Leaders at Constellation Mortgage Solutions (CMS) — the parent company of reverse mortgage loan origination system (LOS) provider ReverseVision — previously discussed with RMD what helped to motivate the company’s entrance into the reverse mortgage industry. Diving deeper into that thread, company executives — including CMS President Steven Ryczek, EVP of Sales and Marketing Kelli Himebaugh and M&A advisor Ruth Lee — also describe some additional interest in the space.
Developing that interest could take a number of forms from the introduction of new products to the acquisition of additional companies. RMD discussed these and other possibilities with the group earlier this month in Baltimore, Md. during the National Reverse Mortgage Lenders Association (NRMLA) Eastern Regional Meeting.
Additional reverse mortgage interest
When asked about any additional potential that CMS sees in expanding its own footprint into the reverse space, Ryczek explained that the company is always on the lookout for potential new acquisitions in the industries it is active in, and reverse mortgage-adjacent companies are no exception.
“We’re always looking for things that are for sale, so that’s predominantly part of it,” he says. “I wish I could just go out and name five companies, and that we [could then] go off and buy them. But fundamentally speaking, I think the key is that we’re always going to have dealers out there looking at other opportunities in the space. We talked about it briefly before, but we’re talking to over 100 different companies right now about the opportunity to potentially buy them.”
Those are a lot of potential deals, but Ryczek is clear that they won’t happen instantly or even within the next year. Some of them have much longer cycles than even that, he says.
“And that’s okay,” he explains. “But I think the key is that we want to continue to build and buy acquisitions and bring companies into the fold that are going to continuously provide value to our clients. It’s just a question of timing, that’s really what it comes down to.”
In that respect, Ryczek pointed to the company’s entrance in the real estate software side. 12 years ago was when the first acquisition and foray into that business first took place, and today CMS has 18 real estate software companies with growth continuing each year, he says.
“It’s going to be the same evolution on the mortgage side,” he says. “It’s just a question of when people are really going to be able to be for sale and when we take advantage of that.”
Reverse mortgage ‘intelligence’
When asked if the ReverseVision acquisition and CMS’ newfound activity help to provide “intelligence” about potential reverse mortgage-centric acquisitions, Ryczek acknowledged that was the case and added that the current acquisition activity is particularly high.
“Certainly part of the conversations we have initially are certain partnerships that might exist today or other components that basically sit outside of our solution today that also support that,” Ryczek said. “So there’s certainly an aspect of that which has created some awareness internally for the M&A team to go off and talk to some of these folks.”
Interestingly, the reason for acquisition activity being as high as it is for Constellation comes from the state of the market before and during 2022, and the changes that have taken place most especially on the forward mortgage side, he says.
“You’ve come off of two really good years on the forward side,” he says. “So everybody, from a vendor standpoint, to some extent is looking into it as an opportunity to potentially sell their companies coming off of a good year in a down market. So I think this year has actually been the busiest year that we’ve had, in terms of forward and probably reverse acquisitions.”
Ryczek has an expectation that an additional three to four companies could be acquired by CMS in the next nine-to-18 months, at least partially due to the environment across mortgage, he explains.
“Not all of them are reverse-specific, some of these are just agnostic products that are going to provide value for both sides of the house<’ he says.
A mission of disruption
Now that CMS has a good idea of the technological landscape present on the reverse mortgage side, the executive team is clear that its intention is to disrupt it.
“A lot of the things that we’re looking to do in terms of our new web version of our product is to try to think outside the box, not just basically take what we do today, put it on the web and [leave it at that],” he says. “We will also look at some of these other ancillary companies that drive communication more efficiently, and do a lot of different things that to some extent, just aren’t things people think about.”
Himebaugh added that a big component of that comes through the addition of business analytics capabilities in its products that can offer customers new ways to absorb essential information, while Lee also adds that inspiration from the forward side of the business can potentially help CMS disrupt the reverse side.
“We’ve learned a lot of lessons about best-in-class software on the forward side, and that’s really what we’re looking to leverage on the reverse side as well,” Lee says. “Whether it’s point-of-sale and having the ability for an originator to have something in their pocket, business and information and analytics, or document management. It can be e-signatures. There’s a lot of pieces, and they’re not all companies that we currently have under our hat. Some of them we do, but it’s a really important piece that we bring to the reverse space.”
Ryczek also said that the fact that Constellation is active in so many different industries could provide a chance for the reverse space to compare notes with other businesses it may not have had previous access to.
“Some of the things that we’re going through are things that other people have already gone through, and so you have a ‘lessons learned’ perspective,” he says. “You can share technology to share discussions and decisions. I don’t really think too many folks in this industry have that kind of an opportunity, to be able to talk to somebody that potentially is in the healthcare industry who’s trying to solve the same problem. So it’s a lot of those different dynamics that I believe [will help us] to be different.”