Ellington Financial, the parent company of reverse mortgage lender and servicer Longbridge Financial, has successfully closed a new securitization backed by a pool of proprietary reverse mortgages initially originated by Longbridge.
Details of the Securitization
The securitization was valued at $208 million, with Longbridge continuing to act as the servicer of the underlying assets, as per the company’s announcement. Longbridge offers its own suite of proprietary reverse mortgage products under the name “Platinum”. These fixed-rate variations are available in 27 states and the District of Columbia, while line-of-credit versions are available in 18 states and D.C. The loans are accessible 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.
Rating and Retention
The debt tranches issued in the securitization were rated by Morningstar DBRS, with the senior-most tranches receiving AAA(sf) ratings. 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.
Financial Results and Future Plans
In its fourth-quarter and full-year 2023 financial results, Ellington revealed that while reverse mortgage originations at Longbridge have slowed, the company is working towards regaining profitability. The slower performance in the reverse division is attributed to seasonal realities and the ongoing interest rate environment, according to Ellington CEO Laurence Penn.
Despite the challenges, Penn reaffirmed the company’s strong commitment to Longbridge and the reverse mortgage business during a recent earnings call. He emphasized the company’s belief in the long-term potential of the business and highlighted Longbridge’s growing market share. Penn also noted that servicing adds additional value to the company and that there is significant unrealized growth potential due to the demographic trends of the wider reverse mortgage business working in its favor.
