Thanks to everyone for the great response to our first newsletter last month. We hope to continue bringing new insights and perspective to the industry through this new medium, consistently raising the bar in our mission to highlight insights mined from our industry’s data.
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Top 10 Lenders
We’ve seen many news items lately touting various lenders as largest, top 10, etc. and rather than continue to watch various definitions circulate, we’ll attempt to clear the air using our industry leading dataset to produce the first comprehensive ranking of top HECM lenders in the nation.
The table above illustrates both retail and wholesale HECM volume for the January to July 2008 period and ranks lenders by total volume through both channels. Rankings are also provided for each channel individually for reference.
There are a few surprises here compared to the Retail-only perspective provided by our HECM MIC reports and HUD’s reports. JB Nutter’s strong wholesale business is challenging industry leadership and vaults them into the very top tier of lenders from a significantly more modest 24th ranking in Retail. Secondly, it’s interesting to note that the combined Bank of America and Countrywide will create a new number two in both overall and Retail rankings when consolidated, pushing Financial Freedom and Wells Fargo down one notch each in Retail and Total, respectively.
Together, these four companies (FF, WFC, combined BAC/CFC and JB Nutter) form the clear heavyweights in industry performance at this point, although there are other giants lurking behind 4 of the remaining 5 companies in the top 10: World Alliance Financial (KBC), MetLife, Liberty Reverse (Genworth) and Generation Mortgage (Guggenheim). Any of these could easily vault into the top tier given their distribution and financial strength advantages, so the story is not over by any means in what remains a major growth market for the foreseeable future.
This does serve to point out, however, the remaining top 10 player – Urban Financial/ReverseIT. This company has grown rapidly and pursued a dual channel approach that puts it in competition with the biggest names in the business and is finding success thus far. Perhaps a glimmer of hope for some of the smaller competitors lurking lower in the rankings without institutional backing that success can still be achieved in this market, despite the increased competition from large financial services conglomerates entering the industry.
Another interesting point to note here is the different business models practiced by each of these leading lenders. The business mix above points out an almost mirror image between Wells Fargo and JB Nutter. Wells Fargo is a well known leader in the industry with a Retail channel strategy leveraging their strong brand and branch network, while JB Nutter is focused almost exclusively on the wholesale business. Each has ridden their respective strategy to success, while other lenders have had a more balanced approach between the channels, albeit with most significantly favoring one of the channels.
We’ll leave the analysis here for this month since we also have some other practical information to share, but we’re always looking for feedback and ideas for insights and information you would find useful and interesting. Contact us at firstname.lastname@example.org or give us a call at 949-281-6470.
Sales Performance Metrics
Have you ever had a conversation with your sales force that seemed like a constant battle of excuses and misdirection? Ever wondered if the competitive pressures your sales force keeps telling you about might not be just a bit exaggerated?
As you may have read in our October article in the Reverse Review, we’ve recently introduced a new tool to help assess reverse mortgage sales performance and encourage more productive, factual (vs. anecdotal) conversations with your sales force. In addition to traditional measures such as unit growth and changes in market share, a number of our clients have adopted this new metric, which, in short, compares your current performance with your prior period performance after accounting for changing market dynamics. It allows you to distinguish between a rising tide that lifts all boats or outselling the competition. And it allows you to determine if share loss is due to a vastly more competitive landscape or to a falloff in your marketing or sales efforts.
To develop this analysis, we look at 1) market endorsement volume, 2) competitor growth, and 3) your raw endorsement performance, where the “market” definition is of your own choosing, down to the zip code level. All markets are local, and this analysis will give you new insights about your local performance as well as overall market dynamics that have been obscured.
Here is a simple example from Miami comparing Q2 2008 and Q2 2007. The metro area is comprised of the three counties of Miami-Dade, Broward and Palm Beach, which all have approximately the same senior population. While our client experienced more than a 20% decline in volume in each county, that still translated into flat market share in Broward and Palm Beach, where total volume fell about the same amount. But in growing Miami-Dade, it resulted in a nearly four percent share loss. Confounding the situation even more, the number of competitors increased 50% in Broward, 48% in Palm Beach but 114% in Miami-Dade.
The volume loss is real, the share gains and loss are real, but who outperformed their market competitors? When you unravel the indicators pointing in different directions, the short answer is the company materially outperformed the market in Broward and Palm Beach, and lost ground in Miami-Dade on an adjusted performance basis. As a result, the sales manager sat down with the loan officers in the three counties and had a very productive discussion about what was working in Palm Beach and Broward that wasn’t working in the more competitive Miami-Dade, and vice versa.
Each of the loan officers came away from the meeting better prepared to meet the challenges in this major market, and the sales manager had a positive impact on loan officer productivity as shown by increased application volumes in subsequent months. While this example came from a client’s traditional retail model with loan officers in the field, the SPAR report and performance process is just as effective in a call center or other centralized sales environment.
The opportunity for informed decisions is apparent every day in every company. In today’s challenging markets, it’s imperative that you focus on the key metrics that drive your sales performance and re-double your efforts to be in the right markets and understand your performance within those markets, in context with what is happening.
Once your team understands that you will hold them accountable for their own performance in their markets against their competitors – rather than for market performance and new competitor growth that they can’t control, you’re one step closer to having a productive conversation that leads to true sales performance.
To that end, as an exclusive offer to our Newsletter subscribers, we’re offering a free sample analysis for the state of your choice. At the county level, we’ll evaluate your reverse mortgage market share, and change in share, along with growth in total originations and in the number of originators. We’ll provide you with both your raw and adjusted company performance described here, and focus a conversation on the implications the analysis reveals.
To request your free consultation, please contact John Lunde at 949-281-6470 or by email to email@example.com.
The RMI Team