Interview With Quicken’s One Reverse Mortgage CEO

May 6th, 2009 | by admin Published in News, Quicken, Reverse Mortgage | 17 Comments

One Reverse Mortgage was acquired by Quicken Home Loans in early 2008 and shortly after saw its business model drastically change. The San Diego, CA based company eliminated all of its outside sales staff to better align with Quicken’s business model and began leveraging the web to market its business more than anyone in the industry.

Quicken was the pioneer of “forward” mortgage lending online but I was skeptical that the online/call center model would be successful in the reverse mortgage business. For the remainder of 2008, the company flew under the radar in terms of volume but 2009 has been a different story.

As I write this, One Reverse Mortgage has seen its volume grow over 500% compared to last year and is currently the 5th largest HECM lender YTD. I was able to talk with Sean Marsh, One Reverse Mortgage’s CEO about the company’s success and how using the web played an integral role in its growth.

Q: After the acquisition was made, your business model seemed to move in a new direction which didn’t rely on a sales force on the ground. Was this decision made to align more the Quicken model?

A: Quicken Loans’ centralized web center-based lending platform, automated work flow technology and streamlined processes have allowed them to be the top online lender, and one of the top-10 retailer lenders in the nation. We were able to leverage their technology and expertise for our reverse lending business. And, as our rapidly growing HECM numbers prove out, Quicken Loans’ expertise has been instrumental in our rapid growth.

Q: Without the sales force on the ground, you have to take the "mail sale" approach with customers. I can imagine some borrowers getting the huge HECM application package in the mail and being a bit intimidated. Does this happen a lot? If so, how do you approach these customers and explain the product?

A: A reverse mortgage is a complicated program, which is why we’ve placed such a strong emphasis on client service and communication. We have created an easy-to-understand information packet that we mail or e-mail to every client. We then arrange a convenient time to go through the package, detailing every step of the reverse mortgage process and answering any questions that may arise.

Our mortgage bankers are always available to answer additional questions. We offer the convenience of being able to talk with a mortgage banker at a time that is most convenient to the client.

Q: Do borrowers have the option to meet with someone in person if they choose?

A: If the client lives near a One Reverse Mortgage Web Banking Center (San Diego and SE Michigan), we are always glad to arrange a meeting. However, we have found that many of our clients prefer working with our mortgage bankers over the phone as it is more convenient and the conversation is really no different if one were in a face-to-face meeting.

Q: The industry has been built sitting at the "Kitchen Table" with borrowers, do you think that’s going to change when lenders learn how to leverage the web?

A: We believe the approach we have taken is the best. It is fast and efficient and our technology also enables our clients to monitor the status of their mortgage in real-time 24 hours a day. Many people asked the same question when Quicken Loans launched its online lending model. Today, they are the nation’s largest online retail lender and one of the ten largest retail lenders in the country.

Most consumers today, regardless of age, have conducted financial transactions over the Internet, whether it’s online shopping or bill paying, and are comfortable transacting online. In fact, many find it more convenient. Our process combines the efficiency and convenience of the Internet with the personal attention of a mortgage banker who is never more than a phone call or email away.

Q: Do you think lenders will be forced to learn how to leverage the web in the next 5 years in order to be successful?

A: I think the Internet is already impacting the reverse mortgage industry. One Reverse Mortgage, leveraging Quicken Loans’ expertise, technology and centralized lending platform, is leading the way, and I expect others will try to emulate our success.

Q: You were actively using online media to market reverse mortgage prior to joining Quicken, have you stepped it up after the acquisition?

A: Since One Reverse Mortgage’s inception, we have realized the importance of online marketing. Since joining with Quicken Loans, we have really been able to leverage their online expertise to expand our social media outreach. We had been using search engine adwords, but have now added a blog, iTunes podcast, an RSS feed and many other items to compliment the adwords campaign.

Q: You market online through multiple channels like your blog, YouTube, Twitter, Adwords ect. Why take the approach of putting your efforts into multiple channels? Any surprises on what has or hasn’t been successful?

A: Many consumers and their families are turning to the Internet for information. While YouTube and Twitter may seem unconventional for the reverse mortgage target market, it really isn’t. Many people, both seniors and their loved ones, are increasingly turning to the Internet for information, and when they do, we want to be the trusted source they turn to.

A great example is an iTunes podcast we recently produced. We were absolutely shocked by the number of times the podcast was downloaded. However, this validates that consumers of all ages are turning to new media to do their homework on reverse mortgages.

Q: The people looking for reverse mortgage information online can be caregivers, family members, seniors, etc. Do you design your approaches to fit a certain group or is it pretty general?

A: We find that most audiences are interested in the same information – what is a reverse mortgage, how does it work, what are my/my loved one’s obligations. Since many people are used to forward mortgages, we’ve seen there can be a fairly steep learning curve. Instead of focusing on tailoring messages, we instead dedicate ourselves to educating our clients and delivering quality service.

Q: We didn’t see One Reverse Mortgage included in the top 10 in 2008, but 2009 is a different story. Was there a certain point when you saw things start to fall into the place and take off?

A: One Reverse Mortgage was just ranked the number 3 HECM originator in March, but we have been making great strides since the last quarter of 2008. The reason we’ve had such impressive improvement is because we have moved away from our old way of doing things and have leverage Quicken Loans’ centralized technology business model, making the loan process simpler and more efficient for our clients.

While that does not mean much to clients, what they are now seeing is a much more efficient process that allows loans to be funded quicker, with much better communication throughout the process.

Q: With things running along smoothly, what do you have planned in 2009 to continue the growth?

A: So far, we are off to a very strong start and we expect to have a very good 2009. We believe in continuous training to ensure that our mortgage bankers are the best trained, most informed and helpful in the industry.

We will also continue providing the best client service in the industry, while funding loans faster than any of our competitors. This also has been the key to Quicken Loans’ success and it is what will make One Reverse Mortgage the #1 reverse mortgage lender in the industry.

Technorati Tags: Reverse Mortgage,News,HECM,FHA,HUD,One Reverse Mortgage,Quicken

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Question_Mark

How are seniors supposed to know their right to a face-to-face meeting? How can they insist upon something that is not known? Some originators believe that if they do not offer the option, they have to obligation to present it. I hope that is not part of the "new school."

Common Sense

Let's not forget that if a borrower wishes to meet face to face, their wish must be met. If a lender/orginator cannot meet the client's wish, then they must refer the loan or inform the borrower that they cannot fulfill the request.

Even as the industry "modernizes", regulations require us to think "old school".

Reversemaniac

Critic you hit the nail on the head!

Question_Mark

How quickly we forget.

At the end of 2006 through early 2008, the industry was abuzz with news about the most significant change to the industry and there was no turning back. The focus of NRMLA conventions was on this trend. The old way of doing business was over. “Be prepared. The change is happening now. If you don't take heed, your business WILL suffer.”

That prediction was far more accurate than the speakers knew. These prophets were declaring that the number and types of reverse mortgages were about to change dramatically; how right that part of their prediction was. Here is where they went wrong -- the dominance of HECM originations was near its end. Proprietary products were predicted to be expanding with no end in sight. However, last I looked 100% of all of our 2009 reverse mortgages was sold as HECMs directly to Fannie Mae. If any lender in the top 50 has seen even 5% of their 2009 production as anything other than HECMs, please let us know.

Does anyone even recall HECM 100s? When they were introduced, this was definitely the trend of the future. Well, the so-called prophets were at it again, predicting. Well, for most that was a move down of 50 bps on margins. When was the last time any of us have experienced a reduction of 50 bps in margins? If Fannie Mae was not encouraging LIBOR, minimum margins on all but fixed rate HECMs would be more than 2.5% over the HECM 100 margin.

Now the “rage” and “noise” are over Internet leads using phone sales. Let’s see I think phone sales started even before my 90 year old father was born. The Internet is today’s upgraded tabloids. (Last I checked most marketing on the Internet is still written.) So what is so “new school” about any of this? Didn’t this “wave” start in the last millennium? I am so old I even remember the dot com debacle. Please!!!!

“But this is the newest and the best and absolutely nothing can stop it from overtaking our entire industry within days or the longest, a few years.” Yawn!!!! In 2005, it was: “if you are not using the newspaper, you will not make sales.”

Some are screaming “new school” versus “old school.” This is so trite and childish; it does not deserve comment.

People are forgetting there are many differences between the forward market of yesterday and the reverse market of TODAY—few products, consumer and senior protection groups, FHA, Senator McCaskill, state legislation, and AARP. Internet sales did “revolutionize” the forward industry, particularly SISAs (commonly called “liar loans”), subprimes, and Alt-As. Last I checked there are still forward mortgage brokers and the proposed legislation against the forward excesses of yesterday still has legs under it. So please let’s not get too far ahead of ourselves. This trend does not even make up 20% of the current reverse market. If it gets to 50% too soon, expect the wrath of those who want to protect seniors.

Please wake me up once all the noise from this latest alleged “tsunami” dies down because like all of the other extreme and alarmist claims that have hit this industry in the last few years, don’t hold your breathe to see it come true. It is time to breathe, take account, add it as a great marketing tool (until it is "irrationally" regulated), and go close more loans.

Reversemaniac

It will definitely all move to the phones/internet...but people we are not there yet...3-6 years at least...baby boomers need to be retiring in bulk, and these days not as many people are retiring at 62....retirees do not recieve maximum Social secuity benefits until 66....so many hold off and keep working until 65-66 in the US. That means we have 3 more years until the first baby boomers reach that age....and with the need for more than 1 years worth to truly make the movement to online a huge one, I truly think those who are mid to late fifties up to sixty right now are going to be the first group to use the internet in mass with this product, so I think we will see a progressive movement for the next three years with some real traction starting in 2014/2015 when we have 20-30 Million Boomers qualifying for this program and 8-10 Million of them Boomers who are currently 60 and under 2-3 years over the inital qualifying age and close to or past the age of 65.....Until then face to face is the only way a normal company can make these loans make sense ( I say normal because I believe that One Reverses Technology and huge database of forward clients is what makes them unique and able to make this product pencil out). I have tried it both ways and the cost to originate ovet he phone is prohibitive and does not pencil out very well (for a normal smaller co.), at least it did not for our company...and we are currently one of the fastest growing reverse mortgage companies in the country as well.

Tanda Rimalshaki

Obviously another stellar interview segment. Old school brick and mortar guys are going to go by the wayside. Quicken Loans obviously has a proven method that seems to work, or One Reverse Mortgage would not be one of the top 5 reverse mortgage lenders in the United States. As more internet savvy people get online, the more and more brick and mortar guys are going to go by the way side. It is a proven theory. People really don't want to see anyone, no matter how much you think it is important. They will be more and more inclined to sit at home, do things via the computer and also on the phone.

If people don't change and move with the times, they will go the way of the dinosaur and Pontiac. Quicken Loans has obviously brought the future of the Reverse Mortgage industry into play with their cookie cutter call center design. They will become the Walmart of the Reverse world eventually, running little mom and pop shops out of business, simply because their method is better.

Concerned is aptly named, he should be concerned. Unless others get off of this tired, I need to meet you in your home and shake your hand method, they will be looking for another line of work. I think concerned is more concerned about the fact that he can't slip an annuity into the conversation when trying to sell a reverse mortgage and that gets him ticked off.

Just because we all work with old people does not mean we need to use the old ways to get the job done.

Question_Mark

Ms. Horvat,

While pleased that your company salespeople recommend seniors to seek the advice of financial advisors, it is what your company then provides that causes concerns.

Too many people believe they understand financial issues but like the example you provide, they do not. If the income is merely matching the interest that accrues on the reverse mortgage, the seniors are still losing economically if the additional income results in current income tax liability.

By providing incorrect and incomplete examples, the company is providing financial advice and is reducing the impact of its advice to see financial advisors.

It would be better if the sales people emphasized at least two or three places in the discussion that ALL borrowers should seek the advice of financial advisors. No matter how much a borrower takes out of the loan, there are many issues to be discussed with a financial advisor including estate planning (not just estate tax planning), income tax planning for both the borrowers and heirs, risk, investments, and other issues.

Question_Mark

Ms. Horvat,

I apologize at the end of my first paragraph I have a typo. I stated: "In all but the second paragraph, you as the spokesperson for One Reverse Mortgage (“ORM”) did a very compete and admirable job in addressing them."

"Compete" should have been "competent."

Question_Mark

Ms. Horvat,

There were some wild, insulting, and unsubstantiated claims made against your company in this thread. In all but the second paragraph, you as the spokesperson for One Reverse Mortgage (“ORM”) did a very compete and admirable job in addressing them. However, the second paragraph begs credibility.

For example, ORM states: “Honestly, seniors are just as much at risk of letting someone in their home that they don’t know, who claims to be trust worthy and could take advantage of them.” Really?

A few years ago, the state of Texas was being paid by telemarketing firms to use their inmates to sell credit cards by phone. This is but one extreme example but there are many more.

In a home sale, the sales person can provide documents that identify them as qualified to provide the mortgage and as having credentials that exceed minimum standards. Yes, they can be forged but that requires substantially more work than a salesperson simply saying it on the phone. A victim has the opportunity to physically identify the offender beyond mere voice recognition. Having an offender in the home also means the person was not in another state or country making the sale and if a violation occurs, there is less hassle trying to address grievances. And the list goes on.

Does ORM really expect us to believe that telephone sales are as safe for the senior? At least the senior has the confidence that the person in their home is not a convict sitting in a jail with no hope of parole.

Since ORM did not try to persuade us that telephone sales are as safe for lenders, I will not address why they are not.

Concerned

Mrs. Horvat you are indeed a part of ORM. Please learn more about your business. You have been no doubt taught how to sell, but kept in the dark about the product and the real picture beyond the walls of your SE Michigan location. The interest rate is fixed between the time of application and the time of closing. The rate can go down but not up. The only thing that can change is the MARGIN. If you and your colleagues there at ORM cannot understand the product and the changes to it, please do not contact my grandparents. This like my name makes me concerned. The reverse mortgage product is already a product that has been under much skepticism and if you are out there misquoting or misdirecting my grandparents with your scare tactics then you will undoubtedly tarnish this program and the reputation that reputable reverse mortgage companies are trying to build. Why would seniors be at risk with meeting with a representative from a local bank offering a reverse mortgage? ORM is a brokerage firm NOT a bank, NOT a servicer. A bank, A servicer would be some of the most trustworthy representatives to work with, with background screenings and drug testing unlike brokerage firms. It’s our money, we do not fund the loan and sell the loan it’s our loan! Our reputation and our company’s reputation are too much to risk. Your account of still talking about taking the money out instead of leaving it in the LOC is laughable... Even with a Libor based monthly adjustable your LOC growth rate would be between 3% - 4% and with any other program the LOC growth rates would be higher. There is NO bank, credit union, or brokerage that is offering a growth rate of 3% or 4%. You do not have to sit across from these clients, look them in the face, therefore you have no cares to mislead or misdirect them. I believe that the internet is a growing industry I will agree with that, but your business practices will give this business a bad name.

Brian McFedries

Clients will utilmately do what they are most comfortable. Good service is good service regardless of the manner in which they are contacted. Ultimately this business will be judged by the integrity of the people who represent the product.

Admin

I can see why people are concerned about not being able to meet face to face, but I do think there is a lot of people in the industry holding onto the "old school" approach.

There will always be a place for the "kitchen table" but I do think it's possible to provide the same service over the phone.

As the industry changes, I think you will see a change in how people will want to complete their application or digest information.

There will always be seniors who want the face to face meeting and for that reason they probably won't choose ORM. I'm sure they realize that and I would assume it also influences the places they market/advertise.

If a person is contacting them from the web, odds are pretty good they are comfortable conducting business over the phone.

Brian McFedries

The Reverse Mortgage industry is changing over time. Just like in the insurance business, technology has its place in this industry vs strictly face to face. Attacking Quicken/One Reverse (or any company) because they do things differently then the old school approach is unfounded. Although I may be biased the Quicken Family really does try and treat their clients with utmost respect. The Mortgage Bankers are well trained and professional.

Question_Mark

Ms. Smith,

While I respect your right to opine, I deplore the sentiment you expressed. I hope you are putting in a better effort into determining suitability than your apparently callous answer would indicate.

Some seniors are terrorized by abusive children. Even if Treverse was absolutely wrong in his/her assessment of the situation, I whole heartedly agree with the caution and concern. I have seen several seniors at their wits end because they need assisted care in a senior community and do not want to go into government facilities but because their RM balance exceeded the value of their home, they had to go into a situation they dreaded. A few were in the situation because of abuse while others made really bad financial decisions. Yes, that is life but if abuse is indicated, why wouldn’t you address it?

Treverse, while we do not always see eye-to-eye, our industry would be far better if more originators were as concerned about seniors as you. However, I do not believe everyone at ORM is as heartless as you indicate. But there is something about telephone RM sales that makes it feel far less than professional.

Jennifer Horvat

On behalf of One Reverse Mortgage, we would like to address the comments made on this article. Everyone is entitled to their opinions and we respect that, but we want to make sure that we are addressing items that are simply untrue.

Face to face meetings have always been a traditional way to do a mortgage. Even in the forward space, there are some clients that still prefer this method. We understand that. We made a similar transition many years ago on the Quicken Loans side and had the same push back then…it takes time to build comfort with over the phone transactions, but it’s becoming more and more popular with the Boomer and Senior generations (as it already has with traditional, forward mortgage clients). We explain to the clients that there are pros and cons to both. Our approach is to make it easy and convenient to do this loan – and SAFE. Honestly, seniors are just as much at risk of letting someone in their home that they don’t know, who claims to be trust worthy and could take advantage of them.

As for counseling, we are in full compliance with the HUD rules. We provide the client a list of 5 national counselors, 5 local counselors, and tell the client they have a choice of which counselor to contact. We have had many occasions where the client cannot afford counseling and we’ve directed them how to obtain it for free. We do have clients ask us for recommendations on counselors that can speed up the process as they need to close their loan fast because of impending foreclosures or other significant reasons. We will forward them additional recommended counselors if they meet the client’s needs and only if it’s requested by the client. Payment for counseling is also determined between the client and the counselor and it is payed outside of closing. We do not set the counseling fee or charge it to the client.

Our Title Fees are competitive in the industry.

We inform clients that numbers and products can change because they do, and it can greatly affect the client’s proceeds. Reverse Mortgages do not lock in a rate at time of application like a forward mortgage. An article was just written on Monday by the Associated Press about the fact that pricing changes with Fannie Mae have caused a very price volatile market as of late, affecting many seniors and the final proceeds. We are trying to make sure the client understands that pricing is not fixed, it can change, and we’ve seen it happen to many clients where they couldn’t do the loan any longer because of the changes.

We do not currently charge our clients for an appraisal.

We always offer our clients the option for a line of credit, lump sum or monthly payments. Clients ask us the difference between the options, as well as the advantages and disadvantages. We inform them that it’s best to consult a financial advisor and provide examples of why: For instance, exercising the lump sum option and putting it in to a money market accounts or CD may yield a greater rate of return than taking the credit line – it depends greatly on interest rates at that moment in time. We want to make sure our clients understand their options and make a well educated decision.

Thank you for the opportunity to address these concerns.

Concerned

One Reverse Mortgage is a vulture company. They have their fast talking headset phone jockies hounding these poor seniors. Calling them 3-5 times a day. If the client wants to meet with someone face to face ORM says that those individuals who write these loans face to face are scam artists and instructs them to not meet with anyone in their home! ORM is scared to death of any competition due to them owning the title company they charge huge 3rd party fees. Counseling.. I don't know how they are surviving due to the new mortgagee clause.. They charge $150 for counseling paid in full for VIP 24 hr turn around time counseling appointments to only their preferred counseling agency. They do not inform the client that counseling is free, If the client wants to obtain free counseling face to face with someone, ORM threatens that the numbers will change, the product may not be available if they wait, that they are jeopardizing their future if they wait etc.. I have had many clients call me after they called the counselors back to find out if other companies originated these loans in their area, only to find out that the client over paid for a free service, cannot have their case number reassigned until a outrageous appraisal is paid for.(appraisals are requested by the title company which ORM/Quicken Loans owns) If the senior wants to keep the money in a line of credit they come up with cleaver ideas (money market accounts or cd's) to have them take it at the time of closing so they the originator gets paid.. Client focused?? I have not seen this?? Focused on their pocketbook?? For sure!

Admin

Common Sense,

Not really, I guess I assumed that from his answer the borrower would probably go somewhere else since they don't have offices any other places.

Common Sense

Admin-
Was there any discussion as to what they do if the borrower is not in San Diego or SE Michigan, yet they desire a face to face meeting?

Dawn Smith

Aloha Treverse - The safest thing about reverse mortgage is that the "greedy relatives" have to leave the property in the name of the "vulnerable senior". The senior gets to stay in the home until they die or leave - so any inequity occurs between the heirs and they can sue/fight each other - as has occurred throughout human history.

If the senior is so vulnerable and cannot understand even the RM counseling - their responsible friends and family need to be vigilant.

Most seniors are NOT that old anymore (think Hillary Clinton) and are alert and akamai about their financial situations.

Any senior that has a home with equity has heirs who are watching and EVEN IF an LO warns the senior not to make the RM, a greedy relative will find another LO who will.

Such is life....

Treverse

This approach may work well with the forward world but working with seniors is a whole different ball game. They may be posting great numbers but at what price?
If it's all about the numbers ($$$) I guess you can say they are doing well.

What about the senior who is being preyed upon? CAN THEY SEE THAT FROM THEIR CALL CENTER? I have had two instances in the last six month's where a greedy relative was trying to push the process and keep the senior out of the loop. I was able to determine that by a face to face meeting and advised the senior that this might not be the best product for them at this time.

Wait until the lawsuits start from the children who had no idea their 80 year old mother was doing a reverse mortgage. I guess Quicken has a team of lawyers to deal with that! Wait until the war stories start being published in the news and damage our industry.

Just my opinion but with all the challenges we have right now this is the last thing the reverse mortgage
world needs right now.

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