Generation Mortgage is winding down its reverse mortgage originations business including retail and wholesale operations, the company confirmed Wednesday.
The wind-down of the business will include the elimination of jobs across Generation’s originations platform, spanning positions based in its Atlanta headquarters and nationwide. The last day for new applications will be Wednesday, October 8, though Generation is maintaining its current pipeline of loans as well as its servicing platform and business.
The company is attributing the departure to a heightened and sustained regulatory environment and having seen reverse mortgage volume fall industrywide over the last 12 months as a result.
“The decision to exit the origination business was not an easy one, but was made inevitable by the wave of recent regulatory changes,” Colin Cushman, CEO of Generation Mortgage, said in an emailed statement. “As a result of those changes, the industry has seen a reduction in the number of units, as well as a reduction in loan balances, significantly reducing origination revenues while increasing expenses.”
In light of a difficult operating environment, Generation based its decision on far more than loan count, Cushman told RMD following the announcement.
“The regulatory environment that hit a year ago and regulatory changes that have been impacting the industry are running deeper than currently reported when it comes to the way in which the marketplace sees the changes,” Cushman said. “It has been reported in unit volume, but there’s a lot more to the origination channels than unit volume.”
Both changes that have taken place as well as changes that are forthcoming were taken into account, Cushman said when asked about the long-delayed forthcoming financial assessment that is scheduled to take effect this fall.
“There are many [regulations] in the mix,” he said. “The timing of things that have not dropped or should have…they all go into any business decision.”
Generation is not making any changes on the servicing side of its business, the company said. It will still be operated under Generation and its parent company, Guggenheim Partners.
Generation has been an active issuer of reverse mortgage-backed securities, with roughly 6.7% market share in the first nine months of 2014, according to third quarter data compiled by New View Advisors.
Nationstar Mortgage is rumored to be eyeing the portfolio. In response to a request for confirmation of its interest in the portfolio, Nationstar told RMD the company does not comment on rumors.
Generation has long held its position as a top-10 reverse mortgage lender, but volume has declined of late, like many lenders have experienced. Over the last 12 months as of July, Generation counted 5.7% market share and 3,131 reverse mortgage endorsements as the No. 6-ranked lender in the business according to rankings tallied by Reverse Market Insight. Relative to endorsements overall, the company has lost some market share over the last 18 months. (See chart. Editor’s note: Chart does not reflect correspondent loans.)
Chart provided by Reverse Market Insight.
It recently built and rolled out an award-winning technology platform marketed through its website nu62.com, to help prospective borrowers understand the reverse mortgage as a retirement planning tool.
On the heels of the announcement, the company’s first priorities is reverse mortgage borrowers, Cushman said.
“We will continue servicing all existing loans and funding all loans currently in process,” Cushman said. “As always, we are committed to providing our senior clients with our award-winning exceptional service on their accounts.”
Written by Elizabeth EckerPrint Article