RMF Uses “Unconventional” Message to Reach New Audience

Often featuring celebrity spokesmen who deliver messages geared toward needs-based borrowers, ads for reverse mortgages tend to follow a familiar script. But Reverse Mortgage Funding has taken an “unconventional” approach with its latest campaign, focusing on the reverse mortgage as an alternative to traditional home equity lines of credit. In the process, RMF says it’s tapping into a new group of potential borrowers.

Jean Noble, the Bloomfield, N.J.-based firm’s chief marketing officer, said participants in multiple focus groups and surveys thought that the “no payment feature” of reverse mortgages seemed “too good to be true.”

“We lose credibility because the feature is not relatable to any other financial product,” Noble told RMD.

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So RMF began marketing its HECM credit-line products as “FlexReverse,” and introduced a two-minute television advertisement touting the “flexible payment option” in October. In the spot, which airs during a variety of sports, news, and movie programming, an actor portraying a potential borrower calls RMF and asks about the difference between home equity loans and reverse mortgages.

The RMF agent in the ad then says that unlike a home equity loan, HECM credit lines give borrowers “the freedom to pay as much or as little as you wish” — not even mentioning the option for not making any payments at all until the very end of the description. The tagline, both in a graphic and read by an announcer, encourages callers to “take control of your finances.”

The message mirrors what Noble told RMD in November during a discussion about changing industry terminology at the National Reverse Mortgage Lenders Association’s annual meeting in Chicago.

“That message really resonates with the customer base because they feel like they have flexibility and control,” Noble said in November.

Noble said RMF has gotten a positive response to the ads from consumers so far, noting that the “unconventional” message is attracting borrowers that normally would have opted for a traditional home equity loan.

“By going after this market we feel that we are doing our part to help grow the industry and attract a different type of customer,” Noble said.

Written by Alex Spanko

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  • The ad concept has been needed for years. Most seniors expect to make some kind of payment. This simply tells them that it is OK to make them but the loan is still performing even if no interest or principal payments are made while the HECM is not in the due and payable status.

    The ad seems a little too long.

  • I have always touted this message with my clients so I am glad to see a company finally thinking out of the box as far as advertising. Everyone does the same old RM commercial.
    I understand this is a 2 minute commercial and this is not mentioned but I focus on two other great features when meeting with my clients.
    1- the credit line growth factor which is not available with any other product.
    2- Also, many people who are retired and don’t have the income do not qualify for a HELOC.
    The only negative I come across are of course the closing costs.

    • treverse,

      Then you do obviously deal with less financially sophisticated borrowers who are not repulsed by the idea of a negatively amortizing mortgage.

      Several of my prospects understand what Einstein called the eighth wonder of the world and his related rule of 72, compounded interest. They hate how compounded interest works against them with a reverse mortgage. Even the compounded growth in the line of credit does not move them.

  • That would seem to be the flaw in the “pitch,” when targeting the HELOC pool of potential customers over to HECM loans: most HELOC customers are probably looking for short-term financial fixes, with the idea in mind of paying -back the loan and returning to full equity in their property.

    With the HECM, the benefit lies in long-term, permanent change.

  • Hats off to Jean Noble, what is wrong with the new approach. We always sell NO more mortgage payments, improve your quality of life ETC! Well, nothing wrong in that but the marketing approach by RMF just might click on a light bulb in some senior homeowners minds!

    They just might think and say to themselves, “Hey that sounds great, if I want to make a mortgage payment this month I can of if I decide I can’t make this one this month for some reason, I don’ have to”! What a great option to have, it makes the senior feel like they are in complete control of a major financial obligation in their lives! What could be better?

    This just puts another great option for seniors to think about and it has nothing to do with if the senior is bright enough or not, this is just plain old good marketing techniques, in my opinion, that is!!!!!!

    John A. Smaldone
    http://www.hanover-financial.com

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