Morningstar DBRS Confirms Ranking on Longbridge Financial, LLC

DBRS, Inc. (Morningstar DBRS) confirmed its MOR RVO2 residential reverse mortgage originator ranking for Longbridge Financial, LLC (Longbridge or the Company). The trend on the ranking remains Stable.

Longbridge was formed as a Delaware LLC in 2012 primarily to originate and service reverse mortgages. The Company originates and acquires agency-backed home equity conversion mortgages (HECM) and a suite of private reverse mortgage products under the Platinum name through retail, wholesale, and correspondent (closed loan seller) channels. In 2024, the Company acquired or originated more than 7,150 reverse mortgages totaling more than $1.2 billion composed of 93% HECM and 7% Platinum product by loan count. Longbridge is wholly owned by Ellington Financial Inc. (Ellington, listed on the New York Stock Exchange (NYSE) under the ticker EFC).

The MOR RVO2 residential reverse mortgage originator ranking reflects Longbridge's demonstrated record as an adept reverse mortgage originator. The Stable trend reflects the Company's experienced and tenured senior management team, effective operating structure, sound training function, strong underwriting practices, and focused risk and compliance culture.

The Company has approximately 447 employees and is headquartered in Paramus, New Jersey, with additional offices in Charlotte, North Carolina, and Houston as well as several sales branch offices nationwide. Longbridge is led by a senior management team averaging eight years of Company tenure and 27 years of industry experience with no turnover during the past 12 months. The underwriting team, which manually underwrites each loan, averages almost 25 years of industry experience with minimal turnover over the past year. Longbridge has consistently demonstrated the ability to grow its reverse originations while maintaining solid loan performance.

Longbridge returned to profitability in 2024 after two consecutive years of losses, with an adjusted return on average equity of 9.7% and adjusted return on average assets of 3.4%, netting out Home Equity Conversion Mortgage-Backed Security (HMBS) obligations, which artificially inflate the balance sheet. Net income strength was driven by gains on reverse mortgage loans held for sale of $20.6 million, which brought Longbridge to profitability resulting from improved securitization execution. Credit risk is generally limited, as the Company benefits from guarantees from FHA and Government National Mortgage Association (Ginnie Mae) on the performance of HECMs and HMBS in its agency-backed portfolio. The Company's parent, Ellington, invests in its proprietary Platinum loans, and has been able to issue securitizations backed only by private reverse mortgages originated by the Company.

All rankings are subject to surveillance, which could result in rankings being raised, lowered, placed under review, confirmed, or discontinued by Morningstar DBRS.

Morningstar DBRS mortgage originator rankings are not credit ratings. Instead, they are designed to evaluate the quality of the parties that originate residential mortgage loans. Although the originator's financial condition contributes to the applicable ranking, its relative importance is such that an originator's ranking should never be considered as a proxy of its creditworthiness.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is U.S. Residential Mortgage Originator Rankings (June 28, 2024 https://www.dbrsmorningstar.com/research/435288) which can be found on dbrs.morningstar.com under Methodologies & Criteria.

For more information on this ranking or this industry, visit dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.

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