First National Bank Rises to Top-10, Then Quits Reverse Mortgage Business

First National Bank announced today that it has decided to discontinue its reverse mortgage business and shift its focus back to traditional forward lending. 

The top-10 reverse mortgage lender has grown its production from fewer than 70 loans in 2010 to more 1,188 loans to date over the course of the last 12 months. FNB also represented a recent reverse mortgage success story in growing its business more than 100% year-over-year for the first four months of 2012. 

“Origination of Reverse Mortgages has been a valuable and profitable business line for First National Bank,” the company said in a statement provided to RMD. “We are proud of the great contribution our reverse team makes to seniors and to the Bank.”

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The company said it continues its focus on mortgage lending, but will close its reverse mortgage business. 

“Management and the Board of Directors have determined, after a careful strategic review, to discontinue offering the reverse mortgage product,” the company said. “Mortgage lending will continue to be a core product; however, the focus will be on traditional forward mortgage lending. Look for refinements to our process and delivery system.”

The company has been devoting resources to the growth of its business, most recently in launching a reverse mortgage production center in late 2011, including new hires in Kennesaw, Georgia.

When asked whether the reverse mortgage team will remain with the company, FNB had not responded as of press time. However, several sources have indicated to RMD a potential deal may be in the works with Orlando, Florida-based Proficio Mortgage. 

Written by Elizabeth Ecker

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  • Again the question must be asked.  How can a division of a bank operation justify its continued reverse mortgage operation with originations still falling?  Add to that the growing default situation and what MAJOR bank wants to deal with our industry?  

    Right now trying to figure out where the bottom to our continuing loss in endorsements might be is like trying to catch a Samurai sword before it touches the ground when standing on the floor of Yosemite Valley when the sword was just dropped from the top of Half Dome.  It “ain’t” easy although some characters are still declaring that we will see 100,000 endorsements “this calendar year, or maybe next calendar year, but it is coming soon — real, real soon….”One can hear the cries that per NCOA the average counselee is much younger now and look at over 10,000 Boomers turning 62 each and everyday.  Then we hear those who proclaim that the sleeping giant is just now waking up and how about the thousands upon thousands of financial advisors who see our products differently.  Oh, then we finally have positive press….

    Yet case number assignments are going down this year over last and endorsement numbers are still dwindling.  The Polyannas who cried out in calendar 2010 that we need to “surround ourselves with positive people and this temporary endorsement drop will go away before we realize it happened at all” seem to be there with their heads buried in the sand.

    Let us be clear, positive press, positive responses from Realtors and financial advisors, an ongoing huge rise in the senior population, and much more are not seen in either endorsements or case number assignments.  But as the Pollyannas would remind us, where would be without of the positive things we see going on.  Here they are absolutely right; where would we be???  

    • Cynic-

      In response to your question, “How can a division of a bank operation justify its continued reverse mortgage operation with originations still falling?”…

      iReverse Home Loans is a subsidiary of a federal savings bank and we absolutely can justify our reverse mortgage operation with overall industry originations falling. We are not looking to conquer the industry and gobble up all the volume. There is still plenty of volume in the industry…perhaps not for a mega bank but maybe the mega banks are not best for our industry. Our volume continues to increase each month and our overhead is low. We focus on quality originations, not just volume. Our parent bank, as well as our federal regulators, are very pleased with our operation and we plan on remaining in the industry for a
      long time. The sky isn’t falling and there is still plenty of opportunity in this market.

      Kenneth J. Klawans
      President

      • Ken,

        I love to laugh. Your comment achieved that goal. I did not realize you had such a great sense of humor.

        I hope mega banks are right for our dinky industry. In less than a decade I would hope our total volume would be well in excess of 250,000 originations annually with the majority of that from proprietary reverse mortgages and mega banks lining up to become industry participants.

        With the origination rate now at less than 55,000 endorsements for this fiscal year, getting to over 4.5 times that volume for some seems more dream than pragmatic goal. Even though I do not look for much increase in the next two years, I would hope things would turn around and our average growth rate per annum would be in excess of 20% per year from fiscal 2015 through fiscal 2022. My personal dream is for an average growth rate of 32% for those eight years. I am probably nothing more than a dreamer but to be a cynic is not to be pessimistic but rather to be a person who is always questioning the motives of others.

        Call me an optimist as to the potential growth in originations for our industry but a stark unbelieving heathenish pessimist as to what iReverse can do in our industry. By today’s standards, iReverse will be but a distant memory by 2016 (LOL).

      • wealthone,

        You are right but look at the industry. If there is no indicator for growth, guess which direction the endorsements for the industry as well as all for the surviving lenders are bound to go. Then consider defaults and all of the litigation which normally occurs in a dying industry and you have the perfect formula to get out now.

        Let me be clear, I do not consider this a dying industry but it has all of the signs of one. For example, the potential market has been expanding at an unprecedented rate for three and one-half years and demand is going exactly the opposite direction. The press is saying nothing but good things about our product but there seems to no traction. Previous naysayers are now recommending the product (financial advisors and realtors), yet even Savers and purchases are stymied. Add to that, big lenders dropping out and rumored significant new entrants are delaying their move in. What does that add up to? One possible answer is a dying industry.

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