Bloomfield, N.J.-based top 10 reverse mortgage lender Reverse Mortgage Funding, LLC (RMF) is reportedly pausing all origination activities after losing its warehouse funding lines, multiple sources told RMD.
The information was confirmed by a company’s spokesperson.
“On Monday, November 21, Reverse Mortgage Funding and its affiliates made the difficult but necessary decision to pause mortgage origination activities,” the spokesperson wrote in an email. “RMF, like many of its peers, has been challenged by unprecedented interest rate hikes and overall macroeconomic volatility.”
While not directly mentioning warehouse funding lines problems, the spokesperson said that “the cost of financing and securitizing reverse mortgages has made it impossible for RMF to continue originations for seniors looking to unlock value in their homes at this time.”
RMF has for years been a leading reverse mortgage lender, offering both Federal Housing Administration (FHA)-backed Home Equity Conversion Mortgage (HECM) loans as well as a suite of proprietary reverse mortgages under its “Equity Elite” brand.
The company’s move represents a blow to industry distribution channels and the potential displacement of approximately 400 employees at all levels of the business, according to a public estimate of its headcount on social media.
According to mortgage tech platform Modex, the company had 139 active loan officers as of November 21. Originations reached $321 million in the last 12 months but fluctuated from $42.5 million in December 2021 to $12.8 million in October 2022.
The spokesperson said the company “has been working diligently with its constituents to support its business and is doing everything possible to weather these challenging market conditions.”
Prior to the sizable industrywide reverse mortgage volume drop-off in September, RMF had been positioning itself to absorb more business in markets it identified as having “rising demand” for reverse mortgage products, most notably the state of Arizona.
According to HECM endorsement data compiled by Reverse Market Insight (RMI), RMF was the fifth-largest HECM lender in the country, with 4,804 endorsements over the 12-month period ending on October 31.
While none of the top 10 lenders in October could recover all of their September losses, RMF came within 9% of returning to August’s pre-loss volume levels.
In an interview with RMD earlier this year, RMF President David Peskin spoke about emerging challenges related to a rise in interest rates, a challenge felt most acutely on the forward mortgage side, but had begun affecting reverse mortgage lenders early in 2022.
With the rising rates and widening spreads, the resulting uncertainty had an impact on margins, Peskin said in March. Making adjustments would be key, and RMF aimed to adjust where it needed to operate at that time, he said.
At the start of 2022, RMF had acquired a portfolio of mortgage servicing rights (MSRs) and other assets from industry-leading lender American Advisors Group (AAG), which consisted of more than 75,000 loans totaling $12.1 billion in unpaid principal balance (UPB).
In September and October 2021, the company had hired new corporate employees in an effort to meet new demand for reverse mortgages. It subsequently appointed an employee to lead its financial planner channel to facilitate connections for RMF’s corps of loan officers.
Following the departure of MetLife from the reverse mortgage business in 2012, a group of the company’s former executives began the process of launching RMF. The lender was the brainchild of former MetLife leaders Craig Corn, Joe DeMarkey, Bob Sivori, Mike Mooney and Rick Peters. The company first launched in August 2013 with David Peskin serving as president.
