Reverse mortgages have undergone major changes this year. As originators are working with a new loan process, the industry’s leading marketers are likewise working through the new product.
Some are viewing the change as an opportunity to begin new conversations with prospective borrowers—many of whom may not have been the target reverse mortgage demographic at the same time last year.
A recent analysis conducted by top-10 originator Liberty Home Equity Solutions indicated there were several reasons why qualifying prospective borrowers ultimately did not get reverse mortgages. One reason was that they were not in “dire financial straits.”
“A lot of people say they are curious and are shopping and don’t want to commit,” said Mary Smith, director of marketing for Liberty, during the National Reverse Mortgage Lenders Association western regional meeting in Huntington Beach, Calif. last week. “That says they are looking, and we need to look more at push marketing than pull marketing.”
Other responses indicated prospects did not move forward because they felt they did not need the proceeds offered by a reverse mortgage, or that they were skeptical of the product. But those responses are shifting away from skepticism and more toward curiosity. And the marketing messaging is shifting likewise to accommodate a new normal for reverse mortgages.
“The Financial Assessment is going to add to growing acceptance,” said Sharon Robbins, senior vice president and chief marketing officer for RMS/Security One Lending. “Also, having more positive press, including financial press, is important going forward. It is nothing but positive, although we still have a long way to go.”
The nation’s leading reverse mortgage marketer and lender, American Advisors Group, recently rolled out a series of new advertising materials featuring longtime spokesman and former Senator Fred Thompson. But the company is taking a slightly different approach, despite its ongoing employment of the public figure.
Change is not new for the industry, said Chief Creative Officer Teague McGrath.
“The unique challenge now is: How do you get the retirement planning conversation started? The financial planning conversation is not an urgent one,” McGrath said. “Despite that, AAG has taken a more long-term approach on the market opportunity. This has forced our hand and to think about the product in different ways. We’re going after a segment of the market that has been undervalued.”
New TV advertising messaging includes financial planning terminology, as do the company’s printed marketing materials and online resources for prospective borrowers.
Independent of the Financial Assessment and new product specifications, one area of focus that has not been marketed in the past is the line of credit growth feature.
“This has been under-marketed and under-valued,” McGrath said. “There are a lot of ways to market the line of credit. It’s very appealing to seniors at this stage in the game. In the commercials now, everyone mentions the line of credit. We never used to do this.”
As to marketing the Financial Assessment specifically, lenders say they are being upfront about the product specifics, but they are not detailing the Financial Assessment itself; they are leaving that to the originators once contact is made with the prospective borrower.
AAG markets the life expectancy set-aside feature as a benefit and all of the companies are disclosing that there will be a financial review.
“We don’t draw it out in upfront marketing,” Smith said. “We do disclose that additional credit requirements may be needed. Then we leave the Financial Assessment conversation to the salespeople.”
RMS and Security One Lending take a similar approach.
“We disclose there will be a review, but our job is to get that customer into the hands of a capable salesperson,” Robbins said.
Written by Elizabeth Ecker