit score profile with a weighted common Fitch mannequin FICO rating of 779 and a 36.7% debt-to-income ratio. The debtors even have average leverage, with a 78.9% sustainable loan-to-value ratio (sLTV) and a 69.9% mark-to-market mixed LTV ratio (cLTV).
Overall, 93% of the pool loans are for major residences, whereas 7% are loans for second properties. Also, 79.4% of the loans have been originated by means of a retail channel, and 100% of the loans are designated as safe-harbor certified mortgage loans.
Fitch views the pool’s house worth values as 10.9% above a long-term sustainable degree (versus 11.0% on a nationwide degree as of 4Q24, down 0.1% for the reason that earlier quarter). Housing affordability is the worst it has been in a long time, pushed by excessive rates of interest and elevated house costs, it says. Home costs elevated 2.9% year-on-year nationwide as of February 2025 regardless of modest regional declines, however are nonetheless supported by restricted stock.
The mortgage money circulation and loss allocation are based mostly on a senior-subordinate, shifting-interest construction, whereby the subordinate lessons obtain solely scheduled principal and are locked out from receiving unscheduled principal or prepayments for 5 years.
The lockout characteristic helps preserve subordination for an extended interval ought to losses happen later in the transaction’s life, Fitch says. The relevant credit score assist proportion characteristic redirects subordinate principal to lessons of upper seniority if specified credit score enhancement ranges are usually not maintained. After the credit score assist depletion date, principal will likely be distributed sequentially – first to the super-senior lessons (A-9, A-12 and A-18) concurrently on a professional rata foundation after which to the senior-support A-21 certificates.
Fitch and KBRA assigned AAA to the A1 by means of A25 notes and to the A-IO1 by means of A-I026 notes. They additionally assigned AA- to the B1, B1A and B1X notes.
While Fitch assigned A to the B2, B2A and B2X notes, KBRA rated them as A-. In addition, Fitch assigned BBB- to the B3 notes, BB to the B4 notes and B to the B5 notes, whereas KBRA assigned BBB-, BB- and B- to them respectively.
