KBC sold its US reverse mortgage portfolio and said it will free up roughly $800 million dollars of cash in a company statement.

The portfolio was previously held by a subsidiary of KBC Financial Products, which owns the Senior Lending Network. While KBC didn’t disclose the buyer, sources close to the deal tell RMD that Bank of America purchased the portfolio.   

During November 2009, KBC says it updated its strategic plan and decided to focus on retail and private banking customers and small and medium sized enterprises in its core markets in Belgium and Central and Eastern Europe. According to KBC, its reverse mortgage business wasn’t consistent with the new strategy and was “earmarked for divestment”.

In July 2009, KBC halted all of the Senior Lending Network’s applications and started looking for a buyer. The company said it will maintain a basic staffing level to ensure an orderly further dismantlement of the company.

Former executives at the Senior Lending Network recently joined Guardian First Funding Group, which added Robert Wagner as its company spokesperson.

Mr. Wagner will appear in all of Guardian First Funding Group’s print, television and web site advertising said a company statement.  In his role as spokesperson, Mr. Wagner will educate Americans about the importance of reverse mortgages.

David Peskin, former CEO of the Senior Lending Network will serve as Chairman of Guardian First Funding Group and will use his secondary market expertise to attract strategic capital partners.

“I am pleased to join Guardian First Funding Group and help implement its vision. I believe that Guardian is well-positioned for future growth and am excited to work with the team.” said David Peskin.

Also joining Guardian First Funding Group is Kenneth Peskin who will serve as chief operating officer. In his role, he will transition Guardian from broker to banker and will focus his attention on gaining efficiencies through new technologies and expanding the company’s banking licenses.

Both David Peskin and Kenneth Peskin will hold seats on Guardian First Funding Group’s Board of Directors.

“It’s an honor to be working with two individuals with so much experience in building a reverse mortgage business,” says Jason Levy, chief executive officer.  “We have a long-standing working relationship and I am confident and excited about our future,”

“Additionally, we could not be more excited and honored to work with such an expressive and endearing talent. Mr. Wagner’s work with the reverse mortgage industry adds credibility and importance to our product and our industry, His knowledge and compassion for the product has given a huge boost to our industry and our  advertising efforts.” added Levy.

Guardian First Funding Group believes these changes will further fuel growth. Increasing the sales staff and grooming existing loan officers has been a large focus and that can be seen in their originations.  The company has increased its sales force by 50% in just the last quarter of 2009.

Guardian First Funding Group will continue to advertise aggressively to meet the growing needs of its direct-to-consumer call center.  “Our business model affords a great deal of time to explain, nurture and support seniors as they make critical decisions about their financial well-being.” said Levy.

Note – volume for October, November, December was provided by Guardian

"World Alliance Financial is proud of its history of providing, through its reverse mortgage products, financial resources to seniors to help them achieve economic well-being that they could not otherwise attain.  We very much regret that we can no longer accept new loan applications," said World Alliance Financial Chief Executive David Peskin.              

"To be clear, this decision will have no impact on our current borrowers, holders of GNMA securities that we’ve issued and our partners in the Senior Lending Network.  We will continue to service outstanding loans, as well as fulfill all of our other obligations. Our core infrastructure will remain fully intact while we seek other opportunities,” Peskin said.            

Mr. Peskin also noted that the Senior Lending Network will direct those who have applied for loans but have not yet been cleared for closing to alternative lenders.

WAF’s parent company, KBC Group has been hit hard by the downturn in the economy, receiving government relief three different times adding up to $41.5 billion in financing and guarantees to recover from disastrous mortgage bets that its financial engineers and traders made.

KBC has been shedding its US holdings, earlier this year EquityKey was repurchased by its founders after it cut off funding for its product which provided a cash advance on a house in exchange for the right to share in the homes future appreciation.

Viviane Huybrecht, spokesperson for World Alliance’s Belgian parent company, KBC Group, said “We greatly appreciate the efforts of our colleagues at World Alliance. However, as the Group has made clear in prior announcements, it is conducting a group-wide, strategic review of its operations and deployment of capital, and as part of that process has decided to no longer make funding available for new reverse mortgages.”

Huybrecht added, “Both the KBC Group and World Alliance management are working diligently to find a buyer or capital partner for the business, but if we are unsuccessful we will begin to slowly wind it down. In the interim, we will be retaining a core group of employees to ensure that World Alliance Financial is able to honor all of its current obligations, and will provide support services to former sales and support staff to help them through this difficult transition.” 

"In conjunction with more and more baby boomers turning 62, today’s unpredictable economy, and seniors wishing to manage and maintain a comfortable quality of life, we’ve adopted this program," said David Peskin, Senior Lending Network CEO.  

The Melville, NY based company sees the new program as a new opportunity for growth and is seeking to develop strong relationships with qualified and experienced realtors and originators who adhere to its strict criteria.  Peskin added, “This is an unprecedented opportunity for realtors to access the reverse mortgage industry, while ethically serving the senior community and helping them reach their retirement goals. That, combined with recent legislation, makes this a very exciting time in the industry."

The company is currently running a pilot program with select correspondents and hopes to have it rolled out to everyone by the end of the quarter said an email from Jean Noble, Executive VP of the Senior Lending Network.

The partnership allows banks to tap into the company’s proven tools, experience, and industry methodologies from its in- house operations, technology, training, and marketing teams said a company statement.

The SLN’s first Bank Direct partner is Champaign, Ill.-based Busey Bank. With more than 40 branches in three states, Busey has a wealth of experience in personal and business banking, and wealth management. 

"Our product is specifically tailored for senior citizens, and if this program is going to successfully reach its intended demographic, we need partners that are trusted entities within their communities," said David Peskin, Senior Lending Network CEO. "To have the opportunity to invent a new angle in the industry — especially with a partner like Busey — marks the beginning of an exciting era for all of us."

The SLN also offers brokers the ability to leverage the company’s brand with its Partner Program that was introduced at the end of last year.

According to people who attended last weeks NRMLA conference in Boston, one of the messages taken away from the event was that Fannie Mae doesn’t want to be the only investor for reverse mortgages.  The significant change in pricing could signal that Fannie Mae is looking to attract other secondary market investors.

Our industry has relied almost entirely on Fannie Mae for the past 12 months and having one investor to sell loans to is never a smart strategy.  However, even when companies like Goldman Sachs were still interested in purchasing HECM production, executives form the company were shocked at the pricing offered by the GSE.

So will the higher margins attract interest from other investors?  People in the industry are confident it will.  “Long term, the changes are better for the industry,” said David Peskin, CEO of the Senior Lending Network.  He added, “By having more than one take out there is less risk for lenders and competition from other investors will help drive margins down for borrowers in the long run”.

Fannie’s pricing adjustment also makes the LIBOR index much more attractive to HECM borrowers.  For most wholesalers, par pricing is about .5% lower in rate on LIBOR products compared to CMT based HECMs.

Even with the pricing changes, historically the rates for HECMs are still low.  However, I do understand everyone’s frustration with having to re-disclose to borrowers and explain to them why they’re getting a higher margin product.  Everyone wishes there was an alternative, but when there is only one investor… there isn’t much we can do.

Technorati Tags: Reverse Mortgage,News,HECM,FHA,HUD,Fannie Mae,Senior Lending Network

At this point in time, yes we are dropping the CMT.  Fannie Mae recently transitioned to mandatory delivery along with Wall Street.  Since our business is composed of less than 10% CMT, from a risk management perspective we believe it is a wise move to temporarily discontinue the product line.  Senior Lending Network is a firm believer in doing what is best for the consumer and in this market the spreads between the LIBOR and CMT are small.  We believe that LIBOR is a very good alternative for both the consumer and the broker.  Should the spread increase, we will make the necessary product adjustments and re-introduce the CMT to better serve our brokers and the consumers we serve.  The average reverse mortgage is in force for 7 years.  Our analysts have reviewed the performance history of both indices and the end result is that LIBOR is a better alternative for the long term. 

The reverse mortgage industry is now a dynamic marketplace with products and services changing to meet consumer, broker and secondary needs.  We will continue to carefully adjust our offerings based on what the market dictates.

David Peskin – Senior Lending Network

It’s going to be interesting to see how the industry handles the switch to mandatory delivery on April 1st.  More on this soon…

In the email, they compare the LIBOR 275 to a CMT 300 which shows that the consumer is receiving a similar principal limit and a lower margin.  See table:

The Senior Lending Network was the first wholesaler to offer LIBOR based products and they’ve been a big supporter of it due to the secondary markets preference of LIBOR.  As far as I know, they’re the first wholesaler to move back to strictly LIBOR based products, well see if anyone else follows suit.