MetLife selling off bank
MetLife Inc. has announced that it is considering selling their MetLife Bank which currently offers traditional banking such as depository business, savings accounts, money market accounts and certificates of deposit. The MetLife Home Loans division, however, is not being considered as part of the sale. The bank’s current assets total $15.6 billion with $9.3 million in deposits.
According to MetLife, they have decided that a bank holding company structure is no longer appropriate despite having been considered a “systematically important financial institution.” They are facing scrutiny from the Federal Reserve Board and regulations like the Dodd-Frank act have loomed overhead.
Government regulations alter company’s direction
“MetLife Bank represented just two percent of MetLife Inc.’s first quarter 2011 operating earnings, and we do not believe it is appropriate for the overwhelming majority of our business to be governed by regulations written for banking institutions,” said Steven Kandarian, President and CEO of MetLife Inc. in a statement.
“In a highly competitive global insurance marketplace, it is imperative that MetLife be able to operate on a level playing field with other insurance companies,” Kandarian said.
The ten year old division initially began offering retail savings products online and their home loans division which will remain in tact was created in 2008 when they had acquired EverBank mortgage and First Horizon Home Loans from from First Tennessee Bank.
Internal memo notes the change
“We are pursuing a sale of our depository operations and in the future will concentrate on our mortgage banking businesses (including forward and reverse mortgage origination, servicing and warehouse lending). MetLife Home Loans will remain a part of the MetLife enterprise,” said an internal company memo obtained by National Mortgage Professional Magazine (NMPM).
NMPM reports that “the company contends that it is committed to growth strategies in all of its mortgage banking businesses, including focusing on the continued success of its jumbo mortgage products.”
“The mortgage business often provides access to the bulk of a person’s wealth and, therefore, is a natural part of financial and retirement planning,” noted the memo. “In addition, the mortgage product provides a natural hedge to the insurance business and a diversified entry point to customer acquisition.”
Major changes to mortgage division
The major changes to the mortgage division over the next year will include a requirement of their loan originators to seek licensing given their dropping of the bank charger, and some states will require fulfillment and loss mitigation employees.
“The elephant in the room here is the fact that all of MetLife’s LOs will now have to become licensed,” said Eric Tishaw, chief operating officer of Hazel Green, Ala.-based Hometown Lenders. “A significant portion of MetLife’s recent growth has come from entire branch networks and producers making lateral moves from competitors in an effort to make a move to a company where licensing would not be required, obviously to avoid the hassles of becoming licensed (and the fear of failing!). Those producers that MetLife are able to both retain and get licensed will no doubt be re-evaluating their compensation levels and comparing that to what they could get elsewhere working for a smaller lender, who will be able to offer them relief from big-bank red tape and who will give them more flexibility, more products and greater autonomy.”
MetLife’s dropping of their bank division is indicative of changing governmental regulations and analysts suspect that such a large closure could change the conversation in Washington about mortgage regulation.
s2kreno
October 4, 2011 at 8:33 pm
The major changes at Metlife are not a good thing for mortgage employees. And I'm not referring to licensing requirements. When we were hired, a major selling point was the fact that jumbo loans were portfolio'd, which would give jumbo loan officers a competitive advantage that would somewhat offset the awful pay (lowest in the business!). But now, it appears that the company is trying to fix up the bank's portfolio and make it more attractive to buyers. But they don't communicate this to employees; they just decline every loan or keep asking for more documentation until after a couple of months the clients give up and the LO looks like an idiot. How many of these underwriters think they'll have jobs if no loans close? How many loan officers does Brian Hale think he'll be able to recruit if they can't get loans closed and even if they do there is no money in it? Something is seriously going wrong here. If I were an employee or a shareholder I'd be worried.