An Austin, Texas-based mortgage lender plans to hire about 50 employees laid off in early May from Live Well Financial, including three of its top executives.
Open Mortgage has hired Live Well Financial’s core team of mortgage lending executives who worked in the company’s San Diego office: Bruce Barnes, the company’s former executive vice president; Jim Cory, its senior vice president of operations; and Joshua Moran, the senior vice president of wholesale and correspondent lending.
Open Mortgage also said about 50 sales and operations employees are joining the company.
About 15 of them worked in the company’s Chesterfield County corporate offices, mostly as underwriters who helped handle the loan process, said Scott Gordon, founder and CEO of Open Mortgage.
A handful of the 50 employees being hired work in sales from the San Diego office, and the rest of the workers are scattered across the country, he said.
Live Well Financial, a once fast-growing mortgage and reverse mortgage lender and servicer, abruptly ceased operations in early May. It laid off 103 employees who worked at the company’s corporate offices in the Boulders office complex in Chesterfield.
“Live Well was a great company. We did a lot of business with them. They were larger than us. They were well-known in the reverse mortgage industry,” Gordon said.
“When we had heard they had shut down, we called them. We thought this was a great opportunity to keep as much of their team together as possible,” he said. “It is a lucky opportunity for us to work with good people. We thought it would be a great fit. We have worked with them, and we knew they were trustworthy.”
Open Mortgage has leased temporary space in an office building on Beaufont Springs Drive in the Boulders office park, not far from where Live Well Financial’s offices had been. Plans call for Open Mortgage to locate to a bigger office here as it expands operations.
The company is taking over the former Live Well Financial office in San Diego, he said.
Founded in 2003, Open Mortgage has operation centers in Austin; Atlanta; Rapid City, S.D.; and now in the Richmond region. It also has 79 branch offices in 24 states with nearly 400 employees. It generated $636.9 million in home loans in 2018.
The Richmond-area office will become more important, Gordon said. “It will be critical to have an ops center in the Northeast, and this will be the first real presence up there. That is exciting.”
Open Mortgage also has been growing its reverse mortgage business in recent years and wants to become an even bigger player by adding the Live Well Financial employees, he said.
Live Well Financial had been ranked No. 7 among the top reverse mortgage lenders by volume, and Open Mortgage was 10th, Gordon said.
Despite the reverse mortgage business in the U.S. recording the lowest volume last year since 2005, Gordon said the demand is still there. “With so many baby boomers getting older, there is demand for the reverse mortgage business.”
Barnes, who joined Live Well Financial in 2014, said in a statement that he and his team built a leading reverse mortgage business that had more than $5 billion in reverse loan volume.
“Our plan is to do this again only bigger and better,” Barnes said. “We are looking forward to further advancing Open Mortgage as a leading retail, wholesale, principal agent and close loan buyer of reverse mortgages.”
It is unclear what forced Live Well Financial to shut down abruptly on May 3, but Gordon shed some light on the situation.
Gordon said he doesn’t have firsthand knowledge of what happened but understands a bad investment impaired Live Well Financial’s equity position.
“For all of us mortgage bankers, it takes quite a bit of cash to run our business, and we use lines of credit from banks. And if your warehouse lenders, the banks that give you lines of credit, they can pull your lines of credit and you are just done,” Gordon said.
“I know they had to shut down from losing warehouse [credit] lines for having less equity. I have no details of how they had that loss,” Gordon said. “They were a good company. That is why I am so happy we were able to work it out with some of their team.”
Officials from Live Well Financial have not responded to multiple requests for comment. But the company provided some details in a letter sent to Virginia employment officials about why it was ceasing operations immediately.
“Due to sudden and unexpected developments in the markets for certain financial assets the company uses as collateral for certain credit facilities that provide this liquidity, these lenders have reduced significantly the amount of liquidity they make available to the company,” the letter said.
“This reduction in credit availability combined with challenging conditions in the markets for mortgage loans, which were conditions outside of the company’s control, along with related regulatory issues, have resulted in the company having insufficient available cash to continue operations.”
Last week, Michigan-based Flagstar Bank filed a federal lawsuit seeking repayment of more than $82 million in principal, interest and expenses on two outstanding loans held by Live Well Financial. The bank is demanding that Michael C. Hild, the founder and CEO of Live Well Financial and the guarantor on the loans, repay the bank, according to the lawsuit filed in U.S. District Court for the Eastern District of Michigan.