WSFS Buys Stake in Reverse Mortgage Lender
The reverse mortgage trend is officially hot: WSFS Financial Corp. (WSFS), the parent of WSFS Bank, said Monday that it had purchased a majority stake in wholesale reverse mortgage lender 1st Reverse Financial Services, LLC. The investment marks the second major financial institution in roughly one month to jump into the now-booming reverse mortgage space; MetLife, Inc. said in early April that it would acquire New Jersey-based EverBankReverse Mortgage LLC. A reverse mortgage allows homeowners age 62 or older to convert some of the equity in their home into tax-free cash, a line of credit, monthly income or a combination of the three. There is no mortgage payment and repayment of the loan is not made until the homeowner permanently leaves the home. Most reverse mortgages are government-insured products. WSFS said it made the move because it expects "high demand" for reverse mortgages as Baby Boomers transition into retirement. More than 7,400 people each day will turn 62 over the next three years, according to Census estimates; and almost 50 percent of workers have set aside less than $25,000 for retirement, according to research from the Employment Benefit Research Institute. "In addition to WSFS' long history and extensive experience with the reverse mortgage business, this acquisition is the right investment in the right industry at the right time, especially as baby boomers need more choices to finance their retirements," said Mark A. Turner, WSFS President and CEO. WSFS has originated reverse mortgages via retail banking channels for nearly 15 years; the acquisition marks the institutions move into wholesale origination. As an operating subsidiary of WSFS Bank, 1st Reverse will continue to operate under their existing name and will remain headquartered in suburban Chicago, the bank said in a press statement. Disclosure: The author held no position in WSFS when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.