25 June 2019

Some Investors Bet on Return to Reverse Mortgages

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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.

Click here for the full article in the New York Times.

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