Two industry veterans have teamed up to launch a new reverse mortgage entity, National Senior Home Equity, that aims to roll up broker shops to aggregate industry volume and consolidate market share.
Bart Johnson, former president of Financial Freedom and Tony Garcia, current proprietor of Liberty Street Financial, have pooled their experience to raise $5 million in capital for the new company along with an investment team including Jim Benson and Alan Botsford of financial services investment firm Benson & Botsford. Johnson will serve as company president; Garcia as CEO; and Benson and Botsford as board members.
The company plans to take advantage of the current regulatory climate that makes it challenging for brokers to compete with large lenders.
“There is a Federally-mandated industry consolidation, and BGJ provides the immediate safe-haven that everyone is scrambling for,” said Tony Garcia. “Broker shops have no choice but to affiliate with a major lender, and we offer a very attractive new alternative in the market.”
Liberty Street would be the first broker company to join the group as a “member company,” and the company says it intends to systematically target and recruit other strong players nationally.
“We have a vision for what reverse mortgages should look like and we think the current regulatory environment has sent a lot of people scrambling…We can provide a broader platform for those who can’t qualify to become a lender but don’t want to become an employee of a big bureaucracy,” Johnson told RMD.
The company aims to close 800 to 1,000 reverse mortgage loans per month, which would put it in the ranks of the top five lenders in the industry. Until licensing is in place, National Senior Home Equity plans to partner with MetLife, which will perform on behalf of the new company during the interim. The partnership is mutually beneficial, Johnson explained, in that it offers a capital guarantee for brokers who might otherwise be considered as a higher risk.
The intention of the leadership is to grow National Senior Home Equity for sale. “We realize that competitors are trying to exploit the uncertainty in the marketplace, but we believe we offer a much better opportunity,” Johnson said. “We start with higher payouts on loans, work with companies to grow their businesses and improve profitability, and strive for an exit event that would permit participants to monetize a portion of their wealth at a market multiple simply not available to any of them individually. No one should go anywhere without talking to us first.”
Johnson says the company is looking in the future to offer products available not only to the 62+ population, but extending to a lower age bracket including those who are age 55 and up.
“It’s still a vastly underserved market niche,” he said.
Written by Elizabeth Ecker