Until a few years ago, Scott Hanson and Pat McClain admit they knew little about reverse mortgages. Mr. Hanson even admits to a previously held bias against them. But after reading an article in 2003 that changed his mind, the two men began creating one of the largest reverse mortgage lenders in the country, Liberty Reverse Mortgage.
While Liberty Reverse Mortgage may have originated 2,200 loans last year, that doesn’t mean success came to the company right away. Just after its first year, for instance, the unit nearly went belly up. “We didn’t have the people or the procedures in place to effectively handle the leads coming in. We were losing money,” Mr. Hanson said. “We shut off all marketing for two months while we worked through our inventory of leads, hired more people and put procedures in place to make sure it wouldn’t happen again,” he said. According to the Investment News article, Liberty Reverse Mortgage Inc., had broken even last year for the first time since its beginning in 2004.
After the restructuring, the company started to take off and Hanson received a phone call from a Genworth Executive looking to buy the company. Initially Hanson had told the Genworth Executive that is was premature to talk about selling, but the Genworth executive continued to follow up and eventually convinced Hanson and McClain to seriously consider selling. As the discussions continued, they struck a deal, and by year’s end, the two expect to receive $50 million — a magnificent return on a $1 million investment.
I thought this was a great article and anyone with the “entrepreneurial bug” is going to love it too. To read a full copy of the story from Investment News click the link below.