In its efforts to connect with a broader base of potential borrowers, the reverse mortgage industry has made a lot of sustained, concerted efforts to communicate to customers how a reverse mortgage might be able to help them, and why the product category may be worthy of consideration.
This has largely been an uphill battle, however, as perceptions of the product category have been afflicted by inaccurate, incomplete and/or out-of-date information. As time has gone on, though, perceptions of reverse mortgages appear to be improving. Lenders, industry educators and other stakeholders are starting to take notice.
This is according to sentiment data released by the National Reverse Mortgage Lenders Association (NRMLA), and interviews with representatives of Finance of America Reverse (FAR) and American Advisors Group (AAG).
Increase in positive and/or neutral reverse mortgage media coverage
According to sentiment analysis data by Cision and compiled by the National Reverse Mortgage Lenders Association (NRMLA) last month, reverse mortgage industry media coverage in the month of May 2020 was overwhelmingly neutral (73.5%), while positive coverage (16.7%) outstripped negative coverage (9.8%). Combined, the positive and neutral coverage made up 90.2% of all industry-focused media coverage that month based on the data.
Improving sentiment is something that is being observed by major lenders and educators in the reverse mortgage space.
“On a month-by-month basis I can often see improvement and the industry has come a long way in recent years,” says Dan Hultquist, VP of organizational development at FAR. “Keep in mind, when we see negative press, it is often tied to an older book of business under older guidelines. Nevertheless, it’s important to know that the number of positive or negative stories is less important than the impact of each story.”
As an example, all it may take in the minds of consumers is one particularly viral negative article to offset the work that a series of positive articles may have done to improve the perceptions of the product category, Hultquist says.
“We need to continually remind audiences of the benefits and the risks of these products,” he says. “FAR has done an excellent job in terms of educating current and prospective customers and its commitment to matching qualified borrowers with the most suitable products.”
Improvement in perceptions of the product category are also being observed by AAG, according to the company’s Chief Marketing Officer Martin Lenoir. Part of this general improvement may be at least partially due to the current economic climate stemming from the unique global circumstances we find ourselves in.
“We have continued to see an increase in neutral and positive sentiment around reverse mortgage products over the last few months.” Lenoir told RMD. “As a result of the COVID-19 pandemic, many seniors saw their investment portfolios decline, heightening their retirement concerns. However, home values remained high and interest rates fell to an historic low, which really put focus on the value of home equity and how it can be used to support a healthy retirement.”
Education is key
The best way to combat misinformation and misperception about reverse mortgages is through the continued development of new educational materials, and making them as easy-to-find as possible, Lenoir says.
“At AAG, we’ve focused on becoming an educational hub that provides resources for any topic related to the reverse mortgage industry,” he says. “The more facts, information and material we can share about reverse mortgages, and how older Americans can incorporate them into a greater holistic plan for their retirement, the more the product’s reputation will continue to improve.”
In creating that kind of content, AAG has sought to connect both with seniors who actively seek out a reverse mortgage, while also expanding to those whose retirement is in sight but has not been reached quite yet.
Some may confuse product education with a form of public relations. While the two disciplines are different, for the reverse mortgage industry it may be productive for them to overlap more than they currently do, according to Hultquist.
“Most of our education efforts have been directed toward loan originators and referral partners, though the industry has started to shift its focus to include consumers as well,” he says. “The public still has a very limited understanding of the industry. For that reason, it’s important for marketing and PR specialists to work with educators to find better ways to communicate product features, dispel inaccuracies, and explain the benefits of reverse mortgages.”
How proprietary products help shape perceptions
One positive element that has broadened the appeal of reverse mortgages is the wider availability of proprietary products, since it frames the product category as a component of a holistic retirement plan, according to Lenoir.
“The introduction of proprietary products has attracted an entirely new type of reverse mortgage borrower, the affluent senior,” he says. “In consultation with their financial planner or other retirement professional, they increasingly view the use of a proprietary reverse mortgage as a way to not only preserve, but also grow their wealth. These growing consultant-client conversations have been a real plus for the industry.”
Not only have proprietary products opened the door to a broader category of seniors in the affluent category, but the tendency for proprietary customers to broaden their perspectives through consultation with trusted advisors just serves to expose more people broadly to the reverse mortgage product category in both personal and professional circles, Hultquist says.
“When these affluent clients tell their story on camera it goes a long way toward changing perceptions,” he says. “In addition, many homeowners who are ideal candidates for proprietary products frequently talk through their decisions with advisors, attorneys, and other financial services professionals. This has helped aid in the education of these important groups.”
Perception has warmed, with room for improvement
Overall, AAG is observing positive forward momentum in the improvement of perceptions regarding reverse mortgages.
“We’re seeing more neutral and balanced coverage on reverse mortgages overall. There has been a general acceptance that the use of home equity is beneficial for seniors, and that while it may not be right for everyone, for some it could be the perfect solution for their situation,” Lenoir says.
Generally things have improved according to Hultquist as well, particularly as the product has been refined with additional consumer protections as the years have gone on, he says.
“Yes, I believe things have improved,” he says. “Occasionally we’ll see the media focus on issues from the past, but one by one those concerns have been addressed by regulators or the industry itself. Today’s reverse mortgages are offered with more consumer protections than ever before.”
When a reverse mortgage is doing what it is intended to do and customers are satisfied, criticizing the product category en masse becomes a trickier proposition, he says.
“The industry is beginning to highlight the flexible financing reverse mortgages provide in retirement,” he says. “It’s difficult to criticize something when it’s providing a solution and satisfying a specific need.”
Still, identifying areas of potential improvement on the industry’s part will only help to keep the positive and neutral sentiment moving even further, he says.
“First, we need to be more aggressive in educating and fact-checking financial experts,” Hultquist advises. “When someone claims ‘you’ll likely owe more than your home is worth’ with a reverse mortgage, it’s clear they don’t fully understand the non-recourse feature. Through education these myths and inaccuracies can be dispelled.”
Ensuring that customers have good experiences with loan servicing can also be a difference-maker, Hultquist says.
“We need to make sure existing borrowers have a positive experience throughout the servicing of their loan,” he explains. “More can be done across the industry to ensure positive outcomes for our clients, and this is certainly a focus for our team.”