Product Education Remains a Key Challenge as Private Reverse Mortgages Cool Slightly

A key challenge for the reverse mortgage industry continues to be the issue of product education, as many reverse mortgage professionals remain very concerned in reforming the industry’s education efforts to reach additional audiences of eligible, prospective borrowers. Additionally, 2020 saw a noticeable “cooling” of sentiment regarding private-label reverse mortgage products, visibly realized in disclosures of proprietary origination data and the measured perspectives of reverse mortgage industry professionals.

This is according to a recent 2021 Industry Outlook survey conducted by RMD by polling our industry readership about how they’re feeling about the business, and what they plan to focus on over the course of the next year. RMD recently presented the first part of its survey results, and are concluding our look at the survey’s findings here.

Product education as a key priority

The RMD Outlook survey was conducted online between November 11 and December 2, 2020, and asked reverse mortgage industry participants to share their insights on issues such as the anticipated impact of the COVID-19 pandemic on business operations into 2021; what the general business outlook for the upcoming year is for them; growth strategies they plan on observing in the new year; and the biggest potential opportunities and challenges are that they foresee for 2021.


Over 150 industry participants gave their insights for the survey’s results. With a concern in-line with the measured concerns of the industry in previous years, respondents for the 2021 Outlook Survey cited negative product product perception and lack of product awareness as the top two challenges they will face in 2021. When asked specifically about components that constitute the greatest challenges to the reverse mortgage industry in 2021, a combined 60% of the respondent pool named “negative product perception among consumers” (33%) and “lack of product awareness among consumers” (27%), respectively, as the top two challenges that the industry will face in 2021.

Less pressing a concern while still being relatively pronounced is “possible program changes determined by the Federal Housing Administration (FHA),” which clocked in at comprising 23% of industry respondents. The COVID-19 pandemic was also seen as a potential ongoing challenge the industry will continue to face according to 6% of respondents, while “a lack of qualified consumers” measured as the primary industry concern for just 0.6% of respondents.

Education and awareness remain key priorities for most major reverse mortgage lenders, as well. In a recent episode of The RMD Podcast, Finance of America Reverse (FAR)’s VP of Wholesale Lending Jonathan Scarpati described why education remains a key priority for FAR and the wider industry.

“Education is probably one of the most important [lessons] because regardless of what type of model you run, if you have a large forward division, a lot of that is going to be educating your forward originators about the benefits of a reverse mortgage,” he says. “To teach them when to be able to identify a potential reverse mortgage. [Asking if a client is] the right age, if they have enough equity, and just identifying that customer who could potentially get a reverse mortgage.”

Proprietary products cool down compared to 2020

2019 was a major year in terms of proprietary reverse mortgage product development and implementation, and that reflected in the Outlook Survey RMD performed as the industry headed into 2020. However, some new information the wider industry gained in mid-2020 coupled with the major interest gleaned for traditional Home Equity Conversion Mortgages (HECMs) as a result of the COVID-19 pandemic may have contributed to a slight cooling of perspectives on the potential importance of private-label products in 2021.

The perceived importance of these products is falling year-over-year, based on the results of the 2020 and 2021 surveys, respectively. Fewer than 40% of respondents indicated proprietary products are “very important” as the industry looks ahead to 2021, versus nearly 50% of respondents in 2020.

“There are about 3,400 conventional reverse mortgage originations (up from about 2,000 in the 2018 data) and 676 conventional reverse mortgage purchased loans reported, representing the niche non-HECM reverse mortgage products,” according to Home Mortgage Disclosure Act (HMDA) data released by the Consumer Financial Protection Bureau (CFPB) in August, 2020. The word “conventional” as used in the data is in reference to loans which are not sponsored, offered or secured by a government entity.

Data from the report detailing the calendar year origination of HECM loans previously placed the 2019 origination figure at 34,800, indicating that proprietary originations make up approximately 9.7% of the total figure of HECM originations in calendar 2019, based on the HMDA data. Nearly 40% of respondents indicate their company’s loan volume comprises less than 10% proprietary loans, which is in-line with the number related by the CFPB HMDA data.

Still, this is not to say that proprietary reverse mortgages are without importance. 38% of respondents still believe that proprietary reverse mortgages will be “very important” to the future of the reverse mortgage industry. More than a quarter report proprietary volume of 10% to 20%. The vast majority (85%) of respondents believe proprietary products are either “somewhat” or “very” important to the reverse mortgage industry in 2021.

Download the full results of RMD’s 2021 Outlook Survey.

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  • In reading this article it takes me back in time. There was always a negative product perception amongst consumers in the reverse mortgage space. It was also a major challenge for us then as it is now!

    Today we are faced with Covid – 19, this is and has been a major stumbling block for all of us. We are handy-caped because we don’t have the luxury of face to face interviews.

    We used to hold public educational workshops, many times partnering up with financial planners and elder law attorneys, this worked very well. We would have as many as 100 senior Home owners or more at our educational work shops!

    Yes, this is difficult to do in this day of age, but just maybe, there are facilities that can be used where limited capacity is allowed. These educational work shops can be done in conjunction with municipality support as well as local media support. This is a great way to educate and reach the senior Home owner population and at the same time, leads will be developed from it!

    Sure, this will take a lot of work, especially with the handy-caps we face today, but it can be done if we put our minds to work! We need to reach the senior Home owners and overcome these negative perceptions of a reverse mortgage!

    Another thing to consider, before we can educate our senior Home owners properly, we must be educated thoroughly! Companies must take the responsibility to train, train and train, regardless of how long an individual has been in the reverse mortgage space. To many changes occur daily.

    Originators must be willing to learn and take advantage of every training course out there, FAR offers good ones every month as an example. We owe it to our senior Home owners to give them the best, sound and knowledgeable advise as we can!

    So, in short, we as an industry must reach the senior Home owners and educate, even though the task is very difficult in today’s environment, but it can be done!

    Secondly, we as originators and representatives of our industry must be as educated as we possibly can, we owe this to our senior Home owner population!

    John A. Smaldone

  • Chris,

    You ask for comments, I put what I thought was a beneficial comment for all on this article, nothing derogatory, but yet you never published it, why?

    Don’t take any offense, please, but do you not want me to put any more articles in the RMD?

    Yours sincerely,

    John Smaldone

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