A $400 million loss on the part of Urban Financial’s parent company, Knight Capital, over the last week, caused many people in the reverse mortgage business to wonder: Will this be the last shoe to drop?
But operating as a separate and independent entity, Urban Financial is alive and well, and even more so—it’s growing, Urban President and CEO Steve McClellan told RMD in an interview granted by email.
“Our wholesale clients, correspondent partners and retail originators did not see any delays,” McClelland says. “Having funded over $150 million in loans, July was a record month for Urban and our goal is to replicate our performance.”
Details of the Knight trading error surfaced in the early days of August, with the company announcing on August 6 that several companies had come to Knight’s aid in offering financial assistance through a stock purchase agreement.
While Knight shareholders saw the value of their ownership plummet, the lifelines included capital injections from Blackstone Group LP, Getco, and TD Ameritrade Holding Corp, Stifel Nicolas, Jefferies Group Inc and Stephens Inc. Tom Joyce remained company chairman and CEO and the effect on Urban’s management and oversight was zero.
“The August 6 announcement has not impacted any of the staff, management team or customers of Urban Financial Group,” McClellan said.
The company also remains an active Ginnie Mae issuer. With Urban making up a good portion of issuance overall, the company remains committed to issuing and its financing channels have not be halted during what some media outlets have called the “Knight-mare.”
When asked whether Urban is actively seeking a buyer, the company said it could not comment in response to speculative questions, but said the reverse mortgage product has value to the company and the greater financial community.
“Our product has great execution and is a valuable commodity to Knight and to Wall Street,” McClellan says. “As always, we are focused on our business and look forward to growing our business as we move ahead.”
Written by Elizabeth Ecker