MetLife is taking full advantage of the recent decisions by Wells Fargo and Bank of America to leave the reverse mortgage market. But industry watchers are wondering why MetLife would dramatically increase its presence in the market, especially with a dismal housing market that could significantly reduce any return on investment the company receives when the properties are eventually sold.
The reverse mortgage is the most prominently featured product on MetLife Bank’s website, a unit that the company said may hedge the parent against declines in the main insurance business.
“They must know something that I don’t know,” David Lykken, president of consulting firm Mortgage Banking Solutions, told According to Bloomberg last week. “They’re too smart to be heading into an area that’s disastrous.”
As Bloomberg notes, demand for reverse mortgages contracted from record sales in 2009 after the housing slide eroded the home equity that seniors draw on to qualify for loans. MetLife climbed to second place in reverse mortgages in May from fifth two years earlier, according to the U.S. Department of Housing and Urban Development.