HomeEquity sold 12% (CA$100 million) of reverse mortgages to Concentra Bank

Thursday, November 12th, 2020

HomeEquity sells $77 million of reverse mortgages

Western Investor

HomeEquity Bank sold about CA$100 million of reverse mortgages to Concentra Bank in the firm’s second sale of such loans as it works to build a Canadian market for the instruments.

The sale represents about 12% of the roughly CA$850 million in reverse mortgages that HomeEquity Chief Executive Officer Steve Ranson estimates the firm will originate this year. The bank is targeting sales of 10% to 20% of its annual originations a year, with plans to explore similar transactions with other investors, he said. It sold about CA$75 million of reverse mortgages last year in what was touted as the first such sale in Canada.

HomeEquity Bank, owned by Canadian private equity firm Birch Hill Equity Partners Management Inc., is the country’s largest reverse-mortgage provider, with about CA$4 billion of assets. Reverse mortgages are an attractive asset for Canadian banks because their average term is 10 years or longer, while conventional mortgages in the country typically last five years, Ranson said in an interview.

“It’s a chance to have a portfolio with a much longer life and reasonably attractive loss rates,” he said.

Unlike conventional loans, reverse mortgages — typically marketed to seniors who have built up significant equity in their homes — don’t require loan payments, with the balance due when the borrower dies, moves out or sells the property.


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