Matt Neumeyer graduated from Georgia Tech in 2003 and soon after interviewed for a job with Smith Barney. “I wanted to be a financial advisor, but they wanted me to mine data with no clear path to advance,” said Neumeyer.
When he decided to pursue a different career path, Neumeyer’s parents referred him to a family friend who owned a company called Shelter Mortgage in Atlanta.
Because he had no mortgage experience, Neumeyer was provided with a mentor who could teach him the tricks of the trade. The mentor originated both forward mortgages and reverse mortgages, but it was the latter that Neumeyer gravitated towards. He was soon preparing proposals and applications, but he wanted to originate reverse mortgages on his own.
“I saw an opportunity, so I asked him if he could focus on forward mortgages so that I could specialize in reverse mortgages and master them,” said Neumeyer.
For the next eight years, Neumeyer did just that, working for several mortgage lenders until he decided in 2012 to open his own company, Premier Reverse Mortgage. Reverse Mortgage magazine sat down with Neumeyer to learn more about PRM, his work ethic, and what he has learned over the past 19 years to be successful.
Reverse Mortgage: What motivated you to open your own mortgage brokerage company after being an originator for so many years?
Matt Neumeyer: Around the time that the subprime fiasco hit, I envisioned Shelter Mortgage becoming a bigger player in reverse; however, Shelter didn’t have the proper training to underwrite HECMs and wasn’t enamored with the product. They were also unwilling to let me establish new wholesale relationships, so that we could deliver loans to more than one investor. That prompted me to change companies. For the next year, I worked for a lender that had a somewhat unique structure. I received no support from corporate. I was my own boss, so it was like owning my own mortgage brokerage business within the company. That worked out fine until I got a call from the owner one day saying that the company had lost its license to originate loans in Georgia where I am based. It completely caught me off guard, and so in my mind, I thought to myself, I have to start controlling my own future. I hung my license with one more company, but in the meantime, I started forming Premier Reverse Mortgage, which is a good thing because that company exited the reverse mortgage business three months later. The other factor that led me to strike out on my own is that a few years earlier, FHA lowered its net worth requirements for third-party originators, so a significant barrier to entry to originate HECMs was eliminated.
RM: What resources did you have to create a business from scratch?
MN: I bootstrapped it with my own 401K and did it on the fly because I had no other choice. I had a mentor when I started at Shelter who taught me the reverse mortgage and forward mortgage game from a loan officer perspective. He now works for me, so we’ve come full circle from him being my mentor to being an employee. I had no resource guide. I made mistakes and learned from them. I’ve been a leader my whole life, and am a go-getter, so a lot of it came naturally.
RM: What can you tell us about PRM?
MN: My vision all along was to be a mid-size national lender, hovering around the top 25 in volume. To stay relevant in this industry long-term, you have to be nimble, because the only constant is change. I’m still young, relatively speaking, and I plan to stay in this business for another 20 years. My target is to be a Top 25 retail originator, in the 20 to 30 loans a month range. Right now, we’re doing anywhere from 5 to 15 loans a month. We have seven employees, down from ten before volumes declined. We intend to cycle back up once the Fed starts cutting rates. Long term, I see us writing 20 to 30 loans a month with 12 to 15 employees. We’re licensed in 15 states. We’ll probably grow to approximately 20 in the next few years. The states we’re licensed in cover 80 percent of the HECM volume in the country, so the last 35 licenses would be just to pick up a small percentage here and there. We only originate reverse mortgages, and we’ll stay that way. I have no desire to dabble in forward mortgages. It’s a different animal as everybody knows and we have enough trouble keeping up with all of the nuances in reverse.
RM: Does most of your business come from Georgia?
MN: A significant amount of it does, but our top states by revenue in 2022 were California, Georgia, Florida, and New York, in that order. We’ve targeted the highest volume states on purpose. Georgia closes less than 100 reverse mortgages a month and when you’re competing with large companies on television, it’s hard to get ten of those 100. When the television ads became mainstream, I pivoted and decided I can’t do the boots-on-the-ground thing anymore. I needed to come up with an idea to generate leads with a more national focus if I wanted to be a bigger player. I was successful at doing that in 2019. That’s when I started to hire people because I was taking on more than I could handle myself. I hired a processor and then started looking at loan officers. That’s where we are today.
RM: What are some lessons you’ve learned over time that have helped make you more successful?
MN: Time management is important. Reverse mortgages require a certain amount of labor, and you can’t automate those hours. You need to be efficient and develop a process that can be easily repeated. You can delegate, but everyone right now is cognizant that they need to be lean. It’s tough to be profitable right now and so you can’t overstaff to handle the highest volume months with ease. Over 19 years, I’ve learned to pre-underwrite loans because it made me a more successful LO with a pull-through rate of 80 percent. I do that for every loan that comes through our door. I spend an hour looking at every document, reviewing the loan software, and visiting Zillow and other valuation sites. I look at Google Maps for images of the home. I look for red flags to catch them early and avoid wasting time on a loan that’s going nowhere. The other thing would be saying ‘no’ to unpleasant customers. A not insignificant percentage of borrowers are not happy with their lives, for whatever reason. If somebody comes to us, and they’re just generally angry and not pleasant, we cut ties with them, because it saves time and eliminates headaches.
RM: How do you generate most of your loan production? Business referrals? Advertising? Social media?
MN: I’m in the process of getting us more diversified. We have a boots-on-the-ground loan officer here in Georgia who goes to all the senior networking groups. PRM does a good bit of web advertising. We tested videos on YouTube and are likely to keep playing around with that channel. We’ve sent out direct mail with limited success, most of that being in H2H. We may try television advertising, but right now, we’re focused mainly on the web. We avoid social media due to the perception of our industry. I’m not a fan, particularly if people can post comments. What you learn is that it is very difficult to generate traditional HECMs at an acceptable cost per acquisition.
RM: You’re based in Georgia, but licensed in 15 states, including California. Does your marketing strategy differ at all by geographic location?
MN: As far as our approach from state to state, we’re mainly an inside sales team. The people I have working as loan officers are coming from an environment where they’re used to selling over the telephone or on Zoom. Our approach to how we deal with people is not necessarily based on where they’re located but rather on the hours that they’re likely to be awake. We also have one loan officer who speaks Spanish, because we get quite a few inquiries from people whose first language is Spanish rather than English.
RM: I guess what I am trying to say is how do people in California find a small mortgage brokerage in Georgia?
MN: The reverse mortgage business changed significantly in the late 2000’s when you no longer had to have face-to-face applications or counseling sessions. Big national players sprung up and you had to adapt or be eaten. You can do Google advertising, whether it be somebody doing it for you and putting you on a list in that specific state, or you could do a direct search yourself where your ads are shown to people in certain states. When you do web advertising, you can direct them to wherever the people are located. We get people who call and say, ‘I want somebody in this city in California to meet with me,’ and we tell them we can’t do that because we don’t have loan officers everywhere. In those instances, we tell them that we can handle this by Zoom video to give them that in-person, kitchen table feel. It’s 2023 and most people can find you on Google to do their due diligence. If they feel like they can trust you, and they like your loan officer, they don’t really care where you’re located, or that you are a broker.
RM: After being in the reverse mortgage business for almost 20 years, what’s the most important lesson(s) that you have learned?
MN: I wrote a couple of things down, and it’s mainly from a macro view of our industry. It’s important to have a thick skin. Everybody has a negative perception of reverse mortgages, including the people in your professional network and family members. I am a big believer that the traditional HECM pie is what it is until we change the way that we’re perceived. When you take out HECM-to-HECM refi’s, the volume has gone from roughly 50k loans a year down to 30k as a result of the upfront MIP changing back to two percent on all HECMs. That’s not a good sign when we’ve had higher home values than ever before and many years of extremely low rates. HUD isn’t throwing us a bone when it comes to the present structure of the product. I’ve heard people say that we need to get more word out and more distribution amongst forward mortgage companies. If you look at the list of originating entities in this business, there are plenty of forward companies with 500 to 2,000 loan officers on staff and yet it’s not changing the volume that we do as a business. Something else must change. I think it’s partly the high closing cost barrier. If we could have a HECM Saver product or some other low-cost option with a market rate, that would be great. But I also think the industry has to either go head-on and push back on the negative perception issue, or we need to rebrand ourselves with a different product name, whether it’s Home Equity Conversion Mortgage or something else. I think we have the right people in this industry to figure it out, it’s just a question of getting together and executing a plan.