Education is key to overcoming any misunderstandings. And in an industry like the reverse mortgage sector, dispelling myths about Home Equity Conversion Mortgages (HECMs) is more important today than ever.
In efforts to set the record straight on reverse mortgages, some lenders have recently tapped into mainstream media outlets to get their messages across to a wider pool of potential borrowers and the general public.
One of the most recent pieces of national news coverage arrived late last month from Fox News, which ran a video segment titled “How to Have a Reverse Mortgage Success Story.”
The piece, covered by Fox News legal analyst and “The Property Man” Bob Massi, delved into the world of reverse mortgages and the couples who used the loans to achieve certain goals during retirement.
Also featured during the six-minute story was Josh Shein, senior director of Home Point Financial Corporation and a reverse mortgage specialist formerly with Maverick Funding Corp., which was acquired by Home Point in April.
Reaching out to real estate professionals and other experts outside of the reverse mortgage space is critical for the industry to build awareness of the HECM product, Shein tells RMD
“The more people that understand a reverse mortgage and are knowledgeable of the persistent questions and concerns borrowers have of them, the more they understand that a reverse mortgage is a positive thing and a helpful thing,” he says.
Questions like “how does a reverse mortgage work?” and “what happens to the home?” are common concerns among borrowers, but they are also important for non-industry professionals, like real estate agents and financial advisers to know as well.
“It also drills down to the local level, which can turn into something bigger in the sense that any person who is an expert and is doing shows, writing letters, etc., should be educated on reverses and should be working with us to cover the topic,” Shein says.
Changes ‘for the better’
For the Fox News segment, Shein spent “a good deal of time” with the self-proclaimed Property Man talking about the reverse mortgage product, including how the loan works as well as different scenarios borrows can use a reverse mortgage.
“It allowed us to have a good dialogue and really hit on the key, major points that come up with reverse mortgages all the time,” Shein says.
About one week prior to the segment with Shein, Massi provided insight in another Fox News piece about how the new reverse mortgage rules under the Financial Assessment aim to reduce risk for borrowers.
“People need to be aware of these changes, and if you are interested in it [a reverse mortgage], you have to go to people that know how to do this kind of business and get these guidelines and see if you qualify,” Massi said in the video segment.
Another major media news outlet, ABC Action News Tampa, recently touched upon the topic of reverse mortgages in efforts to educate its viewers on these financial products. Discussing the pros and cons of reverse mortgages, the segment interviewed a couple who had taken out a reverse mortgage to improve their retirement situation.
The segment also interviewed Mac Tennant of St. Petersburg, Fla.-based Access Reverse Mortgage, who talked about how rule changes, such as upfront draw limits and the cessation of lump sum payments under the fixed-rate HECM, have changed reverse mortgages “for the better.”
Not explicitly discussed during the two-minute segment was the most recent rule change to befall the HECM program, which some suggest has actually been something like a blessing in disguise for the reverse mortgage’s reputation.
Antidote for a bad rep
The new credit underwriting processes and residual income analysis required for the HECM program under the Financial Assessment may have complicated the jobs of loan originators and processing staff alike, however, these new program requirements may just be the antidote the reverse mortgage needs to cure its tainted public perception as a loan of last resort in the eyes of the general public.
“As we’re getting more acclimated and experienced with the Financial Assessment, we’re learning that it is ultimately doing good for the industry,” Shein says. “It’s a positive. And it’s resulting in people like Massi giving this product more credibility and allowing people to really feel that a reverse mortgage is logical and a more appropriate product for the senior homeowner.”
Shein noted that the borrowers spotlighted in the segment featuring himself and Massi obtained their reverse mortgages from American Advisors Group and The Federal Savings Bank, respectively.
But while those two case studies showed how reverse mortgages can play a significant part in the financial planning of someone’s future, there are plenty more potential borrowers out there who might be missing the opportunities a reverse mortgage can provide for them. And it all comes back to a lack of education about the product.
“There are a lot of borrowers we can help and should be working with—a lot more than we are right now,” Shein says. “Any type of media we’re involved in to ensure that accurate information is being conveyed to homeowners is going to help us as an industry, help our businesses and help grow the product.”
Written by Jason Oliva