Longbridge Financial, LLC has received approval from Ginnie Mae to issue Home Equity Conversion Mortgage-backed securities, the company announced Friday.
The Mahwah, N.J.-based originator was formally given the go-ahead before the long Memorial Day weekend, Longbridge CEO Chris Mayer told RMD, after first applying in October of last year. Longbridge plans to issue its first HMBS sometime over the summer, Mayer said.
The Ginnie Mae approval marks the latest growth milestone for the company, Mayer said, after Longbridge began servicing reverse mortgages in-house last year; the company has serviced all wholesale and retail loans since the start of the year, Mayer said, and Longbridge continues to primarily source loans through the wholesale marketplace. Longbridge also launched a broker channel within the last few weeks.
Longbridge plans to use its newly earned HMBS status, along with its servicing operation, to offer more competitive pricing through its broker and wholesale channels. The overall goal, Mayer said, is expanding the total pool of HECM borrowers, including through the facilitation of loans that other brokers or closed loan sellers “would otherwise find not economical.”
“We know the market is really large, and we’re serving two percent of it,” Mayer said, referencing the total number of seniors nationwide who could benefit from a HECM. “Our goal as a company, certainly on the wholesale side and on the retail side, is: How can we help the industry bring more customers into the business than it’s attracting today? And how do we do that in a responsible way?”
In order to become an approved issuer of HMBS, a firm must meet a host of Ginnie Mae requirements: Issuers need to have experience with originating, servicing, and underwriting loans, strong quality-control practices, and a net worth of $5 million — of which at least 20% must remain liquid, according to a National Reverse Mortgage Lenders Association fact sheet from 2015.
Longbridge’s approval process, for instance, involved site visits from Ginnie Mae officials as well as a deep accounting of the company’s business practices.
“Ginnie Mae does a thorough evaluation of everything you do as a company,” Mayer said. “They’re concerned about your ability to continue to service loans, and stand by the customers in various financial conditions.”
Following Longbridge’s approval, there are currently 14 active Ginnie Mae-approved HMBS issuers, according to a company release announcing the news; Ginnie Mae’s listing of active issuers currently shows 18, though the agency may not immediately update its online resource.
Longbridge came in 12th place among all HECM originators in 2016, logging a total of 746 — 416 wholesale and 330 retail — according to data from Reverse Market Insight. The Dana Point, Calif.-based research firm also ranked Longbridge ninth among all wholesale originators; interestingly, Longbridge sourced its wholesale loans from just five active companies, according to RMI.
Longbridge received an influx of investment cash from Home Point, which also operates a separate reverse mortgage business, and Ellington Financial last October, as RMD reported at the time. The servicer and originator previously had a relationship with Bank of New York Mellon, which exited the reverse mortgage industry last summer.
Written by Alex Spanko
