An Analysis of Default Risk in the Home Equity Conversion Mortgage (HECM) Program

2014 ◽  
Author(s):  
Stephanie Moulton ◽  
Donald R. Haurin ◽  
Wei Shi
Keyword(s):  
Default Risk ◽  
Home Equity ◽  
Home Equity Conversion Mortgage

An analysis of default risk in the Home Equity Conversion Mortgage (HECM) program

2015 ◽  
Vol 90 ◽  
pp. 17-34 ◽  
Author(s):  
Stephanie Moulton ◽  
Donald R. Haurin ◽  
Wei Shi
Keyword(s):  
Default Risk ◽  
Home Equity ◽  
Home Equity Conversion Mortgage

scholarly journals International Real Estate Review

2019 ◽  
Vol 22 (2) ◽  
pp. 169-196
Author(s):  
Shan Jiang ◽  
◽  
Chen L. Miller ◽  
Keyword(s):  
Interest Rate ◽  
The United States ◽  
Home Equity ◽  
Macroeconomic Conditions ◽  
Federal Housing ◽  
Home Equity Conversion Mortgage ◽  
Reverse Mortgages ◽  
And Gender ◽  
The Interest Rate ◽  
In The Beginning

Reverse mortgages generally have open maturity dates. The variability of the exact termination time of a mortgage is one of the most important risks faced by the lenders and mortgage insurers. This paper analyzes the termination experience of reverse mortgages in the United States (US). We find that reverse mortgages can be terminated by three distinct events: refinancing, mortality and mobility. Using the Federal Housing Administration (FHA) insured Home Equity Conversion Mortgage (HECM) loan data, we estimate the probability of the termination through individual events. The results show that refinance termination and other termination events are driven by different factors. Refinances are mainly driven by macroeconomic conditions, such as the appreciation of the house value and decline in interest rate, and usually done in the beginning years of the loan origination. Mortality terminations follow closely the US mortality tables, which are governed by age and gender. Mobility termination shares a similar pattern with mortality termination, especially in the later years of the loan life. Meanwhile, the initial cash drawdown pattern has significant but different impacts on each type of termination. By separating refinance termination from the two other types of terminations, we show that refinance termination slows down when the interest rate starts to rise. Without separating refinance termination, HECM investors could over-project the number of future HECM terminations in a rising interest rate scenario and result in loss of funds.

Can “High Costs” Justify Weak Demand for the Home Equity Conversion Mortgage?

2015 ◽  
Vol 28 (8) ◽  
pp. 2364-2398 ◽  
Author(s):  
Thomas Davidoff
Keyword(s):  
Home Equity ◽  
Home Equity Conversion Mortgage

The Home Equity Conversion Mortgage: A Study of Attitudes and Awareness

2009 ◽  
Vol 15 (3) ◽  
pp. 267-280
Author(s):  
Stephanie Rauterkus ◽  
George Munchus ◽  
V.Carlos Slawson Jr.
Keyword(s):  
Home Equity ◽  
Home Equity Conversion Mortgage

Exploring HECM counselors’ fraud awareness and training

2014 ◽  
Vol 21 (4) ◽  
pp. 484-494
Author(s):  
Martin C. Seay ◽  
Andrew T. Carswell ◽  
Melissa Wilmarth ◽  
Lloyd G. Zimmerman
Keyword(s):  
Home Equity ◽  
Reverse Mortgage ◽  
Content Type ◽  
Mortgage Fraud ◽  
Federal Housing ◽  
Home Equity Conversion Mortgage ◽  
Reverse Mortgages ◽  
Fraudulent Activity ◽  
And Training

Purpose – The purpose of this research was to explore the growth of Home Equity Conversion Mortgage (HECM) fraud and the role of housing counselors in its identification and prevention. HECMs are the Federal Housing Administration endorsed version of a reverse mortgage and represent the majority of reverse mortgages on the market. Design/methodology/approach – To investigate HECM counselor’s training, and their ability to detect fraudulent activity, a survey was constructed and distributed nationwide using HUD’s publicly available roster of qualified agencies and counselors. The survey consisted of three main sections agency and respondent information including HECM certification process, typical interactions with clients, and mortgage fraud and HECM fraud. Findings – Responses indicate that HECM counselors have limited awareness of and training in identifying fraudulent activities. Originality/value – The case is made that additional training is needed to raise awareness among counselors so that they might better serve their clients. Given the sizable population that may legitimately need HECMs, it is important to improve awareness and provide training to detect fraudulent schemes and prevent this type of deception from occurring.

scholarly journals Interest Rates and Equity Extraction During the Housing Boom

2016 ◽  
Vol 106 (7) ◽  
pp. 1742-1774 ◽  
Author(s):  
Neil Bhutta ◽  
Benjamin J. Keys
Keyword(s):  
Interest Rates ◽  
Default Risk ◽  
House Price ◽  
Home Equity ◽  
Credit Score ◽  
Housing Boom ◽  
Price Appreciation ◽  
Price Growth ◽  
Mortgage Rates ◽  
New Evidence

Credit record panel data from 1999–2010 indicates that the likelihood of home equity extraction (borrowing, on average, about $40,000 against one's home) peaked in 2003 when mortgage rates reached historic lows. We estimate a 27 percent rise in extraction in response to a 100 basis point rate decline, and that house price growth amplifies this relationship. Differential responses to interest rates and home price appreciation by borrower age and credit score provide new evidence of financial frictions. Finally, equity extractions are associated with higher default risk, consistent with the use of borrowed funds for consumption or illiquid investment. (JEL D14, E43, E52, G12, R31)

Home Equity Conversion Mortgage

2021 ◽  
pp. 2422-2422
Keyword(s):  
Home Equity ◽  
Home Equity Conversion Mortgage
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