Reverse Mortgage Lenders Dwindle Down But Reverse Mortgages Still Stand Strong


The reverse mortgage program is not going anywhere although two of the largest reverse mortgage banks have said they are going to discontinue offering loans made against the equity in a senior's home. Without any question the program is still being offered by HUD and the major players that are leaving the game, Bank of America and Wells Fargo, will still honor existing HECM loans.

In the grand scheme of things reverse mortgage lenders will ultimately stand strong against scrutiny and still offer the federally insured program. We do foresee some possible changes to the industry and its regulations, including the new number one player MetLife.

Why Bank of America Stopped Offering Reverse Mortgages

Bank of America was one of the largest banks offering loans from the HECM program and has quit focusing on these types of home equity loans for a good reason. The national bank has stated they would like to focus on helping struggling homeowners by positioning its resources to modifying traditional mortgage loans. Is this Bank of America trying to clean up its mortgage lending portfolio?

Why Wells Fargo Stopped Offering Reverse Mortgages

Although BOA has said they are trying to focus on doing what is right the bottom line is housing values. Wells Fargo has stated, and it is no surprise with today's housing market being so unpredictable, how can you loan out money based on the value of the home when the value of the home could still become much more lower than it already is. Instead they are focusing on cleaning up bad lending habits and possible future conflicts of interest in the senior citizen community.

What Does This Mean For MetLife and Other Reverse Mortgage Lenders

Obviously this is a huge change in the industry but it does not mean the program will shut down or be stopping any time soon. Instead HECM loans will now be handled mainly by MetLife who was the third largest lender before Wells Fargo and Bank of America stopped offering the service. It could very well be the reverse mortgage industry cleaning itself up by consolidating into a tight nit group of lenders.

Reverse mortgages have been around for a while and are not going anywhere. They have been supported by Presidents like Ronald Regan and utilized by many senior citizens to improve their quality of life when left with no other choices. There has been a lot of speculation into the service and how it is being offered to seniors recently. So it would seem as though regulations may become strict, however, it does not look like HUD will be shutting it down.

After all you worked your whole life for your house if you are a senior homeowner and now your investment is not worth as much as it once was but what are your options while trying to hold out for the economy to pick up? Not to mention many seniors cannot run to their children for help since they are losing their homes as well. A home equity conversion mortgage does not seem so bad when you look at it from the prospective of the very people offering the program, HUD.

In closing utilizing the equity in your home for investment purposes can boost the economy and help our families. Information written in this article has been provided by Alan Nicks, a finance specialist, who has a team of mortgage lenders [] nationwide but has specialized Chicago mortgage lenders [].
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