When considering a reverse mortgage, selecting the right lender is essential.  While large national banks are well-known for traditional mortgages, they approach reverse mortgages differently.  Some smaller regional banks offer reverse mortgages, but major institutions like Wells Fargo, Chase, and Bank of America usually don’t.

If you inquire about a reverse mortgage at these larger banks, they might refer you to an outside specialist.  To make the best choice, it is essential to shop around and find a lender specializing in reverse mortgages that aligns with your needs.

The Shift Away from Reverse Mortgages: Why Major Banks Stepped Back

Historically, major banks like Bank of America, Wells Fargo, and Metlife Bank were active in the reverse mortgage market.  However, after the financial crisis, these banks gradually stepped back.

Bank of America announced in 2011 that reverse mortgages were no longer part of its core business.  Wells Fargo followed, citing concerns over home price fluctuations and borrowers’ ability to meet loan requirements.  Around the same time, MetLife exited the banking industry and sold its deposit business.

This trend, seen more recently with American Advisors Group (AAG) selling its servicing portfolio, reflects how financial institutions rethink their role in reverse mortgages.  Market conditions, regulatory changes, and strategic shifts have prompted larger banks to realign their focus away from reverse mortgages.

Banks vs. Non-Bank Lenders: What’s the Difference?

Reverse mortgage lenders are generally either banks or non-bank lenders.  Banks use customer deposits to fund loans and are regulated to offer Federal Deposit Insurance Corporation (FDIC) protection for deposits.  Non-bank lenders, funded differently, are regulated but don’t offer FDIC insurance for deposits.

Some lenders may operate as both banks and non-banks, depending on their structure.  For reverse mortgage borrowers, it’s key to understand that while the lender type may vary, the loan process often remains consistent.

Evaluating Non-Bank Lenders for Reverse Mortgages: Pros and Cons

For reverse mortgages, banks and non-bank lenders offer HUD Home Equity Conversion Mortgage (HECM) that follow the same HUD guidelines.  Choosing a lender often comes down to service and pricing differences.

Though you may prefer banks, non-bank lenders like All Reverse Mortgage, Inc. often offer competitive pricing and enhanced customer service while still providing the same HECM loan terms.

In 2024, several banks continue to offer reverse mortgages.  The Federal Savings Bank, in business for 13 years, has originated 96 reverse mortgages in the past year with a review rating of 4.49/5 and 89.8% positive reviews.  Magnolia Bank, in business for 105 years, originated 39 reverse mortgages, receiving a 3.00/5 rating with 60% positive reviews.  Bank of England, with 126 years of service, has not originated any reverse mortgages recently and holds a low review rating of 1.67/5 with 33.4% positive reviews.  University Bank, in business for 28 years, has originated 88 reverse mortgages but lacks review data.  Allied First Bank, with 29 years in business, originated 29 reverse mortgages, earning a 3.92/5 rating and 78.4% positive reviews.

This summary overviews each bank’s reverse mortgage activity and customer satisfaction in 2024.

Top FAQs

• Lenders offering reverse mortgages fall into two categories: banks and non-bank lending institutions.
• Since FHA insures nearly 99% of reverse mortgages through the Home Equity Conversion Mortgage (HECM) program, there is no real advantage to choosing a bank over a non-bank lender or broker for a reverse mortgage.
• Most large national banks left the reverse mortgage market in 2012, citing regulatory challenges from Dodd-Frank and the lack of financial assessment guidelines.
• Smaller banks may still offer reverse mortgages, typically working as correspondents with larger wholesale reverse mortgage lenders.