Stifel Financial Launches Reverse Mortgage Business, Targets National Growth

Stifel, Nicolaus & Company, Incorporated (NYSE: SF) has entered the reverse mortgage business through a new origination and securities trading platform and its recent acquisition of Knight Capital Group’s Fixed Income Unit.

The platform, based in New York, is currently up and running under Stifel’s broker dealer Stifel Nicolaus & Co. and began trading reverse mortgage HMBS July 1. It also completed its first HREMIC transaction in July and is working on a second HREMIC transaction this month.

Stifel has big plans for growth for the division utilizing its federally-chartered Stifel Bank & Trust that includes a 50-state nationwide mortgage origination presence. As of June 30, Stifel Bank & Trust based in St. Louis had $4.3 billion in assets, and has averaged $1.5 billion in single and multi-family originations over the past two years.

The reverse mortgage team currently includes Managing Director Darren Stumberger, who is leading the unit and has held similar roles at Knight Capital Group, Bank of America Merrill Lynch, Goldman Sachs and Morgan Stanley, as well as Richard Boyd, Director of Trading, who traded in the sector for Bank of America Merrill Lynch and structured several billion HREMICs. Ernie Calabrese, Managing Director of Mortgage Finance and formerly of Knight, Deutsche Bank and Bear Stearns, and Christina Rosales, also formerly at Knight along with JP Morgan and Countrywide and Christopher Reichert, CEO of Stifel Bank and Trust, complete the present team.

“Given the vertically integrated platform and direct access to HMBS and HREMIC middle-market and institutional investors, we’re very eager to deliver what we feel is a very compelling value proposition to the origination side of the business,” Stumberger says. “Additionally, we think there is a tremendous opportunity with reverse mortgages without a government guarantee and are immediately focused on building trading capabilities.”

The company itself was founded in 1890, and has more than $1.5 billion in equity capital with market capitalization of $2.5 billion. The platform has one of the largest equity research platforms, comprising more than 100 equity analysts covering over 1000 domestic corporations, and more than 2000 Financial Advisors nationwide in its Global Wealth Management Division. Stifel reported record second-quarter revenues of $511.4 million Thursday resulting in earnings of $29.4 million or $0.40 per diluted.

Stifel also counts 237 investment banking professionals via its recent acquisition of Keefe Bruyette Woods. The Fixed Income Division has more than 225 Institutional sales and trading professionals across 32 offices nationwide along with desks in London, Geneva and Madrid.

‘We are truly excited about the prospects of working closely with Stifel Bank and Trust, their infrastructure and extensive experience in mortgage lending, along with tapping into more than 160 Stifel Nicolaus mortgage bond salespeople across the country and abroad for HMBS and HREMIC distribution,” Stumberger says. “I’m ecstatic with the team and platform that’s been assembled in a relatively short period of time.”

The launch is well timed, Stumberger says, with upcoming changes expected from the Federal Housing Administration that will reform its Home Equity Conversion Mortgage program.

“We’re relieved that HUD now has the ability to amend the HECM program via Mortgagee Letter and with H.R. 2157 being passed in Congress in terms of allowing FHA to introduce underwriting guidelines,” he says. “A lot of the past issues relating to tax and insurance defaults will be largely mitigating going forward. We’re very happy with the timing of our launch, and think a lot of the headwinds for the HECM program have been removed via the recent legislation.”

Written by Elizabeth Ecker

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