Open Mortgage Chief Revenue Officer Scott Harkless previously described to RMD how an increased need for reverse mortgages and an increasingly challenging term rate environment contributed to the decision to “double down” on its segment of reverse mortgages, and adds that the expansion will focus on both the addition of employees and new business infrastructure.
Among the infrastructure will be the desire to have branches that serve both the term and reverse mortgage channels, and to pay particular attention to the business growth seen by broker partners to help guide the Reverse Mortgage Division’s future actions.
Wholesale and retail activity for reverse mortgages, “dual channel” branches
On the wholesale side of Open Mortgage, Harkless says the company is seeing a growing appetite for local reverse mortgage product solutions from partner brokers.
“We’re seeing mortgage brokers being responsive in providing reverse mortgages in their local market,” he says. “In terms of localized execution, from 2019 to 2020 we’ve seen 176% growth coming from our mortgage broker partners. And from 2021 we’ve seen 62%. So that means the broader market at the local level has increasingly felt the need [for reverse mortgages] and rise to the occasion.
As refinancing activity declines over time for brokers and retail lenders in general, finding another line of business to fill that void could entice some professionals to enter the reverse mortgage business, explains- he.
“These are professionals who need to think about how they’re going to complete this and how they’re going to help more people by keeping their initiators busy doing meaningful work,” he says. “Well, there’s hardly any more meaningful work to do than helping an older person retire the way they want. It’s a very meaningful job to have, and it pays well. But it’s an unaddressed market for them.
However, the company is not only seeing an increase in demand from brokers. This shows on the retail side of the company’s own footprint, and finding the best way to capitalize on this increased activity is a priority for Open Mortgage, he explains.
“A lot of our retail branches have become what we call ‘dual-channel branches’ that are able to deliver both reverse and direct products,” he says. “We made sure we had the in-house capacity, just like we do with our mortgage brokers, to help them with their first reverse mortgages so that the client always receives excellent service. So we have in-house concierge services to help them facilitate this reverse mortgage. »
That’s not to say the argument about specialization between term and reverse mortgage agents is without merit, he says. The goal, however, is to try to create as many new businesses as possible and create new reverse mortgage professionals who may not have had previous professional engagement with the industry.
“I agree that there is a specialization in the world of reverse mortgages,” he says. “Originators are quite specialized, but we need to remember that we need to attract and facilitate new entrants as reverse mortgage professionals who may have been traditional mortgage professionals. Being able to help them by offering them both loan products and guiding them to teach them is how we are going to have reverse mortgage professionals for the long term future.
Extending the open mortgage in the post-pandemic era
Like virtually every industry globally, the reverse mortgage industry has seen a major disruption in the nature of work as a result of the COVID-19 coronavirus pandemic. Those impacts are still widely felt on the U.S. workforce, and Open Mortgage is making some adjustments based on those disruptions to its expansion plans, Harkless said.
“I think that’s true for almost all lenders right now: COVID has accelerated that ability to work remotely, and we’ve embraced that pretty fully,” he says. “Obviously we have some operations staff who actually come into an office, and to the extent that we need to increase those numbers, we will increase the number of subscribers and processors that we have. Even they have the capacity to work remotely, to some extent.
Yet, for some branch managers who request additional physical space, the company does not reject those requests.
“We don’t necessarily see the need to add office space unless our branch managers want it,” says Harkless. “We are more than willing to facilitate their desire in this regard. But for the most part, we haven’t seen a great need in terms of commercial space to facilitate growth. Most work is done offsite in remote locations or in a home office these days. »
This represents a major change for Harkless from a few or ten years ago, he says. At the time, he would have had a much more solid plan tied to acquiring proper retail space and accompanying signage, but such things aren’t as much of a concern as they used to be.
New leaders, aging partnerships at Open
In addition to increasing the number of originations and account managers across the business to meet the needs of broker partners and retail originators, Open Mortgage is also laying the foundation for its long-term strategies.
“We’ve added another leader, a longtime reverse leader named Peter Klamkin, and he’s director of strategic growth,” Harkless said. “He helps us develop not only our strength of origination, but he also helps us develop partnerships with companies that are focused on helping seniors age in place, and in other entities that are focused on retirement needs so that we can act in synergy and complementary manner with each other.
Lead generation will also be a focus for Klamkin, says Harkless, because such efforts are typically difficult when targeting a specific age demographic that also counts as a protected class.
“One of the challenges we have in the reverse mortgage market is that because you have a demographic age limit, accessing and training that screened audience can be very difficult at times,” he says. . “And so part of that requires lead generation capabilities. But, as I said, we want to be held accountable at the local level. We’re not trying to establish a call center or anything like that, but we still have to be able to provide education and reach people where they are.
The company also recently announced the appointment of a new chief financial officer, Brenda Hedeen, after appointing Harkless to the newly created role of chief revenue officer. In April, they appointed Andrea Easter as the company’s first chief compliance officer.
According to Home Equity Conversion Mortgage (HECM) approval data compiled by Reverse Market Insight (RMI), Open Mortgage is the seventh largest reverse mortgage lender in the nation with 2,329 loans in the 12 months ending April 2022.
Look for an interview soon with the two new leaders of Open Mortgage’s reverse division on RMD.