The National Council on Aging shook up the reverse mortgage industry earlier this year with a study showing that consumers were turned off by the name of the products. But according to a lead NCOA researcher, the results also proved that consumers are open and willing to receiving education about Home Equity Conversion Mortgages.
“People were able to acknowledge their discomfort and their misunderstanding about the products,” Jay Greenberg, CEO of NCOA Services, LLC, said at last month’s National Reverse Mortgage Lenders Association conference in San Francisco.
The study had two primary parts: a quantitative portion, which sought information from 1,000 senior homeowners regarding their attitudes toward HECMs and other equity-extraction products, and a qualitative feedback study that featured input from 112 focus-group participants at 13 events around the country.
The quantitative survey, conducted online, revealed that 58% of respondents preferred the reverse mortgage line of credit to a regular “forward” home equity line when the products weren’t named; meanwhile, among those who were told the names of the products, 68% preferred the HELOC.
To conduct the research, NCOA received financial support from Reverse Mortgage Funding, which used the focus group concept in a new ad campaign this year. In the commercials, average consumers are asked to pick between a HECM credit line and a HELOC using product information alone, and overwhelmingly pick the reverse mortgage — often to their shock and surprise.
While NCOA’s research could seem discouraging to players in the reverse mortgage industry, Greenberg emphasized that the findings illustrate a real willingness among older Americans to explore the option when given the right education. Many participants who already had forward lines of credit on their homes admitted they didn’t have a firm grasp on those products, Greenberg said, and the seniors also pointed out multiple positive factors about HECMs.
For instance, multiple respondents expressed approval of the counseling process, the non-recourse nature of the loans, and the option to make payments — the latter of which formed the basis of another RMF ad from earlier this year.
“What the research did for us is convinced us that we should continue our educational journey in the reverse mortgage field and in home equity in general,” Greenberg said, announcing a three-year goal of educating one million seniors about home equity extraction techniques. As part of that plan, NCOA will place a specific emphasis on reaching homeowners whose wealth is largely tied up in their homes.
“What I’m hoping is that we can continue our work with the industry, both in terms of the industry as a whole as well as specific companies, because there’s a tremendous amount of work to be done, and our nation’s seniors will be much better if we all work together,” Greenberg said.
Written by Alex Spanko