Advertising in local media outlets enables originators to market the benefits of reverse mortgages to potential borrowers who are reading and listening in their areas of operations. So while some reverse mortgage professionals have taken to local newspapers and weekly print magazines to get their messaging out there, others have turned to financial radio shows and podcasts in their greater industry efforts to dispel misconceptions of the reverse mortgage product.
For many lenders, originators and brokers, crafting a marketing strategy that is compatible with consumers’ media preferences all revolves around the content messaging that is being delivered. TV advertising, while it might seem like the most encompassing medium, can often be the most expensive.
In the reverse mortgage industry, few companies have the scale and financial wherewithal to rollout national TV ad campaigns like American Advisors Group or One Reverse Mortgage—lenders who have given famous faces to reverse mortgages over the last decade. But even celebrity spokesmen, as friendly and virtuous as they seem, have not been able to completely sway consumers, many of whom still harbor misperceptions of what reverse mortgages are, what they do, and above all else, how these products can support them financially. And they might never be able to fully convince the public, either.
Capitalizing on the positive mainstream media attention reverse mortgages have garnered in the aftermath of the Financial Assessment last year, and the increased awareness from the financial planning community, some industry professionals have recently appeared in local radio segments and podcasts to tout the benefits of reverse mortgages and remove the veil of misinformation that has long plagued the Home Equity Conversion Mortgage (HECM) product.
“One of the things that people are surprised to understand about reverse mortgages is that it’s not that different than other mortgages—it’s just that they’ve gotten a bad rap,” said David Holland, a Florida-based certified financial planner (CFP), who also hosts a weekday radio program “Real Money” airing in Flagler County, which is included in the Deltona—Daytona Beach—Ormond Beach, Fla. metro area.
In a recent Real Money show, Holland chatted with industry veteran and Chair of the Funding Longevity Task Force Shelley Giordano to “untangle” reverse mortgages, with a discussion that included recent changes to the HECM program and the various uses of these financial planning tools.
“The big, big thing about reverse mortgages—part of the value of a reverse [mortgage] is you don’t have to make interest payments or principal payments,” Holland said during the show. “That’s a huge advantage over the traditional mortgage for the right situation.”
A practicing financial planner going on two decades, Holland admits that he has been reluctant to introduce clients to reverse mortgages in the past, however, continuous inquiries about reverse mortgages led him to begin researching HECMs. It was only after learning about some of the most recent HECM rule changes, and seeing how a reverse mortgage can be incorporated into a financial plan, that changed Holland’s mind.
“And so I’m now licensed to do reverse mortgages in the situations where it makes sense,” he said.
Holland is an example of the slow, but steady change of heart that has been occurring among the financial planning community over the past year, following the implementation of the Financial Assessment and the series of retirement research that has strengthened the credibility of reverse mortgages as viable retirement income planning tools.
“What sort of got the ball rolling for [financial] advisers and academicians to start looking at weaving housing wealth into a retirement plan is the notion that when your portfolio is suffering, the last thing you want to do is begin selling out of your portfolio at a loss,” Giordano said during the Real Money segment. “If you can substitute using your housing wealth in scenarios of extreme volatility, the math is really clear that this is the way a portfolio can have the best chance to survive a long retirement.”
Despite the positive press and financial research, a pervasive lack of awareness continues to hinder reverse mortgages from greater utilization, among both consumers as well as other financial professionals.
“I think that people who are working with financial planners are starting to see in consumer media this discussion about how you can weave-in reverse mortgages and housing wealth into your retirement plan, and have a much better outcome for your retirement,” Giordano said. “We are making progress, but it has been slow and painful.”
The most prevalent misconception of reverse mortgages continues to be the idea that borrowers relinquish ownership of their homes when they obtain a HECM, according to Candy Watson, reverse mortgage consultant with Senior Resource Alliance, who recently appeared on the “Aging with Power: From Womb to the Tomb” podcast from Calif.-based Santa Clarita’s Hometown Station AM-1220 KHTS.
“A lot of people still say, ‘oh, you’re just going to take my home,’” Watson said during the podcast. “No, they are not going to take your home. You retain ownership of it. You’re on title, not the mortgage company.”
During the Aging with Power segment, which also featured a home health provider guest, Watson and host Myles McNamara discussed the differences between reverse mortgages, traditional mortgages and home equity lines of credit; as well as certain HECM features, including the benefits of the mortgage insurance premium and non-recourse provision.
“I really feel it [reverse mortgage] is an option seniors should be educated on,” Watson said. “Whether they pick it or not, the choice is always up to them. There’s no pressure.”
“The people who can be really helped by a reverse mortgage are the salt of the earth, middle-America folks who have some money set aside in their IRAs or 401(k)s and have Social Security,” Giordano said. “Those are the folks who are trying to find a way to make sure their nest egg is going to survive a 30- or 40-year retirement.”
Written by Jason Oliva
