MetLife Bank, a division of the insurance company MetLife Inc., announced that it is leaving the mortgage banking industry. It is looking for a buyer for this division. MetLife cites two reasons for this decision. First is the uncertainty in the mortgage banking industry. Second is the regulatory environment that MetLife says requires excessive resources.
According to MetLife devoting employees and capital to manage new regulations “would divert these resources away from MetLife’s primary focus on its global insurance and employee benefits business.”
For those of us who remember the crazy days of 2004-2006, we saw everyone and their grandmother suddenly becoming a mortgage banker. Insurance companies, investment companies, even pension funds wanted a piece of the action. In most cases these new “lenders” had little or no experience in mortgage lending and jumped on the gravy train out of greed rather than a desire to actually help people buy homes. Most of these new lenders crashed and burned when the real estate market headed south and sustained huge losses.
I find it rather cynical for MetLife to blame more stringent regulatory oversight as a reason to close their mortgage division. Many, including this author, feel lax oversight lead to the eventual failure of the mortgage banking system. I believe a closer examination of MetLife Bank would show a division who did little if anything to ensure themselves and their investors against loss. Rather than closing their doors and blaming others for their failures, MetLife Bank should “man up” and accept responsibility for their own actions and business decisions.
I applaud MetLife Inc. for deciding to focus on what they do best, insurance, and leaving the banking industry. I wish more fly-by-night “mortgage bankers” would follow suit. It will take a lot of time and pain to fix the real estate industry and solutions will come from those who know the industry best, not from temporary participants.