Knight: Does Not Expect FinReg to Impact HMBS Business

NewImage.jpgKnight Capital Group told a group of analysts during an earnings call that it doesn’t expect regulation from the Dodd-Frank reform bill to impact the company’s entrance into the reverse mortgage business.

Specifically, Thomas Joyce, CEO of Knight said it doesn’t anticipate the new regulations will require it to keep “skin in the game” on any of the loans used to issue securities through Ginnie Mae’s HECM MBS program.

“You can only do so much research ahead of our friends in Congress writing rules because nobody has a crystal ball,” said Joyce. “But we certainly put a lot of discussion into that particular topic.”

While not approved as a Ginnie Mae issuer, the company is anxiously waiting so it can realize revenues from origination, securitization, distribution and trading of reverse mortgages.  Knight said it doesn’t plan on holding any of the loans on its balance sheet for extended periods.

“While we will have a certain amount of these loans on our books for a period of time before we sell them,” said Joyce.  “We are constantly moving the product and we have a different group of mortgages on the books at any given moment.”

Knight entered the business when it acquired Urban Financial earlier this year and followed it up by purchasing the assets of Guardian First Funding Group along with the rights to a reverse mortgage lead generation campaign featuring Robert Wagner.

The combination of the two companies makes it the 4th largest retail reverse mortgage lender according to data from Reverse Market Insight.

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