New York (ZeiglerSeniorNews.com) — Just as 77 million Boomers have started turning 65, the second-largest reverse mortgage company, Bank of America, has gotten out of the reverse mortgage business.
BOA surprised the 600 employees and wholesalers of its reverse mortgage division February 4 with the sudden internal announcement.
The decision appears to have nothing to do with the growing demand for reverse mortgages and everything to do with internal management at BOA, a major recipient of federal bailout money under the Trouble Assets Relief Program.
BOA had left the traditional mortgage business in 2010, halting the origination of “forward mortgages” used to purchase homes and for second mortgages.
Reverse mortgages are on the rise and are expected to boom as Baby Boomers need additional income for retirement or lump sums to pay off debts and to fund long-term care and funeral planning. This growing market will now be served without BOA.
Homeowners with BOA reverse mortgages who took the money out as a lump sum have nothing to worry about – they already have their money. Those homeowners who opted for a reverse mortgage line of credit or monthly income will still need to be serviced by BOA or some entity designated by BOA. Also, applicants with loans in procress will either need the continued interaction with BOA to complete the loan process or else to halt the process and switch to another reverse mortgage company.
BOA says that while they will originate no new applications for reverse mortgages, they will continue to service existing mortgages and applicants.
“We fully understand the critical sensitivity of ensuring that our senior customers are provided with the same level of excellent customer service that we have provided in the past,” said Doug Jones, a BOA home loan executive.
A reverse mortgage is a specialized loan for homeowners age 62 or older. It gives the homeowner access to most of the equity in the home without having to sell or move; without having to give up title or control; with no change in homestead or insurance status; with no income tax on the money obtained; with no monthly mortgage payments; with no credit or income requirements; and with no risk that the estate or beneficiaries will ever owe a deficiency if the property value drops.
A homeowner over age 62 can take money from a reverse mortgage as a line of credit from which he can draw at any time, one lump sum, income for a period certain, a guaranteed life-long income, or a combination of any of these. Proceeds can be used for any purpose.
Developments in the unfolding story of BOA’s sudden departure from the reverse mortgage business will be covered at ZeiglerSeniorNews.com .