Wells Fargo & Company is one of the largest and best known banks in the world. Its history dates back to the 1850’s, when Henry Wells and William Fargo began the company to provide banking in California. Today, it is one of the “big four” United States banks, along with JP Morgan Chase, Bank of America, and Citi. By market cap, it’s the third largest and it ranks 4th by total assets.
Wells Fargo was consistently one of the largest reverse mortgage originators in the country from the early 1990s until 2011. The Federal Housing Administration began the Home Equity Conversion Mortgage (HECM) program in 1989, so this run of dominance spanned most of its existence. This makes a great deal of sense – this is a new, complex, and sometimes controversial product, and many customers were most comfortable dealing with a large and well established brand. Banks like Wells Fargo and Bank of America filled this consumer need for years.
Wells Fargo’s market share peaked at an astonishing 35.44% in 2004 and consistently topped 20%. Wells and BofA together consistently originated about 45-50% of total volume. We’ve put together a table below detailing the company’s total originations and market share over time.
| Year | Loans | Market Share |
|---|---|---|
| 1991 | 2 | 0.44% |
| 1992 | 165 | 13.34% |
| 1993 | 160 | 7.53% |
| 1994 | 246 | 6.48% |
| 1995 | 228 | 5.69% |
| 1996 | 222 | 6.04% |
| 1997 | 561 | 9.67% |
| 1998 | 1,006 | 12.81% |
| 1999 | 976 | 11.93% |
| 2000 | 1,101 | 16.56% |
| 2001 | 1,573 | 19.37% |
| 2002 | 3,846 | 27.16% |
| 2003 | 7,099 | 32.84% |
| 2004 | 14,208 | 35.44% |
| 2005 | 15,352 | 31.75% |
| 2006 | 25,315 | 29.63% |
| 2007 | 21,829 | 20.18% |
| 2008 | 18,762 | 16.29% |
| 2009 | 19,320 | 17.90% |
| 2010 | 16,233 | 22.33% |
| 2011 | 14,682 | 21.41% |
However, in 2011 Wells Fargo exited the reverse mortgage business, stating that it no longer made business sense to continue with the product. Its exit coincided with those of Metlife and Bank of America, two other large players within the industry. Since then, the void has been filled by non-bank institutions who are a bit lesser known among your average American.
One of the major problems that Wells Fargo cited was that at the time borrowers did not need to undergo any sort of financial assessment before taking out a reverse mortgage. This led to a high incidence of borrowers defaulting on taxes, homeowners insurance, or both (called T&I defaults within the industry). However, in 2015 the Department of Housing and Urban Development began requiring a financial assessment to make sure that borrowers will be able to meet these obligations.
Although it has been inactive for years, Wells Fargo is still by far the largest reverse mortgage lender in history. It originated over 160,000 HECM loans, whereas the second largest lender, Financial Freedom Senior Funding, has originated about 25% of that number at 49,000.
Will Wells Fargo begin offering reverse mortgages again? Only time will tell. However, if you are an existing customer you can call Wells Fargo Home Mortgage at 1-800-472-3209 for assistance.
