“Words have meaning and names have power”, said Spanish author Miguel de Cervantes. Perhaps this is something the reverse mortgage industry should strongly consider. The 27-year-old Home Equity Conversion Mortgage program is struggling to expand its reach in an ever-growing marketplace. Is our reverse mortgage terminology confusing older homeowners? Does our name need to be rebranded?

For many years I have chafed at the term ‘reverse mortgage’ opting instead for Home Equity Conversion Mortgage, considering widespread product confusion and lingering misgivings born from negative media stories. Even better perhaps we should adopt “Equity Release Mortgage” as our new flagship name as our counterparts in the U.K. and Australia have branded a similar offering. During the NRMLA annual meeting in Chicago, some members argued that the name “reverse mortgage” carries a negative connotation, in the sense that a person is moving “backward”. Create your own user feedback survey

Beyond the argument that our product needs a new name, is the confusing and often contradictory terminology in the HECM itself. The principal limit, while known within our industry, is completely foreign and alien term for older homeowners who have only been exposed to standard mortgage terminology in their working years. Some industry members argue that ‘available proceeds’ is more descriptive. Maximum Claim Amount, or MCA, is another example of industry jargon thrust upon HECM borrowers. Instead, some suggest renaming this to the ‘FHA Lending Limit’. The fact is that mortgage applications are loaded with an alphabet soup of acronyms. With HECM loans layering another set of loan terms, confusion is sure to follow, not to mention increased consumer uncertainty…

Download a transcript of this episode here.

Looking for more reverse mortgage news, commentary, and technology? Visit ReverseFocus.com today