In another blow to reverse mortgage lending, OneWest Bank announced this week that it is exiting the under-fire business.
The Southern California-based bank and mortgage lender, formerly known as IndyMac Federal, is shutting down its reverse mortgage unit Freedom Financial entirely.
Freedom Financial had been a heavy hitter in the space before being acquired by IndyMac several years ago.
OneWest said both the wholesale reverse mortgage business and the retail business will be shuttered.
The wholesale channel made up the bulk of loan origination volume, and so with its demise came the closure of the retail side as well.
The move also means there will be no more wholesale origination channels within OneWest Bank, strictly retail.
In other words, no mortgage brokers will have access to resell the company’s loan programs.
All completed reverse mortgage applications must be received no later than March 31, 2011, and all existing loans must be funded no later than May 20.
And despite the seizure of the reverse mortgage lending business, the company said it will continue to service its “significant reverse mortgage loan portfolio.”
Reverse mortgages were recently referred to as a “last resort” by Consumer Reports, and the AARP sued HUD over the loans earlier this month.
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