When considering a reverse mortgage, finding the right lender is crucial for making an informed decision.  While large national banks like Wells Fargo, Chase, and Bank of America are household names for traditional mortgages, they typically do not offer reverse mortgages.  Instead, they often refer inquiries to outside specialists.

Smaller regional banks or specialized lenders are more likely to provide reverse mortgage services.  To ensure you get the best terms and support, comparing lenders and choosing one that focuses on reverse mortgages and understands your unique needs is essential.

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

In the past, major banks like Bank of America, Wells Fargo, and Metlife Bank actively offered reverse mortgages.  However, following the financial crisis, these institutions began withdrawing from the reverse mortgage market.

In 2011, Bank of America announced that reverse mortgages no longer aligned with its core business priorities.  Shortly after, Wells Fargo exited the market, expressing concerns about fluctuating home prices and borrowers’ ability to meet loan obligations.  Around the same time, MetLife chose to leave the banking industry entirely, selling its deposit business and discontinuing reverse mortgage offerings.

This shift continued in recent years, as highlighted by the American Advisors Group (AAG) selling its servicing portfolio.  These exits illustrate how financial institutions have reevaluated their role in reverse mortgages due to changing market conditions, stricter regulations, and strategic business decisions.

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

When exploring reverse mortgage options, it’s important to understand the distinction between banks and non-bank lenders.

Banks fund loans using customer deposits and offer Federal Deposit Insurance Corporation (FDIC) protection for those deposits.  They operate under strict regulations to ensure the safety of depositors’ money.  Non-bank lenders, on the other hand, rely on alternative funding sources and do not offer FDIC insurance, though they are still regulated by federal and state authorities.

Some lenders may operate as a hybrid, functioning as both a bank and a non-bank lender.  However, for reverse mortgage borrowers, the type of lender doesn’t usually affect the overall loan process.  Regardless of the lender’s structure, the focus should remain on finding a reputable company that specializes in reverse mortgages and offers transparent terms.

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

When considering a reverse mortgage, both banks and non-bank lenders typically offer HUD Home Equity Conversion Mortgages (HECM) that follow the same federal guidelines.  However, differences in service and pricing can set lenders apart.

While some borrowers may feel more comfortable with traditional banks, non-bank lenders like All Reverse Mortgage, Inc. often offer several advantages.  These lenders frequently offer more competitive pricing, reduced fees, and personalized customer service while maintaining the same HECM loan terms.

Ultimately, the choice comes down to selecting a lender that meets your specific needs and delivers exceptional support throughout the reverse mortgage process.  Comparing options ensures you get the best possible terms and experience.

Top FAQs

• Lenders offering reverse mortgages are divided into two main categories: banks and non-bank lending institutions.  Since the Federal Housing Administration (FHA) insures nearly 99% of reverse mortgages through the Home Equity Conversion Mortgage (HECM) program, there is no significant advantage to choosing a bank over a non-bank lender or broker for your reverse mortgage.
• Major national banks largely exited the reverse mortgage market by 2012, citing challenges from regulatory changes like the Dodd-Frank Act and the absence of financial assessment guidelines.  However, some smaller banks continue to offer reverse mortgages, often acting as correspondents for larger wholesale reverse mortgage lenders.
• Understanding your options and comparing lenders is the key to finding the best fit for your reverse mortgage needs.