Redwood Trust booms on jumbo loan market Business for the real estate investment trust is poised to pick up in 2013 as the U.S. housing rebound lifts California and East Coast cities where Redwood finds its mortgages. Jumbos, typically made to the most creditworthy borrowers, and often held on the books of lenders, have been the only new residential loans without government backing to be securitized since the market revived in 2010. Tight supplyU.S. home prices rose 8.3 percent in December from a year earlier, the biggest gain since 2006, as tight supply and brisk demand combined with borrowing costs near record lows, CoreLogic Inc. reported Feb. 5. Lax underwritingDefaults by risky subprime borrowers, with credit scores below 620 out of 850, exposed the lax underwriting and financial markets froze, with defaults spreading to jumbo borrowers with ostensibly better credit, said Brad Blackwell, portfolio manager for residential mortgages at San Francisco's Wells Fargo & Co. Jumbo volume plunged to $98 billion in 2008, data from Inside Mortgage Finance of Bethesda, Md., show. While national values only bottomed last year as measured by the S&P-Case-Shiller index, the jumbo revival has provided liquidity and lifted prices in expensive markets in California, Texas, Florida and the Northeast, according to Thomas Wind, executive vice president at EverBank Financial Corp. Expansion is likely even amid post-crisis scrutiny, he said.