Lender Rebrands Reverse Mortgage Following Financial Assessment

As lenders get under way with new financial assessment rules under the Department of Housing and Urban Development this week, one lender is shifting its approach to reverse mortgage originations by marketing not the “new reverse mortgage” but the product under a whole different name: The Life Mortgage for Seniors.

In transitioning to originating loans with the financial assessment, Chicago-based bank The Federal Savings Bank, is now marketing the product under the new name. The shift is only partly motivated by the new rules, says Executive Vice President Mike Crossett. It’s also partly driven by longtime issues reverse mortgage lenders have had with marketing the product.

“Fortunately or unfortunately, everyone understands the product as a reverse mortgage,” Crossett tells RMD. “I think there are too many people in the industry trying to sell the product rather than helping to solve the problem.”

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Rather than focus on the old product with its existing terminology, the company has opted to rebrand.

“We’re taking the terminology in a different direction,” Crossett says. “Many are leading with: ‘It’s a reverse mortgage,’ and the first connotation is, ‘They take your house.’ We are rebranding with the Life Mortgage. You have lived to pay down your home, now let your house pay you.”

The rebrand will also work toward educating financial planners and other partners on the benefits of reverse mortgages for their clients, the Federal Savings Bank says.

The focus of the new product including the mandatory financial assessment is to protect current assets and investments and provide the highest probability of not outliving assets and leaving a legacy, among other strong points, according to the bank.

Nomenclature aside, however, the goal is the same for the Federal Savings Bank: to provide a legitimate solution for a $14 trillion retirement problem facing Americans.

“We’ve got to change the conversation to show how can we help solve this retirement gap. We can be $4 trillion of the $14 trillion solution, and make real estate part of the conversation,” Crossett says. “Now there’s safety and soundness. Forget the term reverse. Now it’s a life mortgage.”

Written by Elizabeth Ecker

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  • An admirable effort…and not the first…to distance the product from it’s undeserved negative image. Such terminology changes have a tendency to backfire when, at some point in the process, the referral partner or client asks, “Is this a reverse mortgage?” When the response is, “Well, yes but…” the partner/client tends to think you’ve tried to deceive them just to get their business.

  • “and the first connotation is, ‘They take your house”

    Not anymore … not for a long time now. That’s primarily what I heard the first 3 years, but that was 10 years ago.

    I’d have a difficult time transitioning to an entirely different name. Consumers won’t be able to reference it to anything, and I’d end up explaining how everyone else refers to it as a Reverse Mortgage. They’re confused enough … I don’t need to add another layer.

  • I respectfully disagree. What’s a better re-brand than the “NEW Reverse Mortgage”! The industry needs to earn itself better reputation, not hide behind a new name. It was difficult to combat the age old “bank takes your home” myth when the media’s airing yet another underage spouse getting evicted. Those days are behind us and when you close the NBS gap and strengthen the products minimum requirements and shield T&I defaults you’re given an opportunity to truly improve the reputation of the REVERSE MORTGAGE.

    • auerswald,

      Really? We called it the New Reverse Mortgage throughout the Extreme Summit. Now you are suggesting we continue to do that but why? Can you provide any evidence that this change in name has increased endorsements other anecdotally? The Extreme Summit campaign ran last fiscal year which was the worst endorsement year since fiscal 2005 per HUD. In fact the campaign was so bad, that the ad campaign portion which was the justification for campaign costs has stopped.

      How long is a New Reverse Mortgage really NEW? We have been calling HECMs new for over eighteen months. How long can that be reasonably justified? Does every tweak in the program provide a reasonably rationale for continuing to call HECMs new?

      Drinking and serving the “New” Kool Aid does not change the fact that calling our current HECM new is OK for awhile but for how long?

  • This program will always be a very expensive way to use the equity in your home. Those who prepare for retirement can always have this as a last resort if needed in there 70’s or 80’s, which is what it is meant for. If you have to do this in your 60’s face it…you are in trouble down the road. All the changes such as higher insurance costs(the 1.25 MIP was a big one), lower principal limits(can’t even count the # of reductions over the years), and now FA are not here to protect the consumer but the banks/HUD/FHA. I find it funny after 15 years in the business that all these changes are considered to be better for the borrower. Come get this NEW reverse mortgage it is much improved. Why are the endorsements at record lows and only going to get worse if this program is now so much better for folks? I remember my first years in the business in the early 2000’s and people were trying to brand this program to be anything but a ‘reverse mortgage’ in the eyes of the borrower. Guess some things will never change.

  • Life mortgage seems to put in all of the negative elements of a HECM without identifying any of its positive elements. Worse, the name does not imply that there are no monthly mortgage payments.

    Why not go back to the Congressional purpose of the program. Some of us have been kicking around the idea of calling HECMs, the cash flow mortgage.

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