Wells Fargo, the leading originator of reverse mortgages, announced today that they will discontinue offering Home Equity Conversion Mortgages (HECM). This comes after their March 1, 2011 announcement that they were exiting the wholesale reverse mortgage business.
There is a lot of speculation as to why Wells Fargo reverse mortgage would make this move. In their press release the company stated that “the decision was made based on today’s unpredictable home values along with the restrictions associated with reverse mortgages that make it difficult to determine seniors’ abilities to meet the obligations of homeownership and their reverse mortgage, e.g., payment of property taxes and homeowners’ insurance. The government’s HECM or reverse mortgage program was designed in a different economic time.”
We are going to see some pricing increases as we saw when Bank of America left the reverse mortgage business. If fact, it happened already today. The reason is that the secondary market becomes very uneasy when such a large originator of reverse mortgages decides to stop offering the product.
Here’s an email we received from one of our wholesale lenders today:
“I’m sure you all have seen the pricing drop from all Reverse Mortgage lenders and what I’ve been told by secondary is due to the recent announcement of Wells Fargo exiting the reverse mortgage arena most banks have dropped pricing until they see exactly what the investor community will do here… I think we will be OK, but it is going to take a little time to process and settle into the new landscape. Hopefully, it won’t take too long.”
Many seniors rely of reverse mortgages to improve their every day quality of life. MLS Reverse Mortgage is available to help any seniors who may have began a loan with Wells Fargo or were looking into a loan with them. We offer competitive rates and fees and are very proficient at reverse mortgages.
Wells Fargo will continue to service their existing HECM reverse mortgages. For anyone who may have been working with Wells Fargo reverse mortgage, be sure to check out our reverse mortgage calculator to see how much money you could qualify for.
As this is a new story, we will be sure to post more details as we receive them.