Nashville, Tenn.-based FirstBank has exited the third-party origination (TPO), correspondent, and reverse mortgage businesses, RMD has learned. The reverse mortgage division of FirstBank has now moved to operate within Mid America Mortgage, Inc. based in Addison, Texas, a specialty lender that had previously earned a Home Equity Conversion Mortgage (HECM) underwriting designation by the Federal Housing Administration (FHA).
The reasoning for FirstBank’s exit from the reverse mortgage business appears to be part of a strategic move to reduce the company’s overall mortgage footprint, according to Dan Barksdale, formerly FirstBank’s VP director of specialty products and now director of HECM lending at Mid America Mortgage.
“I think it was due to an overall strategy to reduce [the bank’s] mortgage footprint. They had five divisions in mortgage, and they reduced them down to two,” said Barksdale in an interview with RMD. “They decided to stay in retail, both distributed and consumer-direct, and exit every other line of business. I don’t think it had anything to do with the product.”
After it became clear that FirstBank wanted to reduce its overall mortgage footprint, Barksdale and his reverse mortgage team began networking to find a new home via an amicable transition out of the company.
“We started reaching out and networking with people, and what we really wanted to find was another opportunity for us to start a new division with a company that had a vision to do HECMs, but hadn’t been in the business or successful at it,” Barksdale said. “And so, that’s what we went looking for. We feel like we found a wonderful partner at Mid America.”
Mid America already had a reputation for focusing on specialty lending, something that was clear to Barksdale after learning that they were the biggest Native American tribal lender in the United States.
“[That is] obviously a very niche product, and specialty lending is what they do, and they’re not afraid of it,” Barksdale said. “So, they were very excited about it when we came together and talked about an opportunity to start a new group of HECM-only [lending].”
While not entirely sure about how interested Mid America was in the reverse space previously, they had already been assigned a HECM designation, helping to make the transition out of FirstBank and into Mid America a bit easier from the get-go. Additionally, the majority of Barksdale’s previous team at FirstBank will be joining him at Mid America on the ground level of building a new HECM lending arm of the business.
“We’re going to start with a total of six people at Mid America, and then we’re going to expand from there,” Barksdale said. “Obviously we’re going to start small, get set up, start closing loans, and then we’re looking to just grow in distributed retail and wholesale. We’re not going to do lead-gen stuff. We were in lead-gen before, and it just got too expensive. It was very difficult to execute. So, we’re going to focus our energies on wholesale and distributed retail.”
There was no greater partner in the transition into Mid America than FirstBank, according to Barksdale. Much of the in-process loan pipeline was also able to transition with the team into their new home at Mid America.
“FirstBank was very gracious to allow us to move some of the loans we had in-process,” he said. “Since they were exiting the business, we were able to take some of the pipeline and bring it with us. FirstBank was wonderful about the whole transition. They were very gracious and supportive of our move, so there wasn’t any contention there at all.”
In terms of future plans and how the team plans on recouping their loan volume, keeping things small in the beginning to provide a foundation to build off of is key, said Barksdale.
“We’re going to go back out and start hiring sales [people]. Our ideal volume is going to somewhere around 20-30 units, that’s where we want to be in the next 18 months,” he said. “So, we’re not looking for world domination. We’re not looking to do 200 loans or to compete with [bigger players].”
Mid America is approved to operate in 47 states, Barksdale said.
Editor’s note: A previous version of this article stated that FirstBank was based in Lakewood, Colo., but that is a different entity under the same name. RMD regrets the error.