Longbridge parent completes proprietary reverse mortgage securitization

Ellington Financial announced the closing of a $208 million securitization backed by a pool of proprietary reverse mortgages

Ellington Financial, the parent company of reverse mortgage industry lender and servicer Longbridge Financial, announced the successful closing of a new securitization backed by a pool of proprietary reverse mortgages initially originated by Longbridge.

The securitization was valued at $208 million and Longbridge will continue to act as the servicer of the underlying assets, according to a company announcement.

Longbridge maintains its own suite of proprietary reverse mortgage offerings under the product name “Platinum,” with fixed-rate variations available in 27 states and the District of Columbia. Line-of-credit versions are available in 18 states and D.C. The loans are available to borrowers as young as 55 in all but eight states, with a limit of up to $4 million depending on the home’s value.

“The debt tranches issued in the securitization were rated by Morningstar DBRS, with the senior most tranches receiving AAA(sf) ratings,” the announcement stated. “The company retained certain tranches of the securitization in compliance with credit risk retention rules, and also retained the option to call the securitization at any time following the optional redemption date.”

Late last month, Ellington presented its fourth-quarter and full year 2023 financial results. The data showed that while reverse mortgage originations at Longbridge have slowed, the company is in the process of regaining profitability. Some of the lagging performance attributed to the reverse division is tied to seasonal realities and the ongoing interest rate environment, according to Ellington CEO Laurence Penn.

In response to a question from an investor during a recent earnings call, Penn said that the company remains strongly committed to Longbridge and the reverse mortgage business.

“It’s a business that we absolutely believe in long term,” Penn said in the February earnings call. “Since we started many years ago, and even since late 2022 when we bought the other half of it … Longbridge has been growing market share quite a bit. It’s been a tough business. Longbridge has actually, I think, done great relative to the competition.”

He added that servicing adds additional value to the company, and that there is a large degree of unrealized growth potential due to the demographic trends of the wider reverse mortgage business working in its favor.

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