Mortgage Daily Logo

Biggest HECM Lender Abandoning Originations

Mortgage News

Following a similar move by the second-biggest originator of government-insured reverse mortgages, No. 1 is throwing in the towel — a move that will impact a thousand employees. A total of three players have now said they are done in the sector, and those three firms accounted for nearly half of all federal reverse mortgages that were originated over the past year.

Wells Fargo Home Mortgage disclosed in March that it was getting out of the wholesale reverse mortgage business. A statement indicated that the decision was made following a “detailed review and evaluation of volume and goals for 2011.”

But the move wasn’t supposed to impact retail reverse mortgage originations, which were to continue through the direct-to-consumer channel.

Apparently, the Des Moines, Iowa-based lender had a change of heart.

A news release Thursday indicated that Wells would stop originating home-equity conversion mortgages.

Around 1,000 employees will be impacted by the decision. Wells said that they will be offered an opportunity to apply for other jobs within the conglomerate.

HECMs are insured by the Federal Housing Administration. Wells said that HECMs accounted for 1.2 percent of its total 2010 originations. Given the $387 billion that Wells reported in overall production last year, HECM volume amounted to around $4.6 billion.

“The decision was made based on today’s unpredictable home values along with the restrictions associated with reverse mortgages that make it difficult to determine seniors’ abilities to meet the obligations of homeownership and their reverse mortgage, e.g., payment of property taxes and homeowners’ insurance,” Wells explained in the statement. “The government’s HECM or reverse mortgage program was designed in a different economic time.”

During the 12 months ended April 30, Wells Fargo Bank, N.A., originated 19,257 HECMs, according to data from Reverse Market Insight. The next biggest player — Bank of America, N.A., closed 12,801 during the same period.

In February, Bank of America Home Loans said it would exit the reverse mortgage business entirely, while OneWest Bank subsidiary Financial Freedom disclosed plans a month later to end reverse mortgage originations.

BofA, Financial Freedom and Wells account for 46 percent of the total HECM market, and their exit will have a substantial impact on the diminishing sector.

In today’s statement, Wells said it would continue to service reverse mortgages and continue to offer home-equity options for senior citizens.

Related Posts

Centex Home Equity Announces Name and Brand Change to National Mortgage, LLC

Third-Quarter 2012 Mortgage Litigation Index

Lawsuits involving excessive fees, servicing fees and loan fees beyond state maximums. Defendant Plaintiff Court Amount Overview Case Title Case Number Date Filed Date of Activity Link to Story Fannie Mae and Freddie Mac Orangeburg County, Richland County, South...

Centex Home Equity Announces Name and Brand Change to National Mortgage, LLC

Net Branch Lawsuits

Litigation involving net branch operations. Defendant Plaintiff Court Amount Overview Case Title Case Number Date Filed Date of Activity Link to Story PHH Mortgage Corp. Mathews Supreme Court of Virginia na Court held that the term "branch office" includes not only...

Centex Home Equity Announces Name and Brand Change to National Mortgage, LLC

Whistleblower Lawsuits

Litigation related to loan servicing, including escrow issues, transfer of servicing and servicing borrowers in bankruptcy and foreclosure.   Defendant Plaintiff Court Amount Overview Case Title Case Number Date Filed Date of Activity Link to Story Bank of...

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming paperwork has been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and furniture need to...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand-new mortgage loan can be a difficult task, especially for first-time homeowners.   After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first...

Newsletter

Don’t worry, we don’t spam