Room for Improvement: Reverse Mortgage Lenders Talk Keys to Product Awareness

The reverse mortgage industry has a long way to go in its efforts to grow consumer awareness of the Home Equity Conversion Mortgage (HECM) product. But there are several key areas of improvement where the industry can start to widen the net for greater consumer education.

Whether it’s the need for more diversified marketing messaging, increased public relations outreach or more emphasis placed on educating consumers on key product features, reverse mortgage professionals agree that the industry can only benefit from heightened public awareness of the reverse mortgage as a viable retirement asset.

But challenges remain, specifically in regards to scale of the oft-considered niche of reverse mortgages, which represents only a sliver of the broader mortgage market.

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“To improve penetration, the industry needs multiple players with some capital behind them to be able to go out and market the product with some substantial budget and begin marketing a variety of messages,” says Teague McGrath, chief creative officer at American Advisors Group (AAG).

The largest reverse mortgage lender by volume—with 9,271 loan year-to-date in 2015 through August, according to the latest industry data tracked by Reverse Market Insight—AAG’s national reverse mortgage marketing campaign featuring TV spokesman Fred Thompson has ostensibly made the former U.S. Senator the face of reverse mortgages in the eyes of the public.

But while other top industry lenders like One Reverse Mortgage—with Henry “The Fonz” Winkler as spokesman—and Live Well Financial have also rolled out national TV ads, the industry needs more lenders marketing the product—and in different ways, too.

“Once we start diversifying the message, the penetration will improve,” McGrath says.

The most recent changes to the HECM program may also be considered a boon to helping the reverse mortgage industry dispel past misconceptions and further awareness that these products can be valuable retirement assets to help fund longevity.

“With the new Financial Assessment guidelines in place, and many financial experts already lauding the merit of the changes, it is a good time to spread the word to larger, one-to-many distribution channels,” says Mike Gruley, director of reverse mortgage operation at First Financial Reverse Mortgages in Plymouth, Mich.

Large organizations and businesses with wide communication networks can more efficiently distribute this good news to their members, customers, clients, employees, further enabling the chances for the message to become viral, Gruley says.

In the reverse mortgage industry, where the saying “there’s no such thing as negative publicity” has never been more wrong, initiatives geared toward public relations can help put to rights some common inaccuracies of the HECM product.

“I think our best chance is to continue and even increase the PR effort,” says Bruce McPherson, certified reverse mortgage professional (CRMP) with Retirement Funding Solutions in San Diego. “I still see inaccuracies in every article I read. And none of them clearly educate consumers about the stand-by LOC and why it’s so important to secure one NOW before the 10-year LIBOR increases.”

Know some other areas where the reverse mortgage industry can improve awareness of the HECM product? Feel free to email your responses to joliva(at)reversemortgagedaily(dot)com.

Written by Jason Oliva

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  • Jason did a great job on the story. It is a great call to action.

    Bruce is almost right but any HELOC can become a Standby LOC. The Standby LOC is a very, very old concept in financial terms; thus calling a HECM a Standby LOC can be very confusing.

    Call it what it is, a Standby HECM for which there is a Standby HECM (or Reverse Mortgage) Strategy. Now that is relatively new and very different since one does not have to budget required monthly payments of interest and principal even the Strategy itself calls for payback as asset growth permits it and on top of that the available line of credit on current HECMs generally grows at the same rate as the balance due.

  • After reading many reverse mortgage marketing ideas about reaching seniors who actively plan their retirement with financial planners, one concept seems missing.

    It is terribly difficult to start a fifty year old down one avenue of decumulation planning and then suddenly at 62 start down another especially when none of their situation has dramatically changed. We need marketing that not only reaches financial planners but also the cohort of older middle age almost and mass affluent homeowners so that they have time to look into reverse mortgages to meet cash flow needs throughout retirement before reaching the time in which they have concluded their initial decumulation plan.

    Is it already too late to reach Baby Boomers in this way? Right now the youngest Baby Boomer is still 50 years old. Yet the majority are over 59 years old. In three and one-half months, the oldest Baby Boomers will reach 70.

    While no marketing expert, knowing when to introduce planning concepts to clients was very much a part of my job as a partner in a CPA firm. Isn’t it time that older middle age consumers get acquainted with HECMs so that they can incorporate them into their decumulation planning? Waiting until 60 to reach out to those who plan their decumulation phase seems to defeat the whole idea of seeing HECMs incorporated into successful retirement planning.

    (Some may wonder why decumulation instead of distribution. The answer lies in a holistic view of the estate of a senior. Distributions normally apply to cash inflow from entities other than the recipient such as pension plans, IRAs, annuities, S corporations, partnerships, C corporations, trusts, other estates, etc. Decumulation on the other hand accounts for the partial or full consumption of all asset types in the estate of the senior.)

  • In this regard the new book out by Shelley Giordano provides information on how reverse mortgage mortgages can be used in financial planning. It is a decent book on the topic and has good references.

    Hopefully more books of this nature will be forthcoming.

  • I agree with The_Cynic, Jason did a great job with this article! Getting the message out in a different way is needed.

    We need to have companies with the funds to back their reverse mortgage division departments and spend their funds on prudent advertising programs and I don’t mean to just the need based individuals. I am not saying we should not be there for those that need a reverse mortgage for traditional uses, on the contrary.

    However, what I am saying is in order for us to survive and embrace the FA ruling the way it needs to be, we must go after and target additional markets.

    We need our advertisements and marketing approach to attract the financial planner, the attorneys and accountants. What about the small community banks and credit unions? Have we ever seen advertising geared toward these financial professionals?

    We have so many new horizon’s we can capitalize on, I could go on forever but first and foremost, we must change our mindset and embrace the FA ruling!!

    John A. Smaldone

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