Wells Fargo & Co. has confirmed that it is leaving the reverse mortgages sector, but it will continue to act as a servicer up until the departure date of June 30, according to National Mortgage News.
This claim follows months of rumors, and also the precursory exit of the company’s closest competitor-Bank of America.
“The decision was made based on today’s unpredictable home values,” Wells & Fargo Co. said in a statement.
In addition to the loss of Wells in the sector, approximately 1,000 employees were affected. However, Wells is encouraging them to apply for other positions within the company.
Reverse mortgages made up 2.2 percent of retail volume for Wells, and 1.2 percent of overall volume, said National Mortgage News; they funded $1.28 billion in product during the first quarter.
According to Reverse Mortgage Daily, an email sent out Friday afternoon demonstrated Wells’ concern over foreclosing on senior citizens with delinquent reverse mortgages insured by the FHA.
“The last straw in our decision was the recent HUD decision to require servicers to initiate foreclosure on the Senior Reverse Mortgage customers [who] could not pay their taxes and insurance,” the email says according to Reverse Mortgage Daily. “When a product or program creates more reputation risk than value … well … you get the picture.”
There is some speculation that Wells Fargo’s email aimed to put the blame on HUD, while showing Wells in a positive light, and some are hesitant to believe that this is the only reason behind the company’s decision to exit the market.