Top Reverse Mortgage Lenders Say Growth Opportunity is Far From Over

Recent reverse mortgage market data indicated that several of the “new” top-10 lenders are still making big gains in terms of their share in the market. For four of those lenders, the growth was more than double for the first four months of 2012. 

But those gains are attributable in large part to the recent exits of Wells Fargo and Bank of America from the business last year, Reverse Market Insight told RMD following its most recent report on reverse mortgage production by lender. The impact of MetLife’s exit is yet to be seen. 

While some lenders are starting to see growth taper off in light of those exits, still some of those that enjoyed the most growth are gearing up for more. They are staffing accordingly, too. 

“As a result of our brand and national marketing platform, AAG has been the largest beneficiary of the three major exits,” said Reza Jahangiri, AAG president. “With that said, that has not been the main reason for our volume increase over the last year or so. The primary driver of our growth can be attributed to an increase in our sales force along with a material lift in efficiency on the sales floor.”

AAG, which runs an Orange, Calif.-based reverse mortgage call center and has a sales campaign driven in large part by TV ads featuring former Senator Fred Thompson, says there is still much more room to grow. 

“We still anticipate a substantial increase in retail volume due to the seasoning of our sales force, which has grown and will continue to grow in 2012,” Jahangiri said. “I wouldn’t attribute a significant portion of our growth this year to MetLife’s exit. However, we believe that consumers often look for a national brand they recognize when considering a reverse mortgage, and after Met’s exit, AAG is positioned to fill that role.”

Security One Lending, another growth story, says that while it may not double its business in 2012, there is still still an increase anticipated as a result of the exits. 

“I would suspect we will see a cascading impact going forward,” says Torrey Larsen, president of S1L. “We successfully landed/retained many of the Bank America and Wells originators last year. Many others made the decision to join other firms, primarily due to geographic and/or branding reasons. Many of those initial originators that made decisions to go to an alternative lender have reached back out to us. Although I do not believe this subset of originators will allow S1L to grow another 120%, I do believe the lift from former Wells/Bank America Originators will be at 25-30% for 2012.”

Genworth Financial Home Equity Access, says it has benefited from the large banks leaving the business, but that demand for reverse mortgages is an overarching growth driver. 

“The exit of three major reverse mortgage lenders in the past year has created new growth opportunities for large and small reverse mortgage lenders including [ourselves],” says Pete Engelken, president and CEO of Genworth Financial Home Equity Access. “We expect the demand for reverse mortgages to continue to grow as more and more baby boomers enter retirement and product awareness increases among financial professionals. Our geographical footprint and staffing plans reflect the current and future demand for reverse mortgages.”

The top lenders say it has been a combination of their initial teams as well as new hires that have driven growth. But that not all lenders will be able to benefit. “The new hires have definitely contributed to our growth, but we have also seen nice gains by our legacy origination team,” Larsen says. “I believe every other industry participant believes they will grow market share due to MetLife’s decision to exit the space. The key will be to appropriately map production to capacity. Not everyone will succeed on this front.

Written by Elizabeth Ecker

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