Many years ago, some of the biggest banks in the nation offered reverse mortgages.
Among them, Wells Fargo was one of the largest lenders in the U.S. Home Equity Conversion Mortgage (HECM) market. Today that is no longer the case.
Wells Fargo was at one time the largest reverse mortgage lender in the country.
It was only a short time later that the company decided to close its reverse mortgage business, leading to an unexpected timeline of events:
- 2010: Wells Fargo reaches a staggering 25% market share
- 2011: Wells Fargo decides to exit the reverse mortgage business
WF Pros and Cons
Services own loans Sold their reverse mortgage servicing portfolio to Champion Mortgage and no longer services the loans they originated
5,000 branches across the US Government actions and billion dollar fines by the CFPB have tarnished consumer trust
Approved by HUD - Housing and Urban Development No longer provides reverse mortgage lending services
WF Reverse Mortgages Originated
Year Loans National Market Share
6,303 N/A N/A
2007 23,187 107,558 22%
2008 19,678 112,154 18%
2009 18,997 114,692 17%
2010 16,208 79,106 20%
2011 18,880 73,131 26%
2012 922 54,822 .02%
Why did Wells Fargo stop offering reverse mortgages?
Upon the announcement that it would exit the reverse mortgage business, Wells Fargo’s executives told industry press outlet Reverse Mortgage Daily that home price unpredictability combined with HECM program restrictions made it difficult to determine whether borrowers could meet their loan obligations.
These obligations, which continue to apply to reverse mortgages today, include ongoing payment of property tax and homeowners insurance, as well as upkeep of the property to Federal Housing Administration (FHA) standards.
As part of any FHA-insured reverse mortgage loan, the borrower must maintain these obligations in order to keep the loan current.
In turn, borrowers with FHA-insured reverse mortgages are guaranteed that they will continue to receive their loan payments as stated in the loan contract, and that they will never owe more to repay their reverse mortgage loan than the home is worth at the time of sale.
Market factors driving Wells Fargo’s exit from reverse mortgages:
• The housing crash in 2008 led to widespread home price uncertainty
• Wells Fargo could not predict home prices and the ability for borrowers to meet their loan obligations
• Banks at the time were focusing on core operating channels rather than ancillary businesses
Will Wells Fargo Bring Back Reverse Mortgages?
It’s anybody’s guess as to whether Wells Fargo will offer reverse mortgages in the future, but there’s nothing stopping the company from re-entering the HECM lending market.
While big banks are currently absent from the reverse mortgage landscape, there are many small banks that are lending actively, and many have identified reverse mortgages as a potential growth opportunity given the baby boom demographic and the influx of Americans who are ill prepared for retirement.
- Wells Fargo used to be one of the nation’s highest-producing reverse mortgage lenders.
- The bank followed several other banks that decided to exist the reverse mortgage space.
- Today, it remains to be seen whether big banks will re-enter the market.
Where to Get a Reverse Mortgage in 2021?
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.
ARLO recommends these helpful resources:
Wells Fargo Reverse Mortgage Customer Care Number: (877) 937-9357