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For a long time, data has suggested that older Americans are the largest cohort of homeowners — and increasingly, new homebuyers — in the U.S. But the mortgage industry has had issues adequately serving this cohort for a long time, and this is something that needs to be addressed.
This was some of the perspective shared by two leading reverse mortgage professionals on stage last week at The Gathering by HousingWire.
Dan Ventura, the president of reverse mortgage lending at Fairway Independent Mortgage Corp., and Chris Mayer, CEO of Longbridge Financial, spoke with HW Media CEO Clayton Collins to discuss some of the prevailing dynamics of the industry.
After starting the session by touching on the ongoing need to educate potential customers and business partners about the dynamics of the reverse mortgage business at large, the pair also discussed the challenges of broadening the reverse mortgage penetration rate beyond its roughly 2% figure in the broader mortgage market.
“If you ask me, the No. 1 problem has everything to do with the reputation and the preconceived notions of the product,” Mayer said. “I wish I could educate people, not necessarily about what reverse does, but just [to] understand at a high level what the idea is.”
Namely, that idea revolves around people being in a different stage of life, with different needs that may not be met by the existing set of products in the forward mortgage market. But older people are also generally in a stronger place financially than their younger counterparts and have a higher rate of homeownership.
This is when Mayer announced Longbridge’s new product offering for older customers, the “HELOC For Seniors,” which was previously detailed by HousingWire’s Reverse Mortgage Daily (RMD). Mayer explained that his hope is that the new product might begin a broader conversation about serving older customers in ways that U.S. mortgage lenders have not done adequately in comparison to some other nations.
This “opens the conversation, and recognizes that older Americans need a different kind of product than we are currently offering as an industry, but that’s a U.S. problem,” Mayer said.
Reputational challenges are one of the key culprits that people inside and outside of the reverse mortgage industry often see as a hurdle to further adoption. Despite the fact that the Federal Housing Administration (FHA) has consistently been introducing new regulatory safeguards to the HECM program since the end of the Great Recession, the industry has struggled to shake off a negative reputation among general audiences.
To sidestep that, some industry participants have made commitments to new forms of advertising.
Finance of America, for instance, which acquired the assets of American Advisors Group (AAG) and assumed control of its advertising relationship with actor Tom Selleck, has signaled in recent months that it wants to take a different approach in appealing to new borrowers. A company executive, however, said that Selleck remains a “key part of Finance of America’s strategy.”
Other lenders including New American Funding (NAF) have aimed to reposition their reverse mortgage offerings as tools that can empower their customers to live their lives more freely.
Gauging the long-term effectiveness of these plans is difficult since these remain new additions to the reverse mortgage advertising and educational ecosystem. But the companies themselves are aiming to do things differently in the hopes that it might yield different results.
