Based in Roseville, CA, and founded in 1996, American Pacific Mortgage (APM) is a national, independently owned and operated, retail mortgage lender that has funded over $22 billion annually.
In 2005, the company expanded into reverse mortgages and for much of the past decade has consistently ranked among the Top 20 reverse mortgage lenders in the U.S.
The person in charge of the reverse mortgage division since its inception is Desmond Lenz, CRMP, who got his start in the mortgage business in 1992 originating FHA, VA, conventional and construction loans.
Reverse Mortgage magazine sat down with Lenz to find out how he got his start in reverse mortgages, what factors have contributed to his division’s success, and what his priorities are for 2024.
Reverse Mortgage: How did you get your start in the reverse mortgage business?
Des Lenz: I started originating traditional mortgages in 1992 and ended up at American Pacific Mortgage in 2000. I started looking for a niche. Traditional mortgages were interesting, but I started researching reverse mortgages. I liked the demographic, and I liked what the loan could do. I view it as a financial tool that can do a lot of things for a lot of people. I went to the ownership of the company and they said, ‘We don’t currently do them. If you want to do reverse mortgages, you have to do the research, you have to get trained, and you have to pay for whatever needs to get approved.’ I contacted Financial Freedom and we got trained and started originating loans. We did that for about five years when it became really evident that reverse mortgages were a different animal compared to traditional mortgages. My loan processor did forward mortgages and reverse mortgages. She disliked reverse mortgages because they took longer and they were so different. We launched the reverse mortgage division in 2005 as a separate platform within APM to funnel reverse mortgages, so that we had the expertise and the oversight.
RM: How did you find out about reverse mortgages?
DL: I read about them and about seven years earlier somebody came into the office and said, ‘Hey, I do reverse mortgages.’ I had no idea what they were, but we talked a little bit. Nothing developed from that conversation, but it planted a seed, so that later, it was like, ‘Hmm! Let me read about these, let me do some exploration.’ Through the research, that’s where the interest grew, and it was, ‘Oh, look what this could do?’
RM: Tell us about American Pacific Mortgage and what distinguishes it from other lenders.
DL: APM is licensed in 49 states, employs more than 3,600 people, and has around 160 branches. What I like about the company, what distinguishes it for me, is its stability. We have an executive team that is really good at looking down the road and asking, ‘Where’s the market going? Where do we have to be to not only survive but thrive?’ That’s how APM navigated 2008, 2020, right now, which gives us the platform, the framework, to have our reverse mortgage group and to have the doors open every day. Our superpower in the reverse group is our people. We’ve got a team with a lot of experience. I spoke with two people in the office today and both reminded me that they had been with the company since the reverse mortgage division was launched 18 years ago. Our company is built on a purchase business model on the forward side, so it’s face-to-face. You know your Realtors; you know your borrowers. That is a superpower for us because our loan officers sit with the clients and discuss how the reverse mortgage works. We’re not the number one originator in the business. We know it and that’s okay. We know who we are. We service our branches well. We want to do more business organically by growing the knowledge within our forward loan officer network. At the end of the day, I think that we’re good at knowing who we are and taking great care of clients.
RM: How many people are part of the reverse mortgage team? How many states do you offer reverse mortgages?
DL: We have 19 people in various roles. We are licensed in 49 states. A lot of our business comes from the Western U.S., so California, Oregon, and Washington, but with that said, we obviously do loans throughout the nation. When a loan officer in one of our branch offices comes into contact with a prospective reverse mortgage client, our job is to educate the loan officer. We provide the quotes and the loan packages so that the loan officer has all of the right information for the client’s situation, including the right product for them. Our job is to support their efforts so that the expertise that they may not have, we do have, and we fill in the gaps for them so that the clients are well taken care of.
RM: That sort of answers my next question, which is do you allow the forward mortgage salespeople to originate reverse mortgages or is there a firewall that separates the two? It sounds like you do, but it’s managed within your department.
DL: That’s a good way to put it. Our culture at APM is a culture of choice. A lot of top-producing, forward loan officers don’t want to do reverse mortgages because they don’t want to learn it. They don’t spend the time, and you get that, so they’ll just refer it over and we’ll take care of it. Other loan officers say, ‘This is my Realtor’s mom; I want to be the originating loan officer.’ We’ll put them through training sessions, run the quotes, provide the information, and, as you say, manage it within our group to help that loan officer compliantly take care of the client.
RM: You’ve managed the reverse mortgage division since 2005 and consistently rank in the Top 20 when it comes to reverse mortgage originations. To what do you attribute your success?
DL: This gets back to what I said earlier, which is we know who we are. We focus on our business model. We’re not going to suddenly buy a bunch of TV time or hire a professional spokesman. We’re going to connect with Realtors and financial advisors, and we’re going to help our branches have conversations with those professionals. That way the industry professional can refer their clients to our loan officers with the knowledge that this loan is going to help the client financially, to afford the services that they need in their life. At the same time, they can do strategic things to help them get through retirement without running out of money. Another big focus is insurance. The rising cost of homeowners insurance is becoming a big problem, not only in California but across the country. Here’s another funding source that could help somebody stay in their house and afford the coverage that they should have.
RM: Interesting. I had never considered that sales angle before, but it makes sense.
DL: Yeah, we’re talking to insurance agents saying, ‘Hey, your client may not be able to get insurance right now. In California, three major carriers – All State, State Farm and Farmers – stopped writing new policies for the most part. There’s an insurance outlet in California called the Fair Plan and the example an insurance executive gave me was, ‘Look, you go from $1,200 a year for your current policy. Now, I have to go to the Fair Plan to find coverage and it might be, depending on where the property is located, $5,000 a year. Plus, you have to get a wrap-around policy for liability and the other coverages, and that’s another $1,500. So, the policy went from $100 a month to $550 a month. It’s not just California that has a problem. It’s a United States problem, it’s a world problem. Watch the news. Everywhere there are wildfires, tornados, and other disasters. If you’re wanting to stay in your house, and your insurance suddenly went up five times what it used to be, that’s a problem. We’re looking for a way to help clients. That’s a place where they’re going to have a pain point where we can help out.
RM: On its website, APM proudly promotes community involvement for its employees, health and wellness, diversity, etc. What can you tell me about these initiatives?
DL: It comes from the top, the ownership, and executives saying, ‘We care about the communities that we’re succeeding in. We care about the people we hire. What can we do to support them?” We have a charitable arm called APMCares. Loan officers can make contributions on a per-closed-loan basis to the fund, and their branch and APM corporate will make matching contributions. You might have a food bank in your neighborhood that you want to support. You can put in a request to APMCares, along with a dollar amount for the donation. Sometimes they’ll provide the amount requested, while other times they might contribute more. At times financial assistance is provided to an employee of the company who’s experiencing a tough time, maybe the loss of a spouse or family member, or a medical issue. The whole concept is that we’re not just doing loans. Yes, we’re helping people solve financial problems, but we care about our communities, we care about the people we work with, and I give the company a ton of credit. We recently had a golf tournament that raised $25,000 for the APMCares Fund.
RM: Are there particular approaches to marketing and lead generation that you try to instill in your salesforce?
DL: We don’t do TV ads. We don’t buy leads. As a general rule, that’s not how we’re structured as a company. We look at it and say, ‘Here are our loan officers. What have they been doing to be successful in the past?’ Well, in the past they’ve been successful with Realtor referrals. They have relationships out there. They go to the meetings and do all that kind of activity. What do we do to support that? We’ll do a Reverse for Purchase presentation geared toward Realtors. The loan officer fills the seats and we provide the content. It gives them the opportunity to not only provide information for their current Realtor network, but it starts a conversation with prospective Realtor partners. The idea is to support what our loan officers have done in the past to succeed. Let’s figure out ways that we can provide the support that will help them build their business, forward and reverse, and in the process we all win. If I help you win, I’m going to win because there’s going to be a reverse mortgage done. When you’re meeting with Realtors, financial planners, and CPAs, and showing them how a reverse mortgage can benefit their clients, there’s somebody sitting there thinking, ‘I want one of these myself. I personally need the benefit of this.’ Just putting on the presentation a lot of times yields loans because somebody needs it for themselves. We aim to help our branches do a great job at what they’ve already been doing to succeed. That’s really our game plan.
RM: What are your professional goals for 2024?
DL: Number one is navigating this market. We’re going to add more reverse mortgage loan officers to our team. We’re going to train more forward loan officers. When I attended NRMLA’s Western Regional Meeting in June, I took my own mini survey and asked our investors, ‘Where’s the gold?’ and they kept saying a forward mortgage loan officer’s past client database. I agree. We’re a fairly large company with a fairly large database of closed loans with people turning 62 or 55 every day. The opportunity is there. It’s in our database. You don’t have to go out and broadcast and try to find these people. They already know, love, and trust the loan officer who helped them buy a home. This is a huge opportunity. We’ve begun working on that and finding out that there are things you need to figure out to get the forward loan officer connected to their past clients about reverse mortgages. If you think about what that could do for our industry, it’s huge. The conversation for forward loan officers and their past clients, and also the Realtors, is something like, ‘Darryl, you have a very low-interest rate. 3.0 percent, fixed rate. Correct? Yes. Do you want to give that up? No. What’s the benefit of having that low rate? It’s a low payment. What if I could show you no payment? Would you be interested in looking at that?’ That’s the conversation; getting people to get away from having a target fixation on that low rate and to focus on the opportunity that might be provided by looking at a different strategy (with a reverse mortgage). In 2024, there will be a lot of effort to get that message across to our forward loan officers, so that they can do some business and help more people. That’s the goal.