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Survival of the Largest?


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Will smaller lenders need to consolidate to survive?

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Change To Reverse Mortgage Product

The Effects Of Change To Reverse Mortgage Product

Product change and regulation are taking their toll on one business model: the small independent broker or lender. Prior to the elimination of the standard fixed rate HECM brokers and smaller lenders were able to absorb the costs of marketing and regulation due to the high premium payouts the fixed rate product offered. Today that has changed. Smaller premium payouts and increased regulatory costs may cause some to consider joining…




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  1. Fewer lenders is a good thing if the result is a net benefit to borrowers.

    • John,

      While such statements are noble sounding, they are also very self-serving. These are dire times.

      We have a program which has failed to produce the required net position and is so negative, there is little which will save it without some infusion from Treasury near term. I read of a bold move concept which FHA should consider if they are to save the program from close annual inspection from Congress.

      I read the article Shannon uses as the text for this discussion. What it forgot is that there is no consolidation that started this change. What started it was total abandonment by Bank of America, Wells Fargo, and then MetLife with a some mid-size lenders in between.

      Then we saw a smart abandonment of the industry by Genworth, RMS, and Security One Lending in selling out to others. This was no consolidation but rather acquisitions. Ocwen will have the financial strength that the old Liberty operation would not have had on its own plus Genworth got to recover a portion of its original purchase price but only a portion of it.

      Now we come to RMS and Security One Lending, both of which were acquired by Walter Investment Corporation. Both have conservative leadership and both were near the end of their abilities to grow without outside equity support. Now RMS is much larger than they could have ever been on their own and they have a feeder organization while Security One has an experienced HMBS issuer which should take stress off of its warehouse lines issues.

      Will brokers bond together into new merged entities? More importantly how long will they last? That is more joke than reasoned result. Most of these kinds of entities would last a few years at best. In the Security One Lending situation you have a definite segment of management heading up origination and a different set heading up the other aspects. With a merged entity of brokers you have one management composed of owners running origination and little more. Will that work? Ask the leaders from Omni!

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