Posted on 12/02/2022 9:04:51 AM PST by EBH
Reverse Mortgage Funding has filed for bankruptcy. The voluntary petition was registered with the U.S. Bankruptcy Court for the District of Delaware earlier this week. The Starwood Capital-backed company listed assets and liabilities of approximately $10 billion each in the Chapter 11 filing. The bankruptcy classification will allow the firm to continue operating while they work on a plan to repay creditors.
Speaking about the mortgage firm's bankruptcy filing, a representative for Starwood said the decision to file for Chapter 11 protection is necessary and appropriate for RMIT given the adverse trends in the mortgage industry. "We will continue to work closely with management, our advisors, and the company's stakeholders on the best path forward for our investors, consistent with our fiduciary responsibilities," the person said via Yahoo! Finance.
The mortgage company's bankruptcy filing comes almost two weeks after pausing originations. That decision was prompted by the loss of its warehouse funding lines. "On November 21, Reverse Mortgage Funding and its affiliates made the difficult but necessary decision to pause mortgage origination activities," a spokesperson told Reverse Mortgage Daily.
Reverse Mortgage Funding, like many other financial companies, has been challenged by the recent unprecedented interest rate hikes and overall macroeconomic volatility. As a result, almost 500 employees were laid off according to a source with direct knowledge of operations. The mortgage company announced the bankruptcy filing, in a statement that also outlined the efforts being made for its servicing portfolio.
(Excerpt) Read more at msn.com ...
In all seriousness. This stuff is really just barely getting started. I’d lash myself to the mainsail mast if I wanted to survive.
If a reverse mortgage company defaults, shouldn’t you get to keep the house? Regardless of what they’ve paid you.
Reverse Mortgage?....................what could possibly go wrong?.................
As The Fed takes away Yellen/Powell’s punchbowl, the mortgage dominos continue to fall. Yellen’s legacy was cheap money to protect Obama.
I’m not knowledgeable about mortgage company operations, but wonder if anyone here can answer a basic question. What happens to your existing mortgage in a situation like this? Could this be a way of mortgage companies forcing people with low interest rate mortgages into new loans with higher rates? We bought our home two years ago at a very favorable interest rate of 2.99%. It is a VA backed loan.
Very good question. Sounds logical to me.
These types of companies preyed on seniors.
I don’t know how it would work under a reorganization?
The company owns the asset, not the homeowner. So if the BK court orders the homes sold...most likely to another company, it seems to me the homeowner loses.
The loans just get sold to another creditor.
These types of companies preyed on seniors.
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Perhaps but for some seniors it may have been a life line.
Tom Selleck and Henry Winkler hit hardest.
Yeah reverse mortgages always sounded dodgy to me.
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Sold as is? Meaning our mortgage would not change? This is not a reverse mortgage, but the one we got through the VA to buy the house.
Nothing changes other than the logo on the monthly bill...and you’ll have to set up a new online account with new holder if you do paperless billing. My mortgage (VA loan) was originally Countrywide. They went under then I’ve lost count of how many times it changed.
Eventually I refinanced with my Credit Union for a 2.7% rate. It’s been there ever since.
So I think the way this works, is that the Reverse Mortgage company has a lien on the house for the amount that they have paid the homeowner.
But I don’t think they can enforce the lien until the home owner dies or breaks one of the covenants, such as paying property taxes or keeping the home in good repair.
I’m not sure what recourse the homeowner has when the reverse mortgage company stops making payments, except that they can pay off the reverse mortgage company and refinance with another reverse mortgage company to continue drawing equity out of the home.
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