Will Lack of Fixed Rate Standard Reverse Mortgage Impact Marketing?

With the lending industry beginning to address changes announced last week to the Federal Housing Administration’s reverse mortgage program, one concern that has arisen among originators in the market: the potential that fewer marketing dollars will be available.

One impact of the changes as borrowers shift away from the fixed rate Standard product to the remaining products available is that borrowers may end up accessing fewer reverse mortgage proceeds. So while loan volume may not see too heavy of a response, the total loan amounts may fall, resulting in less profit for reverse mortgage businesses, and thus, fewer dollars spent on national campaigns.

“It will have an indirect impact because it will reduce revenue on the average loan that is available for marketing,” says John Lunde, Reverse Market Insight president. “If originators are not able to market cost effectively at the lower revenue levels of ARM product, then we’ll see fewer loans if all else is equal.”

Independent originators and brokers who benefit from large national advertising campaigns worry that this may be the case as the industry reacts to the changes.

“Lenders with famous spokespeople have large marketing budgets that are supported by Fixed Rate rebates,” says Lance Jackson of Castle Reverse. Jackson estimates the impact could be substantial in terms of the ad spends those companies can support under the new program changes.

Yet American Advisors Group, which runs a national ad campaign with former Senator Fred Thompson at its helm says it isn’t the large companies that will feel the impact, it’s the smaller ones.

With no changes planned for marketing in 2013, McGrath says the changes are more likely to impact small, independent lenders and brokers than the larger companies.

Written by Elizabeth Ecker

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Popular Articles

3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please