An article from Investment News discusses some of the recent reverse mortgage acquisitions and why the purchases have all been made in the last six months. “It’s the right opportunity, right time given our core mission,” said Ron Cordes, chairman of AssetMark Investment Services Inc., a Pleasant Hill, Calif.-based subsidiary of Genworth. “From accumulation to distribution, that’s the big theme at Genworth.” Cordes is refering to Genworth’s recent acquisition of Liberty Reverse Mortgage, one of the largest reverse mortgage lenders in the country.
According to the article, many industry observers believe that big banks are motivated to get into the reverse mortgage business with the recent collapse of the subprime mortgage industry. “Up until 18 months ago, when the mortgage market started turning south, [the big national players] didn’t understand what was going on in the reverse-mortgage industry,” said Jim Mahoney, chairman of Financial Freedom Senior Funding Corp., which originated more than $5 billion of reverse mortgages in 2006.
Bank of America is also mentioned with their recent purchase of Seattle Mortgage, which instantly gave them a large piece of the reverse mortgage business. Colin McCormick, a reverse-mortgage product executive for Charlotte, N.C.-based Bank of America, said that it was a coincidence that Bank of America jumped into the market this year during a mortgage slowdown. “We’ve been researching this business for over a year,” he said. Before acquiring Seattle Mortgage, BofA ran a pilot program that was based in Arizona where they also released their jumbo reverse mortgage product named the Senior Equity Maximizer.
Bank of America plans to capitalize on this “fairly young” market and vault into the lead by next year, Mr. McCormick said. “Wells Fargo is No. 1 with retail customers, and Financial Freedom is No. 1 in wholesale,” he said. “We would want to be the overall market leader and the direct-to-the-consumer market leader by 2008.” We have still yet to hear much on whether BofA is planning to expand Seattle Mortgage’s wholesale reverse mortgage business with their forward wholesale business.
Last but not least the article touches on Wells Fargo’s dominance on the retail market. Jeff Taylor, vice president and national program manager for products for the elderly at Wells Fargo Home Mortgage of Greensboro, N.C., said his company’s more than 10 years’ worth of experience with this complex product will give it the edge, regardless of new competitors. “We will continue to prevail,” he said. “We make one of every three reverse mortgages in this country.” Selling a reverse mortgage is a big undertaking because of the amount of education required to make the customer comfortable, and learning this process takes time, Mr. Taylor added. It will be interesting to see if Wells will have the same success in their wholesale reverse mortgage business as they have on the retail side. To read a copy of the full article click the link below.