Connecticut-based Ellington Financial, the parent company of top-10 reverse mortgage lender and servicer Longbridge Financial, announced this week that it has completed a securitization backed by a pool of proprietary reverse mortgages.
The $232 million securitization closed on Thursday and was backed by a pool of proprietary reverse mortgages, all of which were originated by Longbridge, according to Ellington. Longbridge will also continue to act as the servicer of the loans, the company said.
“The debt tranches issued in the securitization were rated by DBRS Morningstar, with the senior-most tranches receiving AAA(sf) ratings,” the company explained. “[Ellington] 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.”
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 Washington, D.C., and they 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.
This marks the second proprietary reverse mortgage securitization the companies have completed this year. In March, Ellington announced a similar $208 million securitization that was also backed by Longbridge proprietary loans that the lender continues to service.
Ellington is scheduled to hold its second-quarter 2024 earnings call on Aug. 7, where it is expected to include details of Longbridge’s performance. In its Q1 earnings call in May, Ellington CEO Laurence Penn said that while there were challenges on the reverse side during the opening months of the year, he expected the story to be somewhat different in Q2.
“Origination volumes and submissions so far in the second quarter are well ahead of projections, despite higher interest rates, which partially reflects additional sourcing channels that Longbridge has successfully established,” Penn said on the Q1 earnings call. “As a result, we’re expecting Longbridge to contribute positively to add in the second quarter.”
In late June, DBRS Morningstar reassessed Longbridge and assigned it a “good” reverse mortgage originator rating for the second time in recent years.
