Subservicer Drops Forwards for Reverses

Many prominent names in the reverse mortgage business have left in the past year, for the most part scared away by issues associated with the servicing of these loans.

Lansing, Mich.-based Celink has done the opposite, getting out of the forward mortgage subservicing business and as of Dec. 31, 2011, becoming exclusively a subservicer of reverse mortgage products.

Celink’s niche in the forward subservicing market had been handling state housing finance agency products as well as second mortgages.

Its chief executive John LaRose said it has been looking for a new niche to service over the past two or three years. Back in 2009, he attended a National Reverse Mortgage Lenders Association conference and became convinced it was an underserved market for what Celink had to offer.

Furthermore, a product where people were doing something good for the senior citizen population of the country was “a call to my heart,” he said.

Since then, the company has been moving towards its current state. Right now, the sole secondary market outlet for reverse mortgage loans is through Ginnie Mae HMBS and Celink’s clientele comes from the aggregators of reverse mortgages for securitization. These firms represent around 90% of Celink’s growth, he said.

As for those forward mortgage subservicing clients, late last year they received assistance from the company to move their servicing rights to be handled either in-house or moved to another subservicer.

Celink chief operation officer Ryan LaRose added, “Reverse mortgages are a feel-good product. They help people age in their homes, maintain their independence and self-determination, and provide viable and sound financial solutions for so many. We all need joy in our work, and our employees feel joy every single day as they help seniors retain their dignity and freedom.”

As for the taxes and insurance issue that was the catalyst for firms like Wells Fargo to drop reverse mortgages, John LaRose said this is also a problem for the forward business as well for loans that aren’t escrowed.

Still, he asked rhetorically what servicer wants to proceed with a foreclosure of a reverse mortgage? Celink has had very few of the reverse mortgage loans with Federal Housing Administration mortgage insurance be called due and payable, he said, adding there have been no foreclosures to date.

Right now Celink subservices 67,000 reverse mortgage loans. LaRose said there are plans to grow the portfolio to 200,000 loans by the end of this year.

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