Correcting the Public’s Reverse Mortgage Misconceptions

A common frustration exists among reverse mortgage professionals when it comes to equipping potential borrowers with good, accurate information about their products.

It isn’t that borrowers aren’t open to learning about the loans, but they sometimes come to the table already having been turned off by news articles or misinformation presented by mainstream media or political figures. While they are small in number compared with the major media networks reaching millions across the nation, lenders and originators agree it is essential to work toward changing the false notions out there—one borrower, newscaster and politician at a time.

“Misinformation and disinformation are hurting our industry and the borrowers we would otherwise be helping who are not considering our product because of fear,” says Jeff Lewis, founding member of the Coalition for Independent Seniors and chairman of Generation Mortgage. “We need to counter the negative press, negative statements by advocates and politicians as well. If we don’t, who will?”

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The timing of the housing crisis and financial meltdown hasn’t helped, says George Downey, founder of Braintree, Mass-based Harbor Mortgage Inc. “The preponderance of the press has been negative in the wake of the mortgage meltdown and subprime crisis. Unfortunately, many articles have been writing with misinformation and a rehash of old information that has already been printed. It has a similar effect on regulators and legislators.”

A recent National Reverse Mortgage Lenders Association study aims to provide an accurate response of current reverse mortgage borrowers, as well as the response from potential borrowers and their children. The results of the survey, Downey says, are overwhelmingly positive, with a more than 90% reporting satisfaction of the loans. Using the NRMLA study and other positive information is one way to address the inaccuracies surrounding the product.

“Collectively, the industry is constantly trying to disseminate good information. If there are 1000 media outlets and one NRMLA, how many times can the association respond? We’re better off to keep educating on the right information rather than trying to fight misinformation,” says Michael Gruley of 1st Financial Reverse Mortgages..

But drawing attention to the negative press can be an unwanted result whenever the question of misinformation comes up.

“We don’t wrestle with the pig,” says Gruley. “We try to correct errors, but the more we engage ourselves in trying to correct, the more we shine light on it.”

Downey says he engages potential borrowers, instead, and asks them about misinformation about the product when he encounters it.

“In talking with people who have these [negative] feelings, I think the better response is, ‘That’s interesting. Why do you say that?’ Then draw them out as to what it is that led them to that conclusion. What I find out almost 100% of the time, is they don’t have specific facts, or they have misconceptions. Generally speaking, it’s what they heard somebody else say.”

The hope is that when reverse mortgages become more mainstream, the education will become easier.

“We believe seniors are starting to ignore it,” Gruley says. “I suppose, in time, we have to hope the truth will prevail rather than fight all the naysayers.”

“One day, this will be a mainstream product, but it isn’t right now,” says Downey.

Written by Elizabeth Ecker

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  •  There are two ways to look at the current environment.  These comments look at the industry myopically.  That is the principal way to run a business successfully on a day to day basis.  It also shows the view of those who are successful with the segment of the senior market we historically work well with. 
     
    Like has been said at recent conferences, most of us did not come into the industry to watch it revert to 78,000 endorsements per year.  In another month we should have the reports needed to forecast what volume for this fiscal year will be.  Currently that number looks to end up within a 3%-4% difference in endorsement volume from the last fiscal year, not a great result.  With market penetration stuck at its current rate, we need to look to determine if the current glass ceiling is due to home values or lack of vision.
     
    Everyone is right to want to ignore bad press.  Our industry is too small and we lack the resources to counter it, besides bad news sells better.
     
    The real question is whether or not we can significantly penetrate a more affluent segment of the senior community in the midst of the current news environment.  Many of us see the Saver as a product to facilitate reaching that segment.  In this group borrower education is important but so is gaining the confidence and trust of professional advisors.  Some advocate reaching out to insurance and securities sales staff.  Others believe that it is the advisors not those heavily engaged in selling products who have the greatest influence with seniors.

  • As I have written so many times before, the mortgage industry (standard or reverse) has never been and will never be the “eyes and ears” of the senior generation. 
    We must connect with the advisors that seniors do turn to when they are planning for their future or are in time of need.
    Financial Planners, LTC Providers, IFA’s, Attorneys…the list is huge.
    When we become these professionals “eyes and ears” to this great product our industry will move out of the shadows and be the mainstream product it deserves to be!

    • Mr. Banner,
       
      Your article in Reverse Review in April makes the point that our industry now has a discernible phobia towards anything that might be somehow construed correctly or incorrectly as cross-selling.  While HERA addresses cross-selling at the federal level, some states have even more restrictive laws making the phobic reaction you describe more understandable by mortgage loan originators and lenders with business in those states.
       
      The main problem with your presentation in the comment above is that you draw attention to the very sales professionals who heighten this phobic reaction.  The question is why?
       
      While insurance and securities sales professionals have influence among the more affluent senior community, they do not have the same influence as fee based only professionals like attorneys, CPAs, CFPs, and tax professionals.  In all of my years as a tax consultant and CPA, I was never asked to bring my plan to an insurance agent for his/her review; it was always vice versa.  Some call these fee based only attorneys, CPAs, and CFPs, “financial gatekeepers.”  Of course the financial gatekeepers strike the chord of another phobia, the initial fear of inferiority and inadequacy.  Those phobias are easily overcome by dealing with these professionals on a regular basis.  But there is little, if any, phobia of cross-selling with these professionals. 
       
      Some have correctly estimated that their ROTI (return on time invested) will be less productive when marketing to financial gatekeepers and will take longer to realize than the same time spent with seniors.  There is no question that will be the case with most financial gatekeepers but there are financial gatekeepers who will produce several leads over time.  Because of bad experiences others would rather look for business from other sources which is fine.  For those looking for immediate gratification, this avenue of marketing will prove extremely challenging.
       
      There are several levels where reaching out to financial gatekeepers needs to take place.  The first is the obvious, the originator level.  Then there is the corporate level and finally, the industry level.  Some originators, like Monty Rose, have been marketing to financial gatekeepers for some time.  Some lenders are now putting out significant efforts to market to all financial professionals.  But where we have no outreach whatever is as an industry.  It is at that level where there needs to be a concerted effort but it is lacking.  An outreach at the industry level has the greatest potential for correcting the public image of our industry.

  •  We have received more negative publicity in the past three years than we ever had. We have also had more rules and regulatory changes in the past three years than we ever have had in our industry.Between the two I just mentioned has given the press great opportunities to have a field day with our industry. We have to be the one’s to correct the misconceptions and the misrepresentations that are made many times in the news. Who else can do it but us?We need to educate everyone we can. As my friend Michael Banner said, we must educate the financial planners, the accountants, attorneys and all the other professional people and entities dealing with seniors. I agree with Mike, but not 100%. The professional groups we both mention are very important. However, we still have the main responsibility to the senior and we can educate from that base.We need to educate and guide our seniors, show them and teach them the right way. Sure their financial planner or accountant may have discouraged them but we can reach out to financial planner representing the senior we are talking to, it a great way to make the connection. Our seniors have misconceptions because they are confused. It is our responsibility to unconfused them, give them peace of mind and be patient with them. They will listen to us if we can instill trust in them for us.We have been talking about educating all these people but the main one we have to educate is ourselves. It is more critical today that the people in the field and those speaking with seniors daily know their product and industry like the back of their hands! We don’t have room in our industry for the fast talking sales person that does not take pride in being the best at their business and know as much about their business as they can. These people are becoming a thing of the past quickly and rightfully so! We have many challenges today and tomorrow, the strong will survive and our seniors will need those survivors more than ever!John A. Smaldone

  • James,
    I agree with your philosophy of doing business with the “financial gate keepers.” But the literally millions of other financial advisors cannot be ignored because they “heighten phobic reaction.”
    Phobias are not cured by ignoring them…
    You also commented that “for those looking for immediate gratification, this avenue of marketing will prove extremely challenging.” I agree with that as well but feel it is a fundamental problem plaguing our great industry today.
    By this I mean many mortgage people are looking for “immediate gratification” and guess what? It doesn’t exist. In today’s environment you have to work for it. You have to hit the street and you have to develop sources of business. You have to speak with dozens of people to identify just one good source. And then you have to stat allover again to develop another.
    It isn’t easy and it certainly doesn’t happen over night. You have to work for it and you have to work harder than most of us have worked in years but for so many reasons, we have to do it.

    • Mr. Banner,
       
      We have far more we agree on than what we do not.  My point is to find common ground with the vast majority of HECM originators and from there drill down to those who share the same vision on reaching out to all the ethical members of the financial community.  Why cultivate into a phobia when you can work around it and then work directly on it later when some of the fog over cross-selling has dissipated. 
       
      Most people agree that the “financial gatekeepers” have no real products to sell.  They guide and advise through their trustworthiness, wisdom, business acumen, and knowledge.  No matter which other members of the financial community we reach if we do not at least reach these major opinion makers, we will still be lacking.  If we reach them we will reach the rest through them.  It is these opinion makers/changers who will have the greatest impact within the more affluent senior community.  With this group the problem is initial intimidation due to their vast knowledge and strong business insight.  These include fee based only advisors such as elder law attorneys, CPAs, tax advisors, and CFPs.
       
      As to the financial community members with the greatest reach there is little question insurance salespeople, securities licensees, and retirement and post retirement financial advisors are among the best.  You are also right to point to LTC providers (not insurance salespeople) as another excellent group to work with.
       
      This industry has always been good in reaching out to the sales types but has failed miserably at reaching out to the financial gatekeepers.  Some should avoid it.  They do not have the knowledge or experience to be equipped to deal with these individuals.  However, as you point out, even though they are a lot of work, very, very little in the business world falls off of trees.  As ones like Monty Rose have discovered they can be rich source of referrals.
       
      While we do not see eye-to-eye on the HECM for Purchase and the real estate community, for some it could be quite rewarding.  I just look at this source in my own community as not being a prime opinion changer or a strong source for HECMs right now.  I now your situation in Florida and the situation of a friend in Arizona are quite different.

  • John,
    Agreed on all points! We must educate the financial advisors but our first priority is always educating and protecting our senior clients.

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