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BNY Mellon to Launch Home Equity Retirement Solutions

Program Designed for Integration into Retirement Portfolio Planning 

BNY Mellon, a global leader in investment management and investment services, plans to launch Home Equity Retirement Solutions later this year, a business that purchases, securitizes and services reverse mortgages and provides advisory services to brokers, financial advisors, and asset managers on how reverse mortgages fit into retirement plans.

The program will be designed to provide U.S. retirees with cash to supplement their retirement plans and help them achieve sustainable home ownership throughout their retirement. 

"Many retirees face a significant financial shortfall," said Michael Gordon, managing director of non-traditional solutions and special situations for BNY Mellon Investment Management.  "We view the funds generated by suitable reverse mortgages as an additional fixed income component of retirement portfolios, an important part of retirement planning that complements other aspects of the plan."

Gordon noted BNY Mellon has a long track record of working with retirees including managing assets for 401K and defined benefit investments.  He added, "We expect that a number of new approaches, including reverse mortgages, will be required to help retirees achieve their financial goals due to the severe underfunding in many people's retirement plans."

These types of mortgages may now be more prudent based on the financial circumstances of an individual homeowner, according to Gordon.  Several actions over the past couple of years, notably the passage of the 2013 Reverse Mortgage Stabilization Act and subsequent mortgagee letters issued by the U.S. Department of Housing and Urban Development, allow lenders to underwrite mortgages, enabling lenders to provide reverse mortgage loans only to those consumers that meet appropriate suitability standards. 

BNY Mellon is designing a rigorous suitability survey for use by intermediaries, outlining a socially responsible lending approach. The consumer loans and advisory services are expected to be offered through a variety of distribution parties, including brokers and fee-based advisors.  "It is extremely important that all parties take a socially responsible approach to these mortgages," said Gordon.

"Leveraging home equity for income can enhance both diversification and projected financial outcomes," said Gordon.  "With a top 10 position in the U.S. retirement market, and as one of the largest investment management companies, with a growing menu of alternative asset management offerings, BNY Mellon is able to offer Home Equity Retirement Solutions as a natural business extension while helping to improve U.S. retiree portfolio diversification overall."*

As part of its focus on retirement, BNY Mellon will work with loan originators to provide the tools and intellectual capital that will enable them to present home equity retirement solutions to home owners in a manner that enhances retirement outcomes and reduces their risk.  Once originators close their loans, BNY Mellon will re-underwrite every loan to determine if they are suitable for BNY Mellon's securitization process.  BNY Mellon will purchase and securitize loans that are suitable. 

*Top 10 – US – Defined Contribution Investment Only (The Cerulli Report, Retirement Markets 2013)
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