A new column that recommends against the use of a reverse mortgage loan has cited recent data from the Consumer Financial Protection Bureau (CFPB) to make a case against reverse mortgages. However, the column does not include some key information regarding the advertising practices of the reverse mortgage business.
The Forbes column, written by John Wasik, explains that seniors are being “bombarded” with reverse mortgage advertising in various formats, including through traditional mail, according to data recently compiled and released by the Bureau.
“Some reverse mortgage solicitations are aggressive and may even pop up in snail mail,” Wasik wrote. “They should be considered as a last resort — and only after consulting with a trusted advisor not connected with a mortgage company.”
The column explores the factual findings from the CFPB report released last month: direct mail reverse mortgage advertising increased significantly between 2018 and 2022; the advertising was largely targeted at low-to-middle-income households; the advertising was geographically focused on the Southern and Western U.S.; and was also focused on “many older homeowners with high equity, lower incomes, and in regions where homeowners have somewhat less ability to stay current on their housing payments.”
It is true that older Americans are often the targets of financial scams, and the column includes reverse mortgages in with general guidance often given to seniors when it comes to avoiding bad actors. While reverse mortgage scams are real, they are most often perpetrated by fraudulent actors and not reverse mortgage industry players.
“As a general safeguard, avoid junk mail, text or email offers on reverse mortgages,” the column said. “Since your heirs or survivors may have to pay off the loan upon your death to keep the house, there’s a big negative factor involved. If you need a reverse mortgage, have a lawyer review the loan and make sure you fully understand the terms.”
But a prior analysis of the CFPB data conducted by RMD found that such targeting for reverse mortgage advertising is not aimed at soliciting a disadvantaged population as much as it is targeting those who can qualify for a reverse mortgage, and those who have traditionally found utility in the loan product.
In 2019 when Facebook made a change to its ad policies in an effort to limit targeted ads for protected classes like seniors, a reverse mortgage professional explained that the industry’s advertising efforts remain focused on excluding from targeting those who simply don’t qualify for the product by law.
“No matter how you look at it, reverse mortgage ads are not targeted to younger borrowers simply because they do not qualify for the loans – not due to any desire to exclude those who could use the program or possible Real Estate Settlement Procedures Act (RESPA) violations,” said Cliff Auerswald, president of All Reverse Mortgage to RMD in 2019.
Reverse mortgage professionals in background conversations with RMD previously explained that they felt the CFPB data did not include revelatory information, but were concerned that the report could further stigmatize reverse mortgages among both those able to qualify and their trusted advisors.
