Move comes just a day after its subsidiary announced major layoff
Facing a liquidity crunch, Reverse Mortgage Investment Trust (RMIT) filed for bankruptcy on Wednesday, a day after its subsidiary Reverse Mortgage Funding (RMF) slashed 80% of its staff.
RMF, one of the nation’s largest reverse mortgage lenders, laid off more than 400 employees during several conference calls on Tuesday, according to a source who wished to remain anonymous.
Following that announcement, RMIT – a Starwood-backed specialty finance company – filed for Chapter 11 bankruptcy protection in Delaware, hoping to “preserve value and monetize its assets.” The New Jersey-based company attributed its financial burdens to unprecedented interest rate hikes combined with credit spread widening and overall volatility in fixed-income markets.
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“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,” RMIT said in a statement. “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.”
The firm said it is in talks with Ginnie Mae and its mortgage servicing rights secured lender to ensure a “smooth landing” for RMIT’s servicing portfolio and other obligations.
The company has also started transferring the remaining loans in its pipeline to other lenders and is in the process of securing debtor-in-possession (DIP) financing from critical financial stakeholders. Once approved by the court, part of that DIP financing will be used to support its operations and cover administrative expenses as it pursues restructuring options.
