DBRS Morningstar Assigns MOR RVO2 Residential Reverse Mortgage Originator Ranking to Longbridge Financial, LLC

DBRS, Inc. (DBRS Morningstar) assigned an MOR RVO2 residential reverse mortgage originator ranking to Longbridge Financial, LLC (Longbridge or the Company). The trend on the ranking is Stable.

Longbridge is a privately held company established in 2012 to provide reverse mortgages to homeowners in the U.S. over the age of 62. The Company originates agency-backed home equity conversion mortgages and a private reverse mortgage product, Longbridge Platinum, through retail and wholesale channels. Longbridge is majority owned by Ellington Financial Inc. and Homepoint. In 2020, the Company originated close to 6,600 reverse mortgages totaling over $1.2 billion and has a servicing portfolio exceeding $4.5 billion.

The MOR RVO2 residential reverse mortgage originator ranking reflects Longbridge’s strong and tenured senior management team, highly experienced underwriting team, financial profitability, and good loan performance.

The Company has approximately 200 employees and is headquartered in Mahwah, New Jersey, with additional offices in Charlotte, North Carolina, and Houston, Texas. Longbridge is led by a senior management team averaging almost nine years of Company tenure and 22 years of industry experience. The underwriting team, which manually underwrites each loan, averages three years with the Company and over 20 years of industry experience. Longbridge has consistently demonstrated the ability to steadily grow its reverse originations while maintaining solid loan performance.

Longbridge has been profitable since 2017 with acceptable returns. The Company has limited credit risk as it benefits from government guarantees provided by the Federal Housing Administration and Ginnie Mae on the performance of its reverse agency-backed portfolio while selling its private reverse mortgages to a third-party investor on a flow basis. Similar to other nonbank mortgage companies, Longbridge’s narrow funding profile relies predominantly on secured wholesale funding, which results in a highly encumbered balance sheet that may limit financial flexibility during periods of market stress. The Company maintains relatively low leverage and its capital comfortably exceeds the required amounts from regulatory agencies and credit facilities.

All rankings are subject to surveillance, which could result in rankings being upgraded, downgraded, placed under review, confirmed, or discontinued by DBRS Morningstar.

DBRS Morningstar mortgage originator rankings are not credit ratings. Instead, they are designed to evaluate the quality of the parties that originate residential mortgage loans. Although the originator’s financial condition contributes to the applicable ranking, its relative importance is such that a originator’s ranking should never be considered as a proxy of its creditworthiness.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is U.S. Residential Mortgage Originator Rankings (August 28, 2020), which can be found on dbrsmorningstar.com under Methodologies & Criteria.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

For more information regarding structured finance rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/358308.

For more information regarding the structured finance rating approach and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/359905.

For more information on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.