Wells Fargo to Exit Wholesale Reverse Mortgage Business

March 1st, 2011 | by John Yedinak Published in Bank of America, News, Reverse Mortgage, Wells Fargo | 11 Comments

Wells Fargo will exit the wholesale reverse mortgage business and will no longer accept applications through its broker channel after March 18th.

“After a detailed review of evaluation of volume and goals for 2011, Wells Fargo Wholesale Mortgage lending (our broker channel) has decided to discontinue offering reverse mortgage loans,” said Veronica Clemons, spokesperson for Wells Fargo Home Mortgage in an email to RMD.

While the bank is the largest retail reverse mortgage originator, wholesale has never been a big part of its business. Wells Fargo is the seventh largest wholesale reverse mortgage lender, sponsoring 1,206 HECM units in 2010 according to Reverse Market Insight. Of its total reverse mortgage volume, only 7% came from its wholesale channel, which was down 34.6% last year.

As far as retail is concerned, it’s business as usual and the company plans to transition wholesale employees to its consumer platform.

“We continue to make reverse mortgage loans through our Retail Mortgage lending channel (direct-to-consumer), where most of these loans are originated for our company,” said Clemons. “Wells Fargo team members who support Wholesale reverse will transition to support reverse mortgage loans through our Retail channel.”

Wells is the second large bank to exit the wholesale business in the last 30 days. Bank of America announced it was shutting down its entire reverse mortgage operation last month.

Update, Wells Fargo announced they’re exiting the retail business as well. More information here.

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Anonymous

As the former national retail reverse mortgage sales manager at Wells was fond of saying: “That’s nothing but old news.” That rumor has been on the street since the decision of B of A to withdraw from our “little” industry.

If it were Wells retail division which was closing down that would be news. Wells never seemed fully committed to a reverse mortgage wholesale operation. In the reverse mortgage area, Wells is great at three things and three things alone — retail, retail, and more retail.

That does not mean that our hearts do not go out to the wholesale employees. We certainly hope all will land on their feet quickly and wish them the best.
Anonymous

2 lenders announce there plans for the upcoming april 1st changes and they decide to get out of the wholesale business. It will be interesting to see how other lenders react to the forthcoming legislative changes since no one has announced their plans. The writing is on the wall for who will survive in the mortgage industry. Unfortunately with little competition the only one who will get hurt is the consumer who will ultimately have higher costs to get a mortgage.
Anonymous

MetLife says “Thanks, BoA, thanks Wells!”
The_Critic

reverseguy1234,

If your interpretation is correct why does Wells still have its retail hat still in the ring and B of A does not?

Are you sure this is a legislation issue or a Fed interpretation issue? There is a huge difference.

How can you say that the consumer will be the only one who will get hurt if the market is whacked by this rule? I can think of many even in our little industry who have been hurt.

There is a definite trend here. The Seattle Mortgage model of the past was principally based on more of a wholesale model than retail. By bringing back Sarah Hulbert and others, it seemed that they were trying to rebuild that model but gave up seeing little hope in THIS environment. Wells has reached a similar conclusion.

The B of A issue seems totally different. Its timing clouds the issue. One friend relayed an interesting rumor that B of A senior management funded a marketing scheme presented to it by their dinky reverse mortgage division last year and risked $5 million and profited but only by $1 million. With the profit in the market at that time, senior management decided that if the situation turned less favorable, they would take out their reverse mortgage division if they had to reorganize their mortgage operations due to the Countrywide fiasco; they concluded that their reverse mortgage operation was little more than distraction with some contingent liabilities. The next twelve months did little to show that the conclusion reached by senior management should change. Now is that rumor fact? Who knows?
John A. Smaldone

I see a few things happening here. First off, we have been seeing for close to two years the shrinkage of players in both wholesale and retail. It has been either due to regulation issues, cost to do business and players not being proficient enough in the segment of the industry they are in, wholesale verses retail.

I know there has been questions as to why BOA is out of retail all together and why Wells is not. That is a good question. I feel Wells Fargo never was in the wholesale business. They were but they were not. The wholesale division of Wells was not profitable from what I understand. They were always good in retail, that is why they hold the position they do in that segment of the market. I think it was a smart move on the part of Wells. They will profit from their decision.

BOA is another thing all together. What I am about to say is my opinion only. I am convinced the deal with BOA and Countrywide was not a marriage made in Heaven and one that was NOT overly welcomed by BOA. In short, I will go on record by saying if I were a betting man, I would bet you this was a forced marriage by the feds. BOA waited until the time was right to dump the Countrywide team and mess they were forced to get into!

I also go on record in saying I believe very strongly it is the intentions of the Fed’s to continue to eliminate players, banks and credit unions in the industry. I feel we are moving toward a monopoly and a socialistic make over of the banking and entire mortgage banking industry. I have said this before and I say it again, we MUST repeal/revoke the “Financial Regulatory Reform Bill” in its present form. By doing so we would eliminate the “Consumer Financial Protection Bureau” and just maybe have some chance to get back on the path of capitalism again in our society!

I realize I am being very bold in what I have said but look around us folks. Look at what is taking place through out the financial industry. We need to wake up my friends, our concerns and actions must be taken more seriously than what we have shown them to be. We have many challenges ahead of us in the reverse mortgage industry. We will experience more change in the upcoming years than we have seen in the past. Many will leave the industry, some will stay and new faces will emerge. Any way we look at it, we will be doing business differently.

However, we do NOT need to socialize our financial industry, we need to make our voices heard and fight for the future of our country, for the reverse mortgage industry and to maintain a free and capitalistic financial system!

John A. Smaldone
The_Critic

Peter,

There is no doubt the small reverse mortgage portion of MetLife has new opportunities and shares some of your view. BUT I am not so sure MetLife senior management shares your view. Time will tell. This is not 2007.
The_Critic

John,

I am not so sure what the situation was/is at B of A. There are rumors that as to the mortgage segment, it was Countrywide which gained the ascendency and is now ruling the roost. Some have said one of the reasons why senior management was willing to dump its reverse group was conflicts between the Countrywide camp and the Seattle Mortgage group. Doing what they did settled the issue once and for all. If B of A comes back into the reverse mortgage space, they will be headed by the Countrywide camp.

It is clear that 600 employees did not make the decision that hard.
Anonymous

This business is for the consumer correct?? Lose that vision and your in the wrong business.
John A. Smaldone

Hi Critic,

I hear what you are saying and I believe you are right. I was with Countrywide Bank and in management in the reverse mortgage operation. I saw all I wanted to see when they brought into the division all their X sub-prime people.They may have called it the specialty lending group but it was sub-prime people and mentality 100% as far as I was concerned.

The Fed’s implemented and forced the joining of forces. The whole BOA/Countrywide fiasco put a major burden on the housing industry. You may be right about what will happen if BOA comes back in the RM world again, I hope you are wrong. You have a good day my friend.

John A. Smaldone
Anonymous

will HUD issue another ML in response to the AARP lawsuit regarding displaced homeowners.
Anonymous

will HUD issue another ML in response to the AARP lawsuit regarding displaced homeowners.

Wells Fargo to Exit Wholesale Reverse Mortgage Business

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