Listen to this articleThe basics:
- Cornerstone’s CHEIFS turns home equity into retirement funding, other needs
- $285M in backing fuels rapid national and NJ expansion
- Offers tax-free funding with no new debt or commissions
A New Jersey company is taking a new approach to helping people fund important aspects of their financial planning strategy.
Summit-based Cornerstone Financing was founded in 2023 by Craig Corn and Daniel Anderson. The firm offers products and solutions, such as CHEIFS (Cornerstone Home Equity into Financial Success), which assists homeowners in converting a portion of their home equity into tax-free funding for retirement planning, insurance, annuities and other financial needs.
CHEIFS is now available in some 20 states across the nation. Earlier this year, the company announced its launch here. “We are proud to expand our offerings in our home state of New Jersey,” said Anderson in an April 1 news release. “Our growing presence across the U.S. is testament to our commitment to providing innovative financial tools for homeowners and advisors nationwide. We look forward to helping more individuals to consider using their home equity value to make strategic financial planning decisions without taking on new debt or monthly payments.”
The company is armed with $285 million in financing – through global investment firms Aquiline Capital Partners and Nomura – to support the rapid expansion of CHEIFS.
“Partnering with these prestigious institutions affirms our commitment to providing advisors with innovative home equity solutions,” Anderson said in an October 2024 announcement of the aggregate financing. “With streamlined distribution through our network of advisors, Cornerstone, through its CHEIFS program, offers a uniquely efficient model that maximizes value and enhances advisor-client financial planning strategies.”
“We are proud to support Cornerstone in the expansion of CHEIFS,” said Timothy Gravely, partner and head of credit, Aquiline. “This product addresses a critical gap we observed through our participation in the insurance market – and we are excited to back the solution.”
Cornerstone says that this new funding solution revolutionizes the home equity landscape – evolving the financial toolkit for advisors and homeowners.
An idea is born
NJBIZ met with Anderson and Corn at Cornerstone’s headquarters in Bloomfield to discuss the company’s early growth, areas of focus, the future – and more.
Corn and Anderson spoke about their long-time relationship working in different parts of this space. Corn is a seasoned leader in the reverse mortgage industry – serving as CEO of Reverse Mortgage Investment Trust, among other key roles with different organizations throughout his career. Meanwhile Anderson brings a variety of experience from the insurance industry, including two key entrepreneurial ventures: founding Madison Brokerage – later sold to Acrisure; and The Insurance Exchange of America – successfully selling to BISYS, now CRUMP, a division of Truist.
“Craig and I have known for each other for 30-plus years – and we routinely, historically, see each other once a year at a friend’s holiday party,” Anderson told NJBIZ. “And it was a couple of years ago, Craig was winding down an opportunity that he pursued for a long time in the reverse business. And I had the opportunity to sell my second business – and I was getting itchy, entrepreneurial.”
That led to a lunch two years ago. “And through that lunch, he laid out a strategy, an opportunity where he wanted to use home equity in such a way to improve people’s lifestyles through an income annuity,” Anderson recalled. “And I heard that – and listened. And because of that conversation, I pushed back at Craig and said, ‘Hey, you might not want to go down that path – let me give you my background.’ He obviously knew my background – insurance distribution on the wholesale side.
“I said it may be appropriate to use that product or that liquidity event in funding insurance products which people need to age in place; whether it’s income, create a legacy or health care opportunity. And from that, we went out to the market and we tested a few scenarios – through private equity; through insurance distribution, retail insurance carriers, reinsurers, regulatory environment.”
And after that journey, they felt like they were on to something.
“So, because of that, that’s where we are today,” said Anderson.
Ground rule No. 1
“We were fortunate that we were at points in our careers where we could – if we wanted to do something, let’s do something impactful. Let’s do something that could be transformative,” Corn told NJBIZ. “With the goal of, let’s develop a business model where it’s a truly compelling value proposition for the consumer, and those that serve the consumer. And that was ground rule No. 1.”
“If you don’t have a consumer value proposition, why roll up your sleeves and get very passionate about something?” said Anderson. “That was – and continues to be No. 1.”
“We kind of started there,” said Corn. “I like to think of it as – two old friends whiteboarding for six months. Here’s the idea – and it refines and it reshapes and it starts to mold into something where if you want to have a compelling value proposition to the consumer, there’s certain things that are important. One of them, of course, is you want to have an efficient cost-to-originate model.
“You want to have something where if you can scale your business – but not have to spend a ton of money through the process of scaling – you can deliver a real attractive value prop to the consumer. So, that was kind of the second order. Compelling value proposition is ground rule No. 1 – how do you do it?”
“So, basically, it’s a no-load – no commission, no load, 100% consumer-friendly opportunity,” said Anderson. “There’s no commission for any advisor. It’s all built into, obviously, the consumer value proposition.”
“I’ve got 35 years in insurance distribution,” Anderson continued, noting this venture has allowed him to tap into that expertise and knowledge. “And Craig – 35 years in mortgage-related backed securities and distribution and developing products. So those two converged: wholesale distribution, Wall Street structured finance got together – and created a boom.”
‘We knew were on to something’
“After we did our whiteboarding and then after we spent 12-plus months really validating the concept with insurance carriers, insurance financial advisor distribution, asset managers. The whole nine yards – all stakeholders that could play a role in our ecosystem,” said Corn. “And we genuinely asked them all – please tell us if there’s anything missing in our business model. Like Dan’s favorite word – where’s the boogeyman?
“But what we were really trying to do, is we knew were on to something,” Corn recalled. “But getting feedback from dozens and dozens of entities and individuals can only help shape the product and program in a better way. And that’s where we landed. That was a really good exercise for us.”
Corn spoke about where the company is now. “We’ve developed a way where, through professional advisor distribution, which can be very broad. It could be insurance, financial services, wealth management, in-home health care. Through that distribution model, we provide them with a third way of funding those critically important insurance, investment products – the kind of things that could help people more successfully age in place,” said Corn. “Dan pointed to it before – if you don’t have income and you don’t have health, you can’t stay in your home.
“So, how do you efficiently do that?”
Corn said that typically when somebody is talking to their advisor about buying something – it comes down to whether you have cash in the bank to pay for it or if you need to sell a fraction of your investment portfolio to pay for it.
“Those are the options,” said Corn. “And what we demonstrated was actually there’s a third way – you can sell a fraction of your home in order to pay for it. And if you think about that simple statement, it has very broad ramifications. When you liquidate some of the money that’s in your bank account, you become less liquid. And for a lot of people, it means you become less safe. You feel less safe.
“When you liquidate or sell a fraction of your investment portfolio to fund something, all that opportunity going forward is gone because you sold. There’s also tax ramifications of selling. If you want to pay $100 for something, you might have to sell $150 of your stock portfolio because there’s embedded capital gains and all of that.”
Another way
Because of those realities, Corn said there are real ramifications for paying for products the old-fashioned way.
“We said – hold on, there may be a different way. Historically, homeownership has been a very binary proposition,” Corn continued. “You either own it 100%; whether you have a mortgage on it or not – or you don’t own it at all and you’re a renter. Well, why does that have to be? Why can’t you sell 10% of your house to us? And those proceeds could be used for whatever you want to use them for.
“The fact that we’re doing this through the Professional Advisor Distribution Network meant that professional advisors and their homeowner customers can have a much more holistic conversation around using the entire balance sheet to determine what makes the most sense in terms of reallocating assets to deliver the most optimal outcome. Whatever they’re trying to achieve.”
Historically, homeownership has been a very binary proposition. You either own it 100%; whether you have a mortgage on it or not – or you don’t own it at all and you’re a renter. Well, why does that have to be?
– Craig Corn, Cornerstone Financing co-founder
He said that is the beauty of the business model.
“And by going down the path of professional advisors, you can scale it. But because we don’t pay the advisor for the referral, they get paid by doing their job,” said Corn. “If their job is – hey, you need to buy long-term care; well, if a long-term care sale is made, they get a commission on that. If their advisor says you need to put money into your grandchildren’s 529 college plans, they get paid – because they’ve increased their AUM.
“That’s how they get paid. We just give them another opportunity to do their job better and serve their clients better. That’s kind of the front-end of our business – and that’s what’s so damn exciting.”
Hot-button issue: homeownership
The issue of homeownership has been a major hot-button one, here in New Jersey and across the country, as the supply falls short of demand, and young homebuyers desperately try to find affordable starter homes. Meanwhile older homeowners – who have built up equity – struggle to afford staying here in the state because of the high costs.
That equation has created an economic, societal – and political – conundrum that has many layers to it.
Look no further than legislation such as the Stay NJ property tax relief program that has been at the center of the last few budget negotiations – reflecting how front-and-center this issue is in Trenton.
“This is perfect Stay NJ – utilizing CHEIF,” said Anderson. “So, we can actually pay them to stay in New Jersey – through purchasing a percentage of their home. And give them the cash – to invest that cash to stay in the state. It’s a game-changer for the State of New Jersey.”
“Having a lot of experience in structured finance, mortgages, reverse mortgages – it was very clear to me, especially those customers, who’d take out reverse mortgages,” said Corn. “They were in that situation where they had two choices: either sell their house to release equity in their home in order to manage through retirement – or take out a reverse mortgage. That was sort of their only options.
“Our business model is much more predicated on what we call – the smart option. You can still pay for that long-term care policy with cash. You have an investment portfolio. You could sell a portion of the investment portfolio to pay for that policy. But we’re giving advisors the ability to demonstrate a smarter option. Our business, if you think about it, is a little bit more mass affluent and higher.
“It’s not those people who were desperately trying to figure out how to stay in their home – and oftentimes, a reverse mortgage is the only alternative. And not that it’s a bad product. It’s good for the market that it serves. That’s not quite our market.”
Smart vs. survival
Anderson stressed that a reverse mortgage is a survival product.
“Ours is the smart product. It’s holistic financial planning. It’s attacking an asset or utilization of an asset that’s been dormant and doesn’t grow as quickly,” said Anderson. “Owning 100% of your home does not improve your lifestyle. If you own 50% of your home and you enjoy all the benefits of homeownership – and you can free up those dollars to improve your lifestyle, it is a game-changer.”
Owning 100% of your home does not improve your lifestyle. If you own 50% of your home and you enjoy all the benefits of homeownership – and you can free up those dollars to improve your lifestyle, it is a game-changer.
– Daniel Anderson, Cornerstone Financing co-founder
The co-founders and CEOs said that the focus now is on raising awareness about the company and its offerings – stressing that they are looking for collaborators.
“When you’re doing something that’s never been done before, as you can imagine, you want to tackle it all at once. But at the end of the day, stay true to the principles: great value prop, scale the distribution model by focusing on those trusted advisors – those advisors who have a fiduciary duty or a best interest standard to serve their client as well as they can,” said Corn.
“And all we do is introduce maybe a more efficient way of doing. So, do it that way – you’re starting in a really good place. And if we can support them well – marketing, collateral, fulfillment; we’re going to be doing a lot of business with New Jersey-based appraisers, New Jersey-based title companies – that whole ecosystem.”
“We’re open for business. We’re handling business,” said Anderson. “We’re no longer a startup. We’re in the market. We are open for business – and looking for deal flow, looking for opportunity.”
The big takeaway
The pair also described their professional journey.
“Coming out of almost 40 years of an old, stodgy insurance distribution business where there’s not a whole lot of creativity – I didn’t design a product in my whole life,” said Anderson. “We just developed or distributed product that was existing. Now, we’re creating product in a brand-new market and distributing product to a brand-new audience. That is exciting.
“So, every day there’s improvement. There’s twists and turns for the better. There’s new opportunity that emerges. That’s what’s exciting. And the market cap is enormous – it’s $35 trillion versus the insurance space which was $450 billion.”
So what’s the biggest takeaway for potential clients?
“We certainly want to transform the way people think about paying for those critically important insurance, investment, in-home health care type of products that allow people to achieve their financial retirement outcomes,” said Corn. “Whether that’s successfully aging in place – whatever it may be. It’s up to them ultimately. But transform – change the way people think about buying and selling these kinds of critically important products.
“That’s what I think we have an opportunity to do. And we knew that two years ago – when we started to sketch this out. It was like – hmm, if we do this right, this is transformative. So, let’s not get too far over our skies. Let’s validate it for an extended period of time to make sure that we’re not nuts,” Corn continued. “Solicit feedback to help shape and refine it – and then roll it out very, very thoughtfully.”
Corn stressed that that’s the message people should be hearing.
“There’s an opportunity to change the way people fund these important, retirement-oriented and other types of products. If we do that, we’ve been super successful.”
