Some private investors are betting
that reverse mortgages, an investment product aimed at older people in need of
cash, will make a resurgence as more homeowners reach retirement age in the
coming years.
A reverse mortgage start-up based in New Jersey has raised about
$230 million in a private offering managed by the investment banking boutique FBR Capital Markets. Investors in the
private sale of shares of Reverse Mortgage Investment Trust included hedge
funds, wealthy individual investors and customers of the investment firm.
The private placement in February sets the stage for a potential
initial public offering for the company, which operates under the name Reverse
Mortgage Funding, according to regulatory filings and conversations with people
briefed on the details, but not authorized to speak publicly about the
offering.
A public offering would make Reverse Mortgage Funding, which
opened its doors last summer, one of the first stand-alone publicly traded
companies that specialize in reverse mortgages, which provide government-guaranteed
loans to homeowners based on the equity value in their homes in exchange for
fees and interest payments that are paid when the loan comes due.
A successful debut in the public markets for Reverse Mortgage
Funding could also encourage other players in this segment to hold their own
public offerings.
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