Fighting Back For Reverse Mortgages

Are you looking to become depressed? Do you want to agitate your stomach acid and cause your head to pound with pain? Well, I have an excellent idea for turning a happy day into a mess of doom and gloom!

Here is my suggestion: go over to Google News and type the words “reverse mortgage” into the search box. I can guarantee you that the results will bring you down into the depths of dreariness within a matter of microseconds.

I just did that exercise myself, and I found myself nearly suffocating in bad news. Among the headlines that popped up were “Great-Grandmother Fights For Her Home,” “New Rules – And Lawsuits – For Reverse Mortgages,” “Expensive Surprise With Reverse Mortgage” and “For Baby Boomers, Reverse Mortgages Are Still A Risky Proposition.” And I am sure the remnants of the Occupy movement are running their red flags through the rinse cycle after seeing a New York Times headline that claimed “Some Investors Bet On Return To Reverse Mortgage.”

Well, one might expect such headlines from what a certain former Alaska governor rather accurately dubbed as the “lamestream media.” After all, scurrilous coverage of reverse mortgages has been an integral part of business news reporting for several years, and I suspect this trash talk has been responsible for preventing reverse mortgages from gaining more market share as a major slice of the U.S. population grows older.

But you know that reverse mortgages have a PR problem when the mortgage banking trade media joins in the negativity. A few weeks back, the editor of another real estate finance website ran an op-ed piece in which he stated his personal opinion that reverse mortgages were “risky.” Granted, this person’s opinion may not carry much weight – he claimed (falsely, it turned out) to be unaware of the product’s existence until he saw a TV commercial from a reverse originator a few years ago. But it is still a major problem when a trade media editor within the industry recklessly badmouths a specific loan product.

This situation is not something that should be casually ignored, especially in view of the financial health of the older members of the population. Today’s seniors are finding themselves in an unprecedented bind. According to the Consumer Financial Protection Bureau (CFPB), 30% of homeowners age 65 and older are now carrying mortgage debt; in 2001, that number was 22%. And 21.2% of homeowners 75 and older are burdened with mortgage debt – back in 2001, that number was 8.4%.

Sadly, this situation goes deeper than merely paying off a home loan. “In addition to carrying increased mortgage debt, many older Americans have also accrued less home equity than their age group did a decade ago,” the CFPB reported. “This decline in home equity may have an outsize impact on older Americans, for whom home equity is frequently their primary or even only asset. The result is less financial security and greater financial risk.”

Admittedly, reverse mortgages are not the right solution for everyone. Heck, homeownership in general is not right for all people! But at a time when older homeowners are feeling the pain of the economic environment in Obama’s America, this is clearly a product that has the potential to provide a strong degree of comfort to many people within a highly vulnerable demographic.

My advice, for what it is worth, is simple: reverse mortgage originators need to do a more efficient job in marketing their products. There needs to be an aggressive, proactive outreach that connects with seniors and details exactly how reverse mortgages work and how they could benefit certain borrowers. Granted, the CFPB and other entities are trying to over-control how the financial services world gets it’s messaging out – but at this point in time, the industry needs to be more determined to have its voice heard.

There also needs to be a serious conversation on some of the controversial news stories that centered on problems relating to reverse mortgages. And while these stories are the exceptions rather than the rule, they still need to be detailed so people can learn from the mistakes of others. As with any financial product, there must be a mature and honest consideration of the pros and the cons of being involved in this type of transaction. People respect honesty, and originators will be able to build greater trust by being frank with potential customers on whether the product fits their particular needs.

Ultimately, there has to be some pushback in regard to the scary headlines and sour news stories relating to this product. Most online news articles have comments sections that can be used to refute broad suggestions that reverse mortgages are inherently evil, and traditional print media usually run letters to the editors by readers who are unhappy with news stories. There are more positive stories relating to reverse mortgages than negative ones – perhaps it is time for these stories to get some play?

And as for dealing with trade media, I would strongly recommend that advertisers within the industry think twice about putting their money into news sites or magazines that get their facts wrong or go out of their way to cast doubts on the viability of loan products. With “friends” like that, who needs mainstream media enemies?

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