Wells Fargo the undisputed industry leader for reverse mortgage production announced plans today to exit the reverse mortgage market.
The decision was announced today in a press release. The reasons cited for the exit was 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.
The move comes several months after Wells Fargo announced plans that they would stop offering channels through their reverse mortgage channel. Their retail channel has always produced the vast majority of their HECM volume.
“Wells Fargo will continue to service the loans of existing (HECM) reverse mortgage customers,” said Franklin Codel, executive vice president, head of National Consumer Lending, “We will continue to provide options for seniors who wish to determine ways to access the equity in their homes.”
According to data from Reverse Market Insight, Wells Fargo has held a 26% market share in the reverse mortgage industry, a 10% increase over the next closest competitor. In the previous 12 months, their total production was 18,084 endorsed units, an average of 1,507 loans per month. After reaching a 12 month peak in March of 1,960 units, production has fallen to 1,253 in April and 1,092 in May.
In the release, Wells expressed pride in their 20 year experience in the HECM business. The current 1,000 reverse mortgage division employees will be provided opportunities to apply for other open positions within the organizations other 80 businesses. As of 2010, the funded volume represented approximately 1.2% of their overall mortgage volume.
The company stated that new applications will not be accepted after June 30, 2011. They encouraged customers with current active applications to contact their reverse mortgage consultant for more information.
Wells Fargo has been in the national spotlight recently as part of the foreclosure settlement negotiations taking place with all state attorneys general and federal regulators. In addition, the U.S. Treasury recently announced that Wells Fargo, along with Bank of America and JPMorgan Chase would have financial incentives withheld due to their involvement in the servicing/foreclosure issues.
This is a breaking story. Updates will be released as available.