The demise of B of A and Wells is a fact complete.  Can they come back?  Their ability to do as they will in our industry is no secret.    
 
So why not sell their operations to another bank after all they were profitable turn key operations with some of the best of the best in the reverse mortgage space as their employees and management?  Shortly after B of A announced the closure of their reverse mortgage operations, its stock value rose.  Was there any correlation?  It seems no one actually noticed.  Did either CNBC or FBN spend 1 minute on the topic?
 
The problem was not with the operations.  The problem was with support from senior management.  There was so little knowledge or understanding about his own reverse mortgage division that on June 10, 2008, American Public Media posted the text of an interview with John Stumpf in which he said:  “We never participated in some of the real exotic things that the industry and others participated in.  For example: we never understood why it made sense to make someone a loan, a home mortgage with negative amortization.”  Really???
 
I know of no major entity which would have ever allowed a subsidy or division go under without at least attempting to sell them unless after selling costs they had no value in the market.  The total employees at the B of A reverse mortgage operations was less than 1% of its employment base.  Is that percentage significantly larger at Wells?
 
The reverse mortgage operations at each of these banks may have been the blue whales of our industry but inside their own banks they probably little more than grunion.  In the years they were part of our industry not once were neither John (no not Jeff) Lewis nor John Stumpf keynote speakers at NRMLA or at the meetings of the reverse mortgage division of the MBA.  Even more conspicuous not even one of the minor members of senior management from either of these companies even bothered to show up.  Were they important to these banking behemoths?  You be the judge.

The_Cynic is right.
 
As someone who was tangentially involved in the mergers and acquisition unit of a strategic planning group of a Forbes 100 company and the liquidation unit of a Fortune 250 company, not even attempting to sell these units says more than the related announcements.  That should have been the headline for both stories.    
 
Bank of America has divested itself of a unit it acquired by paying millions to Seattle Mortgage.  To them the percentage benefits of a tax write off is sufficient.  That in itself is incredible.  Talking about buy high, sell low….
 
Wells on the other hand had a much smaller investment in acquiring Directors Mortgage.  They are giving up a profitable operating unit for nothing.  That also says a lot.
 
The Big Three (Bank of America, Wells Fargo, and Financial Freedom) are now all gone.  What was the total gross sales price paid for all three combined?  That speaks mounds.

1.2% of their total business,thats like throwing a beachchair off a battleship. Its a niche market,a niche business so its time for niche vendors to take over.

Good point.

It would be great if HUD issued a statement regarding their intent to continue to make the HECM available.  That would help to calm everyone down.

Interesting indeed.

Agreed. I just spoke to an elderly homeowner the other day, prior to the WF announcement, that said he heard the government was getting out of the reverse mortgage business and won’t be offering them anymore. I assured him that I didn’t believe that was the case, but I couldn’t find any supporting articles or material to mail to him to reassure him further.

2545,

Let’s say you are right.  You forget many things about the small brokers who shut down.  There are usually lawsuits with no capital to always pay employees.  They do not stay open until the end of the month to get loans in.
 
1,000 originators (forget the over used and much abused term “consultants”) is a goodly number but not much in the scope of things.  Even if just 3% of the originators stay on that is 3% more than at most small lenders.
 
Wells has always been a grinder.  Those who join rarely stay.  Some claim the training was great while others claim they did not understand the industry until they left.
 
Wells is Wells.  Remember it is you who accuse them of lying about placing employees.  It sounds like you have an axe to grind.

Lance (by the way why is the The_Critic calling you Norman?)

Why would it help for HUD to say anything?  Then everyone would worry it was as valid as Wells’ statement about continuing its retail operation immediately after shutting down its wholesale unit. 

Let HUD keep still.

As a WF Reverse Mortgage employee, the saddest part will be leaving my co-workers who have been incredibly supporting and like a family. WF Mgmnt has provided an initial overview of our “displacement package” which is reasonably good, and has a program in place for preferential hiring of those people whose jobs have been eliminated. Transitioning back to Forward HMC’s looks like the primary option for most in Sales, We have been spending the past few days advising our past clients and those currently in the pipeline about the changes.

Wells had over 2500 loans in T&I default which we had been trying to “work through” to avoid foreclosure. However, HUD told us to pull the plug and we will have to do so. The reputational cost to Wells Fargo will be very high with the negative publicity of seniors being evicted by sheriffs while the TV cameras roll, being shown on the evening news with a newscaster in front of a Wells Fargo Bank branch. Painful.

Coupled with the the inability of HUD to develop T&I risk analysis tools on the front end, Wells Fargo management saw this as a program that did not sustain homeownership and increased risk to us and the communities we serve.

We will close out the loans we have and find new places for our drive and passion and I bet most of us still have stagecoaches on our new business cards.

2545,

I think you need to apologize for your statements.  Please see those of azbarbu below.  Your statements are outrageous and needlessly harsh.

Kevin,

Leave it to the Snoop.

Well said, thanks for your insight.  I enjoyed my 4 years there in reverse mortgages.

Well said, thanks for your insight.  I enjoyed my 4 years there in reverse mortgages.

Uuumm, no apologizing, it’s not needed? Who wants to leave the reverse mortgage industry and become an HMC? Unless the employee believes the industry is going down? Who in their right mind would want to deal with realtors on a day to day basis?

Invisible Hand,
 
How quickly we forget.
 
The real estate markets were not yet recovering from the Tax Reform Act of 1986 when the HECM program was being designed.  The value of real estate was dropping everywhere.  Little new construction was going on anywhere.
 
If one is simply referring to the condition of the secondary market, the situation was similar because the GSEs were not in their heyday yet.  I think you might be surprised how similar the home markets were.  What is different today over then are the potential liabilities lenders accept when doing a HMBS versus selling a HECM to Fannie Mae.  It is the latter which seems to have pushed HUD and the banks into the situation we find today. 
    
Wells is looking to bow out with as little flak as possible.  That quote is a platitude not an insightful assessment.   
 
The quoted statement was probably more true in 2006 than right now.  It is very unclear if any of the information we have received to date provides any insight into why Wells left the industry.  We may never know for sure.  That may be something WF never discloses.