June 2015

A closer look at reverse 

mortgage advertisements 

and consumer risks

Office for Older Americans
2 CONSUMER FINANCIAL PROTECTION BUREAU

Table of contents

Table of contents.........................................................................................................2

1. Introduction...........................................................................................................3

1.1 Background on reverse mortgages ...........................................................4

1.2 About the focus group approach .............................................................. 5

1.3 What we heard from consumers .............................................................. 5

1.4 Some consumers did not understand reverse mortgages are loans ........6

1.5 Consumers were confused by incomplete and inaccurate information ..6

1.6 Consumers could not read the “fine print” .............................................. 7

1.7 Consumers misunderstood the role of government ................................8

1.8 Consumers described “lifestyle enhancement” as the primary use for 

reverse mortgage proceeds.......................................................................9

1.9 Conclusion ...............................................................................................11

Appendix A: ...............................................................................................................12

Methodology.................................................................................................... 12

Methodology for environmental scan of reverse mortgage advertising......... 12

Methodology for consumer testing on reverse mortgage advertising............ 13
3 CONSUMER FINANCIAL PROTECTION BUREAU

1. Introduction

Reverse mortgage advertisements, which are marketed to older homeowners, are found across 

many of the major media channels in the United States, including television, radio, print, and 

internet. These advertisements frequently feature celebrity spokespeople. The Consumer 

Financial Protection Bureau (CFPB) reviewed advertisements from a variety of lenders that

appeared in five large urban U.S. markets between March 2013 and March 2014. We also 

convened focus groups and conducted one-on-one interviews with homeowners, age 62 and 

older, in three cities to explore their impressions of the advertisements.1

Among the advertisements we collected, on their face, many contained confusing, incomplete, 

and inaccurate statements regarding borrower requirements, government insurance, and 

borrower risks. Furthermore, after viewing ads in our focus groups, many consumers were 

confused or had misconceptions about important features and terms of reverse mortgage loans. 

For example, some consumers struggled to understand that reverse mortgages are loans that 

must be repaid with interest. Consumers also often misinterpreted the role of the federal 

government in the reverse mortgage market as providing consumer protections that are not 

actually offered. 

Incomplete or inaccurate statements made in advertisements about reverse mortgages can pose 

serious risks to older Americans.2 While advertisements frequently do not describe all the 

 

1 The 59 participating homeowners were age-eligible for a reverse mortgage, i.e., age 62 and older, and reported that they had 50 

percent or greater equity in their respective homes. See Appendix A: Methodology, infra, for additional information.

2 The U.S. Department of Housing and Urban Development (HUD) has taken steps to address misleading claims associated with 

reverse mortgage marketing and sales. HUD’s Mortgagee Letter 2014-10 (ML 2014-10) “reminds mortgagees of the Federal 

Housing Administration’s (FHA) requirements prohibiting misleading or deceptive advertising.” ML 2014-10 further clarifies 

that the prohibition extends to misleading or deceptive descriptions of Home Equity Conversion Mortgages (HECM) 

(commonly referred to as reverse mortgages).
4 CONSUMER FINANCIAL PROTECTION BUREAU

details of the particular product or service being advertised, the incompleteness of reverse 

mortgage ads raises heightened concerns because reverse mortgages are complex loans used by 

older, often financially vulnerable homeowners.3

While reverse mortgages can help some older 

homeowners meet financial needs, they can 

jeopardize retirement security if not used carefully.

Reverse mortgage ads promote the use of home 

equity to supplement retirement income. With 20 

percent of the U.S. population reaching age 65 and 

older by 2030,4 and increasingly likely to consider 

tapping their home equity to supplement their retirement income,5 it is extremely important 

that advertisements do not confuse or mislead prospective reverse mortgage borrowers about 

the terms and potential risks of the loans. 

1.1 Background on reverse mortgages

Reverse mortgages are a type of home loan that allows homeowners, 62 and older, to borrow 

against the accrued equity in their homes, and defer repayment of the loan and interest until the 

borrower dies, moves from, or sells the home. They are very complex financial products with 

costs and risks that can be difficult for even sophisticated consumers to estimate and 

understand.6 While reverse mortgages may be an appropriate option for some older 

 

3 Thomas Davidoff, Reverse Mortgage Demographics and Collateral Performance (February 25, 2014), available at

SSRN: http://ssrn.com/abstract=2399942 or http://dx.doi.org/10.2139/ssrn.2399942.

4 US Census Bureau, The Next Four Decades, The Older Population in the United States: 2010 to 2050 (May 2010),

https://www.census.gov/prod/2010pubs/p25-1138.pdf.

5 See, Snapshot of reverse mortgage complaints Dec. 2011 – 2014 at 5-6 (Feb. 2015), available at

http://files.consumerfinance.gov/f/201502_cfpb_report_snapshot-reverse-mortgage-complaints-december-2011-

2014.pdf. 

6 See, CFPB, Reverse Mortgages, Report to Congress, p.8, 112-114 (June 28, 2012), available at

http://files.consumerfinance.gov/a/assets/documents/201206_cfpb_Reverse_Mortgage_Report.pdf; See also, 

While reverse mortgages can 

help some older homeowners 

meet financial needs, they can 

jeopardize retirement security if 

not used carefully.
5 CONSUMER FINANCIAL PROTECTION BUREAU

homeowners who are seeking to supplement their retirement income, it is important that those 

who obtain these loans understand the loan’s costs, terms, and features. For example, 

homeowners who obtain a reverse mortgage at age 62 may deplete their home equity and run 

out of loan proceeds later in life when they are apt to need supplemental income due to the 

increased likelihood of incurring health and long-term care or moving expenses. 

1.2 About the focus group approach

Focus groups are a valuable way to understand the common opinions, beliefs, and values that 

participants hold, as well as how wide their experiences may range. Focus groups are not 

intended to give us statistically significant data that can be generalized to all consumers. 

However, this method can give us rich qualitative information about what many consumers 

think and feel.

In November and December of 2014, we interviewed 59 homeowners age 62 and older in focus 

groups and one-on-one in Chicago, Los Angeles, and Washington, DC. The consumers we spoke 

with were selected from diverse educational, economic, racial, and ethnic backgrounds. 

Consumers were shown selections of reverse mortgage advertisements and asked about their 

impressions and opinions after viewing or reading each ad. The ads were selected from 97 

unique ads collected and analyzed by the CFPB.7

1.3 What we heard from consumers

Before discussing specific advertisements, we asked consumers if they had ever seen a reverse 

mortgage advertisement. All but one consumer remembered seeing a reverse mortgage ad 

recently. Most of the consumers reported seeing television advertisements frequently, even 

several each day. Many consumers told us they recently saw ads that appeared to be 

“informational” in nature. Some consumers noted that television ads they saw presented 

 

GAO, Reverse Mortgages, Product Complexity and Consumer Protection Issues Underscore Need for Improved 

Controls over Counseling for Borrowers (June 2009), available at http://www.gao.gov/new.items/d09606.pdf.

7 See, Appendix A: Methodology, infra, for additional details.
6 CONSUMER FINANCIAL PROTECTION BUREAU

“neutral” information. One consumer described 

television ads as “more informative than trying to sell 

you something... it seems like he’s just trying to give 

you information.” Most consumers we spoke with 

remembered television ads that featured 

spokespeople portrayed as reliable and trustworthy. 

According to a consumer in one focus group, “When it’s a former Congressman endorsing it, it 

makes it sound like a good idea.”

1.4 Some consumers did not understand 

reverse mortgages are loans

We then showed consumers several television and print advertisements for reverse mortgages 

and asked for their impressions. After viewing ads, some consumers did not understand that 

reverse mortgage proceeds would have to be repaid in the future. Several of these consumers 

believed that reverse mortgages were provided by the government and that therefore repayment 

would not be required. Others thought that because the money they received through a reverse 

mortgage represented home equity they had accrued over time, there was no reason they would 

have to pay it back. 

Some consumers found it difficult to understand that reverse mortgages are loans with fees and 

compounding interest like other loans since most ads either did not include interest rates or 

included them in fine print. After viewing television advertisements that do not highlight 

repayment terms, many consumers expressed surprise when shown a printed ad stating interest 

rates. Some commented that the presence of interest rates made reverse mortgages seem more 

familiar, “like credit cards or mortgages.” Others noted that the interest rate made clear that a 

reverse mortgage would be repaid in the future. 

1.5 Consumers were confused by 

incomplete and inaccurate information

Some reverse mortgage advertisements viewed by consumers used incomplete or inaccurate 

language implying or stating that borrowers cannot lose their homes, or that borrowers make no 

“When it’s a former 

Congressman endorsing it, it 

makes it sound like a good 

idea.”
7 CONSUMER FINANCIAL PROTECTION BUREAU

monthly payments. Some consumers said advertisements claiming that reverse mortgage 

proceeds were “tax free” made them believe they would not have to pay property taxes. 

After viewing ads, many of the participants told the CFPB that they came away with the 

impression that a main benefit of a reverse mortgage was the ability to remain in their homes 

“as long as they want” based on ads that said, “the title and deed remain in their name.” Other 

consumers said they valued the idea that having a reverse mortgage meant they could never lose 

their home. This idea, however, is a misperception. 

While reverse mortgage borrowers retain the title and deed, the loans are secured by a lien, and 

borrowers can, in fact, lose their homes. Reverse mortgage borrowers are responsible for several 

requirements, including paying property taxes, homeowner’s insurance, and property 

maintenance. Failing to meet these requirements can trigger a loan default that results in 

foreclosure.8 Advertisements that create the impression that there is no risk can thus be 

misleading.

1.6 Consumers could not read the “fine 

print”

About half of the advertisements collected by the CFPB included some type of “fine print.” Most 

consumers we spoke with, however, could not read the fine print in printed ads, and none of the 

consumers we talked to could read the fine print that was used in television ads. Ads that 

included information about borrower requirements typically did so in fine print. Fine print 

generally addressed tax and insurance requirements, property maintenance and residency 

requirements, repayment terms, and other important details about the loans.

 

8 We have heard many complaints from consumers facing reverse mortgage defaults and foreclosure. See, Snapshot of reverse 

mortgage complaints December 2011-2014, supra.
8 CONSUMER FINANCIAL PROTECTION BUREAU

1.7 Consumers misunderstood the role of 

government

Ads frequently stated that the loans were “government insured” or a “government-backed 

program.” Several advertisements used text and graphics, such as eagles, government seals, etc., 

that implies that reverse mortgages are affiliated with or offered by the federal government. 

After reviewing reverse mortgage ads, most consumers in our focus groups said the ads implied 

government involvement in reverse mortgages, but opinions varied on the role government 

plays in the loans. Some consumers thought that reverse mortgages are a direct government 

program. Consumers holding this belief pointed out that several of the advertisements 

specifically referred to reverse mortgages as a “program.” 

Consumers pointed to claims in the advertisements 

about “tax free” money as a sign that reverse 

mortgages are a government-run program or benefit. 

Others said the “tax free” money claims meant the 

government encouraged seniors to take a reverse 

mortgage. The marketing of reverse mortgage 

proceeds as “tax free” unquestionably contributed to 

some consumers’ confusion that reverse mortgages 

are not loans. Reverse mortgage proceeds, like all 

loan advances, are not income and therefore not 

taxable.9

Some consumers also pointed to language or images in the advertisements referencing the 

Department of Housing and Urban Development (HUD) or the Federal Housing Authority 

(FHA), which they recognized as federal agencies. To these consumers, the use of federal 

agencies’ names in the advertisements signaled that the government was funding and operating 

a reverse mortgage program for senior citizens. Some consumers said they believed this 

program was directly administered by the federal government (similar to Medicare), while 

others said they thought the government funded reverse mortgages, but used certain approved 

 

9 See, e.g., IRS, http://www.irs.gov/publications/p936/ar02.html.

The marketing of reverse 

mortgage proceeds as “tax free” 

unquestionably contributed to 

some consumers’ confusion that 

reverse mortgages are not 

loans. 
9 CONSUMER FINANCIAL PROTECTION BUREAU

or preferred private companies to distribute the benefits. Other consumers believed the purpose 

of government insurance is to encourage the use of reverse mortgages and almost all said the 

government’s involvement made them feel better or safer about the products. 

For example, one consumer said the advertisements made her more “confident” that “people are 

not going to get taken advantage of” because of the government’s involvement. Another 

consumer said government involvement meant that reverse mortgage companies were more 

likely to look after consumer interests. According to this person, “I feel more comfortable if the 

government is behind it. Otherwise it is just business.” 

Most reverse mortgages are federally insured through Federal Housing Administration (FHA) 

insurance. FHA insurance generally guarantees that borrowers will continue to receive their 

authorized loan funds if their lender experiences financial difficulty or if their loan balance 

exceeds the value of their home. If the loan balance exceeds the value of the home, FHA may 

cover this difference for the lender when the loan is repaid. 10

1.8 Consumers described “lifestyle 

enhancement” as the primary use for 

reverse mortgage proceeds

We asked consumers what they thought the advertisements suggested they do with reverse 

mortgage funds. Consumers said reverse mortgage advertisements promoted living a good 

lifestyle while being young enough to enjoy it, or to travel while they still have their health. 

Several said the advertisements suggested that consumers should get a reverse mortgage while 

they are young and healthy enough to enjoy the money. Images of active, youthful retirees were 

a common feature among ads shown to consumers. Ads typically depicted seniors riding 

bicycles, playing golf, or enjoying similar leisure activities. 

 

10 FHA Reverse Mortgages (HECMs) for Seniors, 

http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/hecmabou.
10 CONSUMER FINANCIAL PROTECTION BUREAU

While advertising is designed to portray products in an attractive light, getting a reverse 

mortgage at age 62 can be very risky since there is an increased likelihood that younger 

borrowers, compared to older borrowers, will outlive their loan funds. Americans live longer 

every year,11 and millions of Americans approaching retirement have little or no retirement 

savings.12 For those with a retirement account, the median balance is only $103,200.13 The 

Employee Benefit Research Institute (EBRI) finds that 44 percent of baby boomers will fall short 

of adequate retirement income for basic expenses and uninsured health care costs.14 While older 

Americans are likely to have less income available to cover day-to-day expenses, health and 

long-term care expenses often increase dramatically.15 Thus, waiting to access home equity can 

help preserve retirement resources.16 Yet the CFPB found in its report to Congress that reverse 

mortgage borrowers are increasingly younger, i.e., borrowers age 62-69 more than doubled 

between 1990 and 2011.17 Tapping home equity early in retirement can jeopardize financial 

security later in life if borrowers outlive their resources or face unexpected expenses. 

 

11 Jiaquan Xu, et. al, NCHC Data Brief, No. 168, Mortality in the United States, 2012 (Oct 2014) at 

http://www.cdc.gov/nchs/data/databriefs/db168.pdf.

12 Fed. Reserve Bd, 2010 Survey of Consumer Finances: Percent of families with retirement accounts, p.441, 

http://www.federalreserve.gov/econresdata/scf/files/BulletinCharts.pdf.

13 Id. at p.442. In addition, an increasing number of Americans are retiring without pensions. See EBRI, Fast Facts, 

#225, Pension Plan Participation (March 28, 2013), http://www.ebri.org/pdf/FF.225.DB-DC.28Mar13.pdf. See also, 

WISER & Society of Actuaries, Impact of Retirement Risk on Women, 2013 Risks and Process ofRetirement Survey 

Report (2013) (finding that women have an increased likelihood of outliving assets), 

https://www.wiserwomen.org/images/imagefiles/2014-risks-process.pdf.

14 See EBRI, Notes, Vol. 33, No.5 (May 2012), http://www.ebri.org/pdf/notespdf/EBRI_Notes_05_May-12.RSPMER.Cvg1.pdf.

15 Health Serv Res. 2004 Jun; 39(3): 627–642, The Lifetime Distribution of Health Care Costs, 

http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1361028/.

16 In an effort to decrease HECM defaults caused by borrowers’ inability to pay real estate taxes and insurance, 

effective March 2, 2015, FHA requires lenders to conduct financial assessments of prospective HECM borrowers 

prior to approving the loan. HUD Mortgagee Letters 2013-27 (September 3, 2013) and 2014-22 (Nov. 10, 2014), 

http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/hecmml.

17 CFPB, Reverse Mortgages, Report to Congress (June 28, 2012) supra at 48-49. available at

http://files.consumerfinance.gov/a/assets/documents/201206_cfpb_Reverse_Mortgage_Report.pdf.
11 CONSUMER FINANCIAL PROTECTION BUREAU

1.9 Conclusion

The results of our focus groups suggest that some reverse mortgage advertisements tend to 

confuse the consumers they seek to reach. After consumers viewed reverse mortgage 

advertisements, they often misunderstood one or more important features of the loans and the 

loans’ potential risks.

Our conversations with consumers leave us concerned about several issues. After viewing ads, 

many consumers we spoke with did not understand that reverse mortgages are loans with fees, 

compounding interest, and repayment terms unless they saw an interest rate explicitly stated in 

the ad. This confusion is understandable where ads tout that reverse mortgages provide “tax 

free” money and are a federal government program.

The CFPB is concerned that advertisements may lead some older homeowners to believe that 

reverse mortgages are a risk-free government program or benefit. While the federal insurance 

for reverse mortgages provides some important protections for borrowers, they are secured 

loans and homeowners can lose their home if they fail to meet the loan terms. 

Similarly, consumers were also confused about ad messages stating that borrowers cannot lose 

their homes. It is important for all potential borrowers to understand the real risk of losing their 

home if they do not fulfill all of the loan’s requirements. We are concerned that these important 

loan requirements are often buried in fine print or not mentioned at all. The consumers we 

spoke with struggled to read fine print in printed ads, and could not read any of the fine print 

used in television ads. 

Finally, lender advertisements undoubtedly 

contribute to consumers not understanding that 

taking out a reverse mortgage in their early 

eligibility years has risks. It’s important for those 

considering a reverse mortgage to understand how 

long their loan proceeds will last them given the 

loan’s interest rate, their living expenses, home 

equity balance, and age. 

Lender advertisements 

undoubtedly contribute to 

consumers not understanding 

that taking out a reverse 

mortgage in their early eligibility 

years has risks.
12 CONSUMER FINANCIAL PROTECTION BUREAU

APPENDIX A:

Methodology

Methodology for environmental scan of 

reverse mortgage advertising

A total of 97 advertisements were included in the final analysis, including:

 15 direct mail materials

 30 online advertisements

 23 paid search advertisements

 7 contextual advertisements

 3 radio advertisements

 6 print advertisements

 43 television advertisements

Each advertisement was analyzed and coded according to:

 Advertisement type (radio, television, etc.)

 Type of product marketed (e.g., fixed rate HECM, HECM for purchase)

 Whether advertisement directs users for more information, and to where it directed the 

consumer

 Whether the advertisement mentioned veterans

 Type of graphics or images used
13 CONSUMER FINANCIAL PROTECTION BUREAU

 Use of fine print / fast speaking

 Use of quotes from spokespeople

 Factual / objective statements about reverse mortgages

 Claims about the benefits of reverse mortgages

 Claims about the costs of reverse mortgages

 Claims about risks of reverse mortgages

 Claims about borrower qualifications

 Claims about borrower responsibilities

 Key messages / subjective statements 

Methodology for consumer testing on 

reverse mortgage advertising

Recruitment of research participants

Focus group and interview participants were recruited by telephone using a structured screening 

instrument developed by the CFPB. All participants met the following criteria:

 Age 62 or older;

 Currently owned a home and had more than 50% equity in their primary residence;

 Had heard of but never had a reverse mortgage, and said they knew “nothing” or “a little” 

about reverse mortgages;18

 

18 Prospective participants were asked, “How much do you know about reverse mortgages?” the three answer choices 

were “nothing,” “a little,” and “a lot.”
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 Had never worked for a financial institution or a non-profit consumer rights group 

related to the banking or financial industries. 

A total of 59 consumers participated in the consumer testing: 48 consumers participated in the 

focus groups, and 11 consumers participated in 1-1 interviews.

Table 1 below, participants in each round and at all locations varied in terms of gender, age, 

race/ethnicity, and education level. 

TABLE 1: CHARACTERISTICS OF FOCUS GROUP AND INTERVIEW PARTICIPANTS19

Washington 

(n=19)

Los Angeles 

(n=20) Chicago (n=20)

All participants 

combined 

(n=59)

Gender

Male 9 (47%) 7 (35%) 7 (35%) 23 (39%)

Female 10 (53%) 13 (65%) 13 (65%) 36 (61%)

Age*

62-70 9 (47%) 15 (75%) 14 (70%) 38 (64%)

71-75 7 (37%) 3 (15%) 4 (20%) 14(24%)

76+ 3 (16%) 2 (10%) 2 (10%) 7 (12%)

Race/Ethnicity

AfricanAmerican 11 (58%) 7 (35%) 10 (50%) 28 (48%)

Caucasian 6 (32%) 10 (50%) 9 (45%) 25 (42%)

Hispanic - 3 (15%) 1 (5%) 4 (7%)

Asian-American 2 (10%) - - 2 (3%)

 

19 Some percentages may not equal 100% due to rounding.
15 CONSUMER FINANCIAL PROTECTION BUREAU

Education 

Level

High School or 

Less 4 (21%) 6 (30%) 4 (20%) 14 (24%)

Some College 12 (63%) 7 (35%) 13 (65%) 32 (54%)

College 

Graduate 3 (16%) 7 (35%) 3 (15%) 13 (22%)

Structure of Focus Groups and Interviews

Focus groups lasted approximately 90 minutes. Interviews lasted approximately 60 minutes.

Researchers conducted 6 focus groups and 11 interviews at research facilities in three locations:

 Rockville, MD on November 12 and 13, 2014 (2 focus groups and 3 interviews);

 Los Angeles, CA on November 19 and 20, 2014 (2 focus groups and 4 interviews); and

 Chicago, IL on December 10 and 11, 2014 (2 focus groups and 4 interviews).