MetLife Fails to Sell Forward Mortgage Business, Reverse Remains

MetLife (NYSE: MET) has announced that it has decided to wind down all of MetLife Home Loans’ forward origination business and had stopped accepting applications as of 5 pm today.

After announcing in October it was seeking a buyer, the insurer said it did not find such a buyer, and will close its forward origination business as of today.

“MetLife has been in the process of marketing for sale its forward mortgage origination business, which includes our Institutional Lending Group. Regrettably, we have been unsuccessful in completing an acceptable transaction,” the company said in a statement sent to its lending partners, which was obtained by RMD. “Therefore, we have made the decision to wind‐down all MetLife Home Loans’ (MLHL) forward origination business, including the Institutional Lending Group (ILG).”

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MetLife said upon the October announcement that its reverse mortgage business would remain intact.

“[The] reverse mortgage business has operating and capital characteristics that are different from the forward mortgage business,” a MetLife spokesman said in October, upon the initial announcement.

Today, the company said in a press release that MetLife Home Loans continues to originate reverse mortgages.

MetLife will continue to service existing mortgage customers, and will honor contractual commitments for loans in process and expects the majority to close in 90 days.

Exit-related costs are expected to total $90-$100 million, after tax, over the next year, without an impact on company operating earnings, MetLife said in a press release.

In December, MetLife announced that GE Capital had agreed to acquire most of its bank business.

The company did not offer additional comments as of press time.

Written by Elizabeth Ecker

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  • After the Countrywide fiasco, who wants to purchase any forward mortgage operation?  That firm and its management did more damage to our industry and certain politicians than the general public perceives. 

  • Yes, today they continue to originate reverse mortgages, but what about in 6 months? Is this, along with the recent introduction of their financial assessment guidelines, a hinting of what’s to come for their reverse mortgage operation as well?  Things seem a little shaky over there.

  • MetLife Bank purchased only the good loans form First Horizon when it entered the mortgage biz in ’08 and has been growing like gangbusters meeting its goals in a tough market and they are very quality / integrity conscious as is the rep of their parent company MetLife.  This is NOT a casualty of the housing crisis / recession.  It’s a casualty of the Dodd-Frank Act of 2010 imposing esp. strict regs on the largest bank-holding co’s which is unacceptably unfair to those bank-holding co’s which are not predominately in the biz of banking (such as MetLife whose bank’s earnings are less than 2% of its total earnings).

  • It is only a matter of time before the reverse mortgage side follows. They will not be able to overcome the (internal) negative implications of failing to comply with Dodd-Frank and the NMLS.

    Remember, the folks who decide what the definition of “risk” is, don’t understand what we do.

    • legal_eagle09,

      While those pieces of legislation should be of concern so should HERA.  For example, what is the safeguard standard required under 12 USC 1715z-20(n)(1)?

      A company like MetLife is much better suited to understanding, assessing, and mitigating risk than most lenders and banks.  After all a company in the insurance industry most likely has much better ideas on how to deal with risk than most of us and, yes, at times they do make bad and poor decisions but overall, they have done well. 

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