Reverse Mortgage Marketing

With the growing popularity and number of people taking out reverse home mortgages on the rise, marketing strategies are becoming more uninhibited. With more companies using tricky and ill-intended marketing tactics, some older homeowners may find themselves unable judge the credibility of a lender or company by its advertisements.

Many companies have started using direct mail pieces with flashy slogans such as “Don’t pay the bank, have the bank pay you” and so forth. These types of advertisements gloss over the risks involved with reverse mortgages.
Some lending companies have also begun to provide “Free, no-obligation” seminars and speaking appearances throughout the country to “spread the word” about reverse mortgage solutions. A few topics you may have seen or will see include:

• Using a reverse loan to pay for long-term care
• How reverse mortgage programs can reduce estate taxes
• Maximizing estate value with a reverse loan
• Supplementing your monthly cash flow

Homeowners should be extremely wary of such reverse mortgage marketing schemes. Do not attend seminars or reply to any lending companies that contacts the homeowner directly; as these lenders often use inaccurate and misleading data to persuade potential borrowers. To illustrate this point, observe that each of the above seminar titles contains incorrect or misleading data. For instance, using a reverse mortgage to pay for long-term care is not practical because homeowners must reside in their home on a full-time basis to qualify for a reverse mortgage. Furthermore, reverse mortgage loans do not affect your real estate taxes one way or the other; nor do they affect the value of your home.

While true that reverse equity mortgages supplement your monthly cash flow, this statement is critically oversimplified, because a reverse mortgage will ultimately be paid back to release a lien placed upon the borrower’s property.

The best advice to any senior homeowner who is interested in a reverse equity mortgage is:
1. Attend the FHA required counseling session, and
2. Know your rights and responsibilities.
Reverse equity mortgages can be an attractive option for some seniors, but this type of loan does come with a specific set of requirements and regulations. Any consumer considering using a reverse loan to the equity in his or her home should carefully examine the terms of the mortgage before committing.