NEW YORK — MetLife Inc. said it will explore a sale of its residential mortgage business along with its banking operations, the latest effort by the life insurer to avoid costly new regulations.
The move comes after MetLife in July said it was exploring a possible sale of its MetLife Bank depositary business, saying its bank-holding company structure was no longer appropriate. The insurer said at the time it would keep the bank's mortgage business, an arrangement that would have forced it to license the business on a state-by-state basis.
The New York-based insurer just three years ago acquired the residential origination and servicing business of First Horizon National Corp. (FHN) in a bid to expand its push into the home loan business. But it came just ahead of a downturn in mortgage volumes as the financial crisis and recession led to tighter underwriting standards and reduced demand.
Through the first half of this year, MetLife was the 12th largest U.S. mortgage originator, with about $9 billion in volume and a 1.5% market share, according to the trade publication Inside Mortgage Finance. Just the top three banks control 55.3% of all home loan originations, although originations are likely to fall by 25% in 2011 to their lowest level since 1997, according to the Mortgage Bankers Association.
"Given all the problems in the mortgage business, and regulation, it's not a surprise," said Bert Ely, president of banking consulting firm Ely & Co. in Alexandria, Va. "It's a retail-oriented business, so it's muich more aligned with banking. But it also raises a question, who wants to be in banking?"
On Wednesday, the insurer said keeping its mortgage business would divert resources away from its primary focus on its global insurance and employee benefits businesses. MetLife Bank began originating forward and reverse mortgages in 2008 through its MetLife Home Loans division.
MetLife said the home-loan business will continue to originate mortgages while it is marketed for sale. A MetLife spokesman declined to further comment.