Wells Fargo ends reverse mortgages
Wells Fargo (WFC) will no longer originate reverse mortgages because of unpredictable home values and restrictions on those loans. A reverse or Home Equity Conversion Mortgage allows the borrower, who must be at least 62 years old, to convert a portion of the equity in the home for cash. No repayment is required until the borrower no longer uses the home as a principal residence, often in the event of death. In March, Wells moved its reverse mortgage originations in house and away from brokers. But now it will cease the product line all together. In 2010, reverse mortgages totaled roughly 2.2% of the bank's $392.5 billion mortgage volume. Wells said it will continue to service existing reverse mortgages, but new rules made it difficult to determine a seniors' ability to meet the obligations of the loan, such as making property tax payments and homeowners' insurance. "The government’s HECM or reverse mortgage program was designed in a different economic time," Wells said. Bank of America (BAC) ceased its reverse mortgage lending in February. Wells said the 1,000 member staff of the reverse mortgage department will be able to apply for other positions at the bank. Write to Jon Prior. Follow him on Twitter @JonAPrior.