Kriss Law/Atlantic Closing & Escrow (KL/ACE) has been active in the reverse mortgage closings space for two decades, but has been conducting business primarily in the Northeastern U.S. That is changing, however, as a new partnership with The Closing Exchange (TCX) expands its offerings to a wider area.
The partnership, announced in May, aims to deliver compliant signing services and expertise to national clients operating in the Home Equity Conversion Mortgage (HECM) space. RMD sat down with KL/ACE Chief Strategy Officer Landon Smith to get a better idea of the partnership, what it entails and how the companies will differentiate their offering from competitors.
Partnership goals
In order to broaden the KL/ACE closing services availability, the company sought out a partner, and KL/ACE and TCX have a history of collaborating, Smith said.
“Well, it’s a strategic partnership with long-term, long time executives in the business,” he said. “We have a track record of working together, and what we aim to do is provide more of a consistent end-to-end experience for HECM/reverse mortgage closings. [We want to] improve the experience for the lender and certainly for the borrower, and offer more consistency, education and awareness: all the critical components that make up a HECM closing.”
Smith has been immersed in the servicing, REO and deed-in-lieu sides of the reverse mortgage business. And, KL/ACE has been conducting reverse mortgage closing for the past 19 years, he said.
Demand from current customers — including some top 10 lenders — is what led the company to explore an expansion beyond its current footprint.
“Recognizing the success that we’ve had with HECM in the Northeast and with pretty significantly-sized lenders that do business around the country, that led to the [recognition of an] opportunity for us to expand that through the partnership with The Closing Exchange,” Smith said. “Because we could extend that consistency around the country. But also, we had our existing lenders asking us if we could do some of these reverse mortgage closings for [them] in other states.”
The established relationship with TCX made the company a natural partner, Smith said. And, another important factor is TCX’s reverse mortgage familiarity.
“It certainly allows us to scale. But more than scale — which can be accomplished in a multitude of ways — it’s the history of us all knowing each other and working together in the business,” he said. “We’re not just finding a new vendor; it’s a tried-and-true relationship based on prior service experiences and relationships. But also, they understand the reverse space. That’s in their DNA, and not all vendors have that experience.”
Market opportunity
Smith acknowledges the challenges the entire mortgage industry is facing. However, that does not diminish the market opportunity, he said.
“We certainly see the opportunity,” he said. “The demographics, we believe, align for growth in the space. Although we’re in a period of a bit of uncertainty, we see that there is equity out there for the reverse demographic. Those folks have owned their own homes for a long time, and although there may be some impact on home equity, overall we still feel pretty strongly — as do these lenders — that that’s a growing segment.”
Smith, KL/ACE and TCX are aware of recent industry changes, including the consolidation, exit and entrance of lenders in the space. The companies also plan to attend the National Reverse Mortgage Lenders Association (NRMLA) Southern Regional Meeting in Austin this week.
The changes could lead to good things, he said, but with the addition of new players comes a need for vendors in the space.
“[New players will] require good vendors that can help educate both them and their borrowers on these types of transactions,” he said. “We see that it’s growing. It just makes sense. I don’t have a crystal ball, and don’t know any more than the next person, and we certainly have challenges on the forward side in the rate environment. But I think the HECM space [presents] a continuing, growing market opportunity.”
Differentiation
Smith said it would be a challenge to differentiate the partnership, but it’s one that KL/ACE and TCX are eager to take on. Still, there are attributes that Smith believes could set his company apart from competitors.
“Consistency, compliance, training, and flexibility for the borrowers,” he said. “There are a lot of different ways to close loans now. There are a multitude of signing options, so understanding your demographic, giving them options and not suggesting they have to do it one way or the other [will be important]. We have different ways of closing to meet those customers’ expectations because as you know, the demographic covers a wide range. People’s adoption of technology and other solutions can differ.”
Still, the track record that KL/ACE has in the space should say a lot to existing partners — and potentially to new ones.
“The proof’s in the pudding,” he said. “We have happy customers. We have lenders that came to us and said that they like what we’ve always done for them, and they’re having challenges out across the country. [They want us to] help them because of challenges with consistency or training. Those are the things that we do differently, and hopefully we do them better. To me, there’s no stronger proof than customers asking if you can help them in other areas because they like the way you’ve been doing it for them. Anything else is talk.”
