For reverse mortgages, try smaller banks

With two of the nation's biggest banks out of the business of reverse mortgage, many home owners is the money to the poor and the rich capital wonder if they can still suffer from reverse mortgages.

The short answer is Yes. They will just have to look further than the next branch, said Jim Cory,Executive Director of Legacy mortgage Arrangements at San Diego.

"It is not difficult to find a reverse mortgage lender or get a reverse mortgage at all," he said. "Butthey're not in the big banks."

Wells Fargo abruptly stopped offering mortgages in reverse at the end of June. In February, Bank of America has pulled out of the reverse mortgage market. A month earlier, financial freedom was out of business. Together, the three lenders have accounted for almost half of the reverse mortgage originations.

Reverse mortgage provide home owners who are 62 years and older the opportunity to convert their home equity into a loan that requires no monthly payments. In a reverse mortgage, the lender does not get paid until the homeowner dies or sells the home, but the owner has a duty to keep property tax and insurance at present or the creditor can foreclose. Most reverse mortgages are insured by the Federal Housing Administration under a program known as Home Equity Conversion mortgage, orHECM.

Until recently, Bank of America and Wells Fargo dominate the market reverse mortgage. More than15,600 of 61,741 reverse mortgage confirmed by FHA in the first nine months of this fiscal year camefrom Wells Fargo. And more than 5,600 is from Bank of America, although lenders stopped taking applications to reverse mortgage at the end of February.

Why banks want out reverse mortgage

Bank of America said it dropped a product of mortgage loans because the contrast is not part of itscore business. Wells Fargo said its decision was based on the reduced home values and challenges in evaluating the ability of homeowners to keep up with the taxes and insurance obligations. Industryobservers say that the lenders foreclosing because about elderly people hurt the Bank's reputation.And for that the reverse mortgages represent a small portion of the lender's business, their reverse mortgage activity is not worth the risk, time, money and effort they have spent to keep up these activities and comply with the regulations.

The lender still offering reverse mortgages

Although the latest departure, many lenders are still offering reverse mortgages and they have no problem filling the gap from the top players already out of the game, Cory said.

"It's a competitive industry, and many other creditors got additional volumes," he said.