As the leading reverse mortgage lender in the industry by endorsement volume, American Advisors Group (AAG) commands a lot of attention. In addition to its lead in market share, the company has also invested in an advertising strategy that has become synonymous with reverse mortgages across the country, but keeping up with the changing realities of the business is an ongoing endeavor.
To discuss this and the continuing efforts to bolster product education, RMD recently sat down with Ed Robinson, the president of AAG, to get a greater idea of how the company is currently adapting to the business environment and what the lender hopes to achieve in terms of growing the business for the future.
RMD: Your perspective is really interesting because you have recently come into a leadership position at a major lender. This position could dial you into some of the misconceptions that exist in the broader mortgage business. What would you say is the biggest misunderstanding that other housing professionals — like in the forward mortgage, real estate and appraisal worlds — have about reverse?
ER: I would say the single biggest misunderstanding is that when taking out a reverse mortgage loan, many folks still believe that our customers no longer own their homes and that they don’t retain the title. In fact, recently, I was speaking with an executive at a nationally-recognized title company, and she was really surprised that the customer owns the home and so many safeguards are in place. She was pleased to learn that information. I’ve had conversations with executives from other title companies and wealth management firms recently, including, a neighbor of my own appraisal firms. Their perspectives were actually rather consistent with broader misperceptions outside of the reverse mortgage industry.
RMD: Where do those misconceptions come from? The persistence of some lingering reputational issues? From previous interactions that those people might have had with other tools that leverage home equity?
ER: I think there are probably a few causes. One includes the pretty high-profile financial experts, if you will, that have come out about reverse mortgages to discuss the good, bad or ugly. Some of these folks, especially folks you see on TV, have very strong personalities and opinions. And so, what you’ve seen is the perspective from these personalities, as well as a lot of articles about the product in the industry. Realistically, people always err on the side of, ‘let’s protect the consumer,’ especially the senior consumer. I personally admire that, and I think that is amazing.
When I first came into the industry 15 years ago, at least from an ancillary perspective, it was very clear that there were old, strong opinions because of some missteps and product development that occurred early on. FHA and HUD were effectively evolving the product. There are some myths and misconceptions that still linger, because of early missteps; The good news is that many were corrected along the way. Still, people have long memories when it comes to our seniors. It is really important that we continue to show that we’re in this for the good of America’s senior community and make sure we take care of them.
RMD: When you came into the reverse mortgage industry yourself, what did you find most helpful in terms of setting the course for your perspective on what this industry is and what it primarily aims to do?
ER: A lot of this comes from education. At the end of the day, I had to understand not only what AAG does but what it stands for. I had to understand how our peers go to market, and I had to understand the specificity of the product. It’s a mortgage, but it’s a negative mortgage. And so I had to go about understanding the dynamics that come into pricing that mortgage or that loan, determining the available borrowing amount and determining the safeguards that are in place when it comes to foreclosures.
By and large, foreclosure is a different model in reverse mortgages than it is in forward. In a forward mortgage, foreclosures occur when folks can no longer pay for their home. In the case of a reverse mortgage, foreclosure occurs upon the death of the youngest borrower or their removal from the home, not their inability to pay, because the intent of the reverse mortgage is to make sure that you no longer have to pay on the home. Foreclosures can also occur to people who are unable to pay property taxes and insurance, or who are unable to maintain their home.
The good news is with safeguards such as the life expectancy set-aside (LESA), now you have ways to make sure that foreclosure is something that really comes down to the consumer. The customer has now utilized the entirety of the mortgage and the funds available for the point needed, which is aging in place. And so I think a lot of it is understanding what FHA, HUD and the lending and servicing communities in this space are doing to make sure that the product is the best fit for each particular customer.
We’re taking it upon ourselves to educate them very thoroughly about what the product can and should be used for, to make sure they safeguard their financial security and then making sure that they and frankly, their adult children really understand the dynamics behind using the reverse mortgage for further benefit.
RMD: How much work goes into correcting product or industry misperceptions both within AAG and industry-wide based on conversations that you’ve been having with other people who are active in the space?
ER: Really, it’s a journey. For example, when I was beginning research with Genworth Financial around 2007 to see whether or not we wanted to offer the product to our customers, there were numerous articles that were rife with misperceptions and even horror stories about reverse. I had to separate fact from fiction, educate both myself and Genworth executives and ensure that we built safeguards for consumers and for business.
Fast forward to August 2021 when I joined AAG, and I noticed that many of the same, common misperceptions still existed. However, I also noticed that AAG employees really understood the realities. They clearly articulate the facts to consumers, regulators and investors. AAG continues to invest in training, awareness, and specific customer stories, which really bring the product and the benefits to life. Continuous communications from professionals across the company ensure that our folks are well-versed in the product, the business and the industry at large.
To add to that, I think the most effort is spent on marketing. Of course, AAG prides itself on being at the forefront of informing the public-at-large about what the product is and what it isn’t. Our spokesman, Tom Selleck, has done a terrific job of speaking from the heart to consumers in our advertising campaigns.
Editor’s note: This interview was originally published in the August 2022 issue of HousingWire magazine.