Reverse Mortgage Broker Roll Up: Attractive For Some, Not All
Having the capital totaling $5 million including an investment from a private equity group does not guarantee National Senior Home Equity to run its mortgage business normally. It is sometimes off and sometimes running. Thus, it is now looking to gather up reverse mortgage in the hope of selling to an institutional investor in the future.
To gain market quota, the company has involved brokers throughout the country and recently told RMD that it has been working with 18 reverse mortgage lenders. Those lenders then are able to receive improved price from MetLife on fixed rate HECM loans. However, since that time, RMD has seen that these “commitments” are, quite, no more than a non-binding expression of interest letter with reference to several sources who have spoken with NSHE. Several of those lenders said to RMD that though it is a new company, they are interested to work together since they felt that they would get improved price.
(Our company) get a bit better price from with MetLife on the fixed rate, one of the brokers said while desiring his name kept secret. Further, he said that there was no obligation to always work with the company as soon as everything was set up. Another broker said that he seemed like having his processing joining in this program. “We package loans and I don’t want to ship loan off somewhere else only to have it underwritten by another lender somewhere else”.
On contrary, brokers like Oakland, Calif-based Trinity Mutual didn’t approve these commitments. They felt that these would only make them lose the ability to operate their business as they wanted. Michael Fullam, president of Trinity Mutual said that the signing of the commitments would make him as an employee and he didn’t want to stay in that position. However, he admitted, “For a long term, it can be an attractive opportunity for some companies.”
Fullam explained further that details on NSHE were slim. There was no much information that could be used as reference, particularly for those who have signed up expression of interest letters. “The attraction of this expression of interest letters is that you have nothing to lose, besides better pricing right now,” said Fullam. “Whether brokers join down the road is unclear because no one knows what their agreement will look like.”
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