Reverse Lenders Prominent Among Mortgage Exits
Jul 05, 2011, 07:00 ET
DALLAS, July 5, 2011 /PRNewswire/ -- Reverse mortgage businesses accounted for a bigger share of mortgage-related casualties tracked during the first-half 2011 in the Mortgage Graveyard from MortgageDaily.com. Fewer banks have failed compared to last year at this time, but the same can't be said for credit unions.
During the first-six months of this year, 74 mortgage-related firms have failed or closed down. At the same point last year, the count was 109.
This year's numbers reflect 10 non-banks -- including four reverse mortgage businesses.
The contraction in reverse lending started during February when Bank of America Home Loans disclosed its strategic decision to exit the reverse business.
A month later, Wells Fargo Home Mortgage said that it had decided to stop offering reverse mortgages through its wholesale lending channel.
Also in March, OneWest Bank Group LLC -- a descendant of IndyMac Bank -- said it would close down its reverse mortgage subsidiary Financial Freedom.
That was followed by Wells Fargo's stunning announcement in June that it would abandon altogether the origination of home-equity conversion mortgages.
Combined, BofA, Financial Freedom and Wells account for around 46 percent of the total HECM market.
One factor impacting the dwindling sector is the possibility that missed payments of taxes or insurance by a borrower could trigger a default on federally insured reverse mortgages. HECM lenders don't want to be in a position where they would have to foreclose on a senior.
Despite the rise in reverse casualties, the number of non-bank mortgage operations to end business was lower than in the first-half 2010.
The failure of banks insured by the Federal Deposit Insurance Corp. was sharply lower, with the number down 44 percent from the same time last year. But credit unions to be seized by the National Credit Union Administration were 45 percent higher.
Type |
1st-Half 2011 |
1st-Half 2010 |
|
Nonbanks |
10 |
12 |
|
Banks |
48 |
86 |
|
Credit Unions |
16 |
11 |
|
Total |
74 |
109 |
|
Complete details about all failed and closed mortgage companies and operations are available at: http://www.MortgageDaily.com/MortgageGraveyard.asp?spcode=pr
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SOURCE MortgageDaily.com