Wells Fargo exiting reverse mortgage business

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Wells Fargo is putting an end to reverse mortgages at the end of the month, the controversial home equity loan taken out by borrowers over the age of 62. According to the Wall Street Journal, the bank, which is the nation’s largest reverse mortgage issuer, said yesterday that it is no longer comfortable making those types of loans, given that home prices are still falling and that federal restrictions make it difficult to determine whether participating seniors will be able to continue paying their property taxes and homeowners’ insurance. Through the loan program, which is run through the U.S Department of Housing and Urban Development, aging borrowers receive regular payments from the equity of their homes, to be paid back when the home is sold, when the borrower dies, or when the borrower defaults on his or her property taxes or insurance obligations. Consumer advocates have cautioned in the past that reverse mortgages tend to come with high upfront fees and can leave seniors vulnerable to scams. Bank of America stopped giving out reverse mortgages in February. [WSJ]