[Update] MetLife Shuts Down Reverse Mortgage Business

MetLife Inc. announced today it will close its reverse mortgage business and is selling its reverse mortgage servicing portfolio to Nationstar Mortgage. The business no longer made sense for the company, a spokesman told RMD.

“It goes back to what we originally said when we sold our deposit business to GE capital. The whole banking operation was less than 2% of our business. We are primarily an insurance company,” said John Calagna. “As we moved down the line from the deposit business to warehouse and forward lending, we looked at whether it made sense to remain in the reverse business and decided no, it did not make sense.”

The wholesale and correspondent business will close as of end of day April 26 and the retail business will close Monday, April 30, the company confirmed.

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The reverse mortgage division included roughly 500 positions nationwide, to be eliminated.

“On the forward side, a lot of salespeople quickly found positions with other mortgage entities. We are hopeful it will be the same situation for our talented people in the reverse business,” Calagna said.

In a call with MetLife employees, MetLife’s Donna Demaio said the decision had more to do with the overall business climate than the reverse mortgage industry.

“It’s not a reflection on the business or the people in the business, but really the times we find ourselves in,” she said in the call, a recording of which was obtained by RMD. Banking regulations, in particular, make it difficult to operate various lines of business, she added.

Nationstar recently entered the reverse mortgage business when it purchased the servicing rights to Bank of America’s reverse mortgage portfolio in December. In the deal, Bank of America agreed to sell roughly $18 billion in servicing rights for approximately $25 million.

Reverse mortgage subservicer Celink was selected by Nationstar earlier this year to handle the servicing transferred from Bank of America.

MetLife has undergone several substantial changes in recent months, including the sale of its depository bank business to GE Capital Financial Inc., a deal announced in December under undisclosed terms that gave GE ownership over $7.5 billion in MetLife deposits.

In January, the company said it would wind down its forward mortgage business after an unsuccessful search for a buyer. A month later, in February, MetLife announced it had agreed to sell its warehouse finance unit, including its reverse mortgage warehouse lines. EverBank confirmed it was the buyer.

As the largest reverse lender following the exits of Wells Fargo and Bank of America from the business last year, MetLife was the first to pioneer an official financial assessment for reverse mortgage borrowers in its retail and wholesale units. The assessment was implemented in an effort to prevent tax and insurance default among borrowers. MetLife later suspended the assessment indefinitely.

Sources told RMD there were several potential buyers with Nationstar being the highest bidder.

Lewisville, Texas-based Nationstar Mortgage currently services more than 600,000 residential mortgages totaling nearly $107 billion in unpaid principal balance, according to its website. The company currently employs approximately 2,600 people, based in the U.S.

MetLife had not returned a request for comment as of press time.

Written by Elizabeth Ecker