MetLife Inc, the largest U.S. life insurer and reverse mortgage lender, made a surprise shift on Thursday with the sale its reverse mortgage business as part of its exit from banking-related activities.
Nationstar Mortgage LLC will buy its reverse mortgage servicing portfolio, and MetLife Bank would not accept any new applications, the company said.
A Metlife spokesman said about 500 jobs are expected to be cut as a result of the sale.
MetLife has been actively shedding its banking and mortgage operations to drop its bank holding company charter and thereby limit U.S. regulation. But as recently as January it said it would continue writing reverse mortgages.
According to market data company Reverse Mortgage Insight, MetLife Bank was by far the biggest U.S. reverse mortgage lender in the first quarter, with 23 percent of the market. At the same time, the industry has been shrinking, with volume in March at close to a 7-year low, RMI said.
MetLife stopped taking applications for traditional mortgages earlier this year, and struck a deal last year to sell MetLife Bank's deposit business to General Electric Co's GE Capital.
Earlier this year, because of the oversight role it has through the company's bank charter, the Federal Reserve blocked MetLife from raising its dividend or buying back shares, amid concerns about some of its capital ratios.
MetLife executives have said they would seek to drop the charter as soon as MetLife Bank's operations were sold, and to raise the dividend and buy back shares thereafter.
MetLife shares rose 1.1 percent to $36.36 in afternoon trading.
(Reporting By Ben Berkowitz; Editing by Gerald E. McCormick and Richard Chang)