J.B. Nutter & Co. - Wholesale - Agency, FHA

Update - 2009-10-26: It has been brought to our attention that J.B. Nutter & Company resumed accepting new business from wholesale clients in March 2009 following the self-imposed moratorium they announced in late January. A report by Reverse Market Insight ranks them as the #1 wholesale reverse mortgage lender by volume for the month of August.

Update - 2009-01-26: J.B. Nutter & Company announced an extension today of their moratorium on new loan submissions, extending a previous two-week halt into March of 2009.

"Warehouse lending issues have forced us to reduce the number of files we can close each day. As such, we must extend our moratorium on new files until March 2009. We advise that you seek out another wholesale lender for the time being and we will keep you posted when new file submissions can resume."

V.P. of Reverse Mortgage Paul Madson did not return our call, but brokers were able to confirm this means all new loans, reverse mortgage applications included, are on hold.

Original Listing - 2009-01-23: Calling a halt to 'forward' originations, J.B. Nutter & Company announced the funding "bottleneck" is permanent. From the email sent to Brokers:

"From this point forward, James B. Nutter & Company will not be accepting registrations or files for "forward" mortgages any longer. We are withdrawing from the wholesale "forward" mortgage market. This would include all conventional, FHA, HUD 184 and VA loans."

Matthew L. Moore (Matt), Vice President says they will "continue working diligently to provide the best service available for our current "reverse" brokers and correspondents."

Original Ailing Post - 2009-01-13: J.B. Nutter & Company announced a two-week moratorium beginning 2009-01-09 on new loan submissions due to a funding "bottleneck" they are experiencing. From the memo:

"For years, when a wholesale reverse mortgage lender delivered a loan to an investor, funds were transferred back to the wholesale lender in a timely manner, usually within 24-48 hours.

Beginning last Friday, however, we unexpectedly began to experience significant delays in obtaining reimbursements from our investors. When we say significant, we mean significant."

That was followed by another email on 2008-09-12 that stated "Rumors indicating that Fannie Mae is the source of the problem or has otherwise been compromised are not true. In fact, Fannie Mae has been ably assisting us in fixing the problem." ReverseMortgageDaily explains the probable cause being due to a change in Fannie Mae's pricing policy that "created a backup of loans at FNMA" for reverse mortgages and notes "JB doesn't say it's FNMA, but we all know they're the only ones buying HECMs."

Prior to those announcements, on 2009-01-08 we received the following comments from a broker doing business with J.B. Nutter:

"I originate in the reverse mortgage space and two loans for this afternoon are being cancelled. The lender is JB Nutter and they are claiming Fannie Mae owes them money and they cannot close until they get paid. The rep is claiming funds are forthcoming but they are halting all loan closings. He said we should be ok to start closing next week as long as Fannie's funds come in today and tomorrow.

Our office is in a panic with these guys right now. They promised loan docs last week on deals, where the signing date has to be precise... and they never came through."

Founded in 1951 and officially the "James B. Nutter & Co.," the Kansas City, MO lender specializes in FHA and Reverse Mortgage lending and also offers conventional loans through both retail and wholesale channels. According to Reverse Mortgage Alert, J.B. Nutter was consistently among the top reverse mortgage lenders in the early years of the HECM program. Average monthly volume for 2007 is reported as $14.8 million and with the recent surge in reverse lending and refinancings the numbers for 2008 are likely higher, but nothing like the $261 million per month achieved back in 2003. From the testimony of J.B. Nutter Vice President George Lopez on 2007-12-12 before the Senate's Committee on Aging:

"The length of our firm's experience with the reverse mortgage product is exceeded only by the depth of our experience. Currently, James B. Nutter & Company is the #2 wholesale reverse mortgage lender in the nation, processing over 1,000 transactions each month and serving over 10,000 customers and 450 correspondent lenders in 47 states and the District of Columbia. We also originate forward mortgages in 50 states and the District of Columbia."

While we doubt this is anything more than a temporary dilemma, it is certainly having an impact on this company. Feel free to share your comments below or email us with additional information.