Urban Parent Buys Big into Forward Originations Market

The owner of top-10 reverse mortgage lender Urban Financial of America is making a major play into the forward lending space through acquisitions announced Monday. 

Finance of America Holdings, a Blackstone (NYSE: BX) portfolio company, has completed the acquisitions of several companies: Gateway Funding Diversified Mortgage services, Pinnacle Capital Mortgage and certain assets and operations of PMAC Lending Services. Finance of America Holdings owns Urban Financial following its $80 million sale in 2013. 

The acquisitions make the holding company one of the largest non-bank originators in the country, with licensing in more than 45 states. The lending services span retail, wholesale and correspondent operations, as well as servicing capabilities, and will include 300 retail lending branches, and five wholesale and correspondent centers. 

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The company will encompass 1,400 loan officers among its 3,000-plus employees, with company leadership seeing the move as positioning it to compete among the nation’s largest. 

“We see great opportunity in the U.S. lending and resulting investment space,” said Brian Libman, Executive Chairman of Finance of America Holdings LLC. “The people and operations associated with these businesses, the capital of our partners and strategic items yet to be announced should provide us with a significant and enduring edge in this highly competitive industry.”

Urban Financial of America has long held a position among the country’s largest reverse mortgage lenders by volume via its wholesale lending unit. The company has also ramped up retail operations of late and has expanded its branch network nationwide. 

Written by Elizabeth Ecker

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  • This is puzzling to me. When rates start going up, the refi business will slow down dramatically (which shouldn’t be long from now), reducing the valuation of their purchases.

    But it could make sense if Finance of American Holdings trained their Reverse side on Forwards, and the Forward sides in Reverse.

    • Without knowing the disclosed price of the purchase for these businesses, you really can’t determine if there is a valuation issue. You especially can’t make this determination without knowing their product mix (refi vs purchase business). A refi based business model will not sell for nearly as much as a purchase focused business model. You also have to look at the percentage of retail vs wholesale channels. Forward mortgage market is much greater than reverse. Blackstone is a well capitalized company with deep pockets and strong management. The move to me suggests maybe they think it’s time to diversify and not rely on just reverse anymore and the best way to get a stronghold in this market is through acquisition.

      The move makes sense to me but again can’t say how good or bad a deal it is without knowing the terms.

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