Wells Fargo & Co. decided to exit reverse mortgages after federal officials insisted it foreclose on elderly customers who were behind on property tax and insurance payments, a Wells executive wrote in an email to business contacts Friday.

The San Francisco bank had other reasons to shut its 1,000-employee reverse mortgage unit. The industry's lack of growth, declining housing prices and other issues have reduced its draw for major lenders, prompting other market leaders such as Bank of America Corp. and Financial Freedom Acquisition LLC, a unit of OneWest Bank Group LLC, to pull out as well. The business is simply not central to the mortgage operations of Wells and others.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.