BNY Mellon Launches Reverse Mortgage Operations

After announcing it was getting into the reverse mortgage business last year, Bank of New York Mellon is making good on its promise to start participating in the market.

Though the large, New York-based bank and investment management advisor will not originate loans, the company will utilize its access to financial planners and other professionals to spread the word about reverse mortgage merits in effective retirement plans. It will also purchase and securitize loans, and is now licensed to do so.

“We have our license, we have our operation set up, and we are ready to purchase and securitize loans,” Michael Gordon, head of Retirement, Insurance, and Strategic Solutions and CEO of Home Equity Retirement Solutions (HERS), the company’s reverse mortgage division, tells RMD. “We are very excited about where we are, and we’re ready to go now.”


The company has compiled a team of reverse mortgage and finance professionals to lead the HERS division. That team includes Chuck Nachman, who will serve as head of Insurance and president of the division; Rick Burke as head of Service and Operations; Bryan Lubin as chief loan purchase officer; Sandy Thomas as head of Risk and Compliance for HERS; and Tim Wilkinson who will serve as head of Pricing and Portfolio Management.

BNY Mellon has contracted with third-party vendors such as ReverseVision for loan processing and Celink for subservicing. It has also formed a partnership with lender Longbridge Financial on originations. It will work through both traditional origination channels such as retail and wholesale, as well as non-traditionl channels like financial planning, Gordon says, stressing that the bank does not do its own origination.

Longbridge, which launched in 2012 by a small group of former New York Life professionals, says it expects to roll out its origination operations over the course of the year, though it is currently closing loans.

“We will be starting a wholesale business with a small number of high quality lenders, starting after financial assessment begins, to take advantage of the financial strength of BNY Mellon to purchase closed loans,” says Chris Mayer, Longbridge CEO. “On the origination side, we will soon be announcing the first of a number of agreements with non-traditional distribution channels—brand-name companies that have not before been involved in reverse mortgages.”

Longbridge is also seeking phone originators and compliance staff to build the new team.

Both companies see the upcoming financial assessment as an opportunity for their partnership, and the industry in general.

“We are strong believers in financial assessment,” says Longbride’s Mayer. “The lack of credit underwriting and resulting high T&I default rates have harmed the industry in many ways, leading to a stigma in the marketplace and challenging the finances of the FHA program leading to higher insurance premiums. BNY Mellon and Longbridge Financial have long said that we support higher standards for newly originated loans to ensure our borrowers have the financial resources to remain in their home.”

And while both companies have also noted the importance of new product development, BNY Mellon does not have any specifics to share currently—though Gordon says interest remains high.

“We understand a need for proprietary products, both jumbo loans and other specialty type products—that might be something health-related, transition-related or other products,” he says.

Written by Elizabeth Ecker

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  • BNY Mellon’s entry to the industry will do more to help remove the undeserved negative stigma attached to the reverse mortgage program than any advertising campaign – Great news!

  • When Genworth purchased Liberty a couple of years ago the head of the Genworth Home Equity group said they were considering a health based version too. I’m sure there are folks a whole lot smarter on here than I am but I recall something to the effect of using an insurance policy to cover or return a portion of the closing costs or accrued interest when the homeowner passed away. Similar in some way to a viatical policy. Can someone pick that idea apart or does it show some promise. I assumed a portion of the proceeds would pay the premiums in a set aside.

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