On the heels of big bank exits from the reverse mortgage industry, smaller lenders tell American Banker that the exits have presented an unexpected surge in their business with a strong upside for those who are more specialized in reverse mortgage products. One even said it was like getting an early Christmas present.
“I’m picking up business now that I never would have had,” Richard Booth of America’s First Funding Group told American Banker. “As an independent lender, this was like getting a Christmas gift early.”
The article, titled “Big Banks Flee Reverse Mortgages, Leaving Industry Void,” notes the departures of Wells Fargo and Bank of America, as well as MetLife’s move away from other mortgage and banking operations, as actions that created some apprehension within the industry, even “overshadowing” the most recent National Reverse Mortgage Lenders Association annual conference in Boston. Wells Fargo, which originated one out of every five reverse mortgages in 2010, attributed only 1.2% of its business to its reverse division, the article states. But while “specialty reverse mortgage lenders will have a difficult time completely filling the bigger banks’ shoes,” there is a silver lining, American Banker points out.
The exit of Wells Fargo and Bank of America “has created a growth opportunity for the next tier of players,” NRMLA President and CEO Peter Bell told American Banker.
“Any time you have a company that specializes in one program they tend to react more quickly to the market, and to come up with solutions to fill needs quicker,” Mary Jo Lafaye, who worked at Wells until 2008, said in the article, noting that her business has doubled since Wells left the industry.
Another lender, Parsippany, N.J.-based lender Reverse Mortgage Network, has also seen strong gains, going from 16 loans per month in October to 30 in November.
“There are fewer feet on the street and unfortunately [seniors] don’t know where to turn,” said the company’s Dino Guadagnino, another Wells Fargo former employee.
Read the American Banker article (by subscription) here.
Written by Elizabeth Ecker