Seattle Mortgage Lender to Sell Reverse Mortgage Unit
One of the nation’s biggest banks and mortgage lenders is turning to a Bellevue, Wash., home mortgage company to help broaden its reach with older Americans.
Charlotte, N.C.-based Bank of America said Thursday it plans to buy the reverse mortgage business of Seattle Mortgage Co., in Bellevue, for an undisclosed sum.
Bank of America said that it actually began testing reverse mortgages in Arizona last year.
Its purchase, expected to be final by the end of June, would make it the third-largest U.S. provider of reverse mortgages overall, behind only IndyMac and Wells Fargo.
Reverse mortgages allow people 62 and older to convert some of the equity in their homes to tax-free income. The home loans get their name from the fact that the payments are reversed — the mortgage lender make payments to borrowers in exchange for equity in their homes and upfront fees.
Such transactions are gaining popularity as baby boomers near retirement age, health-care costs rise and pension benefits often turn out to be less than expected, said David Rupp, a Bank of America exec who will oversee the company’s reverse mortgage business.
“That’s a mix that many of our senior customers are confronting, and we want to help them with that,” Rupp said.
The Federal Housing Administration (FHA) insured 9,349 reverse FHA loan mortgages in February, a record number for the second-straight month.
In fact, according to the National Reverse Mortgage Lenders Association in Washington, D.C., that was up from 5,841 reverse mortgages a year ago.
Seattle Mortgage entered the business in 1995 and now has at least 40,000 reverse mortgages with balances totaling more than $4 billion. Many were sold under the Reverse Mortgage of America name.
About 400 of the Washington mortgage company’s employees will join Bank of America, Rupp said. Of those, 200 work in the Seattle area; the others make up a national sales force in 25 states and Washington, D.C.
John Nixon, executive vice president and chief operating officer of Reverse Mortgage of America, a division of Seattle Mortgage, also will join Bank of America, as will Charlie Jones, vice president of loan servicing.
“This is all about growth,” Nixon said, “not about cost-cutting for efficiencies. This will allow us additional distribution channels to continue our growth.”
SOURCE: Seattle Times