Several different’ people were voicing their opinion on the Senior Lending Network’s decision to eliminate the CMT based reverse mortgage product last week and SLN was paying attention. To provide a bit more insight into why the decision was made, SLN’s CEO David Peskin responded with the following statement:
At this point in time, yes we are dropping the CMT. Fannie Mae recently transitioned to mandatory delivery along with Wall Street. Since our business is composed of less than 10% CMT, from a risk management perspective we believe it is a wise move to temporarily discontinue the product line. Senior Lending Network is a firm believer in doing what is best for the consumer and in this market the spreads between the LIBOR and CMT are small. We believe that LIBOR is a very good alternative for both the consumer and the broker. Should the spread increase, we will make the necessary product adjustments and re-introduce the CMT to better serve our brokers and the consumers we serve. The average reverse mortgage is in force for 7 years. Our analysts have reviewed the performance history of both indices and the end result is that LIBOR is a better alternative for the long term.
The reverse mortgage industry is now a dynamic marketplace with products and services changing to meet consumer, broker and secondary needs. We will continue to carefully adjust our offerings based on what the market dictates.
David Peskin – Senior Lending Network
It’s going to be interesting to see how the industry handles the switch to mandatory delivery on April 1st. More on this soon…