Austin, Tx.-based multi-channel lender Open Mortgage has more than doubled its volume and unit counts in 2020 when compared with business levels in 2018, with its total loan volume production coming out to $1.68 billion and 7,543 units in 2020 according to company data. On the reverse mortgage side, the company funded 1,816 loans with a volume of $401 million that it partially attributes to the low interest rate environment coupled with an increase in homeowner loan adoption.
For comparison, in 2018 Open Mortgage’s total loan volume was $637 million with 3,861 total loans, with reverse volume in the same year totaling $93 million over 606 units. To discuss the company’s pronounced growth over the past two years and to determine what may have contributed specifically to the growth of its reverse mortgage business segment, RMD sat down with Open Mortgage founder and CEO Scott Gordon to chart the path the company has taken.
Sources of growth
When asked about some of the factors that he felt contributed to Open Mortgages success and growth over the past two years and how reverse may have played into it, Gordon was quick to point to the general turbulence of 2020 and the learning experience that the situation stemming from the COVID-19 pandemic helped to provide. That’s true not just for Open Mortgage, but the mortgage industry in general across the forward and reverse segments.
However, in comparison to the traditional mortgage arm of the company, the reverse mortgage segment at Open saw a faster pace of growth than the traditional mortgage arm, Gordon explains.
“2020 was a crazy year for all mortgage companies, with headaches and opportunities,” Gordon tells RMD. “It was a great year for companies like Open to learn where they were weak, and we learned a lot. It was a great year for change for us, and we are continuing that work in 2021. Reverse scaled faster than forward in 2020, largely due to growth from 2019, and our efforts to provide great service to our retail and wholesale partners.”
In terms of how the company employed its national footprint in scaling its operations in reverse, surprisingly Gordon invoked a former Speaker of the U.S. House of Representatives in forwarding his point about the regional nature he feels reverse mortgages have.
“Tip O’Neill said, ‘All politics is local,’” Gordon says. “I think all mortgages are local. It’s great to have a national footprint, but I see reverse mortgages as a local or regional product, with pockets of productivity. We will keep working with both our forward and reverse loan officers to grow those pockets of productions.”
Of course, one of the general concerns that some in the reverse mortgage industry have is related to the source of new business, as some recent points of origination data peg as much as 40% of a recent volume increase to refinances as opposed to bringing new borrowers into the product category. While Open has certainly seen its share of increases on the front of refis, the main focus of Open’s reverse business has been on Home Equity Conversion Mortgage (HECM) for Purchase (H4P) transactions and new HECM loans, Gordon says.
“Like all mortgage companies we did more refinances last year than usual, both forward and reverse,” Gordon tells RMD. “But I’m happy that we stayed focused on purchases on the forward side, and new-HECMs and H4Ps on the reverse side. We should be ready as the refinances go away.”
2021 business concentrations
One of the more notable occurrences that Open Mortgage talks about in terms of its recent growth is a series of hirings the company made after the abrupt 2019 closure of lender Live Well Financial. After the company’s closure, Open Mortgage hired the core team of mortgage lending executives from the lender, also hiring approximately 50 former Live Well sales and operations employees to expand Open’s retail, wholesale, principal agent and closed-loan seller mortgage channels.
In highlighting the company’s recent growth, an official statement attributed the hiring of former Live Well staff as a notable component in the company’s recent successes, and Gordon is confident in the employees that came aboard to Open Mortgage from Live Well, he tells RMD.
“We certainly got some great folks from the Live Well shutdown,” Gordon explains. “They have helped us grow all of our reverse channels. When asked what he would do differently Michael Dell once said, ‘I would hire better people sooner.’ Nothing beats having great people on your team, and we are always looking for more.”
In terms of how the company is planning on approaching the remainder of the year, one of the major industry trends RMD predicted about 2021 is a cornerstone of Open Mortgage’s strategy through the year in terms of technology integration.
“We are working toward new technology for both forward and reverse with a goal of moving to a more consumer-centric, user-friendly experience akin to online shopping, while at the same time keeping the loan officer as the trusted expert in the transaction,” Gordon tells RMD. “We’ll have to find the leading edge, but not the bleeding edge.”
Building for the future
It’s never too early to start thinking about what tomorrow’s seniors will need when they’re old enough to qualify for a reverse mortgage, which will likely evolve into something wholly different than the way customers engage with the product category today. Still, even with that in mind, the focus is squarely on the present, Gordon says.
“When millennials are ready for a reverse mortgage, technology will likely be as advanced to where they’ll be able to simply speak to their watch to convert their mortgage to reverse,” he explains. “That’s the future. But today, we work with the older generation. The right tools for them are not the same as for the millennials. We will be working on that balance.”
In terms of lessons learned in the general 2020 tumult, some were more difficult than others but all around have led to a stronger organizational framework, Gordon says.
“2020 and the pandemic forced Open to reexamine our scalability and training on both sides of the company,” he says. “We made some great changes, and we have more projects scheduled for this year. We were already a very distributed company, but this helped us reexamine our staffing and manager training, reenforcing the importance of our leaders. That’s very exciting.”
In the end, Gordon thrives on disruption, he says. The disruptions brought about by 2020’s events may have been difficult, but that also comes with excitement.
“2020 caused some upheaval and I love upheaval,” he tells RMD. “I think 2021 and 2022 will give us more opportunities to change faster than others, and we are excited about that.”
According to HECM endorsement data compiled by Reverse Market Insight (RMI), Open Mortgage was the eighth largest reverse mortgage lender in the industry with 1,868 endorsements in the 12-month period ending in February, 2021.