Planning for the future in reverse mortgages

CEO widens market share path rather than waiting on interest rates relief

Planning for the future in reverse mortgages

In volatile times, it’s easy to waste away in uncertainty while waiting for interest rates to go down and for inflation to subside. It’s quite another thing to take the bull the horns and steer it into a more fertile landscape.

Scott Gordon (pictured), CEO and founder of Austin-based Open Mortgage states his approach succinctly: “We’re not waiting on relief from interest rates,” he told Mortgage Professional America in a recent interview. The company last made the news in announcing the hiring of Mike Hicks as national director of reverse sales.

Yet a deeper look into corporate machinations reveals a broader goal of expanding business products in an effort to stay ahead of economic downturn. Hicks is the manifestation of the strategy, joining the firm after a five-and-a-half-year stint at Fairway Independent Mortgage Co., where he served as reverse mortgage sales manager. Prior to that, Hicks had stints at 1st Nations Reverse Mortgage, Willow Bend Mortgage Co. and 1st Reverse Mortgage USA – all three positions in the reverse mortgage space.

It's not the company’s first foray into the space

It’s not an entry into the space, Gordon noted, saying Open Mortgage entered the reverse mortgage arena 10 years ago. It is, however, a bolstering of the niche for the company that marked its 20th anniversary this January amid a softened market – a more volatile landscape Gordon is unafraid to acknowledge.

“How hard it is to find leads and transactions,” he said when asked to identify current challenges. In such a climate, he hints newfound focus on reverse mortgages might at first sound counterintuitive: “The combination of the latest rates and limits on loans has made it harder for reverse mortgages to qualify or to be useful. For us, we’re more forward than reverse but the vision is that it’s kind of integral to us.”

Key to the success of the strengthened niche is education. Acknowledging the bad rap reverse mortgages have received in the past – with erroneous tales of seniors losing their homes when using the tactic – he specified how often education is needed to convey the reality: “All the time,” he said with a knowing chuckle.

A reverse mortgage loan, like a traditional mortgage, allows homeowners to borrow money using their home as security for the loan.

“Once a financial planner understands it, when they’re working with their various clients they’ll say ‘oh, there’s an example of a person who could really use a reverse.’ Once they understand what it is and get over the fear of how it might be bad, then you start getting business from that planner because they start seeing people where it fits. It does take a lot of education.”

Betting on the realtors’ response

But Gordon is not shy in spreading the message, and he’s armed with complementary tools to enhance that outreach. “I have investments in other companies,” he added. “One is in real estate technology which will help get our loan officers working more closely with realtors. The relationships we can build with realtors doesn’t just give us a bigger referral network, but makes us the kind of mortgage company that also has reverse people, which makes us more appealing to realtors.”

He gave an example of the appeal: “They know we are really good at FHA 203 rehab loans. It’s not what we focus on   them, but we’re good at them and they know we can do it.” FHA’s Limited 203(k) program permits homebuyers and homeowners to finance up to $35,000 into their mortgage to repair, improve, or upgrade their home.

Gordon is candid about the hard times to which his company has succumbed, acknowledging he was recently forced to lay off personnel like so many other lenders. But he said he’s hiring in other departments given the bolstered reverse focus and hopes to hire more people in better times to augment the current 300-worker force.

“It was painful, but we did it,” he said, when asked about layoffs. “We have also been hiring people in sales and we look forward to when we’ll be hiring again.”

For good measure, concurrent to expansion plans, he said a tailored CRM is being developed for loan officers. “You always have to be looking at the future,” he said. “We just announced to our internal loan officers that we’re implementing a new CRM. We’re about halfway through our implementation of that.”

Read next: The best CRM software for mortgage professionals

In gauging potential success with the renewed focus on reverse mortgages, he points to his company’s Atlanta-area office. “We have an office outside of Atlanta where our reverse operations are and when I visit them, they really care about helping seniors. Forward people also want to help their clients. There’s just something about the whole reverse side of the industry that’s really about helping people.”

In these volatile times, every move is seemingly a gamble. Gordon, however, is no stranger to increasing the pot by keenly understanding the equity of each hand. When he founded Open Mortgage 20 years ago, he said, it comprised a single office with a sole loan officer in central Austin. Today, the company boasts 75 branches, and is licensed to operate in 46 states.

Integral to the growth strategy: loan officers. “It’s good helping loan officers grow their reach,” he said. “We like to work with loan officers who have a referral network. They become a big fish in their town, in their area.”

As gaining market share grows in urgency, it’s a forward-thinking strategy in reverse.

Want to make your inbox flourish with mortgage-focused news content? Get exclusive interviews, breaking news, industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.