At one time, there were quite a few major bank lenders offering reverse mortgages. In fact, in the early 2000s, the majority of reverse mortgage loans were closed by national banks.
One of the large bank lenders was Financial Freedom, which most recently operated under the parent company CIT Group, and previously was owned by OneWest Bank and IndyMac. At its peak, the company originated more than 11,000 reverse mortgages annually and held the title of top wholesale lender.
• Financial Freedom at one time was the largest lender in the Home Equity Conversion Mortgage (HECM) market
• The bank operated both retail and wholesale reverse mortgage channels
• Financial Freedom was owned by IndyMac, which went under conservatorship of the Federal Deposit Insurance Corporation (FDIC) in 2008 and later sold to OneWest Bank in 2009.
• The company no longer operates in the reverse mortgage business
Financial Freedom was at one time a household name in the reverse mortgage business, as the company originated an average of nearly 1,000 loans per month at its peak and was the top lender by volume.
The company had a large presence both as a wholesale lender, in working with brokers across the country, and also as a retail lender, which offered loans through its in-house loan officers. In addition to originating reverse mortgages, the company also operated as a reverse mortgage servicer.
Financial Freedom Reverse Mortgages Originated
MetLife HECM ENDORSEMENT SUMMARY REPORT BY LENDER ACTIVITY
Year Loans National Market Share
2007 153 112,154 .01%
2008 1,677 114,692 2%
2009 3,138 79,106 4%
2010 6,694 73,131 9%
2011 11,515 54,822 21%
Financial Freedom Reverse Mortgages Originated
Before exiting the reverse mortgage business, Financial freedom had built up a large portfolio, employed hundreds of loan originators and staff, and was extremely active in the market.
Several other banks share a similar story of having risen in terms of reverse mortgage volume prior to the housing market crash and immediately following it, before deciding to exit reverse mortgage operations. Among them are Bank of America, Wells Fargo and MetLife Bank.
Why did Financial Freedom stop offering reverse mortgages?
Financial Freedom has a slightly different story given its change in ownership and the downfall of its parent company, IndyMac, following the market crash of 2007 and subsequent housing market decline.
The company’s reverse mortgage volume fell substantially after 2007, though it was still the top wholesale lender in 2009. Shortly thereafter, in 2011, the company announced it would be shutting down all reverse mortgage channels, citing the regulatory environment and a need to focus on OneWest bank’s “core” operations.
“After careful consideration, we have decided to exit the wholesale reverse mortgage origination business based on the regulatory environment and the desire to focus on the bank’s core businesses,” wrote CEO Michelle Minier in a letter to the company’s business partners. “The wholesale reverse mortgage origination channel represents the majority of Financial Freedom’s origination business and is the only wholesale origination channel within OneWest.”
- The Great Recession started in 2007-2008, leading to uncertain home values and home price declines across the U.S.
- Bank regulations increased as a result of the Dodd-Frank Act, passed in 2010
OneWest Bank ultimately sold to CIT Group in a $3 billion transaction in 2015. Three years later, it completed its exit from the reverse mortgage market with the sale of its servicing portfolio to an undisclosed buyer.
The name Financial Freedom still resonates with many people in the industry as it was a mainstay in the business for many years.
While Financial Freedom is no longer in business, there are several active banks and non-bank lenders that do still operate in the reverse mortgage space today. Banks such as M&T Bank, Quontic Bank, Magnolia Bank and Resolute Bank, among many others, continue to offer these loans to qualifying senior borrowers.
Where to Get a Reverse Mortgage Today
There are many active lenders in the reverse mortgage space today — including both banks and non-bank lenders — as well as brokers who can help prospective borrowers navigate the different loan options and interest rates that are available.
A good place to begin is gathering a few pieces of information including your age (and the age of your spouse, if you are married), and your home address so that a reverse mortgage calculator can give a rough estimate of the amount you may be able to borrow. Visit ARLO, the All Reverse Loan Optimizer, to help you get started.