Industry Ramps Up Senior Online Education Program

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If there is anything all players in the reverse mortgage lending arena agree upon—trade group, regulator and consumer advocate—is the need for more education about this product, especially if it starts getting the market share that has been long predicted.

The National Reverse Mortgage Lenders Association rolled out its Borrow with Confidence campaign a week before the Consumer Financial Protection Bureau came out with it own report which says there is a greater need to educate seniors about the product because they are struggling to understand its features.

Meanwhile, also prior to the release of the report, Consumers Union—which states seniors should only use reverse mortgages as a “last resort”—cited the NRMLA education campaign as one of the reasons CFPB must “provide common sense oversight...to protect seniors.”

It termed Borrow with Confidence as a public relations campaign designed to repair the image of reverse mortgage lenders.

Even after the release of its study, CFPB is asking for additional public input about reverse mortgages to help it create future policy and disclosure decisions.

CFPB has concerns over defaults, the age that people are applying for these loans and the rise of lump-sum payouts.

Peter Bell, president and chief executive of NRMLA, said in a statement that the group commends CFPB for the report, that it raises valid questions and “we look forward to a continuing dialogue to collaborate to find answers.”

He points to Borrow with Confidence as the industry’s efforts to give seniors and their children more information and “create the utmost transparency and clear understanding” about the product.

As with any campaign, effectiveness is largely dependent upon the ongoing support plans, that is where and how it is promoted.

Kristi Kovalak, director of marketing for the Lenders One cooperative, said, “With the lending industry at large, it is always good to see efforts that focus on the good work done such as lenders working and communicating their integrity. The campaign can help dispel some myths surrounding the reverse mortgage process for those who might benefit the most.

“Reverse mortgages have a place in the portfolio of offerings to consumers, when done properly they offer value to consumers. I’m not convinced that this story has been told well in the past (especially to the general home-owning public), and it’s good to see an effort that puts the message forward.”

At the NRMLA press conference for Borrow with Confidence, Bell called the program the latest in the industry’s “long-term effort at self-regulation and adapting our products to be more transparent and consumer-friendly.”

It is built around the organization’s pledge to borrowers which guarantees consumers a level of service and openness.

“While there have been very few incidents of inappropriate behavior reported over the years, when they do happen they tarnish the reputation of the reverse mortgage industry,” Bell said.

The key findings of the CFPB report are reverse mortgages are complex products and difficult for consumers to understand; the loans are currently being used in ways different than they had been in the past, which increases the risk to consumers; product features, market dynamics and industry practices also create risks for consumers; consumer counseling needs to be improved; and enforcement and regulation can be improved in areas such as cross-selling, fraud, advertising and disclosures.

CFPB director Richard Cordray pointed out that the study found the most common age for applicants today is 62, the first year of eligibility. “Much can happen in their remaining lifetimes that could change their intention to remain in the home forever.”

Cordray brought up the taxes and insurance issue, noting that one in 10 reverse mortgages are in default because the senior fails to pay T&I. Taking a lump-sum payment could leave borrowers without the money to pay their T&I in the future.

He also mentioned a deceptive mailer which portrayed the reverse mortgage as a government benefit rather than a financial product. The mailer included what appeared to be a government seal and claimed a phony piece of legislation would help seniors save their homes, if they called a “senior helpline.”

CFPB said it would use the report and the additional public comments “to inform future policy and disclosure decisions on reverse mortgages.”

At the NRMLA press call, Bell said reputation is key and the industry cannot afford to have the stories of “isolated incidents” get in the way of serving the senior population.

The industry needs to be “fully transparent and take the time to explain comprehensively” what it does. Growth can only occur if the public is comfortable with the reverse mortgage product and the companies that deliver that product.

Among the key elements of the education campaign are a redesigned consumer facing website at reversemortgage.org. It explains what a reverse mortgage is, the qualification for getting a loan, the fees and the potential risk of the loan, among other items.

There is a frequently asked questions section, as well as a place for consumers to submit questions to NRMLA. Bell said this would be used to help update and refine the FAQ. Later he said the site is “not cast in concrete,” but subject to modification and the group welcomes suggestions on how to improve it.

Besides the website, the organization has created a booklet, “Your Roadmap to Reverse Mortgages,” also giving a list of the process from origination to loan termination.

NRMLA is submitting op-ed articles and using electronic media and social media for outreach. There is also a government relations component to Borrow with Confidence as well, Bell said.

When asked if the organization is going to purchase advertising in traditional media outlets as part of the effort, Bell said the group is not anticipating doing so; NRMLA lacks the fiscal resources. It has created some testimonial videos to be used in the social media efforts.

Furthermore, NRMLA is finding its clientele, whether it be the seniors or their family members, are more often using the web to do research, he added. The Web and social media are the places where it can put out the most detailed and comprehensive information about the product.

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