Reverse Mortgage Funding Lays Off 119 Melville Employees

MELVILLE, NY — Reverse Mortgage Funding, a company based in Bloomfield, New Jersey, laid off 119 employees of its Melville plant on Nov. 29, according to a recently-posted New York State Department of Labor notice.

Reverse Mortgage Funding, at 41 Pinelawn Road, Suite 200, Melville, permanently laid off the employees, who are not represented by a union, according to the notice. "Economic" was the reason given for the mass layoff.

Reverse Mortgage Funding laid off more than 400 employees in total — 80 percent of its staff — according to National Mortgage Professional. The company then filed a petition for bankruptcy.

The company is in discussions with its Mortgage Servicing Rights (MSR) secured lender to try and ensure a "smooth landing" for the company's servicing portfolio, according to a news release. The company is transferring the remaining loans in its pipeline to other lenders.

The company made the decision to file bankruptcy after weeks of negotiating with its constituents.

"RMIT and the broader mortgage industry are facing a number of adverse trends, in particular unprecedented interest rate hikes combined with credit spread widening and overall volatility in fixed income markets, including agency mortgage markets," the news release states. "The market disruption has increased capital requirements to originate and finance new loans and support the Company's servicing portfolio, which severely strained RMIT's liquidity position and depleted the Company's book value. In line with these trends, earlier this month, the Company made the difficult but necessary decision to pause all origination activities, and most recently, conducted a reduction in force."

Reverse Mortgage Funding declined to make any further comment on the layoffs, a representative told Patch.

A reverse mortgage is a special type of home loan exclusively for homeowners 62 and older. With a reverse mortgage, the amount the homeowner owes goes up – not down – over time.