Leading reverse mortgage lender and servicer Longbridge Financial became the industry’s leading wholesale lender late last year, according to data from Reverse Market Insight (RMI). The most recent data showed Longbridge with an edge on market share, even if its total amount of active brokers is lower than its closest competitor.
To get a better idea of what led to Longbridge’s recent ascent to the wholesale leadership position and what it plans to do next within the space, RMD sat down with Longbridge CEO Chris Mayer to get the lay of the land.
Eye on the ball
Becoming the industry’s leading wholesale lender has been a goal for Longbridge, Mayer explained, and has been a long time coming.
“Becoming the industry’s leading wholesale lender has long been a goal of ours, and it is gratifying to see our company’s hard work rewarded by taking over the number one position,” he said. “This is a great achievement for us, as this is the first change in the number one position in over 12 years, which is longer than Longbridge has been in business.”
Still, reaching the goal and keeping it are two different things, and Mayer said that getting over the threshold was only the first part of the company’s work.
“We got here not by striving to hit a specific market position, but instead by serving our clients and helping them grow their businesses,” Mayer said. “In wholesale, you are only as successful as your clients are. To maintain this leadership position, we will remain steadfast in our commitment to the core values that got us here. We need to keep focused on expanding the reverse mortgage market by increasing our partners’ volume while also bringing new partners into the space.”
Mayer spoke about some of the ways in which the company will plan on maintaining its wholesale leadership position, including through the incorporation of technology, training and potentially new products, but he also said that some of what helped the company reach its new place — like its customer service posture — will remain intact.
Laying the foundation
When asked about how the company planned to reach this place, Mayer described how the industry did not look at Longbridge as a potential wholesale channel leader until very recently.
“Just three short years ago, we weren’t high on anyone’s radar screen in wholesale – we sat in the number five position with only a 9% market share,” he said. “In early 2020, we committed to developing our broker/third-party origination business. We welcomed industry veteran Adrian Prieto to our team, who brought a wealth of experience in this area and familiarity with the broker community.”
From that point, Longbridge aimed to employ a “back to basics” approach. Perfecting the execution and infrastructure of its operations division would be critical, especially during the uncertainty of the COVID-19 coronavirus pandemic. Training and marketing revisions were also a component Mayer credits with the company’s wholesale performance.
“We also re-focused our marketing and training to specifically support brokers, who often have very different needs than principal agent and closed loan sellers who have more reverse mortgage experience and resources,” he said. “Another key initiative was to leverage our exceptional capital markets team, who have earned a reputation for being consistent and fair with partners.”
The capital markets team does not only intervene on matters of pricing, Mayer explained, but “can also suggest ways to adjust loan terms and margins to help meet the needs of clients while also having viable economics for the lender,” he said.
The last major piece of the puzzle was focused on recruiting the right kinds of account executives and partner support specialists, Mayer said.
“[W]e’ve always believed in investing in high-quality individuals, whether it be via key external hires or internal promotions,” he said. “Growing and optimizing our team was not an overnight process, it required patience and planning as collaboration and team chemistry are extremely important to us.”
The importance of wholesale to the industry
In terms of how important scaling wholesale is to the future prospects of the reverse mortgage industry, Mayer said that the guiding star for any growth in the space is centered around cultivating trusted advisors who can inform potential borrowers about the impact a reverse mortgage could have on their situation.
“[A]s we all know, misperceptions about the product are widespread,” he said. “In one study that [Stephanie Moulton and I] conducted, [we] found that there were over 2.5 million applications by borrowers 62 and older in 2018, of whom, 1.3 million took out a mortgage (only 32,000 were reverse mortgages).”
Industry professionals also see the potential inclusion of more forward mortgage companies into the reverse mortgage process as critical to expanding the scope of the business, but such an occurrence is slow-going, Mayer said.
“In the forward space, most mortgage lenders are still not presenting reverse mortgages as an option to their clients,” he said. “It is a lost opportunity for those forward lenders, their borrowers, and our industry. So, we see wholesale lending, especially forward lenders who serve elderly clients, as maybe the single most likely path to growth in reverse mortgage lending.”
A lot of industries tend to ascribe scalability to wholesale operations, something that is “especially” true of the reverse mortgage industry, Mayer said. With a large pool of potential partners and the company’s own dedicated education program designed with forward brokers in mind, new partners from the forward space are coming into the fold, he said.
“Identifying, educating, and championing these types of partners is key in spreading the word beyond our industry,” Mayer explained.
