Similar to prior earnings calls that lauded the company’s reverse mortgage performance in servicing, chief financial officer Sean O’Neil said that Liberty’s servicing segment was a big contributor to Onity’s positive profitability outlook in spite of the ongoing elevated rate environment.
“Reverse servicing was up from the prior quarter but lower versus prior year,” O’Neil said. “The year-over-year change was due primarily to strong asset gains in the first quarter of 2024 as well as valuation adjustments on buyout loans in the first quarter of 2025. Overall, our reverse assets, our recapture capabilities and our derivatives delivered an effective hedge to the forward [mortgage servicing rights (MSR)] in the first quarter.”
Leaders also touted the rollout of EquityIQ, a revised version of Liberty’s proprietary reverse mortgage product that was initially teased during an investor presentation in March and officially relaunched last week.
EquityIQ is a “higher margin, broader market opportunity,” the company explained, and is available in the wholesale and consumer-direct channels. The company will roll it out to the correspondent channel at a later date.
The overall performance of the reverse division is commensurate with Onity’s performance across its consumer-direct and business-to-business channels, according to a breakout of its originations performance.
While the revenue margin for reverse increased from 339 to 392 basis points, funded volume fell from $214 million to $176 million on a quarterly basis.
The company noted that industrywide reverse mortgage volume declined by 22% from Q4 2024 to Q1 2025. The company also touted its position as an end-to-end reverse mortgage provider, noting that it serves as an “integrated reverse originator, servicer and subservicer platform.”
This has potential appeal for “correspondent clients that want a one-stop solution for all production,” since “few have combined forward and reverse capabilities,” the company stated.
EquityIQ is seen by Onity as one of multiple high-margin products that will be key to the company’s overall profitability. O’Neil called the product rollout “successful,” and in the earnings report cited the company’s reverse portfolio as an example of a broad set of holdings that could help it weather a potential economic downturn.
EquityIQ is not the first time the company has entered the proprietary reverse mortgage space. In 2007, the company introduced its first proprietary product, Liberty Preferred, before it eventually left the market. And the company launched the original version of EquityIQ in the summer of 2019.
It was briefly suspended in March 2020 due to COVID-19 market volatility but was brought back a few months later. In 2022, the company suspended availability of the product again due to volatility in the bond markets, and it was subsequently removed from its offerings.
It returns in a more crowded field of proprietary products from top lenders like Finance of America, Longbridge Financial, Smartfi Home Loans, Nationwide Equities and University Bank. Most recently, Mutual of Omaha Mortgage also entered the proprietary space.
