Four years ago, Bank of America made headlines in the reverse mortgage industry by acquiring a turnkey operation and then simultaneously announcing a reverse mortgage program for second homes. This was big news, especially for baby boomers who had significant equity in two homes.
BofA, a latecomer to the reverse mortgage party, came in the door with both barrels blasting. It paid a reported $220 million for Reverse Mortgage of America, the reverse mortgage arm of Seattle Mortgage. Several of Seattle Mortgage’s top people also made the switch to BofA, including John Nixon, the executive vice president and chief operating officer of Reverse Mortgage of America.
Seattle Mortgage entered the reverse mortgage industry in 1995. It had a loan portfolio of 40,000 reverse mortgages, totaling more than $4 billion in outstanding balances, when it sold Reverse Mortgage of America to BofA. Approximately 400 Seattle Mortgage associates joined BofA, including a retail sales force of more than 200 sales associates in 25 states and Washington, D.C.
Things were really looking up. But a few weeks ago, BofA completely shut it down, reversing out of the reverse mortgage game to focus on its core business of conventional, "forward" mortgages while adding more manpower to resolving foreclosures and defaults. The bank’s much-anticipated program for second homes barely got started before it quietly faded away.