Now that Nationstar has sewn up a deal to buy the reverse servicing business of MetLife, will it move into the origination space?
Mortgage executives who play in the reverse market expect Nationstar will take the next logical step and began funding new reverse loans, but so far details have been few and far between.
Late last week MetLife surprised the industry, saying it would exit the reverse lending business—where it ranks among the top producers—selling the servicing division to Nationstar Mortgage LLC of Texas. The origination function will be shuttered.
When the insurance conglomerate announced its departure from forward lending in January it said at the time it was keeping the reverse business. But then it had an about-face this spring.
As recently as March MetLife was still attending regional trade shows, and was also an exhibitor at the National Reverse Mortgage Lenders Association Eastern Regional Meeting in New York. Richard Mandell, chief executive of One Reverse Mortgage—part of the Quicken Loans family—described the exit as “a nonevent” with many in the industry feeling that MetLife had been moving in that direction any way.
A MetLife spokesman told National Mortgage News that the decision to leave was just the next evolution in its choice to no longer have bank holding company status. The spokesman noted that it is selling the reverse MSRs only. Nationstar will not be purchasing any origination offices or personnel.
Industry sources noted that reverse mortgage subservicing specialist Celink handles the MetLife servicing portfolio as well as a reverse portfolio that Nationstar acquired from Bank of America.
Observers say these portfolios are in run-off, which means Nationstar will need to replenish them, which means being an originator is inevitable.
MetLife’s decision follows the actions of several former No. 1 reverse mortgage originators—Financial Freedom, Bank of America and Wells Fargo—to get out of the business.
There was no one common reason why these companies elected to leave reverse mortgages, said Jeffrey S. Taylor, president of Wendover Consulting Inc. Each had their own individual reasons and none was related to the credibility of the reverse mortgage program.
While it is sad to see a major lender leave, other originators have been increasing their market share. There are thousands of seniors who still have a need for the product, he continued. (FHA backing is key to the product via its backing of the Home Equity Conversion Mortgage program.)
One Reverse’s Mandall said his company is focused on growing its own business, noting that there is a huge potential given the aging baby-boomer population. That need alone is “a huge opportunity for those of us in the industry,” he said.
He noted that One Reverse is now the largest standalone retail lender in the space.
The firm will continue to hire mortgage bankers to originate loans for it. The company will be happy to speak with reverse mortgage loan officers being displaced at MetLife, he said.
Earlier this year MetLife closed its forward residential funding division, cutting 4,200 workers in the process.
Sources say it is currently marketing its $80 billion MSR portfolio.
