Top-10 reverse mortgage lender Security One Lending has announced it will join forces, effective immediately, with a fledgling broker roll-up that launched earlier this year under the leadership of former Financial Freedom president Bart Johnson and Tony Garcia, CEO of Liberty Street Financial.
The broker roll-up, which previously operated the name National Senior Home Equity, raised $5 million and began recruiting aggressively upon its inception in March, but lost some momentum after finding that obtaining licenses and building systems would take longer than expected.
“The combination with S1L will significantly simplify the usual lengthy and expensive approval and licensing process, and will allow us to scale Security One’s platforms rather than building our own,” Johnson, said. “We see a huge advantage in foregoing administrative tasks to accelerate market consolidation now in order to fill the vacuum created by the exits of Bank of America and Wells Fargo.”
Security One’s leadership will remain the same, with Torrey Larsen continuing to serve as the company’s president and CEO. Johnson and Garcia will lead Premier Senior Home Equity (PSHE) under the S1L brand.
JAM Equity Partners —which invested $3.5 million in the company— will maintain its ownership interest in S1L, while PSHE’s $5 million investment from Jim Benson, former President & CEO of John Hancock Life Insurance Company, and Alan Botsford, formerly of Parthenon Capital will help it become a Ginnie Mae issuer.
The company says it will aggressively recruit high-performing retail broker branches and apply immediately to become a GNMA issuer. Larsen says he expects S1L to quickly become one of the top five reverse mortgage lenders, making a serious play for leadership as industry consolidation continues.
“This strategic play will enable Security One Lending to increase its bandwidth, relative to both its capital structure and management team, so that we can fully leverage our ability to capture production in a fragmented market,” Larsen said.
Earlier this year, Johnson said the company had obtained 27 signed “letters of intent” and anticipates many of the brokers will join them under the new arrangement.
“I am confident that we will retain many branches from our original list, and others that have previously expressed interest, and others that are logical candidates that we have yet to approach,” Johnson said in an email to RMD.
Editors Note: A previous version of the article stated that Alan Botsford was with Parthenon Capital, he is no longer with the company.