In a climate of reduced reverse mortgage volume industry-wide, one lender is leaning on its seasoned staff and reliable business practices to maintain its position as a top-10 lender. Keeping that position can be difficult in an environment of generally reduced volume, where reverse mortgage endorsements have dropped 35% between fiscal year 2018 and 2019 based on data from the U.S. Department of Housing and Urban Development (HUD).
However, consistency in staff, a diverse product portfolio and a continued reliance on education are key for Orange County, Calif.-based HighTechLending in maintaining its competitiveness and building momentum as the industry prepares to enter a new year. To offer perspective on the company’s strategy and to illuminate some of its plans headed into 2020, RMD sat down with HighTechLending President Don Currie.
Staff consistency, through thick and thin
One of the biggest difference-making assets that HighTech has through thick and thin is its staff, Currie says, who come together when times are both good and bad to carry the company through to whatever is next.
“We started doing reverse mortgages in 2008, and during that time, that was kind of the crash of the old mortgage industry,” Currie tells RMD. “We were really fortunate in aggregating a lot of the really top reverse mortgage people back then, and they’ve stayed with us for the last 10-11 years.”
The lyrics of the 1976 Eagles song “Hotel California” come to mind for Currie when he thinks about some of his staff that have been with HTL since the company started in the reverse mortgage space.
“We always kind of joke that it’s like Hotel California: everybody checks in, but nobody checks out,” Currie says. “And I think that’s really what has helped us with consistency. It’s also a very small bowl that the reverse mortgage lives in, and we’ve been really fortunate that our anchor tenants, as we like to call them, stuck around through thick and thin. When it’s a family environment, like what we have, when times get tough, we all hunker down.”
Field reverse mortgage loan officers
In terms of specific business practices that helped the company raise its endorsements at the end of the summer, HighTech has been developing field reverse mortgage loan officers that Currie credits for the upswing in reverse originations the company exhibited in August, where it posted a 171.4% increase to 76 loans according to data from Reverse Market Insight (RMI).
“These are individuals that are self-sourcing, and we have really started to aggregate that individual that has a very low overhead in that they don’t require, in many cases, offices and phones,” Currie says. “They are field loan officers that generate their own business. We have come up with a new business model for them, where they get 100% of our rate sheet price. So, they’re able to keep most of the monies that are available in the reverse mortgage industry as opposed to having to split it with large corporations or with brokers.”
Nurturing field loan officers has helped HighTech, since the individuals are motivated to create their own business while being provided the full amount of HighTech’s rate sheet price.
“That has really been a winner for us,” Currie says.
Maintaining relationships with referral partners is still just as important for field loan officers as it is for traditional loan officers, Currie says, since many of the people working in the field work off of established referral relationships. That can generally be a more profitable way to operate in the reverse mortgage business, particularly in comparison with other lead generation practices, Currie says. Having a diverse array of lead generation opportunities helps to maintain a positive amount of business.
“[Our field LOs] are going out to real estate agents, financial planners and CPAs, and generating their own business through those vehicles,” Currie says. “And in some cases, that is a more profitable way to generate reverse business. Then going digital, going to the online leads and going to the purchasing of leads. Then, we have a reverse call center.”
The ‘elusive’ reverse mortgage lead
Finding effective reverse mortgage leads helps to emphasize HighTech’s ability to stay competitive, Currie says, since reverse mortgage leads can be complex and time-consuming to effectively find.
“The reverse mortgage lead is very elusive and very expensive,” Currie says. “If you don’t know what you’re doing, you can get your hat handed to you, and I’ve got a whole closet full of hats when it comes to marketing for reverse mortgages. It’s [not] something that you [simply] ‘dabble’ in.”
Taking a less dedicated approach to finding reverse mortgage leads is a good way to lose money, Currie says. The best way to make money in the space is by having a well-developed system for tracking leads down and following up on them.
“You need to have a really robust CRM, and you’ve got to have very strict and controlled scripts in a in a call center environment that helps to improve your pull-through over the long gestation period that that is common with reverse mortgage clients,” Currie says. “A very small percentage call you up and say, ‘I’m ready to do a reverse mortgage.’ In many cases, there is a gestation period of education before you are finally able to close that customer.”
Having a sophisticated system in place to help the initial customer is essential, allowing a lender to maintain constant contact from an initial call through a necessary education process. The maintenance of referral partners makes that ongoing contact procedure increasingly important for lowering the cost of generating business.
Proprietary products, industry regulation
While HighTech has most definitely benefited from originating proprietary reverse mortgage products, Currie doesn’t necessarily think that the industry should over-extend itself when it comes to new proprietary innovations. Previous lessons about aggressively pursuing promising avenues in the reverse mortgage business should be heeded before making any vigorous additional moves in the proprietary space, he says.
“I would have to say that I’m happy with the progress that [the industry is] making [with proprietary products], and that it’s really important that we don’t get too aggressive,” Currie says. “We know what happens when we get too aggressive in this industry. I think that the gradual broadening of the proprietary guidelines is going at a pace that I’m very happy with. I think that it’s important for the secondary market to take a look at this product, [and to] get a little bit of it under its belt.”
Still, the biggest issue that the industry has had to contend with over the past several years has been in new rules and regulations handed down by the Federal Housing Administration (FHA), many of which were restrictions on industry activity, Currie says. Still, the industry is adjusting to recent changes well, he adds.
“So, you set up your business to deal with your current volume, and then another regulation or change will then cause you to contract,” Currie says. “It’s really nice to see that we’re getting our feet under us in the current environment for HECMs. And then, we’re also being able to add the gradual growth of the proprietary product. And that just leads to a more stable industry, which is what we all want.”
2020’s ‘perfect vision’ and beyond
For the upcoming year, HighTech plans on building on what has effectively worked for them in 2019, including a desire to expand its base of brokers and to educate new personnel in the idiosyncrasies of operating in the reverse mortgage space, Currie says.
“When we look at the year 2020, the first thing that comes to my mind is ‘perfect vision,’” Currie says. “When it comes to perfect vision, they always say ‘hindsight is 20/20.’ So, we’re going to continue to do what we’ve done in the past that’s been successful for us, and that is continue to mentor the forward brokers and expand that broker base, continuing to educate those new to reverse, expanding our field loan officers that are independent and educated experts in reverse mortgages and continue to compensate them for being the entrepreneurs that they are by providing them with with superior pricing.”
In terms of its third-party origination (TPO) program, Currie says that HighTech will continue to grow its dedicated department to include non-qualified mortgage (non-QM) loans. Since the company’s wholesale department deals only with reverse mortgages, it plans on expanding that department into non-QM lending, and education into reverse will continue to be a major focus of the company’s efforts heading into the new year.
“We’ve found that we have built a really great university in training brokers in products that they’re not familiar with, including the reverse mortgage,” Currie says. “So, we’re going to use that same machine to educate them in the two primary profit centers that are out there in the industry.”
The amount of money in conventional mortgage lending is always very large, but making an impact in a space with so many competitors that are both large and small makes it difficult to stand out, Currie says. Because of that, two of the “last bastions of profitability” are reverse mortgages and non-QM lending, Currie contends.
“Because of that, we’re going to be focusing on providing brokers with the education they need to tap into the two highest profit margin loans in the industry today,” Currie says.