As lenders get under way with new financial assessment rules under the Department of Housing and Urban Development this week, one lender is shifting its approach to reverse mortgage originations by marketing not the “new reverse mortgage” but the product under a whole different name: The Life Mortgage for Seniors.
In transitioning to originating loans with the financial assessment, Chicago-based bank The Federal Savings Bank, is now marketing the product under the new name. The shift is only partly motivated by the new rules, says Executive Vice President Mike Crossett. It’s also partly driven by longtime issues reverse mortgage lenders have had with marketing the product.
“Fortunately or unfortunately, everyone understands the product as a reverse mortgage,” Crossett tells RMD. “I think there are too many people in the industry trying to sell the product rather than helping to solve the problem.”
Rather than focus on the old product with its existing terminology, the company has opted to rebrand.
“We’re taking the terminology in a different direction,” Crossett says. “Many are leading with: ‘It’s a reverse mortgage,’ and the first connotation is, ‘They take your house.’ We are rebranding with the Life Mortgage. You have lived to pay down your home, now let your house pay you.”
The rebrand will also work toward educating financial planners and other partners on the benefits of reverse mortgages for their clients, the Federal Savings Bank says.
The focus of the new product including the mandatory financial assessment is to protect current assets and investments and provide the highest probability of not outliving assets and leaving a legacy, among other strong points, according to the bank.
Nomenclature aside, however, the goal is the same for the Federal Savings Bank: to provide a legitimate solution for a $14 trillion retirement problem facing Americans.
“We’ve got to change the conversation to show how can we help solve this retirement gap. We can be $4 trillion of the $14 trillion solution, and make real estate part of the conversation,” Crossett says. “Now there’s safety and soundness. Forget the term reverse. Now it’s a life mortgage.”
Written by Elizabeth Ecker
