Wells Fargo getting out of reverse-mortgage business

Wells Fargo & Co., the largest U.S. home lender, said it is exiting the business of reverse mortgages because of the possibility that property values will decline further. The move will displace as many as 1,000 employees.

"The decision was made based on today's unpredictable home values," the San Francisco-based lender said Thursday.

Some Wells Fargo employees in the Twin Cities may be affected, but it doesn't appear that the number is large. Vickee Adams, a spokeswoman for Wells Fargo Home Mortgage in Des Moines, Iowa, said that about 800 affected sales and sales support workers are scattered around the United States, including an undetermined number in Minnesota. An additional 190 affected workers are based in mortgage processing centers in California, Texas, North Carolina and South Carolina.

The 1,000 employees in the business are invited to apply elsewhere in the company for jobs, Wells Fargo said.

Reverse mortgages allow retirees to create a lifetime stream of income by tapping the equity in their homes. Lenders are repaid from the sale of the home when the borrower dies or moves. Bank of America Corp., the second-largest U.S. home lender, said in February it was retreating from the business because of "competing demands and priorities" at the Charlotte, N.C.-based company.

"Why be in the reverse mortgage business if the equity that you're lending, your collateral, is disintegrating?" said Terry Wakefield, a mortgage industry consultant in Wisconsin.

Home prices slid 3.6 percent in the first quarter to the lowest level since 2003 in the S&P/Case-Shiller index of values in 20 U.S. cities.

Wells Fargo will maintain its obligations on existing reverse-mortgage contracts, without originating new deals. The contracts represented about 1.2 percent of overall mortgage volume as of 2010, the company said.

Staff writer Steve Alexander contributed to this report.