Q&A: Torrey Larsen on His Newest Reverse Mortgage Endeavor

There is opportunity to be found in chaos and the unknown. And in the reverse mortgage industry, the turbulence presented by recent program changes, particularly the Financial Assessment, could be an opportune time to start a new venture.

Such was the case of Retirement Funding Solutions (RFS), one of the reverse mortgage sector’s newest entrants founded by industry veteran Torrey Larsen.

Formerly the head of Security One Lending’s retail division, Larsen served as the company’s president prior to its acquisition by Walter Investment Management Corp. (NYSE: WAC) in 2013.


This January, he embarked on his newest venture with the launch of RFS and since then the company has added several industry veterans to its leadership team in its efforts to become one of the sector’s top-tier lenders—and it has a few strategic initiatives in the works to help it achieve this goal.

To learn more about RFS’s plans for 2015 and beyond, Reverse Mortgage Daily caught up with Larsen to hear about what drove his decisions to start a new business in the current reverse mortgage landscape, as well as what are some of the biggest challenges the industry faces in the current Financial Assessment playing field.

RMD: You were formerly with Security One Lending, and started Retirement Funding Solutions in January of this year. What drove the decision to start a new business, especially given the current reverse mortgage environment and the various program changes that have transpired within the last year alone?

Torrey Larsen: When we sold Security One Lending, we had a non-compete agreement, which expired in November 2014. So from a legal perspective, I was able to get into the reverse mortgage business at the beginning of this year.

We saw a tremendous opportunity and a tremendous void in the marketplace. Whenever there’s chaos or changes in the marketplace, to me that simply means there’s an opportunity.

With the Financial Assessment (FA) looming for the industry, I looked at the FA differently than just a simple product change—it was a fundamental process change that the entire reverse mortgage industry was going to have to adapt to.

When we mapped that out, we felt that was a great entry point because existing companies were going to have to deconstruct their systems and workflow processes to adapt to the new environment of the FA.

It gave us a competitive advantage to compete effectively in the marketplace, because when you have a pre-existing infrastructure in place, you have to go through the process of deconstructing things like systems and workflows. That’s playing defense.

I saw all of the existing companies playing ‘defense’ trying to get that right, whereas we were able to build right into that under the new FA environment. It gave us the luxury of instead playing ‘offense’—gaining meaningful market share and building a significant platform in the headwinds of the FA.

The changes made by FHA and HUD are changes that we saw as being positive for the sustainability of the reverse mortgage product. Underlying all of that is these new changes are going to have a significant impact on issues facing the HECM product and the HECM industry.

Not only was there an opportunity to build, but we’re building from a foundation of FA as something that’s going to improve the industry. Both of those components together provided a compelling reason to re-enter the [reverse] business.

RMD: Under your leadership, Security One grew from a start-up business comprising four employees to a top retail lender in the reverse mortgage industry. Do you envision similar success with Retirement Funding Solutions? And are there any “lessons learned” from Security One that you plan to take into account with RFS?

TL: When I look back at how we constructed [S1L’s] business , there are a lot of lessons learned, but the fundamentals of building a business are very simplistic.

If you can build with the right people and systems, which are the guardrails of the company meant to protect from unintentional errors, and provide the tools to your people to make them successful—if you get those three things rights and understand who the company’s customer are, that’s what makes a business successful. In our case, we’ve always viewed our customers not only as borrowers, but also as originators.

When I look back, that’s how we built Security One. The way in which we elected to build Security One and the way in which we’ve elected to build RFS will be different from most other companies.

One of our cornerstones of building a company is understanding what your core values are going to be as you operate. We break it down to four items: integrity, loyalty, diligence and compassion. With those four core values, that is how we try to differentiate ourselves from other companies.

RMD: RFS recently teamed up with Shelley Giordano’s Longevity View in efforts of collaborating with the RFS sales force and marketing arm to create a learning community. What will be some specific areas of concentration where this specialized training will focus?

TL: Shelley and I co-founded the Longevity Task Force in late 2012. The simple objective was to figure out ways in which we can educate and penetrate the financial advisor community.

We surrounded ourselves with people who were very motivated to help us with our mission of how to integrate the HECM product effectively into the financial planning side of business and what are some of the obstacles out there?

Shelley is going to continue some training for our individual retail sales force, so they’re equipped to go into the market with new information and also a better perspective on what the financial advisor is looking at relative to their business and be able to communicate with them effectively and educate them on what a HECM can do.

The beauty of the HECM product is that it fills a huge need in retirement. The biggest risk for retirees is outliving their assets—longevity risk. We have to figure out how we bridge that potential risk for retirees, and we feel that the HECM can bridge that gap.

RMD: Are there any specific initiatives the Task Force has planned for this year?

TL: Going forward, there are more things we can do as an industry and as the Task Force.

The next step in our success is educating the compliance directors and broker-dealers in the financial advisor community, to help them feel more confident and begin a dialogue with the appropriate consumers about how a HECM might be a great option to hedge longevity risk.

RMD: In the past few months, RFS has had several significant operational announcements, including several hires at the leadership level. How will these additions to the RFS team help the company ramp up its business?

TL: One of the first cornerstones in building that staffing level was David Entrekin. I have a long history with David. He serves as our Chief Operating Officer and I’ve worked with him for 11 years now. His father also happened to be my first business partner in 1999.

David’s hiring was really key in terms of firming up the operational side of our business. On the operational side, David has a great reputation. A lot of people know him and the minute he came on board, we had a lot of people inquiring about our company. So it gave us the luxury of being able to select the right people for our team.

And the hiring of Alex Pistone on the production side—he has built a great reputation in the market place. Both he and David embody the core values of our organization and they are proven leaders in our industry.

It was a delight and a surprise that they came on board with an early-stage company—and I say ‘early-stage’ and not ‘start-up,’ because we’re in the early innings of this game and we’re in it for the long run.

If you build a great team around you, all of a sudden you look pretty good. I’ve always said that. Success at Security One was squarely tethered to the leadership team and the individuals who executed for our company day-in and day-out. It had so little to do with me and everything to do with the leaders we brought in and the staff that executed in a very significant way.

We are light years ahead of where we were starting the first time around with Security One. Within 12 months, we will be a top-tier team in the industry.

RMD: Now that the industry is a few months into the post-Financial Assessment landscape, and that most of the uncertainty has cleared up, what do you view as the biggest challenge the industry faces now?

TL: The biggest challenges that lie ahead break down to three fundamental things that are key strategically to the industry.

Our growth as an industry is going to be contingent upon FHA’s continuing support of the HECM product. The changes FHA and HUD made provides the opportunity for a stable product and therefore, there’s less uncertainty with the product.

Another is continued investor demand. Investors ultimately provide liquidity. One of the biggest risks we have is if we continue to shrink as an industry and drop in volume, does investor demand diminish? That would be harmful to the industry if that would happen.

The third thing we have to look at is how do we expand the industry? RFS is looking at a couple of key strategies. One is the HECM for Purchase (H4P) and the other is the advisor model.

Financial advisors deal with a non-needs-based clientele, and when you look at that segment—the ‘mass affluent’—that is a segment that’s not going to be held up by FA. They’re going to come through that with very little fallout.

If we can capture a high percentage of market share on the H4P side and do a successful job in penetrating the advisor market and targeting the mass affluent, then the FA is not going to have a significant impact on what we do.

RMD: What can the reverse mortgage industry expect from Retirement Funding Solutions as the rest of 2015 unfolds—and beyond?

TL: In 2015 it’s about continuing to evolve as an organization to solidify our operational expertise to make sure we’re successful years from now. It’s about maturing as a company, identifying and hitting our stride the rest of this year.

Our goal is to be a top-5 company. If we execute our four core values and keep our strategic focus clear, we have a high probability of meeting that objective. But that’s not going to come without a lot of hard work.

Being a top industry participant is about hard work, diligence and getting incrementally better everyday as an organization.

There’s no magic, no silver bullet that’s going to get us into a top-3 or top-5 position. For us, it’s the ‘blocking and tackling’ we have to accomplish everyday from now until year-end.

If you focus on being the best at what you can do, the numbers will eventually follow. I think we will get there.

Written by Jason Oliva

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  • RFS has a reasonably strong chance of achieving its goals. Torrey is the kind of leader who draws the right team.

    Torrey brings out some important issues particularly when it comes to the investment community and his concern that their interest in HECMs could lessen unless we see better endorsement numbers soon. It is tough to rely on an industry which claims to be growing when this is the fourth straight likely year of HECM endorsements of less than 60,100 especially after reaching almost 114,700 endorsements during fiscal 2009.

    Since fiscal 2008, H4P has been oversold as a growth product by and within the industry. One of the key reasons Congress capped the origination fee at $6,000 in HERA was that H4Ps would bring so many new endorsements per industry specialists. For those not familiar with HERA that became law on 7/30/2008 both the $6,000 HECM origination fee cap and the addition of H4P are contained in that law.

    The first H4P was endorsed in February 2009. In January 2015, six years later, H4P reached its 10,000th endorsement. With all of the exuberance over H4P, where was the fanfare for the 1,000th or 10,000th H4P endorsement? Even its promoters know that the hype is not close to matching the facts. Celebrating milestones would only expose the minimal growth this product has brought the industry. Yet the endorsement numbers belie the importance this product is as a marketing tool in reaching out to Realtors. Unlike the financial adviser community, no group of acknowledged Realtor leaders have stepped forward to advocate the use of H4Ps by seniors in buying a home.

    With H4P annual endorsement counts never reaching 4% of total HECM annual endorsement counts, the direct positive H4P impact on our annual endorsement counts is more a subject for cocktail discussions than actual game changer. Any lender expecting substantial growth through primarily relying on H4P production is in for a rude awakening at least in the current environment.

    Torrey also discussed the anticipated value of financial advisers to the growth of his firm. There are two prominent views of financial advisers: one believes that working with financial advisers will greatly improve our endorsement count over time and another which believes that if we are depending on the referrals of financial advisers to grow out the industry, endorsements will come but the numbers will be less than stellar. Up until now the latter view prevails.

  • Great interview by Jason Oliva, it was very thorough! Tory will do well, he always has. The entrance of RFS will only enhance our industry because as The_Cynic said, “Tory is the kind of leader who draws the right team” I agree with tat whole heartedly!

    The_Cynic brought attention to some excellent points, a very well written comment. Not to much more I can say other than to reiterate the great interview conducted by Jason Oliva, I hope many take the time to read it. Go get them Tory!!

    John A. Smaldone

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