Days after Bank of America announced it was exiting the reverse mortgage business, there continues to be speculation over why the company made the decision to leave the industry.
Despite the bank telling RMD in a statement it’s closing the operation to focus on its core mortgage business and move the operational unit into other critical areas serving customers, some aren’t buying it. Guy Cecala, publisher of Inside Mortgage Finance told the Charlotte Observer that Bank of America is trying to minimize its exposure to potential lawsuits.
“You’re dealing with the elderly, you’re talking about taking away their homes when they die,” Cecala said. “That’s a bad set of variables there.”
A spokesperson for the bank told the publication that the decision wasn’t related to any ethical qualms about reverse mortgages. The bank has worked with industry groups to put in safeguards to protect consumers, he said, and is “fully aware that it’s a very sensitive population.” The reverse mortgage unit is profitable, he said.
While Bank of America is the second largest originator in the country, other leading lenders remain committed to the industry. A spokesperson for Wells Fargo — the largest retail lender — told the Observer it’s “continuing with responsible reverse mortgage lending,” and that the loans provide “a number of benefits for older homeowners.”
A spokesperson for MetLife Bank told RMD the company remains committed to reverse mortgages and continues to believe that the product positively affects the lives of many thousands of older Americans. “We look forward to working with seniors and their families to help them determine if a reverse mortgage can help them achieve their goal of a more comfortable retirement,” he said.