Home lender Reverse Mortgage Funding LLC has filed for Chapter 11 bankruptcy and laid off 500 employees, according to multiple reports. The announcement came about a week after the company announced a “pause” on originations, according to Reverse Mortgage Daily. The company remains open at this point, the article said. 

Reverse Mortgage Funding is backed by Starwood Capital. It listed assets and liabilities of at least $10 billion each in its bankruptcy petition, according to Yahoo Finance. Chapter 11 bankruptcy allows companies to keep operating while they work on a plan to repay creditors.

The filing covers five total entities associated with RMF, including the company itself and its parent, Reverse Mortgage Investment Trust, Inc. (RMIT), according to Reverse Mortgage Daily. 

RMIT said in a statement that it was in “ongoing, productive discussions with its Mortgage Servicing Rights secured lender and other industry players, including Ginnie Mae, to achieve an agreement that ensures a smooth landing for the Company’s servicing portfolio, as well as other obligations.” 

The statement went on to say that RMIT has already begun work to transfer the remaining loans in its pipeline to other lenders “in order to support seniors looking to unlock value in their homes.”

The company citing the decision as “symptomatic of broader issues facing the forward and reverse mortgage industries, including unprecedented interest rate hikes combined with  credit spread widening and overall volatility in fixed income markets, including agency mortgage markets,” according to the article.

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