Redwood Trust announces first-ever non-agency MBS backed by blockchain

Firm aims to disrupt the non-agency mortgage space with the technology

Redwood Trust announces first-ever non-agency MBS backed by blockchain

Mortgage REIT Redwood Trust has never issued a prime non-agency MBS that includes blockchain technology before, but that will change soon.

Redwood is preparing to launch the $448.9 million security, with Liquid Mortgage as the “distributed ledger agent”, according to a presale report released by Fitch Ratings.

Read more: Liquid Mortgage secures major investment from Redwood Trust

“Liquid Mortgage will provide more timely reporting of principal and interest payments using distributed ledger technology,” Fitch Ratings said in the report. “The reporting facilitated by the distributed ledger agent is expected to include loan-level payment and aggregate deal collateral data, which may offer insight into loan behavior such as payment timing and prepayments.”

Despite being the first prime non-agency MBS to include a distributed ledger, Fitch said the blockchain had a “neutral” impact on the security. Interest payments from the MBS will be used to pay the fees and expenses charged by Liquid.

“Non-agency mortgage industry continues to heavily rely on outdated manual processes that have been in place for decades due to an accepted, and in some cases desired, status quo,” said Christopher Abate, CEO of Redwood Trust. “As a leader in housing finance, we are focused on disrupting the market with innovative solutions that help all stakeholders, most importantly borrowers.”

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