The last couple of months haven’t been easy on the reverse mortgage industry. Starting with Bank of America’s sudden exit from the industry in February, the departures continued with Wells Fargo announcing it was leaving the wholesale business.

Weeks later, OneWest Bank said it would be shutting down Financial Freedom’s wholesale and retail channels in order to focus on the bank’s core business. While the Financial Freedom exit had been rumored for some time, morale in the industry hit a low point, seeing how a company that played such an important role in growing the industry was shutting down. But looking beyond the headlines and deeper into the data shows a huge opportunity for companies to pick up market share, and plenty are making moves to do just that.

The latest data from Reverse Market Insight puts the two companies’ market share at a little over 20%, with 17.6% coming from Bank of America and Financial Freedom at 3.3%. With so much business up for grabs, companies are doubling down on growth, and it’s coming from all areas of the industry.

Moving Into New Areas

Companies like Reverse Mortgage Solutions and SunWest Mortgage Company are expanding into other areas of the business, even if it means going up against some of their own customers.

Started in 2007, Reverse Mortgage Solutions is moving beyond the servicing and subservicing space by aggressively expanding into the origination and correspondent channels. The Spring, TX based lender says it’s a good fit with its current business doesn’t think it will be an issue competing for loans with some of their customers.

“We thought about that for a long time, and the reality is that we’re the only company that doesn’t originate loans,” says Bob Yeary, CEO of RMS. “Everyone that correspondents sell to are already in the retail business, so everybody is competing with each other on some level.”

After spending most of his career in the origination business, Yeary says moving into retail is a natural extension for RMS. “It has been something we have have looked at doing for the last couple years,” he says.

Despite the recent major exits from the industry, Yeary remains optimistic and the company plans to have 30 loan officers in the field and another 15 people based in the recently built call center in Texas. “Our goal is to be in the top 5 of reverse mortgage lenders after the first year,” he says, “whether we make it, we’ll see.”

Other companies like Sun West Mortgage Company are moving outside the wholesale and correspondent channels and are making a push into retail as well. While the company has done a small amount of retail in the past, it’s planning to change that by opening up an office in Arizona to build the business. Details on the new operation are slim but the company told RMD that within 12 to 18 months, Sun West hopes the retail side will be around 30% of its business overall.

Once in a lifetime opportunity

Lenders like Security One Lending see what some might call an “exodus” in the industry as a once-in- a-lifetime opportunity. Never has there been such a large amount of market share up for grabs and S1L is betting big on taking a significant piece.

In the last few weeks, the San Diego, CA, based reverse mortgage lender has brought on 52 former employees from Bank of America. Other companies had the same idea, so competition for the former Bank of America employees was extremely tight. “MetLife appeared to be our biggest competition,” says Torrey Larsen, CEO of Security One Lending.

According to our sources, MetLife was aggressively offering top producers large upfront signing bonuses to join the company, but Larsen says S1L took a more disciplined approach to bringing in “targeted” teams.

By doing this, S1L secured three of Bank of American’s top regional managers who bring teams with experience in local geographic markets. For the most part, S1L added originators in the Pacific Northwest and the Northeast who can pick up where they left off and continue to utilize relationships built while at the bank. With the help of Ron Fetcher, a former Bank of America executive, Larsen says they were able to determine the best performing regions and go after these highly productive loan originators.

“They’re all self sourced, boots on the ground originators,” he says. Once all the dust settles from the additions, Larsen says the company’s retail sales force will have grown by 35% and could increase overall retail production by 70%.

Relatively unknown lenders like First Century Bank also see the current regulatory environment as a way to pick up marketshare in the Southeast. While the company had a small team originating reverse mortgages out of their headquarters in Atlanta, GA, it’s looking to grow its team in the surrounding states.

“We think its a very opportune time to ramp it up in the reverse mortgage space,” says Dan Diaddago, president of mortgage lending for the bank. “A few years ago, we saw people bugging out about mortgage lending in general. We made a commitment [to the industry] and see it as an opportunity to focus on the Southeast.”

The exits of large players wasn’t a concern according to Diaddago. First Century doesn’t plan on picking up where they left off, but feels the timing is right to make a big push. “We don’t have the same appetite as some of the big lenders, but market share for us, we believe we will pick up market share regardless,” he says.

With only 25 reverse mortgages endorsed in 2010 according to data from Reverse Base, the company recently added Dennis Loxton to grow its retail salesforce. With years of experience, Loxton says he wants to expand the bank’s footprint and add 30-plus originators in the Southeast region over the next few months. “We’re looking to aggressively expand inside our footprint of Georgia, Alabama, and Florida,” he says. “For folks that need to do business in multiple states,” joining a direct lender who has a federal preemption for licensing is a great option according to Loxton.

Other mortgage banking operations like American Advisors Group see the shakeup in the industry as a way to build upon their current footprint and is opening up new offices in Washington state, Georgia, and Florida. While it seems to go against the traditional call center model the company has built, Reza Jahangiri, CEO of AAG says it’s just an extension of what it’s doing now.

“We still believe in the centralized call center and are continuing with the model,” he says. “Our new East Coast operation is set up as a centralized multi state call center that allows us to service customers in different time zones better and we can also utilize our marketing platform to further scale and accommodate the growth.”

AAG says it will add anywhere from 20 to 30 loan officers in the Atlanta office, which complements the company’s strategic plan of AAG to scale its business.

“We are long the product and believe it’s still in its infancy,” says Jahangiri. “We are bullish on [the industry in] 2012 and all this consolidation will benefit those who survive and scale.”

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