Expressing concerns about the growing number of regulations and scrutiny on large banking institutions, MetLife Inc. announced plans to explore the sale of their depository business, MetLife Bank NA.
According to the company, the banking operation attributed a small amount of their operating income and subjected the entire company to banking regulations that hindered their ability to compete with other insurance company.
The move would include their depository business including savings accounts, certificates of deposit and money market accounts. MetLife, however, intends to retain their MetLife Home Loans division and continue to offer residential forward and reverse mortgage loans.
In an internal company memo announcing the move obtained by National Mortgage Professional Magazine, the company stated an on-going commitment to their growth strategies in all of its mortgage banking business, including forward, reverse and jumbo mortgage products.
"The mortgage business often provides access to the bulk of a person's wealth and, therefore, is a natural part of financial and retirement planning," continued the memo. "In addition, the mortgage product provides a natural hedge to the insurance business and a diversified entry point to customer acquisition."
The biggest challenge for MetLife should they successfully sale their banking division will be the licensing transition of their mortgage division. The sale of the banking division will require the company to relinquish their national bank charter and they will lose the national exemption for state licensing. Accordingly, all mortgage division employees would be subject to NMLS and state licensing under the SAFE Act.
MetLife has been a natural gravitational pull for employees coming out of Wells Fargo and Bank of America due to the company being the last major bank in the reverse mortgage sector offering the national exemption to originators. The exemption only requires originators to be registered with the NMLS and are not required to be licensed. This is due to the regulatory structure banks are under at the federal level.
With the exit of the other large banks, MetLife has been poised to assume the top spot in the reverse mortgage industry, by a large margin over the next competitors. However, the transition could slow growth and open the doors for other competitors to gain ground. A key question for originators who are used to being under the bank charter regulations is whether they will choose to go through the licensing process, which will include obtaining licenses in each individual state they plan to operate in, or give up the large brand and join one of the smaller companies that do have the national bank charter.
MetLife, in anticipation of the sale of the banking division, plans to focus on the licensing of their originators over the next 6 to 12 months.
The impact this transition will have on the breadth, depth and reach of their reverse mortgage division, along with the opportunities it creates for others operating in the space, could have an interesting impact on the make up of the industry. If the move affects their momentum, it could allow others to capture market share driving additional changes among the top lenders.