BNY Mellon has revealed plans to launch home equity retirement solutions later this year.
The solutions will be designed to provide retired US citizens with a cash supplement alongside their retirement plans to help them achieve sustainable home ownership throughout their retirement.
The programme, that purchases, securitises services reverse mortgages, will give advisory services to brokers, financial advisors and asset managers on how reverse mortgages fit into retirement plans.
BNY Mellon will work with loan originators to provide the intellectual capital that will enable them to present home equity retirement solutions to homeowners that will enhance retirement outcomes and reduces risk.
Once the originators close the loans, BNY Mellon will purchase and securitise if they are suitable.
Over the past couple of years, several actions, notably the passage of the 2013 Reverse Mortgage Stabilization Act and subsequent mortgagee letters issued by the US Department of Housing and Urban Development, have allowed lenders to underwrite mortgages, enabling them to provide reverse mortgage loans only to those consumers that meet appropriate suitability standards.
As many retirees face significant financial shortfall, Michael Gordon, managing director of non-traditional solutions and special situations for BNY Mellon, said: “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.”
BNY Mellon has a long track record of working with retirees and manages assets for 401K. He expects that using “a number of new approaches” will help retirees “achieve their financial goal”.
