In February, it was announced that reverse mortgage software solutions and loan origination system (LOS) provider ReverseVision was acquired by a division of Toronto-based Constellation Software. This holding company bought another mortgage LOS, Mortgage Builder in 2019.
Shortly after its acquisition of RV, Mortgage Builder rebranded to Constellation Mortgage Solutions, Inc. (CMS) and announced that RV would be folded into the offerings of CMS in an effort to better represent a host of products it will offer across the broader mortgage ecosystem.
To get a better idea about CMS’ perspective on the reverse mortgage business and the opportunity it sees in the space, RMD sat down with CMS President Steven Ryczek, EVP of Sales and Marketing Kelli Himebaugh and M&A advisor Ruth Lee to get a better picture of how the company sees the opportunities in the reverse mortgage space.
A ‘natural inlay’ to the reverse mortgage business
Because of its existing involvement on the forward side, Ryczek describes the extension into reverse as a pretty natural one considering the broader goals of Constellation overall, he explains.
“I think buying ReverseVision was a natural inlay into another part of the sector of the industry, that basically, has been pretty untapped,” he said. “Especially in terms of driving technology and a solution to a better place. And so, as we went through the process and looked at the company, there were a lot of overlapping opportunities between the solution that we have today, and what ReverseVision does today, as well.”
Generally speaking, the concern now is focused on finding the best possible path to bridging the two worlds embodied by CMS and ReverseVision, allowing for something of a one-stop-shop for someone looking for origination needs on both forward and reverse, he says.
“We’re trying to figure out how we basically solve the overarching problem of providing a single solution that can potentially be basically both a forward origination platform, as well as a reverse platform,” he says.
There’s also room for improvement in terms of how much technology can be implemented into the reverse process, believes Himebaugh.
“We’ve also learned that the reverse space is a little bit suspended back in time,” she said. “I think what’s driven the forward mortgage space, it’s not necessarily somebody coming out with great technology as much as it’s about industry regulation. The biggest transformation with that was with TRID in 2016.”
The reverse mortgage space, comparatively, has not had the same kinds of pressures on it that the forward side has, Himebaugh believes.
“It’s not really had to step up,” she says. “And so, I think that’s where we feel like we’re going to make a big difference coming into this: to really bring the technology up to speed with where we are today.”
Doing what they’re good at, evolving the footprint
Ryczek added that another key is to fashion something that members of the industry want to continue using.
“One component of it is to make a very good solution, which is something that we’re good at,” he said. “But it’s also to bring in the partnerships that we have to support the overall vision just the same. And I think that’s also going to be something that probably separates us, because we’ve used partnerships a lot differently than a lot of the other competitors out there.”
CMS is a reseller of several other companies’ solutions, Ryczek says, so that keeps conversations focused at the enterprise level. Such ambitions can also be applied to ReverseVision.
“With ReverseVision, we’re looking to do exactly the same thing,” he says. “Take advantage of those partnerships, and really provide as much value to our clients as possible. And I think it’s going to be a game-changer for a lot of clients.”
Constellation at-large has also been in something of an acquisition mode, as evidenced by prior purchases like Mortgage Builder and ReverseVision. Additional acquisitions are on the table, which also plays into the ambition that CMS has for the reverse space.
“As our footprint evolves and we buy more companies – we’ve got a pending technology product acquisition now which had us focused on forward – but it’s going to apply very well to this space,” Himebaugh added. “So, as we look ahead of other acquisitions, we’ll be looking at how we apply those technologies across both platforms.”
Certainly, other companies and their business models may also do well to consider the addition of reverse mortgages into their product mix in light of some of the well-documented challenges in the traditional mortgage space, adds Lee.
“As we’re looking at companies right now, and they’re flagging volumes and forward refinances as well as purchases, there is a huge opportunity for them to amplify their own business model by really adopting the reverse,” Lee says. “We have some great partnerships with people who can really help them understand how the securitization piece can really move the needle for them in ways that the other products that are out there – like non-QMs etc. – those have risks. [Reverse] has a lot less risk and a lot more upside.”
By establishing the fundamentals of the business model and the potential upsides of reverse that certain businesses and professionals may not be aware of, CMS is looking to ensure that the mortgage industry broadly can understand the potential of reverse mortgages.
“We come in with the technology, we partner with people who are talking about the business model, and all of a sudden we have an entire forward market that is interested in reverse,” she says. “That is a good thing for all of the untapped equity that is out there, and for the seniors who are looking for solutions.”
Look for more from the Constellation team on RMD soon.