Mortgage Informer

The market for mortgage-backed securities that don’t come with a guarantee from Uncle Sam is finally coming back. But the first deal off the rack in 2010 looks quite different from those sold at the peak of the housing boom.

Redwood Trust Inc. disclosed that it plans to issue about $222 million of bonds backed by home-mortgage loans made by a unit of Citigroup Inc. over the past 11 months. The market for new issues of such “private label” mortgage securities—ones that aren’t guaranteed by Fannie Mae, Freddie Mac or any other government-related entity—has been virtually dead for the past two years since a surge in defaults caused investors to flee.

In another encouraging sign for the U.S. housing market, mortgage delinquencies fell in March for the second month in a row, according to new data.

The number of mortgage loans that were at least 30 days past due or in foreclosure declined 8.6% in March, according to LPS Applied Analytics, which tracks loan performance. The biggest slide came in loans that were 30 days past due. Such loans fell by a record 342,000 to roughly 1.45 million, a level not seen since spring 2008.

A unit of the government-controlled insurer American International Group is offering the first of two new residential-mortgage-backed securities worth a total of $1.8 billion, priming the pump for the return of so-called private-label mortgage-backed securities.

American General Finance Corp., through American General Mortgage Loan Trust 2010-1, is selling what could be the first of many deals, a $1 billion issue backed by existing prime and Alt-A residential loans made in 2003 and 2004. The triple-A tranche of $501.33 million is expected to yield 5%.

The company also is offering a second mortgage-backed deal of $800 million that is expected to be sold next month.