Why REITs Could Lead Mortgage-Backed Comeback

May 3, 2010

As the private-label mortgage bond market comes back to life, real estate investment trusts may play the lucrative central role that belonged to banks and Wall Street firms during securitization's pre-crisis heyday. Consider the watershed deal late last month from Redwood Trust. Citigroup was everywhere to be found on the assembly line-except the middle. At one end, Citi's mortgage unit originated the $238 million of loans and services them. At the other, Citi's investment bank underwrote the bonds. But Redwood, a Mill Valley, Calif., REIT, put its balance sheet on the line.

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