PHH Mortgage will halt reverse originations, sell MSRs to Finance of America

Onity Group — the parent company of PHH Mortgage Corp. and its reverse mortgage arm, Liberty Reverse Mortgage — announced on Tuesday that the company has entered into a “strategic relationship” with Finance of America (FOA) to sell $9.6 billion in mortgage servicing rights (MSRs), among other agreements.

A press release said that PHH/Liberty will no longer originate reverse mortgages. The company was the fifth-largest originator of Home Equity Conversion Mortgages (HECMs) during the year ending in September with 1,210 endorsements, according to data from Reverse Market Insight.

The release also explained that FOA will acquire PHH‘s existing pipeline of reverse mortgages and “expects to assume some of PHH’s US-based reverse originations employees.” And while PHH will stop originating reverse loans, it will continue to securitize reverse mortgage buyout loans.

PHH agreed to sell reverse MSRs comprised of some 40,000 Ginnie Mae-backed HECMs. The loans had a total unpaid principal balance of $9.6 billion at the end of September.

PHH will become the subservicer for these loans under a three-year agreement with FOA, which said it has “committed to a minimum volume of new subservicing over the term of the subservicing agreement.

The transaction is expected to give PHH net proceeds of $100 million to $110 million, based on the asset balances at closing, which is expected in the first quarter of 2026.

Upon closing the deal, the companies also plan to partner so that eligible forward mortgage customers at PHH will gain access to FOA’s HomeSafe Second product, a second-lien reverse mortgage.

“We are pleased to announce our partnership with Finance of America Reverse, a strategic step that we believe will simplify our business and enable us to concentrate our resources on maximizing the growth and earnings of forward originations and recapture, as well as our commercial and reverse subservicing activities,” Onity Group CEO Glen Messina said in a statement.

“We look forward to working with FAR to successfully close this transaction and expand our partnership. We are committed to creating a smooth transition for our employees and believe that FAR will benefit from our team’s passion and expertise in the reverse originations business.”

Onity, which reported a small profit for its reverse mortgage division in Q3 2025, said it intends to use the proceeds from the deal to “support growth, reduce debt, and explore a share repurchase program consistent with its growth and capital structure objectives.”

It also expects to benefit from a “significant subservicing relationship” with Finance of America, which ranked second in the nation with nearly 5,600 HECM endorsements for the year ending in September. And by eliminating HECM assets and related liabilities for secondary market issuance, it aims to simplifying its balance sheet and business model for investors.

PHH also recently announced the launch of its FlexIQ product suite tailored to non-QM borrowers. By exiting reverse originations, Onity indicated its intention to focus on the non-QM channel, as well as its established books of business in commercial mortgages and reverse subservicing.

Like many of the larger players in the reverse mortgage space, FOA is leaning heavily toward investments in proprietary loans, which accounted for more than 35% of industry volume through the first three quarters of the year.

FOA reported a loss of $29 million for Q3 2025, but that coincided with a sharp increase in revenue tied to its home equity lending models and expanded partnerships.

FOA President Kristen Sieffert told investors during the corresponding earnings call that the company funded $1.97 billion in reverse mortgages during the first 10 months of this year, exceeding its 2024 total of $1.92 billion.