Top 10 Lenders in the Reverse Mortgage Industry South River Mortgage Designed to focus on its strengths. In addition to offering proprietary reverse mortgage product options and transitioning from a broker to a direct lender last year, the company is focusing on its core business while staying connected to broader industry dynamics.
South River President Tyler Plack recently discussed with us the elements of business in the current market environment house lineReverse Mortgage Daily (RMD). Now, the conversation turns to the wider industry. Despite the well-documented challenges facing the industry, Pluck and South River chief strategist Matthew Hagan said the reverse mortgage business is making steady progress.
Pluck also discussed open mortgageexited the industry late last year, and how alternative equity products are adding to the competitive landscape in the reverse mortgage business.
Chris Clow/RMD: We’re at the midpoint of 2024 in terms of the health of the industry, and given some of the doom and gloom that was probably predicted at the end of last year, what do you think the industry is doing?
Tyler Pluck: I think the industry has shown incredible resilience. At the end of last year and at the beginning of this year, we expected three interest rate cuts in 2024.
Having said that, I’m impressed not just with Nanhe, but with the industry as a whole and how resilient the space is and how resilient the founders in the space are. If you look at the number of originators, you’ll see that in 2024 we don’t see the same level of impact as we did in 2022 or 2023.
Crowe: What do you think drives this stability?
Plack: I think part of that stability comes from some of the Fed’s comments about not raising rates anymore, which is good. But I’ve been impressed with the rest of the industry and their ability to stay in business despite declining sales. Everyone is still working hard, still issuing loans, and many people are still doing business, which is a good thing.
Clow: Industrial consolidation is undoubtedly a hot topic. We are also seeing other forward loan players starting to show greater interest in reverse lending, and I know your company is a valued partner of Open Mortgage. First, how does their absence affect you? How do you see industry consolidation progressing?
Plack: If you look at Open Mortgage, we represented a lot of business for them in the past and they closed in December of 2023. When doing reverse business, you are not doing any business with them. Frankly, we are a net beneficiary of some of the talent that comes out of the Open.
There were a lot of really good people out of work as a result of the closing of the reverse division, and we were lucky enough to find some good underwriters, some closing staff and members of the operations team that would otherwise be difficult to find. So, of course, when one door closes, another opens, and we’re really excited to be able to welcome them to South River.
Matthew Hagen: The other thing I would add is that Open Mortgage has been a great partner for us as we’ve grown our business. We were really sad to see them leave the market, not only because of the relationship we had with them, but also because we had been hoping that they would be a closed loan purchaser on our loans.
They never quite achieved that, but it was our hope so we could continue to do business with them. In this environment, if someone leaves the market, that would be a terrible outcome. There is a huge amount of talent available in this industry and we don’t need fewer people – we need more people. The Open’s break is really disappointing and we’re sad to see them withdraw.
Crowe: Home equity seems to be a bigger part of the conversation, even among forward lenders. They are more interested in traditional vehicles such as HELOCs, and there is also a small group of shared equity investments and sale-leasebacks trying to carve out a niche in the equity lending market. I’m curious if this adds to the competitive landscape for what you’re trying to do, or is it just noise you want to ignore?
Plack: It’s not just noise that we want to eliminate. We are working with a number of home equity product providers and have interest in this space. I think you run the risk of contaminating or misaligning the people who are best suited for reverse mortgages into home equity products. Although there are risks, the important thing is that the best product wins. If home equity is a product consumers want, then we should be offering them home equity investment products, not reverse mortgages.
Also, one of the great things about these stock products is that many of them have no age restrictions. If you are 18 years of age or older and can legally enter into a contract and own the home, you are eligible to purchase this product. When it comes to reverse mortgages, legality varies from state to state, which complicates things. Therefore, the total addressable market for these home equity investment products is much larger. I think any reverse originator should look at these products and see how they can add them as another arrow in their quiver.
