Could HECM for Purchase Take Off Without the ‘HECM’?

While originators agree that the underutilized reverse mortgages for purchase program needs a boost, they are divided on whether removing the words “reverse mortgage” from its marketing is the solution.

During a recent webinar for Realtors, Chris Bruser from Retirement Funding Solutions briefly hinted at the idea of separating the concept of Home Equity Conversion Mortgage for Purchase from the concept of “reverse mortgage”.

Christina Harmes, assistant director for C2 Reverse in San Diego, said that omitting the words “reverse mortgage” makes the product more palatable for baby boomers. Boomers may not look to a reverse mortgage because of negative connotations or because they don’t know it is available for the purchase of a new home, said Harmes, who co-presented the H4P webinar with Bruser.

“I think it’s a huge opportunity to market it differently, and it does work a little bit differently [than a traditional reverse mortgage],” she said, adding that the best terminology she has heard is “flexible purchase payment loan.”

Laurie MacNaughton, a reverse mortgage specialist with Atlantic Coast Mortgage, LLC in the Washington, D.C. area, said she understands why there is discussion, but is “absolutely not in favor of a product rebrand.”

“I’m highly leery of any attempts to avoid the hard questions surrounding the product,” she said.

MacNaughton said that she recently had two separate calls, one from a senior homebuyer and one from a referral source provider, asking about a new “seniors only” purchase loan they had heard about. As they explained the program to her, it became clear they were describing a reverse mortgage.

“This type of marketing to me is shady at best,” MacNaughton said. “We have fought to gain credibility and we’re talking about doing this? What a tragedy that would be.”

Harmes said she does not think rebranding is misleading.

“We would never want to create a name that was deceptive but instead could open more opportunities for the boomer market,” Harmes said.

Tim Linger, broker and owner of HECM Senior Home Financing in Orlando said he definitely supports dropping the words “reverse mortgage” in exchange for HECM.

“No one is using “HECM” in conversation,” Linger, who sells mostly HECMs for Purchase, said.

Harlan Accola, national director for reverse mortgages at Madison, Wis.-based Fairway Independent Mortgage Corporation, agreed with MacNaughton, saying that rebranding H4P could leave potential borrowers feeling tricked when they learn that it is a reverse mortgage —  further hurting the loan’s image.

“Sooner or later we would have to confront the fact that it is a reverse mortgage,” he said. “We’re far better off saying, ‘It is a reverse mortgage, but it’s not what you think it is.’”

Whether rebranded or not, originators agree that one key to more H4P sales is providing more education to Realtors so they are better equipped to sell – and defend – this type of mortgage.

Written by Maggie Callahan

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