Bank Of America Pulling Itself Out Of Reverse Home Loan Market

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Tuesday morning, Feb. 8, Bank of America announced it will no longer write reverse mortgages. In the last few years, reverse mortgages have not proved almost as profitable. A very large number of reverse home loans are ending up in the equivalent of default.

Reverse mortgages at Bank of America

Reverse home loans were provided by Bank of America starting in 2006. Then, Bank of America bought Reverse Home loan America. This happened in 2007. In 2008, Bank of America purchased Countrywide Financial Corporation and took over its home loans and reverse home loan operations in Reno, Nevada, and around the nation. All reverse mortgage operations will be shut down in Bank of America as of early 2011. That means other divisions of the financial institution will prepare to receive the 600 employees. Bank of America will still service everyone who currently holds or is applying for a reverse home loan.

A decrease in the reverse home loan business

Reverse home loans — in which homeowners sell their home back to the bank over time — have dropped in popularity. In 2009 and 2010, the number of new reverse home loans written was dropped. In 2009 it was by a third. You will find homeowners in default on reverse mortgages technically also. There appear to be more and more. A reverse mortgage default is more difficult to parse, because going into “default” means not paying taxes on the property or keeping it maintained. Many seniors are facing the choice of getting no fax pay day loans to keep their home maintained or lose their main source of secondary income.

The benefit of reverse home loans

Reverse mortgages are currently losing popularity. Reverse mortgages aren’t lasting long enough for several senior citizens. There is also the issue of low maintenance on the home causing a default. Many individuals would rather do a reverse home loan though since the home does not have to be sold but they nevertheless get some equity back. It can be a good idea to get reverse home loans at times. However, they’re used inappropriately most of the time.

Citations

Miami Herald

miamiherald.com/2011/02/03/2048507/reverse-mortgages-going-to-default.html

Nasdaq

community.nasdaq.com/News/2011-02/bofa-getting-out-of-reverse-mortgages.aspx?storyid=56592

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