Wells Fargo is the next bank to announce that they are pulling out of the market of selling reverse-mortgages, a loan typically sold to to seniors that converts their home equity into a stream of monthly payments. The lender gets paid when the home is sold at the borrower’s death or when they move. Without reliably rising home values, it’s not a very profitable proposition for lenders.
Indeed, “Why be in the reverse mortgage business if the equity that you’re lending, your collateral, is disintegrating?” Terry Wakefield, a mortgage-industry consultant in Wisconsin, told Bloomberg.
Bank of American also recently announced they were exiting the reverse-mortgage market.
Wells Fargo said they would maintain the contracts they have on reverse-mortgage deals they already made, but they wouldn’t be accepting new applications after June 30th.
Wells Fargo Exits Reverse-Mortgages on Unpredictable Market [Bloomberg] (Thanks to Shawna!)