RMF Conducts Reverse Mortgage ‘Blind Taste Test’ in New Ad

When developing a new television spot, Reverse Mortgage Funding decided to take page out of the Cola Wars handbook, inviting real consumers to take “the HELOC Challenge.”

Decades after Pepsi famously dared soda drinkers to see whether they preferred its flagship product over Coca-Cola in a series of iconic commercials, RMF undertook a similar experiment with Home Equity Conversion Mortgage-eligible borrowers. But instead of two cups of cola, the borrowers received information about a traditional home equity line of credit (“Product A”) and a HECM line of credit (“Product B”).

All the participants know upfront are the facts presented, and that they’re being asked to compare two types of home equity loans. And just like the participants in a recent RMF-supported study conducted by the National Council on Aging, they ended up liking the reverse mortgage far better than the HELOC.

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In the two-minute commercial, an announcer explains that participants were told some of the basic differences between the two products, including the “flexible payment options” available for HECM lines of credit — echoing another recent RMF ad — and the government insurance feature.

“Product B almost sounds too good to be true,” one participant says in a voice-over.

“That was a no-brainer,” says another.

The commercial then transitions into the big reveal, showing the stunned faces of participants who overwhelmingly selected the reverse mortgage product over the traditional HELOC.

“I wish I had known about this before I had taken out the home equity line of credit,” says one participant.

“I haven’t heard yet any reason why I shouldn’t pick this product,” says another.

The ad also shows the homeowners admitting that they had negative or incomplete impressions of the reverse mortgage prior to attending the focus group, but that the side-by-side comparison — minus the name — helped them become better informed.

“I don’t think I ever, for some reason, fully understood that a reverse mortgage was, in fact, line of credit,” says one man, shortly before a graphic reveals that 85 of 88 focus group participants selected the HECM line of credit over the HELOC.

The results certainly weren’t surprising to RMF, according to chief marketing officer Jean Noble. The Bloomfield, N.J.-based lender had been conducting similar focus groups around the country since 2016, and after hearing an enthusiastic response from participants, Noble and RMF decided to bring the groups into viewers’ living rooms.

“You’re sitting behind the glass, and they’re like: ‘This product sounds phenomenal!” Noble said. “What better way to debunk the myth of the product by having real people take this HELOC challenge and airing it on TV?”

The filmed spot came from a series of focus groups in Rochester, N.Y., and the participants knew that they could potentially end up in marketing materials or corporate training videos. But they weren’t paid for their time, Noble said, and the reactions were completely genuine.

RMF first began airing the commercials Monday as part of a “soft launch” on cable networks such as CNBC, CNN, and the Smithsonian Channel. And while it’s still too early to determine firm results, Noble said consumers have responded positively on RMF’s website and social media pages.

“This is a great awareness campaign with something completely different than we’ve ever executed before,” Noble said.

Written by Alex Spanko

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  • When I saw the HELOC challenge ad on Monday on CNBC, it seemed some experienced hands were involved, hands I had seen do a similar videoed focus group back in 2006 but not as an ad. It was such a good ad that I posted a comment on LinkedIn expressing my endorsement even though I have never had any business relationship with RMF. I wanted Mr. Shannon Hicks to view it but neither of us could find it on the Internet.

    Emailing Mr. Joe Demarkey requesting information about where to find the ad on the Internet, Ms. Jean Noble responded. Her response seemed a little hesitant. Then yesterday Mr. David Peskin released the ad in a post on Linked In.

    If more of our TV ads were like this one, would we have much in the way of ad compliance issues? In all likelihood, the industry would have significantly, if not substantially, higher fiscal year endorsement numbers.

    Ms. Noble, Mr. David Peskin, Mr. Joe Demarkey, the marketing group at RMF have brought an ad example to the industry that few others have. Congratulations on the product.

    • David and Jean have revolutionized the direct to consumer approach in the Reverse space, this new initiative is light years ahead of all other marketing endeavors……

      • Mr. Levy,

        It will be interesting to see how successful this campaign will be when compared to others.

  • This quote from the article; “I don’t think I ever, for some reason, fully understood that a reverse mortgage was, in fact, line of credit,” says one man, shortly before a graphic reveals that 85 of 88 focus group participants selected the HECM line of credit over the HELOC.

    I’m a reverse mortgage recipient, and I’ve tried to make this point in a couple of posts, here, in the past. Which is, IMO, the Line Of Credit and specifically the growth aspect, is far and away the most significant “selling point” of the HECM.

    And part -2 of the point is that, in my experience, the Line Of Credit is also the most under-explained/emphasized of the major, beneficial features of the HECM.

    It seems that in an effort to avoid the appearance of giving financial advice, or describing the “growth of the Line Of Credit” as interest, those originating the HECM don’t communicate to the borrower a full understanding of what will probably become (after reviewing the Line Of Credit entry on their first statement) the borrowers’ favorite part of having an HECM.

    Seriously, just saying the word “growth” will mean very little to a prospective borrower. However, saying something like: (demonstrating with paper and pencil in hand), e.g., “If you leave it all in the Line of Credit, and don’t touch it, you’ll have $500 more in your Line Of Credit after just one month; compounded throughout.

    This way, you don’t have to actually say the erroneous word “interest,” but the effect will be the same: “wow, I didn’t realize that.”

    • Mr. McSherry,

      As to the line of credit you are so right it can be an incredible source of cash when dealt with both prudently and strategically.

      What your originator probably did not know how to explain is one of the documents you signed during both the application and the closing process called the amortization schedule. It not only shows the components of the loan balance as they are estimated to build given the assumptions used in its preparation but it also shows the ending balance in the line of credit each year based on those same assumptions.

      In one column (near the right side of the schedule), the amortization schedule provides the information you speak of. It is up to the originator to go over that with you as it is up to the counselor in the counseling session to do the same. Normally the originator will spend the most time doing that with you since most originators want you to see the positive aspects of being a HECM borrower. It is too bad if your originator was somehow intimidated or improperly trained to do that with you.

      You should contact your lender to volunteer to do an ad or even become a reverse mortgage originator yourself. Most of the time, the best salespeople are those who have experienced the benefits of a product.

      • I should have mentioned the amortization schedule in this post, as I did in the other posts.

        Yes, both the originator and counselor went over the amortization schedule, and there was nothing overlooked in the process of explanation.

        It’s just a situation of realizing that actual, extra cash will be available after each month. I think that there’s an impression left with the borrower that the growth is “on paper” and is only available upon selling the property or leaving it to heirs; which is when the borrowers eyes are glazing over, :-).

        It’s just a simple case of making sure the borrower understands that it’s real money, “now.” At that point, guaranteed that the borrower will be studying the amortization schedule, and not “looking beyond it,” wanting to move on to the next topic.

      • Mr. McSherry,

        Your response leaves me scratching my head. If the originator and counselor explained to you the line of credit then how could you EVER think that it would be available on the sale of the collateral or after the death of the last surviving borrower. Neither of those ideas are true. The line of credit terminates upon the terminating event, not later.

        The line of credit increases are not “real” cash. It cannot be inherited. They are an increased invitation for the borrower to take cash in exchange for more debt. I heard the offer referred to as a contingent asset of the borrower versus an asset of the borrower.

        Again your response confuses me and that there is anyway available to obtain cash from the line of credit when the collateral is sold or inherited. Be sure you fully understand the line of credit before your lack of understanding backfires on you.

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