Is Working for a Corporate Reverse Mortgage Lender Overrated?

Is working for a large corporation overrated? In the reverse mortgage industry, the answer may be quickly becoming: yes.

While many have long made the argument that working for a large corporate bank or lender provides “stability,” the last several years seem to have proven that theory wrong.

The industry has seen big name brands leave as quickly as they arrived.

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True, the cream rises to the top and the best talent will always find a new home, but with the exits of Bank of America, Wells Fargo, Financial Freedom and MetLife from the reverse mortgage business, smaller companies have show themselves as a steady place to land and grow a career.

Lately, in particular, with the regulatory oversight of banks—and non-banks—after the Dodd–Frank Wall Street Reform and Consumer Protection Act was signed into law in 2010, large companies have come under increased scrutiny, faced higher costs of doing business and have seen red tape increase. When it came to the chopping block for the big banks, they each stated publicly that their decisions to exit the business were not about the reverse mortgage product but about the “times,” or the small proportion of their companies that their reverse mortgage business comprised.

For Bank of America, which left the business in February 2011, it meant new homes for up to 600 employees of its reverse department. Similar story for Wells Fargo, and now MetLife, which shed its banking operations and forward business before opting to get out of reverse mortgages.

“As a smaller, independent lender, I have for decades found it interesting that whenever industry participants speak of the “major” lenders, they always mention the “security of working for a big company,” one originator told RMD. “For years, I’ve heard people say, “Well, I’m not very happy at XYZ company, but I like the security of a big national firm.  They are big and they will be around.”  While that may be true, it doesn’t guarantee that they will be around doing your business of choice forever or even a few months if upper management decides otherwise.”

Upper management for the “big” companies has decided otherwise in several cases, but has never made the decision about the product itself. While it bodes well for the industry overall to see these companies express their commitment to reverse mortgages in light of their departures, it doesn’t bode as well for the people whom they have employed.

At least in the case of the most recent exit, many originators were obtaining state mortgage licenses in the wake of MetLife selling its bank arm in late 2010.

However, I can’t help but think about the lack of stability they are experiencing. Regardless of the licensing issue, they still have to go back to ground one in joining a new company culture, potentially changing locations and getting used to a new, “smaller” way of business.

“Bigger isn’t always better” rings true in light of these recent decisions.

Written by Elizabeth Ecker

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  • Since the late 1960s, there has been little security at “major corporations.”  Just look at those who worked at Lehman, Xerox, or even Bank of America.  

    Bank of America would not be Bank of America without merger.  It is actually NationsBank renamed Bank of America after NationsBank acquired BankAmerica.  That is why the headquarters of Bank of America is in North Carolina and not California.Dumping divisions like a reverse mortgage division was a common business practice at NationsBank (but less so at BankAmerica) especially acquired divisions like Seattle Mortgage.  Major corporations no longer can afford to hang onto marginal profit centers (in this case, based merely on size of operations) due to the demands of boards and shareholders.  Thus it would be surprising if another major company or two might not also withdraw from the industry as endorsement volume continues to shrink.  They are relative small units at their respective enterprises and could go at any time.  Maintaining forward mortgage operations should provide no comfort; just look at Wells and Bank of America as proof of that assertion.

  • The best originators will always be in demand and will find a home.  Instead of working at Corporate or on the Retail side, some will choose to go with a smaller independent organization where the compensation is much greater.

  • Over-looked though is the benefit side of working for a larger company. When my daughter needed major surgery while I was with Financial Freedom we had no medical costs.

    You can not underestimate the peace of mind which comes with knowing it is available should we ever need it.

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