I know, I made a post earlier but It is now official!  Wells Fargo is no longer going to originate reverse mortgages because of the softness and uncertainty in home values and restrictions on the products makeing it difficult to gauge whether borrowers will make good on their obligations.  As we all know, values are and will continue to decline and Wells Fargo and B of A saw the writing on the wall.  They knew this would be risky business as values dropped.  

Reverse Mortgage loans allowed people at least 62 years old to tap the equity in their homes for cash. The products are known for having high upfront fees, and consumer advocacy groups have warned the complex loans are fertile ground for scams and deceptive marketing.

Times and changed and the reverse mortgage program is behind the times and very risky.  Seniors as well as their siblings are having problems paying the loans back.  The families abilities to meet the obligations of homeownership and reverse mortgages, such as paying property taxes and homeowner’s insurance, has grown difficult because of unpredictable home values and restrictions associated with reverse mortgages.

Reverse mortgage loans and its interest are due when the borrower dies, moves, sells the house or fails to pay property taxes or homeowner’s insurance.  There is a 1 year statute of limitaion for the family member to pay it back from date of death.  This is not happening.  There is also a increased number of short sale transactions on the reverse mortgage fence.    

The reverse mortgage business was about 2.2% of Wells Fargo’s retail mortgage volume and 1.2% of overall mortgage volume.  Met Life Bank will be picking up a line share of this business in the near future.