Welcome to the New RedwoodTrust.com
Our CEO explains what makes us unique, and shares our core organizational beliefs during this complicated period
by Chris Abate
When I’m asked about the Redwood Trust business, my answer could be as simple as “We’re a finance company” or “We’re in the bond business.”
The Redwood story is more complex and interesting, of course. If people want to know more, I boil it down to this:
We provide financing solutions for thousands of homebuyers, homeowners and landlords who are not eligible or well-served by Federal Government loan programs. Put simply, our corporate mission is to make quality housing, whether it is rented or owned, accessible to all Americans.
As this is being written, in the midst of a global pandemic and an unbelievably difficult period for everyone in America, we are reminded of the paramount importance of having a safe and stable place to live. For many of us, including the team at Redwood Trust, our homes have been our respite from a deadly pandemic. They’ve also served as our places of work, gyms, and even where our children – kindergarteners and college students alike – have attended school.
Facing the impacts of Covid-19 has led many Americans to take stock of what really matters. At Redwood Trust, our focus has been on our team members, their families, and most of all their health and well-being. Our minds have focused on empathy for those challenged by the pandemic and its economic aftershocks, and gratitude for our relative good fortune.
With so many in our country worried about how they are going to pay their mortgage or rent, we’ve reflected on the incredible importance of our mission. This period of reflection has reaffirmed for us some core beliefs underpinning how we serve homeowners and renters alike:
Housing matters. For Redwood, housing is more than just a vital sector of the U.S. economy. Providing liquidity to this marketplace through the investments we make provides us with insights into the ecosystem that impacts homebuyers, renters, lenders, investors and the government. As the largest private-sector issuer of mortgage-backed securities — and a leading lender to housing investors focused on increasing and improving the supply of rental housing — we are committed to building a stronger housing finance system. Our starting point is a belief that private sector participants such as Redwood Trust can and should play a bigger role in expanding access to comfortable, affordable housing in communities across the country.
Affordability remains a crisis for almost everyone. Whether you are a first-time homebuyer saving for a down payment on what once was considered a “starter home”, or a family in Seattle or Chicago stunned by the cost of a move-up home, for most people the affordable housing crisis in America is real. In many cases, the pandemic, which has increased the desire for single-family homes with more space and distance, has only made things harder. In the diverse markets Redwood serves, one thing in common is everyone feels stretched to the max by the cost of housing. So, it’s important for us to serve not only the market for traditional prime-quality mortgages, but also the market for those who have to stretch a bit further to afford a jumbo loan, typically in big cities or along the coasts.
Expectations have changed. When I was teenager growing up in suburban Michigan, it was expected that someday I would own a home. Buying a house seemed like a rite of passage into adulthood. However, since the 2008 financial crisis, even as young people’s desire to own a home took a step back and the demand for rental housing rose, homebuying demand raised the price of that first rung of the housing ladder to astronomical heights. This has been the case not just in California where I now live, but in many markets across the country.
And while the immediate effect of the Spring Covid-19 lockdown was to freeze the homebuying market, since April, it has come back, driven by historically low interest rates and a newfound appreciation of one’s home as not only a place where you eat and sleep, but increasingly a place where you work. In August, the National Association of Realtors reported that as of July, year-over-year contract signings were up by over 15% — amidst one of the worst economies in U.S. history.
Moreover, we know from our Business Purpose Lending segment, which helps bring liquidity to the rental housing market, the desire for a comfortable place to rent remains high. In addition, the phenomenon of working from home may free employees from living close to their offices and could lead to a secular shift in housing demand to new neighborhoods and geographies.
Which leads to a final core belief, unchanged by the events since March.
Housing policy matters. Since the last financial crisis, which peaked a decade ago, housing policy in America has been largely frozen in place. In the wake of our current financial crisis, it will eventually become time to restart the conversation in Congress on the role of government and the private sector in expanding housing opportunities. We know this conversation won’t fully begin until 2021, but we look forward to it restarting, post-election and – we hope – when Covid-19 and the economic crisis are in the rear-view mirror.
We’ll continue to address this important topic in the weeks and months ahead.
If you’re interested in learning about our point of view, bookmark this page. Come back to visit. We’re looking forward to telling you more.