The reverse mortgage industry in the United States has had to wrestle with some issues related with some new regulatory rules handed down by the U.S. government in 2017 and 2018, and for some companies that had formerly offered loans in the space, the issues that stemmed from these changes to the federally-insured Home Equity Conversion Mortgage (HECM) program caused some companies to exit the market and cease offering reverse mortgages altogether.

One such company that decided to exit the reverse mortgage space was Maumee, Ohio-based Resolute Bank, which was permanently closed shortly after announcing its exit.

Summary:

• Resolute Bank was an FDIC-insured federal savings bank that offered reverse mortgage loans alongside its other personal and business financing services, as well as routine banking services like checking and savings accounts and credit and debit cards for individuals and companies in its local community.
• Citing a desire to focus its business endeavors on its own backyard, Resolute exited the reverse mortgage industry in 2019 after the business showed signs of decline the prior year.
• The Office of Comptroller of the Currency announced on October 25, 2019 that it was closing Resolute Bank, appointed the Federal Deposit Insurance Corporation (FDIC) as receiver, and nearby Buckeye State Bank acquired all Resolute’s assets and depositors.

While Resolute was never a major, top-10 reverse mortgage lender compared with other companies with a more specific dedication to the reverse product, it did appear to do a respectable amount of business in the space before it began exhibiting pronounced declines in its reverse mortgage endorsement volume.

By September 2018, Resolute had originated 261 reverse mortgages over the course of the year to that point.

Comparing the figures to the same point in 2019, however, Resolute’s reverse mortgage endorsement figures showed only 90 reverse mortgage originations, a fall of over 66%, coming in at number 27 on a ranking of top 100 lenders tabulated by reverse mortgage market data company Reverse Market Insight.

Why Did Resolute Bank Stop Offering Reverse Mortgages?

Like many other companies that have exited the reverse mortgage space in recent years, Resolute’s ultimate decision to exit the business appeared to result from multiple factors.  According to leadership at Resolute Bank, the broader regulatory changes affecting the reverse mortgage industry had little to do with the bank’s decision to exit the space.

Instead, the organization publicly stated its desire to refocus its business efforts on its local region, aiming to align its business concerns with the financial needs of people and businesses in Resolute’s immediate communities.

“We’re a small community bank in northwest Ohio,” said Resolute Bank president Kevin Rahe to reverse mortgage industry media outlet Reverse Mortgage Daily in late 2019. “Our reverse mortgage division was centered in Henderson, Nevada, and we’re really just trying to get back to our core business in northwest Ohio and southeast Michigan. Focusing on our footprint a lot more [is a top priority].”

That being the case, the larger issues that led to a general decline in industry volume – including the lowering of reverse mortgage principal limit factors (PLFs) in 2017, and the addition of a collateral risk assessment that in some cases necessitates a costly second property appraisal in 2018 – may have resulted in Resolute taking a harder look at the overall reverse mortgage business climate, and its own ability to be successful within it.

Will Resolute Bank Bring Back Reverse Mortgages?

Resolute Bank will not offer reverse mortgages again in the future, because federal regulators and its remaining assets shut the organization down, and depositors were moved to another bank.

While the successor to Resolute, Buckeye State Bank, has not indicated its potential to enter the reverse mortgage business in the future, many smaller banks have identified reverse mortgages as a growth opportunity, given the baby boomer demographic and the influx of Americans who are ill-prepared for retirement.

Every business needs to make its own individual evaluations about what does and does not work for it, though, and if you’re hoping to get a reverse mortgage specifically from Resolute Bank, it may be worth evaluating the other options that are available.  Fortunately, there are several reverse mortgage providers across the country that can serve as viable alternatives, especially depending on the kind of loan you may be seeking.

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