Marketing the Reverse Mortgage— A Retirement Option

Many seniors are concerned about funding their retirement, especially with rising medical and living expenses. A reverse mortgage product allows credit unions help older members address their financial needs.

Many seniors are concerned about how they will be able to afford their retirement. They question whether they have built a nest egg to comfortably live for another 10, 15 or even 20 years. According to New York Life, seniors can live on 70 to 80 percent of their working income each year after factoring in inflation. Making ends meet during retirement can be a challenging endeavor, especially in a period of rising medical and living expenses. If seniors need to access cash on either a one-time or a reoccurring basis, a reverse mortgage may address their financial needs.

To learn more about the reverse mortgage product and its growing market potential, read our previous article.)

Member education is a critical component of the reverse mortgage process. Before a financial institution can close a reverse mortgage application, borrowers must present a certificate demonstrating they spoke with a HUD-certified counselor. While some argue that the mandatory counseling is a bottleneck due to a current shortage of voluntary counselors, the process ensures that seniors make a well-informed decision on perhaps their largest collateral item their house.

Counseling helps members decide whether to move forward with the applicationbut credit unions are responsible for marketing the program and building awareness. Below are three marketing strategies currently in use:

Senior expo events – A few credit unions host a booth at senior events that attract a large audience. Mountain America FCU’s ($1.8 billion in West Jordan, UT) staff attends a two-day senior expo every year that draws more than 10,000 visitors each day. The event is held at the convention center and covers topics relevant to senior citizens. Booth staffers raffle off a DVD player or similar prize to seniors who fill out a questionnaire. At the bottom of the form, seniors can optto have a credit union representative contact them about a reverse mortgage. For each of the last three years, Mountain America has generated approximately 100 leads from the senior expo. We’re working on developing a process to trackthese leads, said Jeanie Olsen, vice president of mortgage services. The event is meant to build awareness for not only the reverse mortgage, but also the credit union’s presence in the community.

Reverse mortgage seminars- There are several misconceptions about the reverse mortgage product. One of the more prevalent misconceptions is that the financial institution will own the house when the loan is due for repayment. While thatis not the case (the borrower retains the title), credit unions are hosting reverse mortgage seminars to address this and other issues. Ent FCU ($1.9 billion in Colorado Springs, CO) hosts a quarterly seminar that has been popular with its membership.Executives begin by playing an informative DVD produced by Financial Freedom, a subsidiary of IndyMac, and then take questions for the rest of the session. What’s great about the reverse mortgage is that we can connect seniors with ourinvestment advisors since the seniors suddenly have a sizeable amount of money, said Jon Paukovich, director of real estate lending. It’s a great cross-sell opportunity. Ent currently closes about three reverse mortgagesa month.

Target their children- Seniors’ children can be very involved in the decision process. Many want what is best for their parents while a few fight for their inheritance. Mountain America sends direct mailings to seniors’ childrenwho are in their 40s and 50s and may be getting ready to help their parents. The marketing message is that if your parents are struggling, a reverse mortgage is a great vehicle to help them with their expenses. Most seniors deliberate for one to twoyears before moving forward with the application, so establishing a long-term pipeline is critical to the product’s success.

The reverse mortgage is a viable tool promoted by the AARP and several non-profit research organizations. Credit unions would promote a public policy of meeting the special needs of seniorsan issue of increasing importance as the baby boomer generationbegins to retire.

To hear from leading credit union executives who have implemented a reverse mortgage program, Callahan & Associates is hosting Addressing the Feasibility of Reverse Mortgages,its third quarter mortgage lending series webinar sponsored by Charlie Mac.

April 14, 2016

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