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The reverse mortgage education ecosystem has long struggled to push back against the tide of what the industry views as bad information about its products and business model.
Nonprofit counseling agency Credit.org is aiming to offer more prospective reverse mortgage borrowers a source of information. It has created a new e-learning course that aims to demystify reverse mortgages for interested parties.
Online reverse mortgage academy
Credit.org’s Reverse Mortgage Academy aims to “empower you with the knowledge to confidently understand the benefits and risks of a reverse mortgage, empowering you to make informed decisions about your financial future,” the organization said of its offering.
To get a better understanding of what the company hopes to accomplish, HousingWire’s Reverse Mortgage Daily (RMD) spoke with chief innovation officer Robin Hillary.
Hillary said the company has conducted reverse mortgage counseling sessions for years, but the potential need for such a product has increased despite a persistently low adoption rate. While nonprofit counseling organizations are typically at the end of a reverse mortgage workflow, the new academy aims to flip that around, she explained.
“Reverse Mortgage Academy […] places our services at the beginning of a homeowner’s journey to understand, from an unbiased source, what a reverse mortgage is, if it’s right for them and the pros and cons,” Hillary said. “All of those things help them become more educated about the product before speaking to a lender.”
For lenders, it has the potential to generate a hotter lead. A prospective borrower who has gone through the course has a higher level of understanding about the loan’s requirements, obligations and other attributes, she said.
“By this point, the understanding of the product is already more complete, and now it’s time to get into the details,” she said. “That’s really why we thought that there was a clear niche in the way that reverse mortgages are presented to consumers. Today, that model really only produces about 2% of homeowners that are willing to look into a reverse mortgage, or to actually convert into one.”
Educated consumers as conversion tool
For Credit.org’s part, it feels that an educated consumer of qualifying age who is willing to listen to reverse mortgage product details constitutes “a bigger target market, especially when you think about the economy today and how it’s impacting senior citizens,” Hillary said.
Credit.org is also in a unique position to potentially bolster reverse mortgage uptake due to its status as a nonprofit. Hillary said it also has a commitment to providing more objective information about loan products and what they entail for prospective borrowers.
The landscape of the estimated 2% penetration in the wider mortgage market “puts a nonprofit in a really good position, because a lot of the skepticism comes from when reverse mortgages first came out, and the bad reputation they gained,” she said. “Credit.org does not care whether the person ends up taking out a reverse mortgage or not.
“Our sole focus is to ensure that the consumer is well educated about the product, and that from a nonprofit base is really a safe place for consumers to come without any pressure.”
Benefits of nonprofit product educator
After absorbing the e-learning course, a “student” can then choose to move forward and proceed with a fee-based counseling session that friends, family or other trusted advisers are encouraged to attend.
“I think that being a nonprofit presents an entirely new way of looking at educating about a reverse mortgage, where it starts at the beginning of the journey, and also we’ll be there at the end,” she said. “So if they decide to go on to a lender and take out that reverse mortgage, Credit.org, as well as all the other nonprofits, are there at the end to provide the HUD-certified counseling.”
The course is available online in both English and Spanish, and it prioritizes interactivity to keep the user engaged. Hillary said interactivity often serves as a way to overcome any potential technical hurdles that some older clients may face.
At the end of the day, Hillary added that simply getting more people to understand the details of a reverse mortgage can be a powerful tool in closing the massive gulf that exists between reverse and traditional forward mortgages.
“The reverse mortgage industry has a great product, especially during economic uncertainty, but they need to innovate and try new ways to engage consumers to move past the 2% conversion rate,” she said. “I believe this new model will benefit the industry at large, because having an educated consumer traditionally leads to a higher conversion rate.”
