Beginning in January 2012, MetLife will no longer purchase reverse mortgage loans from correspondent lenders that source their loans indirectly through mortgage brokers, a company spokesman confirmed Thursday in an email to RMD.
The largest reverse mortgage lender in the industry, following the exits of other large bank lenders in 2011, currently sources reverse mortgages through its retail channel, wholesale channel and by purchasing directly-sourced closed loans in its correspondent channel.
Those loans sourced by brokers through correspondent lenders—or “fourth-party” loans—the company will no longer accept.
“We feel that the ability to control for quality presents challenges as degrees of separation increase,” the spokesman said. “As such, we have begun notifying our correspondents that we will no longer purchase these types of transactions beginning in the new year.”
MetLife was the first lender to implement a financial assessment of reverse mortgage borrowers that considers their income and credit history in order to prevent default on property charges including tax and insurance. The financial assessment was implemented in November, across all of MetLife’s business channels.
While many brokers have told RMD that they are continuing to wait and see if other lenders implement such changes, others have said they will take business elsewhere, due to the increase in time and steps it takes to qualify borrowers under MetLife’s assessment.
Written by Elizabeth Ecker