Most agree that reverse mortgage borrowers now come to the table with more education than in past years when they are looking into a reverse mortgage. However, some are finding that more doesn’t always mean “better.”
“When we compare our clients today with our clients ten years ago, there is a difference,” Mike Gruley of Plymouth, Mich.-based 1st Financial Reverse Mortgages told RMD in an email. “Ten years ago, we were most likely the ‘first educators’ to prospective borrowers who really had no idea of what a reverse mortgage was. Most of them had never heard about reverse mortgages, and didn’t know anyone who had one.”
Most RMD readers agree. In a recent reader poll of 102 readers, an 80% majority said that borrowers today are more informed than they were five years ago. But that initial information may only be half the battle.
Today, the role of “first educator” is largely occupied by word of mouth referrals, with originators seeing a large number of potential clients who at least know of someone else who has a reverse mortgage.
The awareness has changed, says Alain Valles, founder and president of Norwell, Mass.-based Direct Finance Corp. Valles recalls an appointment with a potential borrower couple some time ago during which the clients were apprehensive about the idea of a reverse mortgage because of how others in their social group would perceive them
Today, he says, less so.
“It has slowly moved in another direction,” Valles says. More recently, he was doing a loan for someone who was falling behind on credit card debt. The borrower said she was a little embarrassed to be in the situation, but that her friends had asked her if she had heard of a reverse mortgage. “We all have them,” her friends had told her.
But, Valles says, “We spend a lot of time going over the myths.”
“Many prospective clients know someone who has taken a reverse mortgage, however we don’t think that point of contact typically contributes much to their education about the program,” Gruley says. That “herd mentality,” however, can prove to be effective in getting the conversation started.
“Knowing that a friend or relative has taken a reverse mortgage has, in our view, made prospective borrowers feel more comfortable taking the initiative to learn more by searching the Internet, reading articles or contacting a lender,” he says.
Some of the initial information gathering has already been done, but originators say there is still more to do on the education front when they first meet with a borrower.
“I love when they say, ‘reverses are terrible,’ or ‘they’re expensive,'” Valles says. “It gives me the opportunity to say: ‘Well did you know this? Or did you know that?'”
Being a second or third educator comes along with correcting the wrongs, Gruley says.
“In most cases, our job as educators has become easier because of the wide availability of accurate information today as compared to years ago,” he says. “However, because there are still ‘misinformants’ in the media and elsewhere, we still have occasional clients that must undergo a very difficult and uncomfortable ‘re-education’ process.”
Written by Elizabeth Ecker
