In the wake of a $440 million trading loss sustained by Knight Capital Group (NYSE: KCG) this week, the company’s reverse mortgage unit, Urban Financial Group will continue operating and will maintain its presence as a Ginnie Mae HMBS issuer, the company said Thursday.
“Knight’s loss related to an equity trading technology issue August 1 did not impact Urban Financial’s capital base,” said spokeswoman Kara Fitzsimmons. “The ability to issue GNMA HMBS is established and Urban is in full compliance.”
Additionally, the company confirmed there would be no delay in funding of loans through any of Urban’s reverse mortgage channels including retail, wholesale or correspondent.
The loss took place as the result of a trading technology glitch which led the company to buy high and sell low. Losses to its stock price amounting to near 75% on Thursday let many analysts to question the company’s solvency, in spite of its making good with clients and customers.
Company Chairman Tom Joyce told Bloomberg News in a TV interview Thursday that the company was seeking financial support. No agreement had been made as of late Thursday.
Urban Financial is the largest reverse mortgage lender by volume as well as an active Ginnie Mae issuer.
Written by Elizabeth Ecker