Annual report [Section 13 and 15(d), not S-K Item 405]

REVERSE MORTGAGE LOANS HELD FOR INVESTMENT AND HMBS-RELATED BORROWINGS

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REVERSE MORTGAGE LOANS HELD FOR INVESTMENT AND HMBS-RELATED BORROWINGS
 12 Months Ended
Dec. 31, 2024
Fair Value Disclosures [Abstract]  
REVERSE MORTGAGE LOANS HELD FOR INVESTMENT AND HMBS-RELATED BORROWINGS REVERSE MORTGAGE LOANS HELD FOR INVESTMENT AND HMBS-RELATED BORROWINGS
A reconciliation of the changes in reverse mortgage loans held for investment and HMBS-related borrowings for the periods presented is below:
Year Ended
December 31,
2024 2023
(in thousands)
 Reverse Mortgage Loans Held for Investment
HMBS-Related Borrowings(1)
Reverse Mortgage Loans Held for Investment
HMBS-Related Borrowings(1)
Balance — beginning of year
 $ 315,912  $ (302,183) $ —  $ — 
Originations and purchases 143,490  —  109,589  — 
Securitization of HECM loans and tails accounted for as a financing (including realized fair value changes)
 —  (142,917) —  (106,691)
Acquisition of loans held for investment, net(2)
—  —  189,770  (187,221)
Repayments (principal payments received) (41,417) 41,797  (5,089) 5,138 
Change in fair value recognized in earnings(3)
33,719  (22,676) 21,642  (13,409)
Balance — end of year
 $ 451,704  $ (425,979) $ 315,912  $ (302,183)
December 31,
2024 2023
Securitized loans (pledged to HMBS-related borrowings) $ 433,613  $ (425,979) $ 307,998  $ (302,183)
Unsecuritized loans and tail advances 18,091  —  7,914  — 
Total $ 451,704  $ (425,979) $ 315,912  $ (302,183)
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(1)HMBS-related borrowings represent the issuance of pools of HMBS, which are guaranteed by GNMA, to third-party security holders. The Company accounts for the transfers of these advances in the related HECM loans as secured borrowings, retaining the initial HECM loans in the Consolidated Balance Sheets as reverse mortgage loans held for investment and recording the pooled HMBS as HMBS-related borrowings.
(2)During 2023, the Company purchased a reverse mortgage servicing portfolio of HECM loans securitized in Ginnie Mae pools. As the Ginnie Mae HMBS program does not qualify for sale accounting, the transaction conveyed the HECM loans and associated HMBS-related borrowings to us. The Company has accounted for this transaction as a secured
financing, as a purchase of loans held for investment and assumption of an HMBS securitization liability for the obligation to Ginnie Mae.
(3)See further breakdown in the table below.
The following table presents gains (losses) on reverse mortgage loans held for investment and HMBS-related borrowings for the periods presented:
Year Ended
December 31,
(in thousands)
 2024 2023
Gain on new originations(1)
$ 6,795  $ 4,172 
Gain on tail securitizations(2)
1,633  195 
Net interest income 104  78 
Change in fair value
 2,511  3,788 
Fair value gain recognized in earnings(3)
11,043  8,233 
Loan fees and other(4)
4,054  1,859 
Total
 $ 15,097  $ 10,092 
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(1)Includes the changes in fair value of newly originated loans held for investment in the period from origination through securitization date.
(2)Includes the cash realized gains upon securitization of tails.
(3)See breakdown between loans held for investment and HMBS-related borrowings in the table above.
(4)Loan fees and other are included in loan origination fees and gain on sale of loans, net in the Consolidated Statements of Operations.
The following table presents the unobservable input assumptions used to determine the fair value of reverse mortgage loans held for investment and HMBS-related borrowings:
December 31,
2024 2023
Unobservable Input Range (Weighted Average)
Life in years
0.1 - 9.2 (6.8)
0.1 - 8.9 (7.2)
Discount rate
12.0% - 12.0% (12.0%)
12.0% - 12.0% (12.0%)
Conditional prepayment rate including voluntary and involuntary prepayments
6.5% - 10.9% (7.9%)
6.9% - 11.3% (8.1%)