Those of you that read my earlier post, “How to Choose a Reverse Mortgage Lender,” might recall that Bank of America is the second largest reverse mortgage lender by volume in the entire country. Thus, BofA’s news that it was exiting the reverse mortgage business came as nothing short of a shock.
Officially, the move is “due to competing demands and priorities that require investments and resources be focused on other key areas of our business.” In other words, its management made a strategic decision to refocus the company’s mortgage unit on its core business. While 10,000 loans a year and 5% market share made earned it the admiration of its competitors, reverse mortgages nonetheless represented only about 1% of overall mortgage lending and was really just an ancillary business for BofA. (By the way, BofA will continue to service its existing reverse mortgages).
Still, there aren’t many industries in which the company with the second largest market share and $4 Billion in annual loan volume would voluntarily quit, without first consider monetizing its business through either a sale or spin-off. For that reason, industry watchers have speculated that the decision was grounded more in Public Relations and Risk Management, than in business strategy. “Guy Cecala, publisher of Inside Mortgage Finance, said that Bank of America is trying to minimize its exposure to potential lawsuits. ‘You’re dealing with the elderly, you’re talking about taking away their homes when they die. That’s a bad set of variables there.’ ”
On the one hand, the fact that reverse mortgage lending actually declined in 2010 means it might be worth taking BofA at face value. On the other hand, the move also represents a calculated assessment that reverse mortgages have a tarnished image. Class action lawsuits – like the kind that conventional mortgagers are rushing to join – are probably unlikely. Still, BofA’s legal troubles continue to mount, and the company is being forced to adopt a more conservative approach to mortgage lending.
There are a couple of implications for the reverse mortgage industry. First of all, there is now a gaping hole, and it will be interesting to see whether it is filled by national reverse mortgage lenders are smaller, regional players. Second, it begs the question of whether BofA knows something that we don’t, and/or anticipates future problems stemming from its reverse mortgage lending operations. For now, Wells Fargo, the industry leader (now by an even larger margin) has no plans to follow suit. If it does, it will turn the industry on its head.
4 Responses to “No more BofA Reverse Mortgages”
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August 13th, 2011 at 7:25 pm
I am 67 and my mother had the reverse mortgage. Financial Freedom has ruined my life and my son in remission with cancer. I grew up in this home (60 years) have spoken with the most compassionate person FHA/HUD President Gerald Pfier, who could not assit me. I felt he could have placed some calls to assist since he couldn’t, but not to be. I am the sole heir, only child, no family buried them all. Just my son, and two PUGS…No one would/will help me go after Financial Freedom reverse this horrible nightmare that I have been subjected to for one whole year..Mother passed 03/2010, MY NIGHTMARE BEGAN……I tried refinancing, doing my own reverse, at 67 I had hoped to live my remaining years in my childhood home with my son and too dogs. I have no money, no place to go, will live in my car with the dogs, my son I don’t know. This was supposed to be a FHA/HUD loan, come to find out it never was, don’t know what it is, no one will tell me who the lender is. No one will not step forward to keep me in my home of 60 years. Went through counseling for my reverse, and FF blocked everything I ever tried to do, was rude, nasty to anyone associated with me in any attempt to help me.
PETER BELL, NATIONAL REVERSE MORTGAGE PRESIDENT SHOULD HAVE STEPPED IN AND AT LEAST ANSWRED MY E-MAILS, PHONE MESSAGES. HE MADE A RATHER BOLD AND PROFOUND STATEMENT THAT “NO JUDGE WOULD PUT A SENIOR OUT OF THEIR HOME”…WELL I WOULD LIKE TO SEND HIM MY PICTURE SO HE CAN ALWAYS REMEMBER WHAT JUDGE MULROY DID TO A 67 YEAR OLD FEMALE WITH OUT MEANS AND MONEY AND LITERALLY WAS PUT OUT OF HER ONLY HOME. AT LEAST THE PRESIDENT OF FHA/HUD HONORED ME WITH A PHONE CALL AND ATTEMPTED TO ASSIST ME AND FOR THAT I AM FOREVER GREATFUL AND MOST APPRECTIATIVE. HE AT LEAST TRIED AND INVESTIGATED, BUT PETER BELL DID NOTHING,,NOTHING. FINANCIAL FREEDOM SHOLD BE CLOSED DOWN COMPLETELY, DALLAS OFFICE NEEDS TO GO. THEY ARE RUTHLESS, RUDE, VICIOUS, NASTY. THESE ARE ONLY A FEW OF THE ADJECTIVES DESCRIBING THEM BY OTHER BANKS, LENDERS ATTEMPTING TO HELP ME FOR A WHOLE YEAR. HAS MY HEALTH BEEN AFFECTED BY THIS, DAMN RIGHT, NO ONE GIVES A DAMN ABOUT SENIORS, THEY JUST CARE FOR THEMSELVES….THEY HAVE A PILLOW TO PUT THEIR HEAD DOWN ON AND THE WARMTH OF A HOME AND SAFETY TO ENJOY. A TABLE TO EAT AND FACILITY TO BATHE. I AM SICK AT HOW OUR SOCIETY AND HIGHEND INDIVIDUALS TREAT SENIORS. WE ARE NOT ALL DEMENTED, THERE ARE SOME OF US WHO STILL HAVE OUR MINDS AND STILL CAN THINK AND KNOW WHEN ONE IS BEING SCAMMED AND MISTREATED. THIS I FEEL SHOULD GO TO THE MEDIA AND ANYONE WHO HAS BEEN EFFECTED BY LENDERS/SERVICERS AS I HAVE. ANYONE WHO WILL LISTEN, I WILL PUT IT OUT THERE SO NO NE ELSE WILL BE SUBJECTED TO SUCH ABUSE AND DISRESPECT FOR AND INDIVIDUAL/HUMAN BEING BY A SERVICER WHO REFUSED TO ALLOW ME TO KEEP AND MAINTAIN MY HOME…MY HOME FROM MY PARENTS. MY LEGASEE.
I am sure you won’t answer or respond to my desperate plea for help…they took, stole, sold my home….
September 3rd, 2011 at 5:53 pm
This is now 2011. I would like to know if Bank of America continued as one of the countrys top leaders in Reverse Mortgage? as well as Wells fargo & Fannie Mae? If they are not who are the top leanders now?
October 26th, 2011 at 7:27 pm
I wish this posing had a date!
January 29th, 2012 at 12:22 pm
Hello i need your help by borrow me at least $50,000: my family survive.