The trade group representing reverse mortgage lenders is launching a lobbying and public relations campaign today that it hopes will reverse perceptions on and off the Hill that it’s an industry that preys on seniors.
“We’re proud of what we do,” said Peter Bell, president of the National Reverse Mortgage Lenders Association. “We’re highly misunderstood.”
The effort, called “Borrow With Confidence,” comes as the industry and its critics await a study from the Consumer Financial Protection Bureau. The review, which is set for a mid-July release, was mandated by the Dodd-Frank financial reform legislation.
“We believe we have a very useful service,” Bell added. “But because of the lack of understanding, a lot of people who could benefit from it,don’t pursue it.”
Reverse mortgages allow people 62 and older to take out a loan on the equity they own in their home. Unlike a home equity line of credit, homeowners don’t make regular payments and lenders only get repaid when the borrowers sell their home or die.
The campaign touts the industry’s transparency and consumer protection measures and offers a road map to the loans, including potential fees, at the newly revamped ReverseMortage.org.Bell said it highlights that reverse mortgage lenders are increasingly “consumer centric” and that the industry recognized that it needed to take steps to make sure consumers were comfortable with its products.
The price tag for the campaign is $500,000 to $750,000. The NRMLA typically has not been a big spender when it comes to K Street. Last year, it reported $175,000 in federal lobbying expenses. It has farmed out work to Fennell Consulting, David Horne LLC and Rasky Baerlein Strategic Communications.
According to the “Borrow With Confidence” campaign talking points, the group expects the Consumer Financial Protection Bureau’s report to be “generally positive. This government relations campaign is an effort to give context to the report.” The talking points add that if the report includes “exaggerations or misrepresentations, we will aggressively work to correct them.”
The messaging blitz might do little to convince skeptics, who have already raised concerns about reverse mortgage companies’ advertising campaigns, which sometimes feature aging Hollywood figures such as Henry Winkler, best known as Fonzie from “Happy Days.”
“We’ve seen an uptick in the use of celebrity spokesmen ... and that’s troublesome,” said Norma Garcia, senior attorney and manager of financial services programs for Consumers Union.
She said reverse mortgages serve a purpose but should be considered a niche product for people who have no other financial options. The star-studded ads, make the mortgages sound like a product for all seniors, she said.
“It has to be a very serious decision. You need to go in with your eyes open,” Garcia added. “Not if your eyes were sparkling by some celebrity who had you dazzling.”
Seniors lobby AARP supports a Department of Housing and Urban Development program with which the majority of reverse mortgage lenders comply. But in testimony last month before a House Financial Services subcommittee, Lori Trawinski, a senior strategic policy adviser with AARP, said: “Some advertisements may inadvertently create the impression that a reverse mortgage is a federal benefit rather than a financial product.”
Consumers Union and some Members of Congress have called for preloan counseling sessions to take place face-to-face. That’s something Bell says the industry opposes because it would make it more difficult for seniors, who might not live close to a certified counseling center or who might want to include family members who live in other states. The HUD program already requires a counseling session that can be done by phone.
“Reverse mortgages can be a critical tool for seniors to help pay off debt or simply ease the strains of monthly expenses,” said Luis Gutierrez (D-Ill.), ranking member of the Financial Services Subcommittee on Insurance, Housing and Community Opportunity, at the hearing last month. He added that “strong consumer protections are essential to the success of this product.”
Vice President Joe Biden waits to conduct a mock swearing-in ceremony with Sen. Brian Schatz, D-Hawaii, in the Capitol's Old Senate Chamber, December 2, 2014. Schatz was sworn in to serve the remainder of his term since he was appointed to the seat after Sen. Daniel Inouye, D-Hawaii, passed away.