All crops require preparation

Education is the key to softening resistance to reverse mortgages

Often, the one bearing a potential solution is battered for their effort.

Reverse mortgage professionals can certainly sympathize with such a statement. It’s not just homeowners but our national and local media outlets who are prone to paint HECM in the poorest possible light.

Presenting a potential answer for any vexing issue is a delicate business. Doubt me? Try to promote a local ballot measure in your city and see what happens.

Where is most of the resistance rooted? Generally, it’s not suitability or even product design. It’s misunderstanding rooted in a lack of education. Over two-thirds of HECM professionals responding to Reverse Mortgage Daily’s 2020 Outlook Survey and Report identified a lack of product awareness and negative perceptions as our biggest ongoing challenge. Ask any random adult in your town how a 30-year mortgage works and chances are they will get it generally right. If you ask the same person how a reverse mortgage works brace yourself. You most likely will hear how the bank takes your home away and how the loan is a terrible option.

But wait! Hasn’t the federally-insured reverse mortgage (HECM) been with us for 30 years? It certainly has but unlike traditional mortgages, few banks now actively sell the loan to their clients in the wake of big bank exits, most financial advisors will discuss traditional home financing while ignoring the HECM, and the government has not publicized the usefulness or legitimacy of the program. Outside of national television ad campaigns, the majority of older homeowners first learn about the reverse mortgage second-hand from a friend, neighbor, or family member. That leaves it to us- you and me- to inform and educate not just our potential borrowers but the general public in our community.

To put it in an agrarian context even the most nutrient-rich soil ideal for a particular crop requires preparation. Not just plowing the top one-inch of soil where the seed is planted, but a foot or more below so the root takes hold and water can easily seep upward. Not unlike our potential market of homeowners neglected soil becomes hardened, dense, and compact making growth nearly impossible. Something to consider the next time a homeowner or professional rails against reverse mortgages. However, like your local farmer, we have to live off our short-term crops. That means we find ourselves typically focused on working the ground around a particular homeowner to ensure the success of that effort. While this is effective we also need to dedicate a portion of our efforts to public education. That could mean appearances on your local television and radio stations as we discussed in a recent episode of the Industry Leader Update on HECMWorld. You could speak to local senior groups not to try to sell the loan itself, but to merely inform them how a HECM truly works.

The truth is public awareness and education begins in our backyard. Our government won’t do it for us. Amazing television ads may help but cannot reach everyone dispelling common myths and misunderstandings. Even a coordinated national effort is ultimately reduced down to what each of us individually is committed to do.  The challenge is to look at carving out time each week and month this year to spread the word on how a reverse mortgage actually works. In doing so you will not only dispel the most common persistent rumors and myths about the HECM  but prepare the soil to increase the yield from your future efforts.

1 comment

Steve Kule February 11, 2020 at 9:56 am

You are so right on this. I wasted months talking to local politicians, and explaining the process, only to be tossed from one department to another,and after months of frustration, just gave up that approach. If the individuals in government are so uneducated in our field, how can they address the issues. Also, the political issue of weather to support or dismiss this product is a crap shoot, depending on who you speak with.

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