Walter Investment Management has spotted a nice way to increase returns on its reverse mortgage business.
The Tampa, Fla.-based lender and servicer has acquired two reverse mortgage companies over the past year and built a huge reverse mortgage servicing portfolio.
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“We are advancing the principal at par and putting it in a Ginnie Mae tail” MBS and earning a retail premium rate of return, according to executive vice president Denmar Dixon. He spoke at a FBR Capital Markets investor conference Tuesday.
Walter is securitizing these FHA Home Equity Conversion Mortgage draws a couple of times a month.
“It has a long duration,” says Dixon, because it takes a lot of small loans to make up a $1 million to $5 million MBS. But investors will “pay a premium for that duration,” he added.
