A 37 percent year-over-year decline in bank failures has the number of mortgage-related operations to close or fail down steeply during the first quarter at the Mortgage Graveyard from MortgageDaily.com. Despite the subdued banking activity, the reverse mortgage sector took a beating.
During the first three months of 2011, a total of 37 mortgage-related firms or departments either failed or were closed down by management, based on coverage at MortgageDaily.com — a leading online news publication for people with an interest in real estate finance.
The decline in casualties was primarily attributable to a slowdown in the number of bank failures. As of the end of last month, just 26 bank failures had been reported by the Federal Deposit Insurance Corp.
By the end of the first quarter of last year, 41 federally insured banks had already failed.
The latest quarter also saw fewer failed banks than the 30 in the final quarter of 2010.
Within the latest quarter, 23 of the bank failures occurred during either January or February; but only three banks failed during March.
“One sector that saw the exit of high-profile players was reverse mortgage lending,” said Sam Garcia, founder and publisher of Mortgage Daily. “During the first quarter, Bank of America Home Loans disclosed plans to abandon reverse mortgage lending, Financial Freedom’s parent OneWest Bank Group LLC said it decided to pull the plug on reverse lending, and Wells Fargo Home Mortgage announced it would eliminate its wholesale reverse mortgage channel.”
The exit by the big players comes as reverse mortgage originations have plummeted. During fiscal 2010, only 96,971 home-equity conversion mortgages were endorsed by the Federal Housing Administration, tumbling from the previous year’s 162,619.
While NetMore America Inc. hasn’t necessarily closed down, the company did substantially reduce its operations during the period.
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Complete details about all failed and closed mortgage companies and operations are available at:
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