When MetLife decided to exit the reverse mortgage business in April, it sent the industry reeling—albeit temporarily—as the third in a series of large corporate lenders to quit offering Home Equity Conversion Mortgages.
Why did MetLife really leave the business? Inman News’ Tom Kelly addresses the question in a column published last week.
“There is no other product where greater care is given, more counseling is mandatory and more questions are answered before anything is done,” Kelly writes. “And now, there are fewer places to get them.”
Inman News reports:
“MetLife was jumping over dollars to get to dimes.
That’s how the huge life insurance company viewed reverse mortgages and, helped along by a slap on the wrist, was the ultimate reason it decided to get out of the reverse mortgage business.
The Metropolitan Life Insurance Company is one of the world’s biggest providers of annuities, life insurance and employee benefits. Sixty days ago, it also was the largest single provider of reverse mortgages in the United States and was expected to continue in that role, thanks to the exits from the industry by Bank of America, Wells Fargo, Financial Freedom and Seattle Mortgage.
…Obviously, the potential liability from mortgage lending did not go over big to a corporation whose bread and butter is life insurance. When the powers that be stood back and took a look at mortgages, especially reverse mortgages, they determined that segment did not even amount to a rounding error in the company’s big picture. Why not concentrate on insurance and annuities? So, it got out of mortgage lending and the reverse industry lost another player.
While there were some huge mistakes with the early reverse mortgages that were compounded by a few bad operators, today’s product is a needed, helpful tool that provides thousands of seniors access to funds otherwise untouchable. How many conventional lenders will grant a loan to a 70-year-old with no income? …
Read the original column.
Written by Elizabeth Ecker