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Open Mortgage Chief Revenue Officer Scott Harkless previously described for RMD how a greater reverse mortgage need and an increasingly challenging forward rate environment have contributed to the decision to “double down” on its reverse mortgage segment, and adds that the expansion will focus both on the addition of employees and new company infrastructure.
Among the infrastructure will be a desire to have branches serve both the forward and reverse mortgage channels, and paying specific attention to business growth seen by broker partners to help guide the future actions of the reverse mortgage division.
Wholesale and retail activity for reverse mortgages, ‘dual-channel’ branches
On the wholesale side of Open Mortgage, Harkless says that the company has been seeing a steadily rising appetite for reverse mortgage product solutions at local levels from broker partners.
“We see responsiveness with mortgage brokers to provide reverse mortgages at 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 that the broader market at the local level have increasingly seen the need [for reverse mortgages] and are rising to the occasion.”
Because refinance activity is diminishing on the forward side for broker and retail lenders broadly, finding another business segment to pick up that slack has the potential to lead some professionals into the reverse mortgage business, he explains.
“These are professionals who have to ask how they’re going to supplement that, and how they’re going to help more people by keeping their originators busy doing meaningful work,” he says. “Well, there’s almost no more meaningful work to do than helping a senior retire in the way that they want to retire. It’s a very meaningful job to have, and it pays well. But it’s an unaddressed market for them.”
The company is not only seeing a spike in demand from brokers, however. It’s being seen on the retail side in the company’s own footprint, and finding the best way to take advantage of that heightened activity is front-of-mind for Open Mortgage, he explains.
“Many of our retail branches have turned into what we call ‘dual-channel branches’ that are able to deliver on reverse and forward products,” he says. “We’ve made sure that we have the internal capability, just like we do with our mortgage brokers, to help them in their first few reverse mortgages so that the client still gets excellent service. So, we have internal concierge services to help them facilitate that reverse mortgage.”
That’s not to say that the argument about specialization between forward and reverse mortgage loan officers is meritless, he says. The goal, however, is to try and create as much new business as possible, and to create new reverse mortgage professionals who may not have had a previous professional engagement with the industry.
“I do agree that there is a specialization in the reverse mortgage world,” he says. “The originators are fairly specialized, but we have to remember that we need to bring in and facilitate new entrants as reverse mortgage professionals that may have been traditional mortgage professionals. Being able to help them by providing both loan products, and guiding them along to teach them is how we’re going to have reverse mortgage professionals for the long term future.”
Expanding Open Mortgage in the post-pandemic era
Like virtually all industries worldwide, the reverse mortgage business experienced a major disruption in the nature of work in the wake of the COVID-19 coronavirus pandemic. These impacts are still being broadly felt in the American workforce, and Open Mortgage is making certain adjustments based on those disruptions for its expansion plans, Harkless says.
“I think this is true of almost all lenders right now: COVID hastened this ability to work remotely, and we’ve embraced that pretty fully,” he says. “Obviously, we have certain operations staff that actually come into an office, and to the extent that we need to increase those numbers, we will increase the amounts of underwriters and processors we have. Even they have the ability to work remotely, to a degree.”
Still, for some branch managers who request additional physical space, the company is not dismissing such requests.
“We don’t necessarily see the need to add office space footprint unless our branch managers desire it,” Harkless says. “We’re more than willing to facilitate their desire in that regard. But for the most part, we have not seen a great need in terms of commercial space to facilitate the growth. Most of the work is done outside of remote locations or at a home office, these days.”
That accounts for a major change for Harkless compared with a few years or a decade ago, he says. Back then, he would have had a far more robust plan related to the acquisition of appropriate commercial space and accompanying signage, but such things aren’t as much of a concern as they used to be.
New leaders, aging in place partnerships at Open
In addition to expanding the origination and account executive numbers at the company to meet the needs of broker partners and retail originators, Open Mortgage is also laying the groundwork for its long-term strategies.
“We have added one other executive, a longtime reverse leader named Peter Klamkin, and he’s a director of strategic growth,” Harkless says. “He’s helping us develop not only our origination force, but he’s also helping us develop partnerships with companies that are focused on helping seniors age in place, and in other entities that are focused on addressing retirement needs so that we can act in a synergistic and complementary way with each other.”
Lead generation will also be a focus of Klamkin’s, Harkless explains, since those efforts are generally difficult when targeting a specific age demographic that also counts as a protected class.
“One of the challenges that we have in the reverse mortgage market is that because you have an age demographic limitation, accessing and getting the education to that filtered audience can be very difficult at times,” he says. “And so, some of that requires lead generation capabilities. But, like 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 need to be able to provide education and reach the people where they’re at.”
The company also recently announced the appointment of a new chief financial officer, Brenda Hedeen, having previously appointed Harkless to the newly-created position of chief revenue officer. In April, they appointed Andrea Easter to be the company’s first chief compliance officer.
According to Home Equity Conversion Mortgage (HECM) endorsement data compiled by Reverse Market Insight (RMI), Open Mortgage is the seventh-largest reverse mortgage lender in the country with 2,329 loans over the 12-month period ending in April, 2022.
Look for an interview with the two newly-appointed leaders of Open Mortgage’s reverse division on RMD soon.
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