Wells Fargo & Co, the fourth-largest U.S. bank, recently announced that it will no longer originate reverse mortgages because of unpredictable home values and restrictions on those loans. The Bank of America terminated its reverse mortgage program earlier this year and last March Wells Fargo removed reverse mortgages from wholesale brokers and began originating them only through its own branches.
Back in 2010, Wells Fargo was the biggest maker of reverse home loans in the United States and reverse mortgages totaled nearly 2.2% of Wells Fargo’s $392.5 billion mortgage volume. Now Wells Fargo says it will continue to service existing reverse mortgages, but new credit rules have made it difficult to determine a seniors’ true ability to make property tax payments and continue paying homeowners’ insurance. Reverse mortgages essentially allow older homeowners to receive monthly payments that are actually loans backed by the borrower’s home. Reverse mortgage loans are usually only due when a borrower moves out of the home or dies.
Wells Fargo had been the market leader with nearly 25 percent of all reverse mortgage loans to consumers in the last year, but demand for reverse mortgage loans declined steeply last year after the government changes the rules to reduce the amount of cash borrowers could take out on loans it backed. Wells Fargo said in a statement that the reverse mortgage program was originally designed in a different economic climate and added that the 1,000 employees who currently work on the reverse mortgage program will be offered other jobs within the company.
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Wells Fargo Halts Reverse Mortgages
by HomeLoan.comBack in 2010, Wells Fargo was the biggest maker of reverse home loans in the United States and reverse mortgages totaled nearly 2.2% of Wells Fargo’s $392.5 billion mortgage volume. Now Wells Fargo says it will continue to service existing reverse mortgages, but new credit rules have made it difficult to determine a seniors’ true ability to make property tax payments and continue paying homeowners’ insurance. Reverse mortgages essentially allow older homeowners to receive monthly payments that are actually loans backed by the borrower’s home. Reverse mortgage loans are usually only due when a borrower moves out of the home or dies.
Wells Fargo had been the market leader with nearly 25 percent of all reverse mortgage loans to consumers in the last year, but demand for reverse mortgage loans declined steeply last year after the government changes the rules to reduce the amount of cash borrowers could take out on loans it backed. Wells Fargo said in a statement that the reverse mortgage program was originally designed in a different economic climate and added that the 1,000 employees who currently work on the reverse mortgage program will be offered other jobs within the company.