Senior Lending Network CEO Provides Insight Into Switching To LIBOR

image Several different’ people were voicing their opinion on the Senior Lending Network’s decision to eliminate the CMT based reverse mortgage product last week and SLN was paying attention.  To provide a bit more insight into why the decision was made, SLN’s CEO David Peskin responded with the following statement:

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. 

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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…