Open Mortgage, a multi-channel lender based in Austin, Texas, and a top 10 reverse mortgage lender, has closed its reverse mortgage origination division, RMD has learned.
Open Mortgage CEO Scott Gordon confirmed the news.
Multiple sources both inside and outside the company reached out to RMD saying that the company had closed, but Gordon explained that, although Open is shuttering its reverse division, the company itself will continue to operate in the forward mortgage space.
“We made a public announcement today that we are shuttering the reverse division,” Gordon said, referring to an all-hands call on Monday. “It was a very difficult decision because we believe in the product and we had some of the best reverse folks in the industry, both in ops and in the field.”
Lower origination volumes combined with lower closing pull-through rates made the cost to close reverse mortgage loans too high, Gordon said of the dynamics leading to the decision.
“The forward side will get used to current rates if they don’t get better, but the reverse side needs significantly lower rates to make deals workable again,” he said. “We can’t predict when that will happen, so we will be closing out the pipeline in December.”
“Traditional volume has actually been growing so [the forward side] of the business is fine,” he explained. “We believe this focus on forward mortgage will see us through winter and high rates to better times.”
In August, Open Mortgage appointed a new national director of reverse mortgage sales. At that time, Gordon spoke about industry challenges, and a necessity to find ways to get through the immediate issues facing the wider industry.
“I think the industry has to live through the short term — which we will,” he said in August.
According to reverse mortgage endorsement data compiled by Reverse Market Insight (RMI), Open Mortgage was the sixth-largest lender in the reverse mortgage industry with 922 loans over the 12 months ending on Oct. 31.