MassMutual launches securities-backed credit line through Supernova Lending

MassMutual Wealth Management began offering a securities-backed credit line on Oct. 15, giving brokerage clients a way to borrow against taxable holdings instead of selling them to raise cash.

The MassMutual Wealth Management Secured Credit Line runs through MML Investors Services LLC, the subsidiary that operates under the MassMutual Wealth Management name. Clients may pledge stocks, ETFs, mutual funds, Treasuries, other bonds and cash equivalents held in MMLIS brokerage accounts; retirement accounts are excluded. The size of the line will vary with the value, type and concentration of the pledged securities, according to the announcement.

Every loan is made, approved and serviced by Supernova Lending LLC, a non-bank lender licensed at the state level. MMLIS is a referral partner: it takes applications and originates loans, Supernova pays it for that role, and MMLIS makes no underwriting or credit decisions. The credit decision and the loan balance sheet sit with Supernova, while the application and the referral payment run through MassMutual's broker-dealer.

MassMutual says it charges no application, maintenance or closing fees, and that interest accrues only on the amount drawn. The announcement did not disclose rates, saying they compare favorably with many traditional borrowing options. Loans will not be available in Mississippi, Nevada, North Dakota or Puerto Rico. MassMutual lists real estate purchases, bridge financing, tax payments, business expansion and wealth-transfer planning among the uses.

"We built Secured Credit Line in partnership with Supernova so when a client need or an opportunity arises, the financial professional can remain at the center of the conversation," said Linda Bestepe, MassMutual's head of lending and banking services.

InvestmentNews, which reported the launch, described it as the second banking-style product MassMutual has put in its field force's hands in as many weeks; the credit line came seven days after Flourish said it would offer its high-yield cash account to MassMutual's network of more than 6,000 financial professionals. Together the two give advisors a place to hold client cash and a way to lend against client assets — the combination wirehouses have long used to keep wealthier relationships sticky, the report said. Control of Flourish has changed hands: per this publication's reporting, Aquiline bought a controlling stake in the platform, with MassMutual retaining an interest.