Wells Fargo Home Mortgage announced today that it will discontinue origination of Home Equity Conversion Mortgages (HECM), commonly known as reverse mortgages. The HECM is a U.S. Department of Housing and Urban Development reverse mortgage program that was designed for senior citizens in 1987. Wells Fargo Home Mortgage began originating reverse mortgages in 1990. As of 2010, the funded volume of reverse mortgage business was approximately 2.2% of our retail mortgage volume and represents about 1.2% of overall mortgage volume.
The company stated that the decision was made based on today’s unpredictable home values along with the restrictions associated with reverse mortgages that make it difficult to determine seniors’ abilities to meet the obligations of homeownership and their reverse mortgage, e.g., payment of property taxes and homeowners’ insurance. The government’s HECM or reverse mortgage program was designed in a different economic time.
“Wells Fargo will continue to service the loans of existing (HECM) reverse mortgage customers,” said Franklin Codel, executive vice president, head of National Consumer Lending, “We will continue to provide options for seniors who wish to determine ways to access the equity in their homes.”
Wells Fargo takes great pride in the exceptional work that its reverse mortgage team has done to build the HECM business over the past 20 years. The company’s 1000 reverse team members will be provided with opportunities to apply for other open positions within Wells Fargo’s 80 plus businesses.
Wells Fargo Home Mortgage customers with reverse mortgages may call the company with questions at 800-472-3209. Wells Fargo Home Mortgage customers with a reverse mortgage loan application in process may call their reverse mortgage consultant with questions. New applications will not be accepted after June 30, 2011.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.2 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 9,000 stores, 12,000 ATMs, the Internet (wellsfargo.com and wachovia.com), and other distribution channels across North America and internationally. With approximately 280,000 team members, Wells Fargo serves one in three households in America. Wells Fargo & Company was ranked No. 23 on Fortune’s 2011 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy all our customers’ financial needs and help them succeed financially.