The growing use of social media is undeniable. People flock daily to Facebook, Twitter, and other online channels. The aging population is no exception.
Today’s Baby Boomers and seniors are more connected than ever before, research shows. The Internet is the top source for gathering information on topics of interest for boomers and seniors — outpacing TV and print media by a substantial margin, according to a May 2013 study by Google and Ispos. And social networking sites are used by the majority of boomers and seniors daily with more than half following a group or organization on a social platform, the Google and Ispos study finds.
But when reverse mortgage lenders take to online channels to reach existing and new audiences, it’s imperative that companies adhere to Federal Financial Institutions Examination Council (FFIEC) guidelines. The FFIEC’s final guidance defines social media as “a form of interactive online communication in which users can generate and share content through text, images, audio, and/or video,” noting that social media can take many different forms.
While the FFIEC issued its final guidance, Social Media: Consumer Compliance Risk Management Guidance, in 2013 regarding social media use by banks, savings associations and credit unions, as well as by nonbank entities supervised by the Consumer Financial Protection Bureau (CFPB), it’s a confine some lenders still struggle with.
“Loan officers tend to get aggressive with promises and enticing messages as their job is to find new borrowers— but that’s where they can get into trouble,” says Dan Carroll, lending compliance specialist at Smarsh. Smarsh offers a unified archiving platform to meet retention and supervision regulations, which helps mortgage and other financial institutions stay compliant.
“Many loan officers have used social media to find borrowers for a quite few years,” Carroll says. “One of the main challenges these loan officers now face is that they adopted social media before the regulations were set. These social media-savvy loan officers now need to ensure they understand and abide by the new FFIEC guidance on social media.”
A financial institution’s use of social media to attract and interact with customers can impact a financial institution’s risk profile, the FFIEC warns.
“The increased risks can include the risk of harm to consumers, compliance and legal risk, operational risk, and reputation risk. Increased risk can arise from a variety of directions, including poor due diligence, oversight, or control on the part of the financial institution,” says the FFIEC.
While some lenders might still be figuring out how to address social media oversight regulations from the FFIEC within their own company policies, industry members who have embraced social media say the opportunity to interact with prospective customers on social media is undeniable.
American Advisors Group (AAG) uses social media as part of its overall integrated marketing and communications strategy, says Jeffrey Lawrence, vice president of digital marketing at the largest reverse mortgage lending company. AAG utilizes Facebook, Twitter, LinkedIn, Google+, YouTube and others.
Using social media to communicate the benefits of the financial tool helps to promote the overall image of the long misunderstood home equity conversion mortgage (HECM).
“We share content with those who help generate awareness and educate others on the benefits of reverse mortgage as a widely accepted retirement planning tool,” Lawrence says. “Social media supports our efforts in search engine optimization as well as online reputation management.”
Beyond social media’s ability to educate a wide audience, a strong social media presence can also boost a company’s search engine optimization (SEO) ranking. Like many industries, reverse mortgage lenders are increasingly relying on SEO to ensure they can be found in local search results.
Google, the most widely used search engine worldwide, indexes a company’s social media pages so those who search for a business on Google will notice their social media pages are included in the top results. And more shares on social media can lead to showing up higher in organic search results. This means the difference between a company’s name showing up on the first page of Google’s search results, versus the fifth, for example.
Social media also offers “a strong platform for lead acquisition in which to market to new potential customer and partners,” Lawrence says.
Many lenders say social media plays an important role in connecting with prospective and current borrowers and their families.
“I have gotten clients from my social media channels through referrals from financial advisors, Realtors and other contacts,” says Certified Reverse Mortgage Professional Beth Paterson, executive vice president of Reverse Mortgages SIDAC. Paterson writes regular blog posts about the industry that she promotes using social media channels including LinkedIn, Twitter and Facebook.
The responsibility falls on each institution to carry out an appropriate risk assessment and maintain a risk management program that is tailored to the particular institution’s size, activities, and risk profile, the FFIEC states.
“Companies need to have a written social media policy that includes guidance for loan officers of what they can and cannot say,” Carroll says, adding that “they need to support that written policy with a monitoring solution to ensure compliance.”
Loan officers should understand their company’s social media policies and if loan officers have questions regarding compliance, they need to reach out to their employer, Paterson says, noting that policies regarding social media use beyond what is regulated by the government will vary depending on the size and scope of the company.
At AAG, the company’s compliance and legal department works closely with team members to ensure social media activity “is vetted through a considerate review process,” Lawrence says. “We’ve also worked with state regulators and other parties and agencies to adapt to changing requirements over time.”
Ultimately, as the aging population becomes increasingly tech-savvy, it behooves lenders to be at the forefront of conversations regarding reverse mortgages on social media channels. In fact, the amount of consumers 65 and older using the web regularly is up from less than 2% 10 years ago, at 22% currently, according to “Capturing the Exploding Senior Market” by KBM Group.
“The more those of us who are using social media to share the facts and promote positive articles, the better — but everybody needs to know what the rules are,” Paterson says.
View Social Media: Consumer Compliance Risk Management Guidance here.
Written by Cassandra Dowell