DBRS Morningstar Confirms Ranking on Longbridge Financial, LLC

DBRS, Inc. (DBRS Morningstar) confirmed its MOR RVO2 residential reverse mortgage originator ranking for Longbridge Financial, LLC (Longbridge or the Company). The trend on the ranking remains Stable.

Longbridge was formed as a Delaware LLC in 2012 primarily to originate and service reverse mortgages. The Company originates and acquires agency-backed home equity conversion mortgages and a suite of private reverse mortgage products under the Platinum name through retail, wholesale, and correspondent (closed loan seller) channels. In 2022, the Company acquired or originated over 11,000 reverse mortgages totaling over $2.5 billion and had a servicing portfolio exceeding $8.6 billion. Longbridge is wholly owned by Ellington Financial Inc. (Ellington, listed on the New York Stock Exchange (NYSE) under the ticker EFC). Ellington completed its acquisition of Longbridge during Q4 2022 by purchasing substantially all of the shares of Longbridge that it did not already own.

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

The Company has approximately 470 employees and is headquartered in Mahwah, New Jersey, with additional call center offices in Charlotte, North Carolina, and Houston, Texas as well as several sales branch offices nationwide. Longbridge is led by a senior management team averaging almost four years of Company tenure and 26 years of industry experience. The underwriting team, which manually underwrites each loan, averages over 22 years of industry experience. Longbridge has consistently demonstrated the ability to grow its reverse originations while maintaining solid loan performance.

Longbridge had its first full-year loss in 2022 since its approval as GNMA HMBS Issuer, with a return on average equity of -12.2% and adjusted return on average assets of -3.6%, netting out Home Equity Conversion Mortgage-Backed Security obligations, which artificially inflate the balance sheet. However, the pure origination business remained profitable in a challenging market. Further, 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 third-party investors on a flow basis.

All rankings are subject to surveillance, which could result in rankings being raised, lowered, 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 an 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 (June 26, 2023), which can be found on dbrsmorningstar.com under Methodologies & Criteria.

For more information on this ranking or this industry, visit www.dbrsmorningstar.com or contact us at [email protected].

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