Reverse mortgages are loans that are highly in demand for senior homeowners, typically from the ages of 62 and up, who are looking for equity against their home to support their retirement and other expenses. The loan only becomes payable in 3 scenarios – when the homeowner moves, sells their home or passes away in life.
Currently, the market size for the Reverse Mortgage industry in 2022 is $5.5 billion USD and has experienced a 12.5% growth compared to the previous year (IBIS World, 2022). Although Reverse Mortgages are a popular product and service for financial lenders, the industry presents challenges when trying to offer this loan to a consumer. Today we explore these challenges and how lenders can overcome them.
Challenges with Advertising Reverse Mortgage
Transparency is critical when it comes to advertising reverse mortgages. Lenders in the past decade have faced a lot of scrutiny for taking advantage of seniors through deceptive marketing. A classic example would be to promote reverse mortgages as a “cost-free loan”. In fact, this is false as taking out a reverse mortgage may include ongoing costs such as interest, servicing fees, and property charges such as tax and homeowner insurance.
Understand that the Reverse Mortage industry is heavily regulated under laws such as:
– Mortgage Acts & Practices Advertising Rule (MAPs Rule)
– Truth in Lending Act (TILA),
– Consumer Financial Protection Act, and more
When it comes to advertising, reverse mortgage lenders and agents should focus on the MAPs Rule. MAPs Rules in summary is the prohibition of false, misleading or deceptive claims by reverse mortgage brokers when advertising the financial product to the consumer.
Penalty fees for violating the MAPs Rules can vary but they can be well over 6-figures. In 2021, an article reported the Consumer Financial Protection Bureau (CFPB) had fined a reverse mortgage lender $140,000 in penalty fees. In another instance, $790,000 for a group of lenders.
Some additional examples of reverse mortgage violations include but are limited to the following scenarios:
– Misrepresenting borrower’s risks and requirements- Promising financial security and wealth
– Inflating property value assessment to attract new customers
Compliant Reverse Mortgage Lead Generation Services
After reading about advertisement compliance around reverse mortgages, it can be quite the headache and at the same time meeting, a quota for revenue can be quite the headache. Consider working with lead generation agencies that understand the ins and outs of reverse mortgage compliance while providing opt-in leads in real-time through strategic and targetted marketing.. Focus on the most important aspect of your business – engaging and educating your prospects to close sales and generate revenue.
At Prizm Media, we have over 20 years of expertise in compliant lead generation services for reverse mortgage clients and have proudly supported clients to increase their sales with a minimum average of 200%.
If you are a reverse mortgage lender who is ready to grow their revenue and is looking for a partner to navigate the complexities of reverse mortgage advertisement, let’s get in touch and learn more about your business below:
