In a significant development, Ellington Financial, the parent company of the prominent reverse mortgage lender Longbridge Financial, has announced the launch of a private reverse mortgage securitization worth $243 million.
This new financial venture centers around Longbridge’s exclusive “Platinum” product line.
Longbridge’s Role and Performance
Moving forward, Longbridge will retain responsibility for servicing the loans included in this securitization.
HousingWire’s Reverse Mortgage Daily sought additional details from Ellington Financial but did not receive a timely response.
In their November overview, Ellington Financial reported a dip in net income directed towards common stockholders for the third quarter.
Despite this, company leaders shone a light on the Platinum product line’s impressive performance, underscoring its importance in Ellington’s overall offerings.
The proprietary section of reverse mortgages recorded profits tied to a successful securitization in July 2024.
This achievement stemmed from enhancements in origination margins and a rise in volume, both of which significantly bolstered profits for that segment.
Future Prospects and Financial Health
Laurence Penn, the CEO of Ellington Financial, emphasized Longbridge’s pivotal role in their investment strategy, noting it accounts for about 12% of the firm’s equity capital allocation.
He expressed optimism regarding the adjusted distributable earnings (ADE) from Longbridge, anticipating that maintaining around $0.09 per share quarterly could place the company in a favorable position to fulfill its dividend obligations.
JR Herlihy, Ellington’s CFO, commended the Platinum product line for its substantial contributions to the company’s profits.
He highlighted a notable 16.5% increase in Longbridge’s origination volume compared to the previous quarter, even as the broader industry faced a downturn.
This strong performance culminated in a $0.12 per share contribution to ADE for the third quarter, primarily driven by Longbridge’s proprietary reverse mortgage offerings.
Analyst Insights on Portfolio Diversification
Analyst Douglas Harter from UBS remarked on the positive effects of Ellington’s diversified portfolio this year.
He pointed out that the company’s sustained efforts in securitization across multiple platforms have facilitated portfolio growth, enhanced earnings, and a return to stable dividend coverage based on earnings available for distribution.
This trajectory is seen as a promising sign for Ellington Financial’s future.
Source: Housingwire