When the reverse mortgage product was created, its primary audience was persons born between 1925 -1945, often referred to as “The Silent Generation.” Emblematic of this group was overwhelming acceptance of authority. They prefer social interactions with people in the same room or on landline telephones. The ability to tweet, Skype, text, bank electronically or email did not come easily, and for many, never came at all.
The Boomers (1946 -1964) are coming into our industry and they are nothing like their parents! Boomers grew up during the Civil Rights and women’s movements, and against the backdrop of the Vietnam War. In a 180-degree turn from their parents, Boomers questioned all authority. Who can forget the riots and escalating tension surrounding the Vietnam War at Chicago’s 1968 Democratic National Convention (“Hell no, we won’t go!”)?
I’m a Boomer, and we will not “go gently into that good night.” We are comfortable with any and all forms of electronic communications. Boomers have refinanced home mortgages and closed on financial transactions without ever leaving their family room. We’re changing the makeup and dynamic of the “typical” reverse mortgage borrower. Reverse mortgage servicers must adapt to this population of tech-savvy consumers. Boomers will want statements via email, electronic access to their loan data, and will prefer access to their funds electronically (debit cards). These demands will create great challenges for servicers: How can we implement safeguards to protect these borrowers now and as they age? The reverse mortgage industry is in for some profound changes.
At present, when a borrower wants to draw funds, they are required to submit a written request. The numerous touch points of the current servicing process create, by specific design, internal safeguards against fraud and theft. Occasionally, servicers discover family members forging borrowers’ signatures, and worse yet, third parties coaching borrowers to create draws for the express purpose of stealing their money.
Reverse mortgage servicing agents are highly skilled at detecting harmful nuance when speaking with a borrower, and touch points between servicers and borrowers are critical with this product. Technology provides speed, efficiency and reliability, but the best-designed technology cannot match the effectiveness of a concerned servicing agent’s “gut feeling.” When borrowers access funds through electronic means only, servicers might not uncover inappropriate fund distribution until after the fraud has been committed. When borrowers receive monthly statements through secure email, the servicer will no longer receive return mail – a critical red flag of a potential occupancy issue. If reverse mortgage loan servicing becomes an entirely electronic process, what additional safeguards can be put in place to protect our borrowers?
Mandated counseling sessions may have to be reconfigured to appeal to Boomers who have been making major lifestyle and corporate decisions for decades. Financial products can be researched online and obtained by online application or a quick trip to the bank. In a short time, borrowers are able to access what can be a formidable amount of funds. A financial product that requires personal attendance at a lengthy counseling session, followed by a test, may be perceived as a hindrance rather than help. I foresee Boomers protesting and questioning protective rules and regulations and demanding that congressional representatives remove the obstacles to freely obtaining a reverse mortgage.
The reverse mortgage industry is faced with the challenge of adapting to the needs and demands of this new demographic, while continuing to acknowledge that cognitive skills can be lost with age and that some protection is not entirely out of order. Boomers are more health-conscious and will enjoy a longer, better-quality life than their parents. Let’s make sure the reverse mortgage product does not make itself extinct by failing to adapt to this massive change in our market.
