In the face of concerns over the pace of reverse mortgage endorsements over the coming year, one lender is placing an ambitious bet on expansion in 2018.
Quontic Bank is in the process of expanding its Indianapolis reverse mortgage originations office, with a goal of expanding its 50-person team by at least 25 through the end of March — with an additional 15 by the end of the year.
“From a strategic standpoint, if you don’t grow, you’re going to go at this point,” Tom Holsworth, Quontic’s vice president of reverse mortgage lending, told RMD.
“If you don’t expand your business and your footprint, because of thinner margins, you’re going to face a lot more turmoil. So when staff don’t see things moving in a positive direction, that’s when businesses decline,” he said. “It’s always important to pump in a positive energy.”
The Queens, N.Y.-based Quontic launched its Indianapolis reverse mortgage operation in January 2016 with just Holsworth at the helm. Since that time, the bank has built a significant call center location in — Holsworth says he’s opted to lease additional office space each year — and cracked into the top 30 lenders in the industry.
In 2017, Quontic generated 467 Home Equity Conversion Mortgages, good enough for 21st place on Reverse Market Insight’s list of top 100 lenders for the year. That’s a 213% increase from 2016, when the bank logged 149 reverse loans.
By the end of 2018, Holsworth wants his team to exceed 100 loans per month. If Quontic hits that target, then the company will explore strategic acquisitions of other companies, he said.
The bank’s success has come largely on the back of call-center originations, with leads generated primarily online. While the company did employ a boots-on-the-ground strategy during its early days in the reverse mortgage space, CEO Steven Schnall told RMD last year that such a model is difficult to scale — thus prompting Quontic to turn to a call-center-heavy approach after establishing a foothold in the industry.
The long-term gaol, according to Holsworth, is to ride out the changes in the industry through continued expansions, fighting tightening margins by improving economies of scale. He envisions a 2019 where Quontic has 140 employees in Indianapolis, 100 of them loan officers.
“If you grow by headcount, your fixed costs are your fixed costs,” Holsworth said. “You can outrun this thing.”
He also noted that this isn’t the first time the industry has faced an existential crisis, pointing to the 2015 implementation of new Financial Assessment regulations.
“I’ve been around since 2001, and I’ve been through some hairy times,” Holsworth said. “I remember FA, for example, and everybody thought the business would be dead by that point.”
Written by Alex Spanko