Positive Press Slowly Defeating Reverse Mortgage “Echo Chamber”

Originators and other players in the reverse mortgage industry say that they’ve seen a notable shift in the way Home Equity Conversion Mortgages are covered in the general media, and public-relations monitoring data backs up those observations.

The National Reverse Mortgage Lenders Association uses a third-party public relations firm to track mentions of HECMs in the news; during the period from August 2016 to the present, 36.9% of all reporting on reverse mortgages was positive, with neutral mentions accounting for a further 56.1% — and negative stories representing just 6.4% of the total.

These hard numbers reflect a trend that many in the industry have observed in recent years, particularly as respected news outlets such as the Wall Street Journal and Forbes have reported on independent scholarship from researchers such as Wade Pfau, Harold Evensky, Gerald Wagner, and Robert Merton.

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Brett Kirkpatrick, a partner at Harbor Mortgage Solutions, Inc. in Braintree, Mass., said his clients frequently bring in clippings of positive reverse mortgage articles from outlets such as Forbes and the New York Times. This of course was not always the case: Kirkpatrick said general opinion suffered from an “echo chamber” of rumors and negative reports feeding off of each other for years,

The tide began to change within the last four years, with Kirkpatrick pointing to an August 2013 column by popular financial-advice columnist Jane Bryant Quinn as a key turning point. Previously a HECM skeptic, Quinn began recommending reverse-mortgage lines of credit for certain borrowers in their early 60s as a retirement strategy. Kirkpatrick also applauded the National Reverse Mortgage Lenders Association’s efforts to meet with members of the popular media and educate them about the finer points of HECM.

“Those articles are definitely reaching our clients and our potential clients,” Kirkpatrick said.

But despite the positive numbers, there’s still opposition in certain markets. Danny Phillips of Southchase Mortgage in Foley, Ala. says he frequently faces resistance from prospective clients who tell him that “they” say reverse mortgages are scams. He always has the same response: “Well, what’s bad about them?”

“They can never tell me,” Phillips said.

Phillips went so far as to reach out to the local NBC affiliate after one of its news programs ran a sensationalist story about a woman who faced a reverse-mortgage foreclosure. Phillips pointed out that the report was light on specific details, and used the terms “foreclosure” and “reverse mortgages” as a type of attention-getting scare tactic.

“There shouldn’t be any foreclosures,” Phillips said. “(But) people with forward mortgages get foreclosed on. That doesn’t stop anyone from doing a forward mortgage and buying a house.”

Phillips said that Southchase first concentrated solely on regular “forward mortgages,” but that he became interested in HECMs after his parents got older and needed help with money for their retirement. Even though Phillips’ mother ended up having to go through a foreclosure after she moved into a nursing facility and the property was slow to sell, Phillips said he still sees the benefit of reverse mortgages, and began offering them to his own clients.

He said any changes in the popular opinion of HECMs that he’s seen in his neck of the woods were due to his work making connections with local banks.

“It’s through my efforts,” he said. “I would love some help.”

Written by Alex Spanko

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  • Who cares how positive the news about reverse mortgages is if we keep seeing more months like February 2017 which had the lowest monthly HECM endorsement count for any February in more than a decade?

    There have been some odd rebuttals to the endorsement loss issue recently. The most significant was one which went like this. More important than the number of endorsements is the total balance dues on new HECMs!! Who cares if endorsements are down as long as the balance dues at closing are going up? Yeah, who cares if there is but one endorsement per month as long as the balance due at closing each month was rising?

    It is hard to believe that the total balances due on new originations are materially rising when endorsements are dropping, especially if the endorsement drops are substantial.

    • NRMLA needs to keep a positive spin on this industry somehow! This is a very niche product and this will not change.

      Just curious. If the tide is changing for Harbor Mortgage I see they did 35 loans in MA in 2016 with 5 registered MLO’s. That is a loan every 2 months per loan officer assuming they are all bringing in business. How do people survive doing reverse? Did not want to go further back, but what was the volume before the tide changed? I know MA used to do 350-400 loans a month when things were good. Now you are lucky to see 75+ for the entire state. I have seen it as low as 50. This is with over 50 companies writing at least 1 loan in the 2016 calendar year in MA. So companies are lucky if they are getting 1-2 loans a month with multiple loan officers on average. The attrition rate must be tough in this industry. What do you say to a new hire if they ask for #’s?? This industry has a ways to go or this is the new norm. I don’t know.

    • Who cares? We Care! Positive thoughts breed positive results! The positive press RM’s receive the more the public will view them in a positive way which will undoubtedly lead to more seniors taking advantage of the program which will lead to higher endorsements! It has to start somewhere! Always pointing out the negative while may be true and accurate, does nothing to help. Yes, we should not ignore it completely but to CONSTANTLY be talking about it and reminded of it IS being negative! Yes we have challenges, but guess what, the SUN rises everyday and we have the ability to change our outcome! Be Positive!

      • EricSD,

        Where is there any evidence that good press brings about more endorsements? Our best years of endorsements were some of our worst years for negative press. Yet today when we are in downward sloping secular stagnation, the press has been much better for a number of years now. So why spend any resources on positive press?

        Sometimes it seems the members of our industry ignore the things that can create higher endorsements to focus on things that are perceived true but whose perceived truth has no empirical foundation.

        So rather than focusing ONLY on those things that will increase endorsements we are easily distracted to try things that have been tried so many times before yet with no increase to endorsements. We try things whose foundation is questionable anecdote.

        Our industry is built on the principle that Einstein called the eighth wonder of the world, compound interest. Yet when it comes to his definition of insanity, we try to disprove it. Insanity as defined by Einstein is doing the same thing over and over expecting different results.

        Show the positive correlation between good press and increasing endorsements and you make a believer; otherwise, your theory has an active opponent.

      • Positive Realist,
        You are not getting my point which has nothing to do with Einstein, increasing endorsements or anything else that you mentioned. You turned an article about positive press about our industry into a discussion about lower endorsements and other numbers that were not mentioned in the article because that was not what the article was about. Why would you want to turn something that was supposed to be positive into something negative by pointing these things out? What purpose does it serve, to make sure everyone knows what everyone already knows, that our numbers are down? Constantly bringing up the negative numbers IS insanity, we already know this. Talking about new things, new ideas, new markets, that is positive and productive. But like everything they take time to turn into increasing numbers.

      • EricSD,

        I guess you do not get it. Putting in time into creating positive press which does not result in a POSITIVE turnaround in endorsements seems a waste of time.

        We do not have to waste time theorizing about the outcome of positive press. 27 years of outcomes says enough. Our best years for endorsements were 2007, 2008, and 2009! They were some of the worst years for bad press. The last four years of ever improving press have done little to nothing to break us out of the trend of downward sloping secular stagnation.

        I am fighting against another year of low endorsements just to return to another year of less than 50,000 endorsements. Odds are we should go above 49,999 endorsements this fiscal year based on our current annual endorsement trend but then the outlook on this trend is endorsements for 2018 of less than 46,000 or even 45,000 endorsements.

        Join in. Fight the trend.

  • The past negative articles and headlines in the media lead to the many misconceptions, fear and people believing reverse mortgages are bad or are scams. The more positive coverage we receive helps educate our referral sources and the public on the actual facts. Over time these positive pieces will eventually turn the tide.

    Even if not impacting the immediate endorsements, I believe over time the positive stories create positive thoughts on the product and will have a positive impact on our industry. It’s one step at a time, while slow, the articles are steps forward.

    The constant negative comments on public forums such as this about low endorsements, negative thoughts on how the product has changed, criticizing others in the industry who are trying to educate on the benefits, etc. continue to feed the negative image of this valuable tool.

    Thank you NRMLA for tracking and for promoting the positive image of reverse mortgages in the media.

    • Beth,

      It is clear you believe what you write. Sometimes we disagree on what you write. I believe in the product but not necessarily the claims I read about it.

      When first coming into the industry, I used to say FHA insurance made HECMs nonrecourse until I found that was completely false. So I spent several months investigating what benefits seniors got from incurring this cost. Finally I was reminded that few lenders would offer such a risky product at such a low interest rate with relatively high proceeds to appraised value unless there was FHA insurance.

      Then there was the ridiculous claim that HECM proceeds were income. When some originators claimed there was no way to explain to seniors how their bills would be paid if proceeds were not called income, I told them that I had yet to confuse even one senior by telling them HECMs can provide the cash they need to pay (those same) bills.

      It took months before there was a move away from language about HECMs being some kind of odd and strange financial product that ate up home equity. Finally originators began using the phrase: “A HECM is first and foremost a nonrecourse mortgage with special benefits to borrowers.”

      Still to this day people talk about HECMs as if the only cost that accrues is interest. Even some veterans upvote those who spew out the false concept of interest only payments keeping the unpaid balance of a HECM the same month to month when there are no other paybacks or payouts to borrowers or their payees (such as LESA payouts for taxes and insurance). They forget about ongoing MIP which on newer HECMs has an annual rate of 1.25% but is charged monthly.

      Every time such concepts or corrections were introduced, some originators called them negative with some even resorting to name calling or calls to my employer. So that my employers would not have to be bothered, I retired from the industry.

      I am one of those who upon seeing no positive correlation between a claim and the needed outcome scoff at the claim. While the positive press idea sounds terrific, after more than several years of NRMLA showing us the turnaround, where is the proof that it will turn things around?

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