Onity leaders about the profitability of reverse mortgage, own product development
The leaders of the Onity praised Liberty as the fourth largest reverse mortgage provider in the country based on Home Equity Conversion MortGage (HECM) -Backed Securities (HMBS) issue of 2024.
But Messina also explained that a large potential growth area for the company is its own reverse mortgage market, which has much higher credit limits than to be found in the Federal Housing Administration (Fha) -backed hecm program. Although the company currently has a share of around 18% in the existing HECM market, it currently has a share of 0% in its own space.
This was not always the case. In 2007, the company introduced Liberty Prefered, the first own product, which ultimately left the market. Twelve years later, which was then known as OCWEN FINANCIAL CORP. announced that it had developed a new patented product called Equityiq.
It was launched that summer and was briefly suspended because of COVID-19 market volatility in March 2020, but it was reduced a few months later. In 2022, the company suspended the availability of the product as a result of volatility in the bond markets, and it has since been removed from the market.
Liberty is now ready to re -introduce its own space against experienced competitors Financing of America and its home -hedging product, as well as Longbridge Financial And its platinum line. Although Liberty’s product is still developing, Messina is enthusiastic about the possibilities.
“It is clear that launching a competitive Jumbo -so that offers the possibility of growing,” said Messina. And again, with an 18% [HECM] Market share, we have a great market coverage to push that product. “
No timeline was offered on a potential rollout.
O’Neil offered some insight into the company’s profitability ratios. He explained that although the reverse mortgage activities is much smaller than the forward correspondent and co-emperor channel of Onity, a much higher adapted margin has per basic point.
In the tax year 2024, the forward correspondent channel had an adapted turnover margin of 24 basic points, while the inverted division had a margin of 341 basic points.
Rever and the Consumer Direct Channel, while it is overshadowed by the forward correspondent channel, “stimulate considerably larger income margin,” said O’Neil.
In a “snapshot” of the inverted activities of the company, O’Neil pointed out that is a rare entity – a public company that makes its own reverse mortgages, subverts, which has a valuable place in the overall portfolio of the company.
‘[There are multiple reasons] Why we like it, “he said.” I will point out that it is a very effective hedge for our forward MSRs. We cover our MSRs somewhere between 90% to 110%, and Reverse is an important part of it. “
These several reasons include what the company calls ‘robust and consistent profitability’, the upward potential for its origination market if the rates fall and an appeal to correspondent partners who are looking for a ‘one-stop-shop’ for all inverted positions.
It also has “skills and service skills to acquire reverse assets”, remarkable liquidity and accretive income via HMBS securitizations, and growth potential due to the high levels of senior equity in the house.
O’Neil also emphasized the purchase of HMBS assets by the company of Waterfall Asset Management As a positive move. That deal was originally announced during a profit call of Q2 2024.
