During its annual conference call with analysts and investors, Jim Smyth, EVP, Senior Advisor and Senior Relationship Officer at Knight Capital Group said the company sees big potential in the purchase of Urban Financial.

“While the business has already added value to the franchise, we believe that there is a significant upside as we aim to more than double our market share, reaching 20% by 2013,” he said.

Using both wholesale and retail volume, Urban’s is the fourth largest reverse mortgage lender and its market share stands at 8.4% according to data from Reverse Market Insight.

Currently, more than 80% of Urban’s business comes from their wholesale channel but that could change with the acquisition of Guardian First Funding Group’s assets and the Robert Wagner brand earlier this year. Expected to close in early 2011, the deal provides Urban with a nationally recognized marketing campaign and essentially doubles their retail production overnight.  According to data from RMI, Guardian has endorsed 1,024 HECM loans year to date.

Both acquisitions also integrate nicely with Knight’s growing MBS business by providing a consistent supply of loans it can use to issue Ginnie Mae bonds backed by reverse mortgages.  During the call, Ronak Khichadia, Managing Director and Global Head of Knight Capital Group, said Ginnie Mae’s HMBS program has “become the product of choice” for several of its bank, asset money managers, and insurance company clients.

“Our capital markets MBS securitization team has been a crucial link between our origination business and our self-distribution of Urban product,” said Khichadia.  “This team of industry professionals has created seamless workflow to efficiently distribute both Urban and third party originated products.”

Through the acquisition of Urban, Knight said it created a network of third party financing solutions for both Urban and other Ginnie Mae-insured reverse mortgage originators.  “While facilitating this financing has created an incremental source of profitability for Knight, it also has created another value added attribute for Knight to offer our wholesale origination network.”

“In origination, our primary objective is to grow our market share in reverse mortgages,” Khichadia said. “We will have origination and capital markets and the securitization team work closely together to evaluate opportunities to expand our origination product base.”