Without audience targeting are Google Ads Dead? Think again…
Early this month Google announced new restrictions for targeting specific audiences. The restrictions apply to content related to housing, employment, credit, and those who are disproportionately affected by societal biases. The news of these restrictions created quite a stir among industry brokers and lenders who heavily rely upon targeted Google ad campaigns. All which may have you asking if these changes will kill future reverse mortgage advertising on the world’s most popular search engine. In just a moment we’ll hear from our online SEO expert Josh Johnson to find out.
Google’s restrictions are not necessarily novel nor unexpected. It was just over two years ago Facebook faced scrutiny from federal regulators for allowing those offering credit or housing finance to restrict ad audiences by race or religion among other questionable metrics that would violate HUD’s fair housing rules. An investigation by ProPublica broke this news in October 2016. It was nearly two years later in August 2018 that HUD filed a formal complaint against the social media giant for discriminatory advertising practices. Seven months after HUD’s complaint Facebook announced sweeping changes. Both Facebook and later Google, took a blunt approach much to the chagrin of lenders and service providers.
What ad filters are going away? In its official release Google revealed, “credit products or services can no longer be targeted to audiences based on gender, age, parental status, marital status, or ZIP code.”
Is this the end of Google ads for reverse mortgages? To answer that question I reached out to Josh Johnson who heads up Reverse Focus’ Online Dominance SEO program and Google marketing. Here’s his explanation.
Here’s what makes Google unique from other platforms and why reverse mortgage Google ads will continue to reach the intended audience.
To summarize, older homeowners are intentionally seeking out reverse mortgage information on Google which means, yes-your ads will be seen by your target audience, even though you can no longer target specific age groups.
Financial Advisor Magazine:
“Reverse mortgages get a new look in pandemic times”
Rodney Dangerfield famously quipped “I don’t get no respect”. Reverse mortgage lenders and originators can certainly sympathize with that statement. However, a recent column last Thursday in the Financial Advisor’s online publication sees that changing. “The reverse mortgage market got some new respect earlier this year. When it looked like Covid-19 might wreck the retirement plans of older Americans, some turned to these mortgages to tap a new source of money.” HECM monthly endorsements in the fiscal year 2020 outperformed nearly all months from the prior year. Demand for the federally-insured reverse mortgage increased by 32% over the fiscal year 2019.
Yet, despite a significant spike in loan volume, a working paper submitted by the Pension Research Council at the University of Pennsylvania’s Wharton School suggests that older Americans aren’t using reverse mortgage home equity as much as they could be when compared to other developed nations. In the Financial Advisor column, Eric Rasmussen noted the simulations cited in the paper show that “17% to 25% of denied forward mortgage borrowers would have sufficient home equity to originate a [reverse mortgage] at their requested loan amount, corresponding to 98,000 to 147,000 older adults.”
Chris Mayer and Stephanie Moulton discuss the slow uptake of the HECM in the U.S. in their paper ““The Market for Reverse Mortgages Among Older Americans.” “Potential concerns are many, including high costs, dicey sales practices, and the potential of retirees to lose their home if things go badly.” The paper noted most recent loans are adjustable rate and the steep 2% FHA insurance premiums could be hindering market acceptance.
The paper also noted the impact of the sudden departure of national-brand banks and loan originators in the wake of the housing crisis which led to loan volumes plummeting. When it comes to extracting home equity the chasm in acceptance couldn’t be bigger. Wharton researchers found 2018 HMDA (home mortgage disclosure act ) data reveals only 33,000 reported reverse mortgage transactions while traditional mortgage cash-out refis, HELOCs, and second liens recorded over 609,000 in the same year. Ironically the same study shows half of the applicants rejected for a HELOC or second were denied because they lacked the ability to make the required monthly payments. “Simulations show that between 26% and 36% of rejected HELOC and second lien applicants likely could have accessed a reverse mortgage”, says the study.
Anecdotal reports show increased acceptance of reverse mortgages by financial professionals. Yet, many remain reluctant to recommend the loan to their clientele. “I’ve looked into [them] on occasion for my clients,” says Vince Clanton of Chancellor Wealth Management in Atlanta. “The product has very high costs associated with the transaction. The sales cost is marginal, but there is an insurance component to protect the lender, and I think that is very expensive. The embedded interest rates are variable, and the cash available is limited. If someone is still working, a cash-out refinance is possible. If in retirement, it may be that the best option is to sell the home and downsize.”
As you, our viewers know, selling the home and downsizing is not always practical or desired. “When the market is volatile, it can be helpful to have a non-market correlated asset to draw from if your portfolio is down and these assets can help with this regard”, says Benjamin Offit of Offit Advisors in Maryland. In conclusion, it can be argued that the reverse mortgage has in fact garnered new respect- perhaps much in part to the COVID-19 pandemic, stock market volatility, high home values, and low interest rates. The question is how do we increase acceptance of one of the most powerful yet misunderstood loans available to older homeowners.
Additional resources cited:
Financial Advisors Magazine column: Reverse Mortgages Get A New Look In Pandemic Times
U Penn working paper: The Market for Reverse Mortgages among Older Americans