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Mortgage

Is Liberty Home Equity Solutions about to get in on the proprietary reverse mortgage game?

Parent company Ocwen reveals successful pilot program

It seems Liberty Home Equity Solutions may be the next HECM lender to launch a proprietary reverse mortgage product.

Liberty’s parent company, Ocwen Financial, recently revealed that the company successfully test drove a non-agency reverse product in financial documents detailing fourth quarter earnings.

It also said it was exploring other new products and alternatives, which seems to be the goal for many HECM lenders these days as volume continues its downward spiral in the wake of program changes.

Currently No. 6 on Reverse Market Insight’s list of the top 100 HECM lenders, Liberty’s reverse mortgage volume shrunk 77% year over year from February.

But Ocwen execs appear to be unconcerned, saying the company’s funded volume is “in line with industry trends.”

According to the document, Liberty’s pre-tax income was $8 million in the fourth quarter of 2018, which Ocwen attributed to favorable portfolio valuations as a result of lower interest rates.

In Q4, the lender had 7,395 HECM loans endorsed by HUD, down from 8,985 loans in Q3, the document stated.

It seems the company is eyeing an expansion into non-agency reverses to boost revenue.

In the last year, the reverse mortgage market has seen an influx of these non-agency equity release products come to market, some with creative features like a line of credit option or a second lien possibility that set them apart from the Federal Housing Administration’s standard reverse mortgage offering.

Currently, five lenders offer proprietary reverse mortgage products, which are designed to cater to homeowners with higher valued homes that exceed FHA’s reverse mortgage lending limit.

While most industry execs say they don’t expect private reverse mortgage products to overtake the FHA’s HECM market, many do say that a healthier balance between the two is needed. And, with more lenders bringing innovative products to market, that goal may become a reality.

HousingWire reached out to both Liberty and Ocwen for comment, but had not heard back as of press time.

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