Redwood Trust puts the pedal to the metal

HW+ Redwood CEO Christopher Abate
Redwood Trust CEO Christopher Abate

Redwood Trust Inc. recently unveiled a hint of how 21st century technology is about to transform the opaque process of securitizing residential mortgages in the non-agency space — via the use of blockchain technology.

The Mill Valley, California-based real estate investment trust, or REIT, which operates as a specialty finance house that invests in, acquires and securitizes residential loans, earlier this month announced that it was bringing to market a $449 million bond issue backed by 497 jumbo residential loans. Assisting Redwood with the securitization is a fintech startup, Liquid Mortgage, in which the REIT earlier this year acquired a minority stake. 

The fintech firm, which represents one of several venture capital investments Redwood has made over the past year, will utilize its digital asset and data platform to leverage blockchain technology to track loan-level payment and transaction-reporting data for borrowers and lenders. Blockchain technology links transaction records in a data chain, creating a transparent yet indelible digital ledger that can be accessed securely by designated parties.

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