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June 2020 saw a sharp increase in Home Equity Conversion Mortgages. A number of lenders have seen success as a result of the unfreezing of the 10-year LIBOR SWAP and the lowest prepay seeds show that Longbridge Financial, LLC is at the top among its competitors.
"Over the top five reverse mortgage lenders in the country, Longbridge performs the best by a pretty sizable margin," said SitusAMC director Dan Ribler, according to Reverse Mortgage Daily. "In the affected period, Longbridge had the slowest prepay speeds and thus performed the best among major lenders."
The report revealed that Longbridge has benefitted from its ability to determine the overall values of loans in its portfolio. "Longbridge employs a data-driven approach to many aspects of its business, from lead acquisition to partner selection and pricing," said Tim Wilkinson, vice president of capital markets at Longbridge, according to the report. "This focus has helped ensure that Longbridge’s portfolio of loans is of high quality, and accordingly has performed well over time."
This is important for originators because it determines how attractive the loan is to Wall Street buyers.
"Because on the Wall Street side, the buy-side accounts are going to be looking more closely at the expected rates that they’re buying," said Ribler. "So, you might end up seeing loans [in which] the premium might start to disappear faster as you move up in coupon above the expected rate floor."
Ribler told the website that there is a point where a loan might be unattractive because it may be so prone to being refinanced. "'Above par compression' is a term that people will throw around there. You might start seeing that happen as the buy-side gets a little bit more in tune with this," said Ribler. "But, [this certainly doesn’t mean that] the industry is broken or anything."
Read more about why Longbridge is leading the way in this reverse mortgage metric.