BNY Mellon is getting into the government-insured reverse mortgage business. Loans will be originated through third parties.
The New York-based company said Tuesday that it plans to launch a new reverse mortgage business later this year.
Dubbed Home Equity Retirement Solutions, the new division will purchase, securitize and service reverse mortgages.
BNY Mellon plans to work with loan originators. In addition, it will offer the product through a range of distribution parties that include brokers and fee-based advisors.
BNY Mellon says it is employing a “socially responsible” approach to reverse mortgage lending.
While the announcement didn’t directly reference home-equity conversion mortgages that are insured by the Federal Housing Administration, the bank made it clear that HECMs are its intended product.
“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,” the news release stated.
After loans have been closed by the originator, BNY Mellon said it will re-underwrite every loan to determine suitability for securitization.
Securitized HECMs are guaranteed by Ginnie Mae.
