Reverse mortgage industry veteran Kevin Gherardi only launched his new software company, Reverse Technology Group, this past August, but he already has a major new acquisition under his belt: the Department of Housing and Urban Development’s central reverse mortgage software system.
RTG purchased the Home Equity Reverse Mortgage Information Technology (HERMIT) platform from Walter Investment Management Corporation (NYSE: WAC) in December of last year, Gherardi said in an interview with RMD. Gherardi just announced the acquisition last week after a probationary period expired, he said, though he declined to disclose the purchase price.
HERMIT essentially serves as the reverse mortgage nerve center for the Federal Housing Administration, managing the origination and servicing of all Home Equity Conversion Mortgage loans in the Mutual Mortgage Insurance fund — from origination to Mortgage Insurance Premium collections to claims and terminations. Under the terms of the acquisition, RTG has full ownership of the systems and source code associated with HERMIT, which it is currently licensing to HUD for a five-year term that began in December. Reverse Market Insight, a Dana Point, Calif.-based research firm, also provides joint services for HERMIT as part of the agreement.
Gherardi said the HERMIT deal was only the first step for his fledgling company, which he launched in August 2016 after leaving Reverse Mortgage Solutions, the company he co-founded in 2007. (Walter, which acquired the formerly independent RMS in 2012, shut down its origination efforts earlier this year, and the brand currently lives on only as a servicing firm.)
He already has 25 employees working on multiple new software platforms that RTG plans to introduce by the second quarter of 2017, with a primary focus on allowing mortgage originators to service their own loans. The staff is split fairly evenly between employees with HECM experience and those with programming backgrounds.
“I’m a true believer that you need both business and technology people to make anything work,” Gherardi told RMD.
RTG is currently focusing on the development of software products that would allow reverse mortgage lenders to service their own loans without the help of third parties. The first program would attempt to fully automate the servicing process in order to prevent missing key HUD-required benchmarks, which Gherardi called out as a major potential pitfall for lenders.
“If you don’t service these loans to HUD’s guidelines and stay on top of them, you put yourself out of business very, very fast,” Gherardi said.
Another program would automate the claim-filing process when loans are reassigned to HUD in order to expedite repayment and avoid errors. All of RTG’s software will be compatible with both HERMIT and programs developed by other companies, Gherardi said, such as the San Diego-based ReverseVision and Bay Docs of Novato, Calif.
“There’s no reason why everyone can’t service their own loans if they want to,” Gherardi said. “I see it as an opportunity for people not to subservice, to keep their own loans.”