Over the past 3 weeks we have seen the exit of at least 2 large wholesale players in the Reverse Mortgage market. Both have quietly packed up shop… No press releases and no major announcements about their closings or layoffs. The first new wholesale operation that we were aware of being scuttled was Deutsche Bank / Mortgage IT. It appeared that Mortgage IT was in the process of developing a wholesale reverse mortgage channel as far back as last January. It sounds as though they will be participating more in secondary marketing transactions rather than third party and retail originations going forward.
The second group were the folks at Virtual Bank Seniors Group (VB). The Virtual Bank scenario is summed up as: Start. Stop. Start. Stop. RMD has posted various articles on VB’s product when they were released and then pulled back and then re-released under similar guidelines but with higher margins and fee differences. Our company spent the time to complete their application and weeks later when we found a contact who took our call, that person told us that they had decided to quietly exit the market. So much for that evening spent filling out the application.
We wish those people that were laid off best wishes in their next move.
Both MortgageIT and VB had successful correspondent and wholesale operations in the past but does past performance in the “forward market” lead to success in the Reverse world? And, the burning question that remains is whether the bigger players will decide to build (not good track records here), buy or “partner” (a/k/a lease) with an existing Reverse player?
Double down on the future trend of the lease with an option to buy.
PS – If you haven’t seen ML-Implode yet, check it out to see all the latest news on lenders closing.