Following the passing of the Reverse Mortgage Stabilization Act in 2013, the sentiment towards reverse mortgages has been largely favorable. With this newfound acceptance among the media and seniors alike, the overall challenges that the reverse mortgage industry faces have shifted in a new direction.
“Right now it feels like we’re in a ‘rebuilding the reputation’ mode. We’re on a good path to changing the perception of the product. I think the main opportunity going forward will simply be to educate the greatest number of people,” says Marty Bell, senior vice president of communications and marketing at the National Reverse Mortgage Lenders Association (NRMLA).
Previously, the industry faced challenges regarding non-borrowing spouses of reverse mortgage borrowers and keeping reverse mortgage borrowers up to date with their loan obligations. Significant progress has since been made on these topics by way of regulations introduced in 2014.
With the addition of these new product safeguards, and as society’s attention shifts towards senior wellness, reverse mortgage lenders can focus on innovating new ways of educating and engaging older Americans with information about the financial tools available to them.
According to Bell, for the first time in history, seniors represent the largest sector of the American population. “Culture, business, politics – society as a whole is shifting its focus on the baby boomer segment. We are developing new methods of educating more and more people, which should be easier with the boomers than maybe it has been with earlier generations.”
“As boomers enter retirement age, they’re much more technology-savvy than older seniors, and this allows us to more easily reach out and educate them. The Internet is a great tool, but I think we’ve just scraped the surface. We need to continue to leverage the web to inform more people. My job is to expose the product to as many people as possible…to teach them. Any tool that can help us show how a reverse mortgage fits into a retirement planning strategy, while also helping improve the reputation of the product, is valuable,” Bell says.
And, according to Bell, there is an urgent need to broaden financial education efforts targeted to seniors. This is based on recent studies that indicate many seniors simply don’t have the funds to retire comfortably.
“A study out of Boston College will tell you that close to half of all seniors do not have enough money for retirement,” Bell shares. “I just read something that said what used to be a 3-legged stool is becoming a pyramid. The 3-legged stool included Social Security, personal savings, and Medicare. Today’s seniors need to look beyond these areas to better fund their ‘golden years.’ Now, a more comprehensive package might involve Social Security, personal savings, Medicare, home equity, other benefits, and possibly other funding vehicles. There is a big retirement funding gap in this country. In order for it to be filled, seniors need to consider every possible asset.”
Many seniors carry a significant amount of wealth in their homes that is normally difficult to access. With a reverse mortgage, retirees may discover and utilize untapped equity as a means to close the gap in their financial plans.
Bell comments on the significance of acting as an educational advocate for senior consumers, “When people have a deep understanding of the facts without the pressure of someone trying to sell to them, they are able to reach a certain comfort level. I feel that the industry as a whole can only benefit from sharing this kind of ‘unpressured’ information.”
He continues, “We, as an industry, need to create that comfort. With the growing number of tools available, and more of our demographic using them, I can see the opportunity for us to do just that is expanding.”