Reverse Mortgage Lender Banks on Industry Partners to Fuel Growth in 2017

It was a rough year for business in the reverse mortgage industry in 2016, marked by low industry volume and the looming uncertainty of proposed regulations. But just one month into the new year, one lender sees 2017 as the right time to continue expanding its presence in the reverse mortgage space—and it’s doing so with the help of its industry partners.

After receiving an investment from an existing partnership and a top-10 industry lender last year, Mahwah, N.J.-based Longbridge Financial, LLC is entering 2017 with plans to grow both its reverse mortgage salesforce and originations activity.

“You’re going to continue to see us grow in 2017 and beyond,” Longbridge Financial CEO Chris Mayer told RMD. “We’re significantly adding to the number of LOs we have and we’ve been growing our volume.”

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Compared to the previous year, Longbridge saw its volume increase 560% in calendar-year 2016 to 339 Home Equity Conversion Mortgage (HECM) endorsements, according to recent industry data tracked by Reverse Market Insight.

Longbridge was tied to some big news last year when BNY Mellon announced its exit from the reverse mortgage space. Until then, BNY was a closed loan buyer to Longbridge, but that did not stop the latter company from continuing to operate as a licensed Federal Housing Administration lender and servicer. Longbridge continued to originate and purchase closed HECMs with the support of its major investor, Ellington Financial, LLC (NYSE: EFC).

A couple months later in October 2016, Longbridge received an investment from Ellington Financial and top-10 reverse mortgage industry lender, Home Point Financial Corporation, to grow its business channels, including originations and servicing.

While the companies remain separate licensed entities, the traditional mortgage business expertise of Home Point provides opportunities for Longbridge to further its own growth, particularly in growing retail and wholesale originations and expanding relationships with third-party affiliates, such as “forward” mortgage lenders, financial planners and other professionals working with older adults.

“We’re trying to grow third-party originations,” Mayer said. “We’ve been growing rapidly in terms of loans we are getting from other companies and we continue to build and add people to support that business as well.”

As for Ellington Financial, the company’s capital markets experience aligns with plans Longbridge has for 2017 in the Ginnie Mae HECM mortgage-backed securities (HMBS) market.

“We expect in 2017 to be a significant issuer of HMBS and to take advantage of our great partners in Ellington Financial and Home Point Financial to provide expertise to help us grow that side of the business,” Mayer said.

Looking to the year ahead will see Longbridge focused on growing its inside sales team, as well as targeting “substantial growth” in third-party originations on the wholesale side of its business.

“Those are our three focuses: grow the size of our inside sales team, expand our source of leads and contacts, and grow wholesale,” Mayer said. “Our focus as a company has always been growing the size of the pie.”

Written by Jason Oliva

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  • It took Longbridge over three years just to get to 50 endorsements for Calendar Year 2015. Looking at it from that position, Longbridge is just now experiencing any sizable growth.

    It would be interesting to see how much equity it is has to give up in order to get the investment support it has needed from the start. The only conclusion one can reach is that Longbridge was undercapitalized at its start.

    Let us hope that they will be able to substantially increase their retail operations over time.

  • I can understand “The Positive Realist’s” comment about Longbridge, however, this article put out by Jason eludes to other positive things Longbridge is doing. Not only what Longbridge is doing but what our entire industry needs to do!

    I have said this many times before, we are in a new environment of our business cycle. We must go after different markets, just as Longbridge is doing. Sure, we all hope that Longbridge has the capital to venture out in the way they realize they need to!

    Going after the financial planners, advisors, insurance companies small community banks and credit unions is the way to expand our horizons!

    I realize many in the industry knows this already. Many are gearing up for it and many are already doing it. However, I read the RMD almost daily and feel it is my responsibility to join in and do my part with my comments, good or bad!

    I wish Longbridge all the success in the world as I do all of us in our industry!!!! Opportunities are out there, no doubt about that my friends!

    John A. Smaldone
    http://www.hanover-financial.com

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