Bank of America told employees it’s leaving the reverse mortgage business on Friday.
The company left the “forward” wholesale business last year, but at the time, told RMD it remained committed to the reverse mortgage wholesale channel. Rumors began swirling early Friday and RMD confirmed with several people within the company that it’s leaving all channels (wholesale, correspondent, retail).
A spokesperson for BofA told RMD in a statement that it’s closing the operation to focus on its core mortgage business and is moving the operational unit into other critical areas serving customers.
“We made the strategic decision to exit the reverse business due to competing demands and priorities that require investments and resources be focused on other key areas of our business,” said Doug Jones, Consumer Sales and Institutional Mortgage Services executive for Bank of America Home Loans. The company said it will continue to serve the needs of existing reverse mortgage customers and those with loans in process, as well as maintain their servicing portfolio.
“We fully understand the critical sensitivity of ensuring that our senior customers are provided with the same level of excellent customer service that we have provided in the past,” Jones said.
Earlier this week, BofA announced the sale of its Balboa Insurance organization to the QBE Insurance Group Ltd, the exit from reverse mortgages is an additional step in the effort to focus on its core mortgage operations they said. The division employed 600 people and if they’re not redeployed, they will have the opportunity to apply for other open positions at the bank.
After operating a small retail operation, BofA moved into the industry in a big way when it purchased Seattle Mortgage’s reverse mortgage business for $220 million in 2007.
The latest data from Reverse Market Insight shows the bank’s retail channel — down 29.4%during the year — was the second largest reverse mortgage lender in the country, behind only Wells Fargo. Retail controlled 9.4% of the market.
BofA was the second largest wholesale lender and despite volume being down 25.7% during 2010, the company still controlled 18.3% of the wholesale market.
All the information we’re receiving makes it sound as though the decision to exit was a surprise to employees. One vendor told RMD they set up a meeting with a BofA executive for next week on Monday and they announced improved pricing for wholesale this morning.
It’s odd they would do both of those and then close later in the day. RMD will continue to post more information as we get it.
Updated with BofA’s comment.