WSFS Financial Corp. in Wilmington, Del., has given up on its reverse-mortgage joint venture after a little over one year, citing the unlikelihood of profitability at the unit.
It was the second reverse-mortgage lender to abandon the business in recent weeks. Previously, Senior Lending Network of Melville, N.Y., was shut by its owners, KBC Group, a bank based in Brussels.
In April 2008, WSFS acquired a majority interest in First Reverse Financial Services LLC of Westmont, Ill.
While results at the unit did improve during the second quarter when compared with the first quarter of this year, it was still a money-losing operation.
For the most recent period First Reverse had a pretax loss of $152,000, while in the previous quarter it lost $586,000. Another positive sign was a $98,000 increase in fee income during the period, to $654,000.
However, according to WSFS president and chief executive officer Mark Turner, First Reverse has not reached break-even levels "and in the current economic climate, prospects for achieving required returns are weak."
Turner added that WSFS will still do reverse mortgages in its Delaware banking branches, pointing out it is the top reverse originator in that state.
At the time of the acquisition, WSFS said what attracted it to First Reverse was that it was a national originator of the product through the third-party channel, while its own retail operation was limited to its branch network.