OFG suspends new reverse mortgage loans
Over Fifty Group (OFG) will suspend new applications for reverse mortgage loans after the close of business today, belatedly following the lead of other lenders earlier in the year.
The decision stems from a flood of applications that occurred in the wake of the “withdrawal by a majority of lenders during recent turbulent credit markets”, according to chief executive John McBain.
“Ultimately, we believe increasing balance sheet exposure in this sector would be inappropriate given OFG’s size and our conviction to concentrate on core activities.
“Continuing to write new reverse mortgages would use a disproportionate amount of the group’s resources,” he said, adding that the product would be “best offered by a large institution such as a bank or building society”.
OFG, which has a reverse mortgage book of $230 million, had determined that “cost savings associated with managing the loan portfolio at its present level make the suspension the most profit-accretive to OFG”, he said.
“The suspension limits the reverse mortgage division’s maximum balance sheet liability to the current approval level and as the loans are repaid, the liability will decrease.”
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