Ellington again praises Longbridge inverted mortgage performance
Longbridge performance
The lender contributed 30 cents per share to the net result and 17 cents per share in adapted distributable profit (ADE) in Q4 2024. Penn has also credited the reverse mortgage protection of December ownership loans as an important contribution to the performance of the segment.
“We have completed our third patented inverted mortgage certification of the year in a deal that surpassed several times and that was considerably tighter than our two previous deals in 2024,” Penn said.
“Our entire subsidiary Longbridge has become one of the greatest originators of its own reverse mortgages, so we have a good price force in that market, as well as great visibility on the stream that we will continue to see from that product.”
JR Herlihy, the financial director of Ellington, was more detailed about some of the details of the performance of the segment. He also cast it as a solid contribution to the general success of the company.
“The robust results of [Longbridge] Were due to an excellent quarter for original driven by higher volumes, which increased 18% successively in all products, “he said.
“Improved origin marges in [Home Equity Conversion Mortgages (HECMs)] and net profits related to the [proprietary] reverse securitization, Longbridge also had a net win on his [mortgage servicing rights (MSRs)] Driven by tighter [HECM-backed Securities (HMBS)] Proceeds spreads, as well as net profit at interest rates with rates higher during the quarter. “
But the Longbridge portfolio “dropped successively by 15% to $ 420 million,” Herlihy explained. He said that the impact of one’s own securitization “surpassed the impact of new original in that company”.
Mark Tecotzky, the co-chief information officer Van Ellington, has added some extra color to the performance of Longbridge by choosing the three own securitizations of the year again.
“With every next deal we have brought in a larger and larger grid of debt investors, and we have executed at tighter and tighter level, [showing] That tighter implementation of Deal translates directly into more competitive loan prices for Longbridge, “he said. “That helps them to build loan volumes and market share.”
‘Excited’ about question, possibly new product
Penn added that Ellington is ‘enthusiastic’ about what the company sees with regard to the demand for Longbridge’s own reverse mortgage products. These are marketed under the brand name “Platinum”, which recently saw a reduction in the minimum home value.
During the Q&A part of the call there was a question about the demography of the reverse mortgage industry in the game. The caller described the company as “huge” and “generally undervalued” before he asked the leadership team if more mainstream competition in the reverse mortgage space is something they expect.
This led Penn to reveal that Longbridge together develops a new product that speaks to the question, but he refused to offer many details.
“Longbridge actually works actively with some other partners to make some other products for seniors who may not be technically not reverse mortgages, but have many similar characteristics,” Penn said. ‘I don’t want to give away too much, but [there are] Many ways with the relationships we have with the compliance program that, I would say, unique for the inverted mortgage -originators who have to do so much more when dealing with seniors, for example. “
“We are enthusiastic and we hope that we can even announce some interesting new products in the near future.”
When asked whether this could be a collaboration with life insurers, Penn said that instead it would be aimed at “other types of loan assignments”.
