MetLife, the nation’s largest provider of reverse mortgages, is getting out of that business, the company announced Thursday.
MetLife, also the nation’s largest life insurer, decided earlier this year to stop taking mortgage applications through its MetLife Bank and leave mortgage lending altogether.
The company has 23 percent of the reverse mortgage business in the U.S., according to Reverse Mortgage Insight, a market data company.
Reverse mortgages have been popular among retires but have been less attractive in recent years, with loans now at a seven-year low, according to RMI. Part of the downturn can be traced to the plunge in home values.
The difference between a conventional mortgage loan and a reverse mortgage is that with the first, the homeowner pays the loan back in monthly installments over the life of the loan, and with the second, the homeowner essentially takes out a line of credit against a home’s equity, with the lender paying the homeowner monthly payments, or a lump sum.
Many retirees use reverse mortgage checks to supplement other retirement income. The homeowner has to be at least age 62 and the home must be paid off or nearly paid off to qualify. The homeowner is allowed to stay in the home as long as he or she lives. If the homeowner moves out or dies, however, the full amount of the outstanding debt becomes due.
If the estate cannot pay back the loan after the homeowner dies, the home may be sold to satisfy the debt. Some relatives take out insurance policies on the homeowner to cover the debt and keep the home.
MetLife is selling its reverse mortgage business to Nationstar Mortgage LLC. A MetLife spokesman told the Chicago Tribune the company will cut about 500 jobs connected to the reverse mortgage business.
What has been your experience with reverse mortgages?