Wells Fargo Home Mortgage has taken back its reverse mortgage servicing portfolio of over 28,000 accounts from the subservicer Wendover Financial Services Inc. and acquired Wendover's reverse mortgage servicing system.
Wendover, which was long one of the most prominent players in reverse mortgages, has shuttered the division that services them and will lay off 50 employees by mid-December. The Wells Fargo & Co. unit was by far its largest client. The 4,500 accounts of Wendover's other six clients have been taken over by CompuLink Corp., which does business as Celink.
In a statement prepared for American Banker, Jerald Banwart, Wells Fargo Home Mortgage's senior vice president of servicing operations, said its move "is strategic for the growth that we anticipate in the reverse mortgage market."
Susan O'Doherty, Wendover's president, said her Greensboro, N.C., company would continue to subservice other mortgages and consumer loans, including private-label credit card receivables and home equity lines of credit.
"We would rather focus on core products and divest" from "a niche product," she said. "Reverse mortgages are a very highly specialized area" of servicing and "we weren't going to invest" further in that market.
Jeffrey Taylor, who founded Wendover in 1986 and later sold it to State Street Corp., joined Wells in 2000 as its vice president of senior products. (State Street, of Boston, eventually sold Wendover to Electronic Data Systems Inc. of Plano, Tex.)
The clients whose accounts Celink, of Lansing, Mich., took over were CUNA Mutual Mortgage, EverHome Mortgage, Fannie Mae, SunAmerica Mortgage, GMAC Mortgage, and Wendover's own servicing portfolio. Unpaid principal balances on these six portfolios total about $300 million.
John LaRose, Celink's chief executive, said it began looking at reverses about three years ago and got Fannie's approval to service them this year. The business has been "quite a little culture change" and more complicated than he expected, he said.
The product is more like a construction loan than a regular mortgage in that the servicer spends most of the time disbursing, rather than collecting, payments. "Everything is backwards from what you've known for years," Mr. LaRose said.
Also, "you have to micromanage the entire servicing process to protect the interests of Fannie Mae and HUD," the product's main investor and insurer, respectively.
The most labor-intensive part of the job is customer service, he said. The average phone conversation with a borrower is three to five minutes; for subprime loans the average is 30 to 45 seconds.
"Senior citizens require more explanation" and comforting, and the product "can be confusing to them," Mr. LaRose said.
