Knight Capital Group, Inc. (NYSE Euronext: KCG) announced it closed the acquisition of Urban Financial Group, Inc., one of the largest reverse mortgage lenders in the country late Thursday.
The purchase of Urban provides Knight with an origination securitization distribution model in home equity conversion mortgage backed securities according to Thomas M. Joyce, Chairman and Chief Executive Officer, Knight Capital Group.
“Reverse mortgages allow borrowers age 62 and older to convert a portion of home equity into cash and don’t have some of the risks associated with traditional, forward mortgages,” he said. “Further, HMBS pools are one hundred percent guaranteed by the federal government, unlike conventional private MBS. Considering the relatively low risks, growing demand among institutional investors and Knight’s revenue model, the acquisition makes perfect sense.”
Based in Tulsa, Oklahoma, Urban Financial has both a retail division and wholesale business it operates through Reverseit. The company has 109 employees and branch offices in 10 states.
In connection with the close of the acquisition, Urban Financial Founder and Chief Executive Officer Bryan W. Hendershot was appointed Managing Director, Head of Mortgage Origination. He will report to Ronak Khichadia, Managing Director, Global Head of ABS/MBS. Hendershot will continue to run the company on a day to day basis as well.
Terms of the acquisition were not disclosed.
Update: The original article said Urban has 115 employees, changed to 109