Looking to capitalize on its connections in the forward mortgage world, a Texas-based lender this month announced the launch of its new reverse mortgage division.
The Plano, Texas-based Starkey Mortgage originated its first Home Equity Conversion Mortgage about three months ago, according to new reverse mortgage division head Ken Witte, but only publicized the launch in early August.
The plan, according to Witte, is to capitalize on the 17-year-old firm’s existing forward mortgage contacts at first, educating them on HECMs and taking advantage of their relationships with key partners such as builders and real estate agents.
“As the market changes, we’re always looking to add new products and services that could benefit our clients, and certainly with an aging population, reverse mortgages make a lot of sense,” Witte told RMD in an interview. “Not only for our current book of business, but [also] focusing on new clients.”
Starkey intends to hire a dedicated team of reverse mortgage professionals over the next few months, though Witt noted that in the near term, the company remains focused on building up its reverse infrastructure internally.
“We’re one hundred percent behind this, and feel like it’s a good opportunity long-term,” Witte said.
With the HECM play, Starkey joins a variety of other forward mortgage players looking to employ a “generational lending” strategy: the idea that originators can offer HECMs as part of the larger array of traditional “forward” products in an attempt to make lifetime customers out of clients. For instance, Reverse Mortgage Funding recently introduced new software designed to appeal to forward brokers, while C2 Financial in California launched a reverse mortgage education program for its forward team last fall.
Witte isn’t a stranger to the HECM industry: He first worked in the space at his previous position at Element Funding, an Atlanta-based lender, before joining Starkey last October. In coming to Starkey, he also joined his wife, who works for the firm in the forward lending space.
The company is currently licensed to originate in nine states, and plans to roll out its reverse mortgage division in the retail channel only.
Witte’s biggest challenge should sound familiar to those who work in the reverse mortgage space: educating not just forward originators, but the partners who could be poised to refer clients.
“People just don’t understand and aren’t aware of the product,” Witte said, adding that he’s heard many stories from people who have “bad vibes” around reverse mortgages but can’t point to an actual reason why.
“I think we’ve got a lot of work to do, but it’ll be very good work with our existing sales force and their sphere of influence,” Witte said.
Written by Alex Spanko