The recent exit of Wells Fargo from the reverse mortgage industry will become a critical point in time for lenders and mortgage companies with plans to service the financial needs of seniors.
Wells Fargo, the nation’s largest reverse mortgage lender, was the kingpin in the industry in more ways than one. It had 26.2 percent market share, according to the latest data from Reverse Market Insight, the largest network of reverse mortgage professionals and a money-making operation.
With Wells gone, now all of the reverse mortgage industry’s big-name players have left the business this year. Financial Freedom, Bank of America and Seattle Mortgage preceded Wells Fargo’s exit. Like the others, Wells Fargo indicated it was closing the reverse component to focus on its core mortgage business, or "forward" mortgages.
The bottom line is that anyone over the age of 62 who wishes to tap the equity in their home without making a payment to repay the debt will now have to show the ability to pay the property taxes and homeowners insurance needed to stay in the home. While seniors have never had to qualify to obtain the "conforming" Home Equity Conversion Mortgage (HECM) insured by FHA, the writing is now on the wall if the industry has any hope of succeeding.