Another major lender has decided to get out of the reverse mortgage business — bringing to four the number of high-profile exits this year. Still, several firms have recently increased their commitment to the sector.
The stream of departures started in February, when Bank of America Home Loans said it would abandon reverse mortgage lending.
That was followed in March by Wells Fargo Home Mortgage’s disclosure that it would close its wholesale reverse mortgage channel. That same month, Financial Freedom parent OneWest Bank Group LLC said it would close the former reverse lending giant.
Then, in June, Wells Fargo revealed that it would stop originating reverse mortgages altogether.
The latest casualty was at SunTrust Mortgage Inc.
“After careful consideration, we have determined that we will no longer offer reverse mortgages,” a spokeswoman said in a statement this week.
She noted that reverse production represents an “extremely small” share of the company’s total originations. Residential fundings at the Richmond, Va.-based company during the first half of this year totaled $10.5 billion.
“From a strategic perspective focusing our full resources on more traditional mortgage origination and servicing is the most effective and efficient use of our resources going forward,” the statement said.
Loans already in the pipeline will continued to be processed, but no new applications will be accepted.
Impacted SunTrust employees will either be considered for other positions within the firm or given outplacement support.
The number of reverse mortgage lenders has fallen to 1,269 as of August from 2,001 last year, according to data reported by Reverse Market Insight.
But despite the contraction in the reverse-mortgage sector, some firms still see opportunity financing the loans for seniors.
Among them are J.G. Wentworth parent JGWPT, which this week announced the formal launch of a reverse mortgage division.
MetLife Inc. said in July that despite its intention to sell MetLife Bank, N.A., it would keep the bank’s reverse mortgage unit. Also in July, One Reverse Mortgage LLC, a subsidiary of Quicken Loans Inc., reported that it would begin issuing Ginnie Mae HECM mortgage-backed securities.
And Reverse Mortgage Solutions Inc., which provides loan servicing and private-label sub-servicing technology for reverse mortgage products, announced in March that it had “moved aggressively into the reverse origination sector.”
