Proprietary reverse mortgage products offered by reverse mortgage lenders Liberty Reverse Mortgage and Longbridge Financial, respectively, have been hit by bond market volatility, RMD has learned.
Liberty suspended new creations of its “EquityIQ” loan, while Longbridge briefly halted the ability to create new applications for its “Platinum” suite of products in its loan origination (LOS) systems. However, Platinum applications can now be resumed, according to a company representative.
EquityIQ’s suspension has been attributed to continued bond and bond market volatility, creating what has been described as “dislocations” in the proprietary reverse mortgage market according to a partner communications alert reviewed by RMD. Liberty has informed its partners that the markets are being closely watched and that originations for EquityIQ will resume as soon as market conditions stabilize.
In the case of Longbridge’s Platinum suite of products, the company described the need to implement immediate changes to product loan-to-value (LTV) ratios. While these changes were being implemented, the ability to spawn new applications inside LOS systems was “temporarily pending” according to a partner alert reviewed by RMD. The ability to generate and submit new Platinum applications was up and running again on Tuesday, according to a company official who contacted RMD.
Platinum applications dated September 26 or earlier will adhere to the previously disclosed LTVs, but must be closed by October 27, while applications dated September 27 and later will be affected by the revised LTVs. Other product “enhancements” may also arrive this week, the communication says.
Due to the described conditions under which the products were affected, RMD has contacted other lenders who offer proprietary reverse mortgage products to determine if other private products are affected by the same volatility. A Finance of America Reverse (FAR) representative told RMD that applications for HomeSafe are still active.
RMD has also reached out to Liberty for additional context on the impacts on EquityIQ, but has not received a response as of press time.
A reverse mortgage professional who spoke to RMD described that while these impacts are troublesome, they are not as disruptive as an earlier example of market volatility earlier this year when three reverse mortgage lenders changed their exclusive product offerings in response to market turbulence. Two of these lenders suspended their offers and one lender changed its products to compensate for market conditions.
At the onset of the COVID-19 coronavirus pandemic in March 2020, reverse mortgage lenders responded to the uncertainty created by this event in the economy by also suspending exclusive offers at this time. Exclusive offers suspended at the beginning of 2020 returned to the market in mid-summer.
The economic shock of the first pandemic was not just reserved for private label reverse mortgages, as prices for home equity conversion mortgages (HECMs) also saw notable swings in the early days of the pandemic. This eventually stabilized, leading to a period of buoyant activity for the industry and a boom in HECM-to-HECM refinance deals that only dissipated early this year.
RMD will update our audience on any further developments on this as they occur.