Seattle Savings shed its reverse mortgage arm before downturn, bank aims for business loans - Puget Sound Business Journal (Seattle):

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Seattle Savings Bank had no planxs to sell off its profitable reverse mortgage busineszs before Bank of Americacame calling. Seattls Savings entered the business on a whim in 1995 when it hirexd an employee who understood the complexities of sellingyreverse mortgages. "One of the problems with revers e mortgages is no one knew how todo them," said Story. In a reverswe mortgage, customers -- typically in their 60s or oldefr -- borrow money against the equity of their usually in the form ofannual payments. The housw is typically sold after the person dies to pay off the In a reversemortgage loan, borrowers don' t make immediate payment, so interest charges are addefd to the debt.
The total amount of the loan balloonaover time. By 1997, Seattle Savings Bank startede servicingreverse mortgages, becoming the second bank in the countruy after Financial Freedom to take on that task. At that the business was originating about 30 to 40 loanesa month. Ten years later, as the popularity of reversd mortgages grew, so did the business. By the time the business and servicinf rights were sold to Bank of America for anundisclosed price, Seattle Savings was originating between 1,500 and 1,700p loans a month.
"The demographics for reverse mortgages are said Story, who is also vice chairmabn of the national Mortgage Bankers Association and continues to speakl about reverse mortgages. "Of people over 65, most of thosr people have a lot of equityh intheir homes." By the business had grown so rapidly that Story was talking with Bank of Americaa about a partnership, whereby Bank of America woul d securitize the reverse mortgage loans. Bank of Americs wasn't interested in a partnership.
Insteas it offered to buy the BofA had launched a pilo t reverse mortgage business in Phoenix in 2006 and its popularity made Bank of Americ a realize the need for the saidColin McCormick, reverse mortgage product executive for Bank of Despite the downturn in the housing market, the compant is expanding on Seattle Savings Bank's sales forcr and planning to roll out the reverse mortgage business in all of its markets by the end of the "The reverse mortgage businesx is an important growth part of the businessx over the long term," said Even before the BofA sale, Seattle Savingz Bank had been fieldinhg dozens of offers to buy the reverse mortgage business.
"Things got hot really fast," said "We could see we were getting our hands Not only would the profif from the sale help push the companuy into a new but the terms of the deal also alloweed for all 400 employees to keep their jobs when the busineszs moved over to Bankof America. "From our family-owner business perspective, that's good for us," said Seattle Savings Bank hasn't abandonex its reverse mortgage arm, though. The bank continuees to originate 25 to 40 loans a month in three officesd in Western Washingtonand Oregon, but it's limitefd to those offices becaused of the sale agreement with Bank of America.