One Reverse Mortgage Takes New Focus in Latest TV Commercial

The industry’s second-largest lender, One Reverse Mortgage, recently unveiled its newest television commercial. And no, it doesn’t include The Fonz.

In what appears to be a broader industrywide focus to tout the financial planning benefits of reverse mortgages, One Reverse is making an effort to educate consumers, as well as financial planners, about one of the most commonly misunderstood features of the reverse mortgage product: the line of credit.

“One of the best kept secrets to help you plan for your retirement is the Home Equity Conversion Mortgage line of credit,” explains Pamela Yellen, financial planner and author of The New York Times best-seller, Bank on Yourself (2010, Vanguard Press), in the latest TV commercial from One Reverse.

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Several attributes about Yellen made her a good fit to appear in the TV spot, according to One Reverse Mortgage CEO Richard Mandell.

“Pamela has a very long history of studying financial products and understanding which ones are safest for people to use,” Mandell told RMD. “She is a great partner and someone we are proud to have working with us.”

Yellen, who has been working with financial advisors since 1990, already hosts seminars for financial advisers and consumers on how the reverse mortgage product works.

The need to highlight the line of credit in particular is due to a lack of understanding among the general public not only about how this product feature works, but how it can help seniors plan strategically for retirement.

“There are a lot more people out there who could benefit from getting a reverse mortgage than are actually utilizing the program,” Mandell said. “Our goal is to give people a better understanding of how the line of credit works. The components of this part of the program matches up better with strategic financial planning than the way reverse mortgages were used in the past.”

Although the commercial doesn’t features Henry Winkler (known affectionately as The Fonz of Happy Days acclaim), he still remains a big piece of One Reverse’s marketing, Mandell said.

“The work we’re doing with Pamela Yellen gives a different type of information than we are having Henry share with people, but we will continue to work with both of them,” he said.

One Reverse is the most recent reverse mortgage lender to unveil a new TV spot with a different spin on marketing the HECM product. In early February, American Advisors Group aired a new commercial featuring several academics espousing the use of reverse mortgages, and last week, Finance of America Reverse (formerly Urban Financial of America) launched a new marketing campaign that featured the company’s updated branding and messaging.

As part of this new marketing push, One Reverse also plans to explore new ways to “get the word out” about reverse mortgages within the context of financial planning.

“It’s important that we, as an industry, get the word out to the public as to what a great tool a reverse mortgage can be for people, and how they can use it to help them in retirement, whether that means using a reverse mortgage to extend the life of their savings, provide a safety net for them or provide protection against a loss of income,” Mandell said. “There needs to be a greater understanding that a reverse mortgage, though it’s not for everybody, is a great tool for people who are utilizing it today.”

The new commercial is currently airing across various national TV networks.

Written by Jason Oliva

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  • 8.06% growth rate? And to think how a HECM salesman (from a company that shall not be named) castigated me about a year ago because I set the rate at a little over 7% to show my counseling clients a worst case scenario. One, which I told them was a worst case scenario several times, pointing out that, while possible, I did not think it was likely that the rates would be in the low sevens any time in the next couple of years, and that I would be highly surprised if they stayed that high for 30 years. Now, Quicken is using the exact same theory to sell HECMs.

    By the way, the salesman castigated me because the way that the people were going to use the loan, the house would have zeroed out in value in about 18 years. The couple decided that is not what they wanted to do when they saw that as a possibility. They decided to sell their home and down-size. The salesman yelled at me for letting him waste all that time on this couple. (I also think he was having a bad day as he would not let me get a word in edgewise and ultimately hung up the phone on me.) I found the sad thing was that when that same couple sold their house, they used a HECM to purchase to buy their new condo, and they used a different company because the salesman was very rude to them when they explained what they wanted to do (I do not think he ever let them say that they were planning to use a HECM to purchase).

    So now Quicken is utilizing the same scenario to sell HECMs. That truly amuses me. Of course, without the proper disclosures, it worries me as much as a salesperson who says that the loan will stay at the initial rate for ever.

    Frank J. Kautz, II
    Staff Attorney

    Community Service Network, Inc.
    52 Broadway
    Stoneham, MA 02180
    (781) 438-1977
    (781) 438-6037 fax
    FrankKautz@csninc.org

  • It is fiction to say that the line of credit grows annually. First the computation is done monthly not annually but far worse, the line of credit does not necessarily grow at all.

    For example, let us say the senior is 63 years old, his balance due is $19,957.15, the expected interest rate is 5%, the tenure payout is $857.45 per month, the principal limit is $218,602.42, and the available line of credit is $49,641.48. The margin is 2.5% and the annual LIBOR index was 0.75%.

    Let us say the that the index for year remains 0.75% for the second year. So what will the available line of credit be 3 months later assuming that no cash is paid out of the line of credit and no payment was made by the borrower to pay down the balance due in that three month period? $49,550.84.

    For clarity’s sake, the principal limit at closing was $209,000, the unpaid balance due was $9,000, and the available line of credit was $50,000. There are no set asides.

    So why isn’t the available line of credit growing? Why is it diminishing? Isn’t it time for our originators (including compliance) as well as industry spokespeople to become educated on how the line of credit ACTUALLY works?

    While it sounds great to say that the line of credit cannot be reduced, frozen, or terminated but is any of that true? The line of credit can be reduced as demonstrated above. It can be terminated as when an eligible non-borrowing spouse elects to extend the date when payoff is due. It can also be temporarily frozen (or better said suspended) if a petition for bankruptcy is filed for or by a borrower.

    While we like to say the line of credit and its growth are guaranteed, there are circumstances where the reduction discussed above can reduce the available line of credit to zero over time.

    There is a lot to learn about the available line of credit with a HECM, unfortunately we have just scratched the surface and have already gotten a lot wrong already.

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