New Reverse Mortgage Launch Sees Growth Opportunity in H4P

A south-Atlantic mortgage bank recently launched its first-ever reverse mortgage lending operations helmed by one industry veteran who sees opportunities for growth in the Home Equity Conversion Mortgage for Purchase (H4P) market.

On March 1, Alpha Mortgage Corporation, a Wilmington, N.C.-based mortgage lender officially added the HECM product to its roster of services offerings under the guidance of reverse mortgage division manager and Certified Reverse Mortgage Professional Greg Gianoplus.

Established in 1983, Alpha Mortgage is one of the oldest independent mortgage bankers serving the Carolinas. In addition to basic mortgage services, Alpha provides in-house processing, underwriting, closing, funding and now, reverse mortgages.

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“As southeastern North Carolina’s longest-standing independent mortgage bank, we’re deeply rooted in the communities we serve,” Gianoplus said. “We created a reverse mortgage program to give our customers access to beneficial and flexible new financial options, like the ability to purchase a house with a HUD-insured HECM.”

Alpha maintains several offices across North Carolina with locations in Wilmington, Fayetteville, Jacksonville, Hampstead and Greensboro. The company’s team of reverse mortgage specialists originate loans from the firm’s Wilmington and Raleigh offices.

The decision to launch a reverse mortgage lending channel was not necessarily a direct strategy for Alpha Mortgage, said Gianoplus, who admits it took several meetings, which were mostly educational in nature, with Alpha’s Founder and President Michael Lopez before the bank warmed up to the idea of adding HECMs to its service line.

Although Alpha at first was not interested in launching a reverse mortgage business, Gianoplus said the bank’s sentiment changed after learning more about the H4P and its potential to leverage the company’s purchase business, as well as its relationships with Realtors and home builders.

“Alpha is a traditional mortgage shop that has mortgage banking running through its veins,” Gianoplus said. “Once that window opened where Alpha saw the opportunity for HECM for Purchase, they embraced the idea of starting a reverse mortgage division.”

Alpha’s new launch is the latest reverse mortgage endeavor for Gianoplus, who in 2010 started the HECM division for Gateway Bank, the Raleigh-based mortgage banking subsidiary of Bank of Hampton Roads serving North Carolina, Maryland and Virginia. In this former role, he led the channel until October 2015, after a merger resulted in the discontinuation of Gateway’s reverse mortgage offerings.

That was when Gianoplus worked on an exit strategy to find a new home for the reverse division. During this process, he interviewed 15 potential banks who might be willing to take on a reverse mortgage segment, one of them being Alpha Mortgage, the owner of which he had a prior relationship with in the past.

Right now, the reverse mortgage division of Alpha Mortgage consists of five staff members, including Gianoplus. The vision, he says, is to build the division to include 25-30 well-trained reverse mortgage specialists.

For this new endeavor, Gianoplus said the plan is to develop a high-quality reverse mortgage business focused in choice local markets, rather than a big, multi-state footprint. While something that resembles a mini-call center model might be in the works later down the road, the company plans to keep its sales efforts more personal.

“We want to harvest the low-hanging fruit because we believe that since the implementation of the Financial Assessment, this business has become more knee-to-knee and knuckle-to-knuckle than ever,” Gianoplus said. “It’s easier to win the trust of a prospective client by meeting them face-to-face than it is through a call center.”

Written by Jason Oliva

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  • Jason,

    Did Greg indicate what “the low-hanging fruit” in that part of the country is?

    “‘We CREATED a reverse mortgage program to give our customers access to beneficial and flexible new financial options, like the ability to purchase a house with a HUD-insured HECM'” (all caps added). Interesting word selection by Greg.

    • By “low hanging fruit,” I am refering to our company’s robust market presence with respect to local market purchase money lending in southeastern NC. Alpha has a three decade history of relationship lending by referral through real estate agents and builders in southeastern NC. The “low hanging fruit” will come by educating our referral partners about H4P. Thank you, Greg Gianoplus

      • Greg,

        Your future positive experience in converting your Realtor referrals from just forward mortgage referral sources into reverse mortgage referral sources should become a pattern that can be successfully replicated by other forward mortgagees. So please keep us informed on your progress.

        Hopefully one day you will be offering training courses to forward mortgagees on just how to turn their Realtor referral sources into reverse mortgage referral sources. That would be a game changer for H4P.

      • Yesterday I presented H4P to about 40 real estate agents in their office training room. The broker in charge gave me 20 minutes to be followed by a short Q & A. The agents were so engaged that after 30 min of questions, the BIC had to end the session with still hands up for more questions. I am highly encouraged by the enthusiastic response. Greg Gianoplus

      • Greg,

        You should be encouraged, I am on your side on this 100%, great job my friend!

        John

  • Good article Jason, I know Greg Gianoplus very well and proud to call him a friend. Greg is a seasoned veteran, knows the business well!

    Greg is smart to recognizing the opportunities that are on the horizon with the H4P program. This is a market that has been virtually left trailing any other in product in the HECM bank!

    The opportunity is so great but the problem has been how to market it. We all know the primary source of business comes from the real-estate sector. The real-estate broker/sales agent, as well as the contractor/builder.

    For some reason reverse mortgage loan originators, not all, but many have been reluctant to approach the realtor and builder. The H4P product opens up a whole new source of business and revenue for these major market players.

    We have to aggressively reach out to them, take the realtor as our example. Go meet with the broker and by the way, do not approach the brokers agents without going through the broker first! Many loan originators make this mistake and find out when it is to late.

    Show the broker the tool you have that can increase his or her business as well as his or her agents in the form of increased commissions. Hand out a certain amount of educational material to the broker but not to much.

    Once you have the brokers interest ask him or her if you can set up a time that you can speak before his or her agents Say to the broker that you would like to conduct an educational workshop before them. Usually your workshop will be at their scheduled meetings.

    You notice I used the word “Educational Workshop”, sounds a lot better than a seminar or sales presentation. When you give your workshop session before the group, at that time, have your full set of marketing materials to hand out to them.

    The real-estate industry is always looking for new ways to increase their sales and client base. Children of seniors are looking to move parents from other cities, seniors are looking to down size and I could go on and on. The point is that when that realtor can advertise to the senior population that they have a program whereby a senior can buy a home, not have any mortgage payments, and without having to pay all cash for the home, that is one heck of a sales tool my friends!!

    The same principle works for builders that have an inventory of homes or models to sell or even homes that are close to being finished. This is a great market waiting for us!

    Go get them Greg, you know how to do it partner!

    John A. Smaldone
    http://www.hanover-financial.com

    • John,

      With an up year for endorsements last fiscal year, total H4P endorsements were the highest ever but still less than 2,500 endorsements. If each producing HECM originator just got one H4P last year, we would have more endorsements than 2,500.

      We complain that senior bias keeps seniors from taking a rational look at how HECMs can help them but you are saying HECM originators are guilty of exactly the same thing when it comes to selling H4P.

      By the way you have helped make my point that it is not our content that is in any way more education than the presentation of other salespeople when they have a complex product to sell. Education is but a mislabeling in the hope of disguising the true nature of our presentation, in this case the cry for more referrals from real estate brokers like me. But if we called it a referral workshop, few would attend unless they thought they would be the recipient of a referral.

  • Greg,
    Regardless of the poor past performance of the H4P it has the “potential” to literally change the way clients, 62 years old and above, purchase their new home.
    There is only one reason it hasn’t: the reverse mortgage industry has little to no idea the work involved in creating a successful referral network with real estate agents. And those who profess “to know” won’t put the effort forth.
    Most reverse mortgage professionals did not come from the forward part of the business as you do. Their knowledge of the real mortgage industry is minimal. (Which is why they can’t break through to the Realtors)
    And make no mistake about it, it’s all about education.
    My school, the American C.E. Institute, is licensed in 25 states to teach Realtors a 3 hour class on the H4P. The more real estate agents that take the class, the more applications we write.
    Would love to speak with you in person if you would like to send me your contact info. My e-mail is mbanner@pmanow.com
    Huge kudos and congrats on your new endeavor!

    • Mike,

      We did have an increase in H4P endorsements last fiscal year. They went up one third over fiscal 2014 but that was a total increase of just 629 endorsements. (Of course fiscal 2014 was a 14% drop from total H4P endorsements during fiscal 2013; so the increase of fiscal 2015 over fiscal 2013 was a percentage increase of just 14%,)

      Those numbers are not all that impressive when one sees H4P for what it is, a part of a national federal program. Increase will come but as it always has, slowly. We have many TPOs in the industry that mainly originate forward mortgages but as our numbers show, H4P in its present form is difficult for many experienced forward mortgage originators to successfully market to Realtors, even to those they regularly work with.

      Few if any Realtors have adopted a H4P strategy. If they have done so successfully, none are publishing about it. Many major business schools with grad degrees in finance offer either a major in real estate or banking or emphasis in either. Yet none of their academicians have stepped forward to advocate H4Ps. What for decades was considered our most difficult referral source, financial planners is now considered our second best (just behind our borrowers) but where are Realtors?

      Fiscal year 2016 may be another loss year as to total H4P endorsement production but growth should shortly reemerge in fiscal 2017, just very slowly for the foreseeable future.

      I am sure if H4P were a true sleeping giant, you and other H4P experts would have found a way to wake her up in the last eight years. At least for now, there is nothing wrong with slow growth.

    • Michael, I am contacting you off line. I’ve had an interest for some time now in becoming certified to teach real estate agents about H4P through a class that would qualify as CE for the agents. Thanks for the encouragement, Greg Gianoplus

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