Wells Fargo and Bank of America Get Out of Reverse Mortgage Business
The New York Times reports that two of the largest banks are getting out of the reverse mortgage business due to financial pressures.
The following response to the news from the industry trade group, The National Reverse Mortgage Lenders Association
Statement from Peter Bell, President of the National Reverse Mortgage Lenders Association, regarding the Wells Fargo Home Mortgage announcement to discontinue reverse mortgage lending:
“Reverse mortgages and HECM loans are readily available to seniors as an important tool to help them stay in their homes and to fund their longevity. The decision by Wells Fargo that it will no longer originate new reverse mortgage loans does nothing to change this. The HECM program remains a relevant tool and the vast need for it continues.
“All current Wells Fargo reverse mortgage borrowers will continue to be serviced and funds made available. Demand for HECM loans remains strong. In fact, the HECM program has evolved to meet the changing economic times with the recent introduction of the HECM Saver, a new product that reduces costs and increases consumer protections. The HECM Saver has been embraced by consumers, and grown steadily since its launch.
“NRMLA has been working with HUD to develop and implement procedures to undertake a financial assessment of prospective borrowers’ income and expenses to determine their ability to pay taxes and insurance charges after obtaining a HECM or to establish a set-aside of funds to pay such charges. It is anticipated that the Department will be issuing a rule change in the future to provide HECM lenders with the discretion to make these necessary underwriting changes.
“NRMLA will work with all member institutions to ensure the industry has the capacity to process loans for seniors who need them. HECM loans are insured by the Federal Housing Administration, and are replete with consumer safeguards. Additionally, the Federal Government insurance guarantees funds will always be available to borrowers, and limits their exposure to the market value of the home.
“Wells Fargo Home Mortgage will be missed by the industry. The reverse mortgage professionals at Wells Fargo have been good corporate citizens, sharing knowledge, business insight, and educational resources. We wish them all the best as they transfer to new opportunities.”