When it comes to getting a reverse mortgage, you may start by wondering what type of lender to work with, and specifically: which banks offer reverse mortgages. Perhaps you used a national or regional bank for a mortgage loan in the past as many of the big banks offer mortgage lending services. It’s also possible you worked with a non-bank mortgage lender, as these companies are also active in the mortgage lending space.
There are many banks that offer reverse mortgages, although most of the major national banks, such as Wells Fargo, Chase and Bank of America, do not offer them. A representative at one of these national banks may refer you to a loan originator outside the bank if you do inquire about a reverse mortgage at one of these institutions.
Banks and non-bank lenders
Lenders fall into two categories: banks and non-banks. Banks take some form of deposit or investment from consumers, and in turn lend that money to others. Non-bank lenders or finance companies are funded in other ways. One key difference between banks and non-bank finance companies is that banks are subject to more regulation — they also carry some insurance for consumer deposits from the Federal Deposit Insurance Corporation (FDIC). There are reverse mortgage lenders that fall into both categories; banks and non-banks.
Why don’t big banks offer reverse mortgages?
Historically, some big banks have offered reverse mortgages. In fact, Bank of America and Wells Fargo were among some of the largest reverse mortgage lenders at one point in time. Following the financial crisis, however, both of those banks decided to discontinue their reverse mortgage operations. Bank of America announced in February 2011 that it would exit the reverse mortgage business, and Wells Fargo made a similar announcement later that year. Wells Fargo originated more than 16,000 reverse mortgages in the prior year.
Bank of America stated that reverse mortgages were not part of the company’s “core” business at the time. Wells Fargo stated that with home price unpredictability, it was difficult to determine whether reverse mortgage borrowers would be able to meet their loan obligations.
Which banks currently offer reverse mortgages?
There are still many banks that offer reverse mortgages. They include FirstBank, Quontic Bank, Resolute Bank, M&T Bank, The Federal Savings Bank, Townebank, Goldwater Bank and many more.
Banks that Offer Reverse Mortgages (Last 12 Months)
|Banking Institution||Years in Business||Reverse Mortgages Originated (Last 12 Mo.)||Review Rating||BBB|
|Quontic Bank||13||71||A+||Rating Source|
|Resolute Bank||12||38||A+||Rating Source|
|M&T Bank||163||48||A+||Rating Source|
|The Federal Savings Bank||7||14||A+||Rating Source|
|Goldwater Bank||12||9||N/A||Rating Source|
There are also many banks that do not offer reverse mortgages but can point you in the direction of a loan originator who can help you learn more.
Lenders fall into 2 categories, Banks and non-Banking lending institutions.
Since FHA insures nearly 99% of reverse mortgages available today, there is no advantage utilizing a bank to secure a reverse mortgage over a non-bank reverse mortgage lender or mortgage broker.
Large national banks exited the reverse mortgage space in 2012 siting difficulties with regulatory environment (Dodd-Frank) and the inability to create underwriting overlays. (Prior to HUD creating financial assessment guidelines.)
Small banks still offer reverse mortgage loans usually as a correspondent through larger reverse mortgage wholesale lenders.
It is wise to compare reverse mortgage rates and fees with both banks and non-bank lenders as each have the ability to set their own margins.
Where can I get information about reverse mortgages?
A licensed loan originator can give you more information about reverse mortgages, but a good place to start is our reverse mortgage calculator. By filling out a few pieces of information such as home value, your age and the age of your spouse if you are married, and your home’s location, a reverse mortgage calculator can give a rough estimate as to how much of your home equity you may be able to borrow.
For more information, visit ARLO, the All Reverse Loan Optimizer, to get a sense of the different reverse mortgage options that may be available to you today.