MetLife Inc., the largest U.S. life insurer, agreed to sell its reverse-mortgage portfolio to Nationstar Mortgage LLC as Chief Executive Officer Steven Kandarian retreats from banking to limit U.S. regulation.
MetLife will cut about 500 jobs as part of the move, said John Calagna, a spokesman for the insurer. The company will no longer accept applications for reverse mortgages, New York-based MetLife said today in a statement that didn’t disclose terms.
Kandarian has agreed to sell about $7.5 billion of deposits to General Electric Co. and said in January he would stop originating traditional home loans after the Federal Reserve rejected MetLife’s plan for a dividend increase. Banking operations generated less than 2 percent of 2011 operating earnings and subjected the company to Fed oversight.
“Given MetLife’s strategic focus as a global insurance and employee benefits leader, the company decided in 2011 that a bank holding company structure was no longer appropriate,” according to today’s statement.
Bank of America Corp., Wells Fargo & Co. and MetLife, once among the top issuers of reverse mortgages, have been retreating from the market after the housing slide eroded the home equity that seniors draw on to qualify for the loans.
Reverse mortgages are loans that convert a homeowner’s equity into a lump sum or line of credit and are generally available for those 62 or older. The balances, including interest and any fees, generally must be repaid at death by the borrower’s heirs or through the sale of the home.
MetLife said in March that another capital plan, which included share buybacks, was rejected by the Fed after the regulator found the company would fall short of a U.S. capital standard in a severe economic downturn. The insurer will probably stop being a bank holding company by the end of June, MetLife said in March.
Nationstar Mortgage Holdings Inc., a lender and servicer, was taken public in March by Fortress Investment Group LLC. Lewisville, Texas-based Nationstar expanded last year by purchasing servicing rights from Bank of America and sub-contracted with other institutions to handle their most troubled loans.
Nationstar rose 1.9 percent to $15 at 4:15 p.m. in New York. MetLife advanced 1.4 percent to $36.47.
The insurer was advised by K&L Gates LLP and Deutsche Bank AG, according to the statement. MetLife said in January that most of the 4,300 employees at the main mortgage-origination business would lose their jobs with the unit’s closing.
A spokesman for Nationstar didn’t immediately return a call seeking comment.