[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

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  • Exactly as I predicted about a month ago.

    This is the end result of the McCaskill Bill which essentially killed Met’s plans to leverrage their agents….which if the government had stayed out of this, would have been a great plan and served many seniors. Now, we have one less player inthe filed and we will be hearing more fear and doubt in our client’s voices as they start asking (again) why all the big boys have bailed.

    Thank you Barney, and thank you Claire. Good Job. You two are the
    Decepticons of the American Housing Industry. Between the two of you, you did more damage than will ever be calculated.

    • legal_eagle09,

      Where are you getting your facts?  Your comment reads more like bad, bad legal_beagle than legal_eagle.Legislation by Senator Claire McCaskill figures into the decision of MetLife to leave, how???  You make the management of MetLife to either be incompetent or stupid (or maybe both).MetLife acquired EverBank Reverse on 10/1/2008 but HERA was signed into law by President Bush two months earlier on 7/30/2008.  So how did Senator McCaskill harm MetLife?  If HERA impacted the decision to leave then that is the fault of MetLife management for not getting their ducks in a row during its due diligence investigation about the acquisition of EverBank Reverse.Sections (n)(1) and (o) of 12 USC 1715z-20 as added by HERA (PL 110-289) Section 2122(a)(9) are not my favorite sections of the law.  That is the only federal law the Senator had any part in when it comes to leveraging the use of agents.

      I am no fan of Senator of McCaskill but I also do not believe in blaming her for something that was known BEFORE the acquisition.  Blame her for what she does wrong not for what the management at MetLife does wrong.  However, I doubt if it was HERA which drove MetLife out of the industry.  

      Personally, I believe it is the outlook for originations that had a lot to do with their decision and the status of the HECMs in default for failure to pay taxes and insurance.  NRMLA tried to convince the world that we would be at 100,000 endorsements during some 12 month period that ends in 2013 but who was fooled?  Certainly not MetLife.

      • Typical Demoncrat.

        Goes down with the ship, no matter the facts.

        You’ll drown defending Bonnie Fwank and his fwends from the disaster they have caused.

        This creep will vote for President Zero, you watch.

      • Eliot,

        Where was any defense of Congressman Frank?  Was there any defense of Senators McCaskill and Kohl, or former Senator Dodd?

        Former Governor Romney is an Etch A Sketch conservative.  President Reagan was a very liberal Democrat for years.  Then when he became a conservative, he was a force to be reckoned with for decades before running for President.  He proved his conservatism.  The former Governor may be your idea of a conservative, not mine.

        What I hate is blaming Democrats for every decision we do not like.  I agree that the Dodd-Frank Act had a lot to do with MetLife getting out of our business.  I do not agree that the McCaskill anti-cross-selling legislation (if that is what it is) should have had ANY impact on the MetLife decision to leave the industry.  It was the law of the land months before MetLife entered our industry.  MetLife should have included the adverse nature of those provisions in their due diligence coming into the industry.  If they did not, that speaks reams about the level of management competence at MetLife.  Either way the so called McCaskill provisions had absolutely nothing to do with the decision to leave the industry.

        Your reaction is exactly why conservatives are so divided and ineffective in this election cycle.  While I condemn the McCaskill provisions, they are not the reason MetLife left the industry!!!

        While I deplore the policies of this President, I am struggling with the John Lindsay “look a like” (politically) Mitt Romney.  Romney has my vote but not my enthusiastic support.    

  • We all saw this coming when the bank was sold.  My biggest concern for the industry is how this will impact the Saver numbers moving forward.  I think we’ve heard HUD say in the past that they’d like to see Savers at 20% of HECM production.  Hopefully this won’t affect principal limits or FHA insurance costs down the road.  Metlife was carrying the Saver torch into the financial planning community as well.  Can anyone replace that?   

  • >>The wholesale and correspondent business will close as of end of day April 2

    How is the existing pipeline impacted?  Will the files in Underwriting continue their flow, or stop?  How about files that have been assigned case numbers?

  •  I really feel for all my friends over there that went through this with Wells before going to Met where all they heard was “we’re really committed to this product” over and over again.  Excuses don’t make good bedfellows.

  • If the origination channel, retail and wholesale, would have been included in the sale this would have been a good deal. Unfortunately, for about 500 MetLife employees, it did not happen. Even worse, it’s one more prime time player that leaves a huge hole in not only the industry, but in NRMLA as well.

    • At 8 this morning, I had the same conversation with a MetLife originator.  I’m sure the Genworth people went to bed last night asking the same exact question.

  • I dont think anybody was surprised by this. They followed the same path as BOA and Wells. These large corporations only look at numbers and have short term vision. The RM program will be a big force in peoples retirement life and I see nothing but opportunities for those who remain committed to this business.This is a slow growth business, and unfortunately large corporations dont have the time or patience for this as they need to answer daily to their shareholders.

    • Michael,

      In one decade the business is four times bigger.  The problem is we are not just in decline but in ever growing decline with no end in sight.  

      Rather than asking where is the beef, we need to be asking NRMLA and our industry leadership, where is the bottom?  The withdrawal of MetLife shows how ridiculous the cheer rally at NRMLA last month really was.  100,000 endorsements in 2013, does anyone have a bigger joke????

      The big reason for getting into this industry last decade was because of the huge increase in demand Boomers would bring.  So far that huge increase is a huge net decrease.  The absolute numbers of youngest borrowers getting HECMs today who are under 65 has never been lower in the last 42 months.

      Your measure of success and the measure used by the Board of Directors and senior management at MetLife are quite different than yours.  MetLife is doing quite well but are you?

      Reverse mortgages are becoming a greater burden to lending management and yet the market is shrinking.  The potential liabilities to MetLife over tax and insurance defaults continues to grow.  HUD continues to drag its feet in this regard and NRMLA is ineffective on this front.  The only hope is marginal decreases in defaults from recent (but very reduced) endorsements.

       MetLife made the right decision.

  • Actually I think it is a brilliant move by MetLife but, unfortunately, not for the reverse mortgage industry.  Because MetLife had a bank charter, they were prevented earlier this year from raising its dividend or buying back shares. In addition they have been hobbled by increased regulations to cross sell their products and have unknown liabilities going down the road. I don’t blame them one bit for getting rid of the entire mortgage operation and jettisoning Federal Reserve oversight as it was a drag and diversion from their core mission and represented only 2% of their business.

  • I don’t think this is any surprise to anyone. However, I understand there were many devastated employees yesterday when the news was broken to them.

    I can’t say I was impressed the way announcement was made, especially with the short fuse on deadline for applications to be turned in.

    Another giant bites the dust, good or bad? It is always bad to see an exit of a company from our industry, specifically the largest, Met Life! I am sure it will have an impact on seniors who hear about it and see it the various media sources. We don’t have much choice other than to counter act it by giving our seniors the assurance that there are many other lenders in the industry and more cumming into play.

    We need to reassure our seniors that FHA stands behind their reverse mortgage and reinforce the benefits of the program!

    There will be many opportunities for the existing lenders and new one’s entering the reverse mortgage arena. It is important to understand how patient we must be with the senior. They do not understand our industry and to them the giants bailing out means instability of the loan product itself.

    We will get through all of this and emerge stronger than ever down the road.

    John A. Smaldone

    • John,

      Well down the road for now.

      RMD spoke of new interest from insurance companies and others looking at our industry.  In a matter of weeks, most of that interest is dead or dying. The MetLife decision will NOT turn the situation around.

      Worse, here is another company which acquired its reverse mortgage business at a real cost and is now simply walking away.  That says far too much.  Ownership equity in a reverse mortgage entity has tumbled yet further.  Perhaps book equity of most lenders as to their reverse mortgage operations (minus any net goodwill asset related to the acquisition of the reverse mortgage operations) is multiples of the street value of that business.  What a mess when the stock market as a whole has been doing so well lately.

      In the go-go years of 2006 and 2007, correspondents were guilty of counting the value of their enterprises.  Some were bragging how that they would wait for the end of the decade, then sell at a killing.  Seattle Mortgage, EverBank, Liberty Reverse, and a few others sold at just about the right time.  Those who waited for better prices will now be waiting for years, if not decades.

      What a change in outlook in just five years!!!

      • Too bad but the writing has been on the wall for a long time regardless of what management says. Got to make your decisions with the information that you have…Wells management said the same thing when BofA got out.

        I agree Critic The market will become smaller and smaller and 100K is a loonnggg way down that road.

      • You said it well my friend, what a change in outlook in just five years! Down the road it may be. Sure wish I had my Chrystal Ball back, the one I broke about 20 years ago, it was a darn nice one!

        Thanks Critic, I appreciate you,

        John A. Smaldone

  • In my opinion, the way that MetLife handled this was terrible.  They lied straight-faced to their employees and business partners, all the while attempting to sell.  24 hours notice to business partners, a weak severance package for loyal employees, abandoning them while announcing strong operating earnings growth the same day.

    • Lance,
      Do you really believe MetLife senior management took the management team at the reverse mortgage group into their confidence?  What poor assassins if they did.  What one does with a division like this is provide a few golden handcuffs and a few golden parachutes.  What need is there to do more?

      Snoopy is still in tact and the company is still making money.  Senior management did their job and did it well.  But looking at the interest there was in the turn key operations of the largest reverse mortgage company in the country ONCE AGAIN proves there is no EQUITY value in reverse mortgage operations no matter what the size or experience of the enterprise.

      Not only did Bank of America pay a ridiculous sum for Seattle Mortgage but so did Genworth for Liberty Reverse and MetLife for EverBank Reverse.  What this shows is that we are in a down market and things do not show much of a prospect for getting better.

      Sorry you got hurt.

      Zorro

  • I am a reverse mortgage counselor.  I just followed up with one of my reverse mortgage clients.  He closed his reverse mortgage loan with MetLife on April 30th.  Was that the last day that MetLife closed loans?

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