Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark one)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2010
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number: 333-159791-02
Sequoia Mortgage Trust 2010-H1
(exact name of issuing entity as specified in its charter)
Sequoia Residential Funding, Inc.
(exact name of the depositor as specified in its charter)
RWT Holdings, Inc.
(exact name of the sponsor as specified in its charter)
New York 38-3813659
(State or other jurisdiction of 38-3813660
incorporation or organization) (I.R.S. Employer
Identification No.)
c/o Wells Fargo Bank, N.A.
9062 Old Annapolis Road
Columbia, MD 21045
(Address of principal executive (Zip Code)
offices)
Telephone number, including area code: (410) 884-2000
Securities registered pursuant to Section 12(b) of the Act:
NONE.
Securities registered pursuant to Section 12(g) of the Act:
NONE.
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.
Yes ___ No X
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.
Yes ___ No X
Note - Checking the box above will not relieve any registrant required to
file reports pursuant to Section 13 or 15(d) of the Exchange Act from their
obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No ___
Indicate by check mark whether the registrant has submitted electronically
and posted on its corporate Website, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T
(Section 232.405 of this chapter) during the preceding 12 months (or for
such shorter period that the registrant was required to submit and post such
files).
Not applicable.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K.
Not applicable.
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer", "accelerated
filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ___
Accelerated filer ___
Non-accelerated filer X (Do not check if a smaller reporting company)
Smaller reporting company ___
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Act).
Yes ___ No X
State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the
common equity was last sold, or the average bid and asked price of such
common equity, as of the last business day of the registrant's most recently
completed second fiscal quarter.
Not applicable.
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court.
Not applicable.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Not applicable.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the
Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document
is incorporated: (1)Any annual report to security holders; (2) Any proxy or
information statement; and (3)Any prospectus filed pursuant to Rule 424(b)
or (c) under the Securities Act of 1933. The listed documents should be
clearly described for identification purposes (e.g., annual report to
security holders for fiscal year ended December 24, 1980).
Not applicable.
PART I
Item 1. Business.
Omitted.
Item 1A. Risk Factors.
Omitted.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
Omitted.
Item 3. Legal Proceedings.
Omitted.
Item 4. (Removed and Reserved).
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities.
Omitted.
Item 6. Selected Financial Data.
Omitted.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operation.
Omitted.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Omitted.
Item 8. Financial Statements and Supplementary Data.
Omitted.
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.
Omitted.
Item 9A. Controls and Procedures.
Omitted.
Item 9B. Other Information.
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
Omitted.
Item 11. Executive Compensation.
Omitted.
Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters.
Omitted.
Item 13. Certain Relationships and Related Transactions, and Director
Independence.
Omitted.
Item 14. Principal Accounting Fees and Services.
Omitted.
ADDITIONAL DISCLOSURE ITEMS FOR REGULATION AB
Item 1112(b) of Regulation AB, Significant Obligor Financial Information.
No single obligor represents 10% or more of the pool assets held by the issuing
entity.
Item 1114(b)(2) of Regulation AB, Significant Enhancement Provider Financial
Information.
No entity or group of affiliated entities provides any external credit
enhancement or other support for the certificates within this transaction as
described under Item 1114 (a) of Regulation AB.
Item 1115(b) of Regulation AB, Certain Derivatives Instruments (Financial
Information).
No entity or group of affiliated entities provides any derivative instruments or
other support for the certificates within this transaction as described under
Item 1115 of Regulation AB.
Item 1117 of Regulation AB, Legal Proceedings.
On December 23, 2009, the Federal Home Loan Bank of Seattle (the
"FHLB-Seattle") filed a claim in Superior Court for the State of Washington
(case number 09-2-46348-4 SEA) against the depositor, Redwood Trust, Inc.,
Morgan Stanley & Co., and Morgan Stanley Capital I, Inc. (collectively, the
"FHLB-Seattle" Defendants). The FHLB-Seattle alleges claims under the
Securities Act of Washington (Section 21.20.005, et seq.) and seeks to rescind
the purchase of a mortgage pass-through certificate (or, residential mortgage
backed securities, "RMBS") issued as part of the Sequoia Mortgage Trust 2005-4
("SEMT 2005-4") securitization transaction and purchased by the FHLB-Seattle.
The FHLB-Seattle seeks to collect interest on the original purchase price at
the statutory interest rate of 8% per annum from the date of original purchase
(net of interest received), as well as attorney's fees and costs. On
January 22, 2010, the case was removed to the United States District Court for
the Western District of Washington (case number 2:10-cv-00132-RSM). The
FHLB-Seattle moved to remand the case to state court on March 11, 2010. On
June 10, 2010, the FHLB-Seattle filed an amended complaint in the District
Court. On September 1, 2010, the District Court remanded the case to Washington
state court. Subsequently, on October 18, 2010, the FHLB-Seattle Defendants
filed motions to dismiss the FHLB-Seattle's complaint, which motions are
pending. The FHLB-Seattle alleges that the FHLB-Seattle Defendant's offering
materials for the SEMT 2005-4 RMBS contained materially untrue statements and
omitted material facts about the SEMT 2005-4 RMBS and the mortgage loans that
backed the SEMT 2005-4 RMBS. Among other things, the FHLB-Seattle alleges that
the FHLB-Seattle Defendants made untrue statements or omissions regarding
(1) the loan-to-value ratios of the mortgage loans that backed the SEMT 2005-4
RMBS and the appraisals of the properties that secured them, (2) the occupancy
status of those properties, (3) the underwriting standards of the originators
of the mortgage loans that backed the SEMT 2005-4 RMBS, and (4) the ratings
assigned to the SEMT 2005-4 RMBS. The SEMT 2005-4 RMBS that is the subject of
the FHLB-Seattle's claim against the depositor and Redwood Trust, Inc. was
issued with an original principal amount of approximately $133 million and, as
of December 31, 2010, had a remaining outstanding principal balance of
approximately $30 million. The depositor and Redwood Trust, Inc. believe that
the claims against them in this matter are without merit and intend to defend
the action vigorously.
On August 18, 2010, the depositor received service of process with respect to a
claim filed on July 15, 2010 in Superior Court for the State of California in
San Francisco (case number CGC-10-501610) by The Charles Schwab Corporation
("Schwab"). In the claim, Schwab is suing the depositor and 26 other named
defendants (collectively, the "Schwab Defendants") in relation to RMBS sold or
issued by the Schwab Defendants. With respect to the depositor, Schwab alleges
a claim of negligent misrepresentation under California state law and seeks
unspecified damages and attorney's fees and costs with respect to a RMBS issued
as part of the SEMT 2005-4 securitization transaction (which is the same
securitization transaction at issue in the litigation initiated by the
FHLB-Seattle described in the preceding paragraph). Among other things, Schwab
alleges that the offering materials for the SEMT 2005-4 RMBS contained
materially untrue statements or omissions about the SEMT 2005-4 RMBS and the
mortgage loans that backed the SEMT 2005-4 RMBS. Among other things, Schwab
alleges that the Schwab Defendants made untrue statements or omissions
regarding (1) the loan-to-value ratios of the mortgage loans that backed the
SEMT 2005-4 RMBS and the appraisals of the properties that secured them,
(2) the occupancy status of those properties, (3) the underwriting standards of
the originators of the mortgage loans that backed the SEMT 2005-4 RMBS, and
(4) the ratings assigned to the SEMT 2005-4 RMBS. On September 8, 2010, the
matter was removed to the United States District Court for the Northern
District of California, Case No. C 10-04030SI. On October 1, 2010, Schwab
filed a motion to remand the matter to state court, which motion is pending.
The RMBS that is the subject of Schwabs claim against the depositor was issued
with an original principal amount of approximately $14.8 million and, as of
December 31, 2010, had a remaining outstanding principal balance of
approximately $3.3 million. The depositor believes that the claim against it in
this matter is without merit and intends to defend the action vigorously.
On October 15, 2010, the Federal Home Loan Bank of Chicago (the "FHLB-Chicago")
filed a claim in the Circuit Court of Cook County, Illinois (case number
10CH450B3) against the depositor and more than 45 other named defendants
(collectively, the "FHLB-Chicago Defendants") in relation to RMBS sold or
issued by the FHLB-Chicago Defendants or by entities controlled by the
FHLB-Chicago Defendants. With respect to the depositor, the FHLB-Chicago
alleges that the offering materials for two RMBS issued as part of the Sequoia
Mortgage Trust 2006-1 ("SEMT 2006-1") securitization transaction contained
untrue and misleading statements and material representations in violation of
Illinois Securities Law (815 ILCS Sections 5/12(F)-(H)), and alleges claims of
negligent misrepresentations under Illinois common law. On some of the claims,
the FHLB-Chicago seeks to rescind the purchase of these RMBS and to collect
interest on the original purchase price at the statutory interest rate of 10%
per annum from the date of original purchase (net of interest received). On one
claim, the FHLB-Chicago seeks unspecified damages. The FHLB-Chicago also seeks
attorney's fees and costs. Among other things, the FHLB-Chicago alleges that
the offering materials for the SEMT 2006-1 RMBS contained materially untrue
statements or omissions regarding the SEMT 2006-1 RMBS and the loans
securitized in this securitization transaction, including untrue statements or
omissions regarding (1) the loan-to-value ratios the mortgage loans that backed
the SEMT 2006-1 RMBS and the appraisals of the properties that secured them,
(2) the occupancy status of those properties, (3) the underwriting standards of
the originators of the mortgage loans that backed the SEMT 2006-1 RMBS, (4) the
ratings assigned to the SEMT 2006-1 RMBS, and (5) the due diligence performed
on the mortgage loans that backed the SEMT 2006-1 RMBS. The first of these two
SEMT 2006-1 RMBS was issued with an original principal amount of approximately
$105 million and, as of December 31, 2010, had a remaining outstanding
principal balance of approximately $51 million. The second of these two SEMT
2006-1 RMBS was issued with an original principal amount of approximately $379
million and, as of December 31, 2010, had a remaining outstanding principal
balance of approximately $178 million. The depositor believes that the claims
against it in this matter are without merit and intends to defend the action
vigorously.
The business of the sponsor, the depositor, the seller and their affiliates has
included, and continues to include, activities relating to the acquisition and
securitization of residential mortgage loans. In addition, the business of the
sponsor has, in the past, included activities relating to the acquisition and
securitization of debt obligations and other assets through the issuance of
collateralized debt obligations (commonly referred to as CDO transactions).
Because of their involvement in the securitization and CDO businesses, the
sponsor, the depositor, the seller and their affiliates could become the
subject of litigation relating to these businesses, including additional
litigation of the type described above, and could also become the subject of
governmental investigations, enforcement actions, or lawsuits and governmental
authorities could allege that these entities violated applicable law or
regulation in the conduct of their business.
The sponsor and its affiliates have received, and responded to, information
requests and subpoenas from two governmental authorities (one by the SEC
relating to the sponsor's CDO business and one by the National Credit Union
Administration relating to a residential mortgage securitization conducted by
the sponsor and the depositor). It is possible that the sponsor, the depositor,
the seller or their affiliates might not be successful in defending or
responding to any litigation, governmental investigation or related action and
any losses incurred as a result of the resolution of any such action or
investigation could have a material adverse effect on the sponsor, the
depositor, the seller or their affiliates. In any case, regardless of the
merits of any allegation or legal action that may be brought against the
sponsor, the depositor, the seller or their affiliates, or of their success in
defending against such allegations or legal actions, the costs of defending
against any such allegation or legal action may be significant or material and
could have a material adverse effect on the sponsor, the depositor, the seller
or their affiliates.
Item 1119 of Regulation AB, Affiliations and Certain Relationships and Related
Transactions.
The seller and sponsor and the depositor are both wholly-owned subsidiaries of
Redwood Trust, Inc. Citigroup Global Markets Inc., an underwriter, is an
affiliate of CitiMortgage, Inc., the originator and servicer of the mortgage
loans.
There is not currently, and there was not during the past two years, any
material business relationship, agreement, arrangement, transaction or
understanding that is or was entered into outside the ordinary course of
business or is or was on terms other than would be obtained in an arm's length
transaction with an unrelated third party, between (a) any of the seller, the
sponsor, the depositor and the issuing entity on the one hand and (b) any of
the servicer, the custodian, the trustee or the originator of the mortgage
loans on the other hand.
Item 1122 of Regulation AB, Compliance with Applicable Servicing Criteria.
The reports on assessment of compliance with the servicing criteria for
asset-backed securities and the related attestation reports on such assessments
of compliance are attached hereto under Item 15.
The assessment of compliance for CitiMortgage, Inc. disclosed the following
material instance of non-compliance, as applicable during the twelve months
ended December 31, 2010:
Regulation AB Item - 1122(d)(4)(vii) - In certain instances, the Servicer has
not obtained proper documentation as required by the transaction documents and
internal policies with respect to foreclosure activities.
Beginning in the fall of 2009, Citi took a series of steps to strengthen its
practices and add additional resources to ensure foreclosures were being
processed correctly. As part of these improvements, Citi centralized its
foreclosure operations into one unit, added staff and enhanced training for
greater efficiency and control, and requires annual certification of its
employees' understanding of the proper procedures. Also, managers were made
accountable for regularly reviewing files to make certain that employees
comply with the procedures. These improvements were fully implemented in
February of 2010. Under Citi's existing procedures, affidavits are prepared by
outside counsel to ensure compliance with each state's foreclosure laws, and
each package is reviewed by a Citi employee who verifies the information and
signs the foreclosure affidavit in the presence of a notary. When errors are
found, the documents are returned to the attorney, who revises the package and
resubmits the documents for review. Foreclosures are monitored to make certain
that staffing is adequate to review the affidavits properly. The changes and
safeguards implemented during the fall of 2009 and 2010 give Citi confidence
that there are no systemic issues in its existing foreclosure processes. To
date, Citi's review of foreclosure affidavits has not identified cases where
Citi foreclosed on a property in error.
Item 1123 of Regulation AB, Servicer Compliance Statement.
The servicer compliance statements are attached hereto under Item 15.
Part IV
Item 15. Exhibits, Financial Statement Schedules.
(a) Exhibits.
(31) Rule 13a-14(d)/15d-14(d) Certification.
(33) Reports on assessment of compliance with servicing criteria for
asset-backed securities.
33.1 CitiMortgage, Inc. as Servicer
33.2 Wells Fargo Bank, N.A. as Trustee
33.3 Wells Fargo Bank, N.A. as Custodian
(34) Attestation reports on assessment of compliance with servicing criteria
for asset-backed securities.
34.1 CitiMortgage, Inc. as Servicer
34.2 Wells Fargo Bank, N.A. as Trustee
34.3 Wells Fargo Bank, N.A. as Custodian
(35) Servicer compliance statement.
35.1 CitiMortgage, Inc. as Servicer
35.2 Wells Fargo Bank, N.A. as Trustee
(b) Not applicable.
(c) Omitted.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Sequoia Residential Funding, Inc.
(Depositor)
/s/ John Isbrandtsen
John Isbrandtsen, Chairman of the Board and Chief Executive Officer
(senior officer in charge of securitization of the depositor)
Date: March 22, 2011
Exhibit Index
Exhibit No.
(31) Rule 13a-14(d)/15d-14(d) Certification.
(33) Reports on assessment of compliance with servicing criteria for
asset-backed securities.
33.1 CitiMortgage, Inc. as Servicer
33.2 Wells Fargo Bank, N.A. as Trustee
33.3 Wells Fargo Bank, N.A. as Custodian
(34) Attestation reports on assessment of compliance with servicing
criteria for asset-backed securities.
34.1 CitiMortgage, Inc. as Servicer
34.2 Wells Fargo Bank, N.A. as Trustee
34.3 Wells Fargo Bank, N.A. as Custodian
(35) Servicer compliance statement.
35.1 CitiMortgage, Inc. as Servicer
35.2 Wells Fargo Bank, N.A. as Trustee
