The remnants of a company that was once among the largest originators of reverse mortgages are being sold. The sale includes servicing and nearly $1 billion in whole loans.
An agreement has been reached to sell Financial Freedom to an undisclosed buyer, parent CIT Bank, N.A., revealed in a news release on Friday.
Included in the sale will be a whole-loan sale of approximately $900 million in reverse mortgages. The contract additionally calls for the sale of mortgage-servicing rights.
CIT
Chairwoman and Chief Executive Officer Ellen R. Alemany explained in the statement that the move it part of a strategy to simplify CIT.
“Throughout this year we have made continued progress in transforming the company and applying our focus toward maximizing the potential of our commercial banking and deposit franchises, which are the core of our go-forward strategy,” she said.
Houlihan Lokey served as financial advisor, and Sidley Austin served as legal advisor in the latest deal.
The sale of Financial Freedom — which is subject to certain regulatory approval, investor approval and other customary closing conditions — is expected to close in the second-quarter 2018.
The company was once a powerhouse in the reverse mortgage market.
IndyMac Bank FSB reported $2.9 billion in reverse mortgage originations during 2005 for then-subsidiary — Irvine, California-based
Financial Freedom Senior Funding Corp.
At the time, Financial Freedom was the self-proclaimed “nation’s largest lender of reverse mortgages.” In 2009 it was ranked No. 2 by the National Reverse Mortgage Lenders Association behind Wells Fargo, N.A., and ahead of Bank of America, N.A.
But by 2011, Financial Freedom’s new parent, OneWest Bank Group LLC, made a decision to stop originating reverse mortgages. That left just assets and servicing.
After CIT Group Inc.’s August 2015 acquisition of OneWest, the New York-based company became the new owner of Financial Freedom.
In 2016, CIT disclosed a $167 million loss predominantly from discontinued
third-party reverse mortgage servicing.
Earlier this year, the Department of Justice revealed an $89 million settlement with Financial Freedom over its handling of the servicing on mortgages insured by the Federal Housing Administration.
