Knight Capital Group has purchased Urban Financial Group, a Tulsa, Okla.-based originator of reverse mortgage loans, making it an origination through securitization player in the sector.
Terms of the deal were not disclosed. Based on information from Reverse Mortgage Insight, for the first half of 2010, Urban was the nation's fourth largest originator of Federal Housing Administration Home Equity Conversion Mortgages, with an endorsement volume of 1,036 loans.
"Knight has acquired one of the leading originators of reverse mortgages in the U.S. and created an origination-securitization-distribution model in home equity conversion mortgage-backed securities," said Thomas Joyce, chairman and chief executive, Knight Capital Group. "HMBS pools are 100% guaranteed by the federal government, unlike conventional private MBS. Considering the relatively low risks, growing demand among institutional investors and Knight's revenue model, the acquisition makes perfect sense."
A spokesman for Knight said the Jersey City, N.J., company "engaged in secondary trading of HMBS prior to the deal. With the transaction close, we now have origination, securitization and trading capabilities in-house."
Urban Financial's founder and chief executive Bryan Hendershot is joining Knight as managing director, head of mortgage origination. He will report to Ronak Khichadia, managing director, global head of ABS/MBS.
According to its Web site, Urban does traditional forward mortgage lending, second mortgage lending and commercial lending.