How Home Equity Extraction and Reverse Mortgages Affect the Credit Outcomes of Senior Households

2016 ◽  
Author(s):  
Stephanie Moulton
Keyword(s):  
Home Equity ◽  
Reverse Mortgages

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.

scholarly journals Reverse Mortgages Payment Based on Type of House in Kuala Lumpur: Comparing HECM and MPRM

2018 ◽  
Vol 7 (3.15) ◽  
pp. 120
Author(s):  
Suraya Fadilah RAMLI ◽  
Norkhairunnisa M REDZWAN ◽  
Farah Aisyah M HATTA ◽  
Mohd Bokhari S ANUAR ◽  
Nazatul Nadhirah ZULKIFLI
Keyword(s):  
Life Expectancy ◽  
The Elderly ◽  
Kuala Lumpur ◽  
Home Equity ◽  
Home Value ◽  
Reverse Mortgages ◽  
Gender Perspectives ◽  
The Difference ◽  
To Receive ◽  
Loan Amount

A reverse mortgages is a type of home loan for homeowners to receive an amount of money against the value of the house in the form of fixed monthly payments or a line of credit. It enables the elderly homeowners to access their home equity and hold up payment into cash of loan until a certain condition apply whereby the loan amount will not exceed the home value over the life of the loan. This study aims to compare reverse mortgages payment between the Home Equity Conversion Mortgages (HECM) model by United State and Malaysian Proposed Reverse Mortgages (MPRM) loan structure on every type of house in Kuala Lumpur. Both loan structures have slight difference in the loan amount. From gender perspectives, it shows that male received higher amount of payment received compared to female. This situation happens because the difference in the life expectancy where one of the elements of reverse mortgages payment, whereby female are longer live than male due to mortality perils. Thus, between two models, the model that gives more payment towards Malaysia elderly is HECM rather than MPRM.  

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 Asset-rich and cash-poor: which older adults value reverse mortgages?

2021 ◽  
pp. 1-18
Author(s):  
Joelle H. Fong ◽  
Olivia S. Mitchell ◽  
Benedict S. K. Koh
Keyword(s):  
Financial Literacy ◽  
Home Ownership ◽  
Home Equity ◽  
Reverse Mortgage ◽  
Targeted Interventions ◽  
Home Owner ◽  
Interest Level ◽  
Potential Demand ◽  
Reverse Mortgages ◽  
Nationally Representative

Abstract Home equity represents a substantial share of retirement wealth for many older persons, particularly in Asia where national housing policies have encouraged home-ownership. This paper explored the potential for reverse mortgages to help ‘asset-rich and cash-poor’ older Singaporeans unlock their home equity while ageing in place. The empirical analysis was based on a nationally representative survey of home-owners age 50+ in the 2018 Singapore Life Panel (N = 6,258). Our analyses showed that the average older home-owner holds some 60 per cent of total net wealth in housing equity, suggestive of high demand potential for reverse mortgage products. Nevertheless, actual interest in such products was much below potential demand. Only one in four older home-owners indicated interest in commercial reverse mortgages if these were to become available; a larger majority had never heard of the financial product. Interest in reverse mortgages was positively associated with product awareness and self-rated product understanding. This implies that a critical step towards building consumer interest would be to enhance awareness of such products and simplify related contract terms. Having a mortgage, fewer children, financial literacy and preparedness for retirement were also positively associated with interest level. These results have implications for targeted interventions to enhance consumer awareness and spur interest in reverse mortgages, especially in ageing societies where older people have built up substantial equity through the housing market over time.

Reverse Mortgages, Financial Inclusion, and Economic Development: Potential Benefit and Risks

2020 ◽  
Author(s):  
Peter Knaack ◽  
Margaret Miller ◽  
Fiona Stewart
Keyword(s):  
Economic Development ◽  
Potential Benefit ◽  
Financial Inclusion ◽  
Development Potential ◽  
Reverse Mortgages

Home Equity in Retirement

2011 ◽  
Author(s):  
Makoto Nakajima ◽  
Irina Telyukova
Keyword(s):  
Home Equity

Home Equity Lines of Credit and the Unemployment Rate – What Does the Evidence Say?

2012 ◽  
Author(s):  
John Phillip Lajaunie ◽  
Norbert J. Michel ◽  
Shari Lawrence ◽  
Ronnie Fanguy
Keyword(s):  
Unemployment Rate ◽  
Home Equity ◽  
Lines Of Credit
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