Explaining why, right or wrong, (Italian) households do not like Reverse Mortgages

Size: px
Start display at page:

Download "Explaining why, right or wrong, (Italian) households do not like Reverse Mortgages"

Transcription

1 Explaining why, right or wrong, (Italian) households do not like Reverse Mortgages Elsa Fornero Mariacristina Rossi Maria Cesira Urzì Brancati Save PHF Conference on Demographic Trends, Saving and Retirement Security: Stylized Facts and Behavioral Responses Munich, July 2012 University of Turin, CeRP-Collegio Carlo Alberto, and Netspar, University of Turin and CeRP-Collegio Carlo Alberto University of Tor Vergata and CeRP-Collegio Carlo Alberto.

2 What is the Reverse Mortgage? It is a loan (specifically designed for the elderly) against the home value, such that the value of the loan cannot exceed the present value of the house at predicted death An illiquid asset becomes a source of liquidity, mainly for consumption purposes Accumulating wealth, if not translated into consumption, should not affect utility Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

3 Why we need the Reverse Mortgage Because of the demographic trends, the saving behaviour of the elderly and their portfolio holdings are central to the policy debate Dependency ratios will rise dramatically in the next 30 years Population ageing puts strain on the public purse Many public retirement systems are very generous: replacement rates often come to exceed 70 per cent Reverse Mortgages can: Alleviate the burden of an ageing population on public budgets Increase income security in old age and allow better consumption smoothing Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

4 Theoretical framework: Modigliani and Bruemberg s (1954) lifecycle hypothesis Life is divided into a productive period and unproductive ones (childhood and in old age) The model highlights the role of savings for retirement and predicts a hump shaped wealth profile, and specifically dissaving by the elderly Empirical analyses have found that the rate of wealth decumulation is slower than the LCH model predicts (Venti and Wise, 1987; Ando et al., 1993; Chiuri and Jappelli, 2007; Angelini and Laferrère, 2010). Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

5 Possible motives for the low propensity to dissave Precautionary savings or buffer stock savings behaviour (Carroll et al. 1992) can emerge when consumers facing income uncertainty are both impatient and prudent target wealth stock Bequest motives: more wealth is held, and wealth trajectory is flatter. However, some empirical studies have found no bequest motive (Hurd 1986); Portfolio composition of the elderly, i.e. heavy presence of illiquid assets, such as housing (Mitchell and Piggott 2003) Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

6 Potential for Reverse Mortgages in Italy Italy has very high homeownership rates (around 78% among the elderly) Italian households hold most of their wealth locked up in housing Evolution of homeownership Housing Wealth over Net Wealth 74% Mean Median 72% 70% 68% 66% 64% 62% % 80% 75% 70% 65% 60% 55% 50% Source: Bank of Italy s Survey on Household Income and Wealth (SHIW), Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

7 Reverse Mortgage: product s main features RMs require no obligation of repayment until the individual (or spouse) dies, moves out, or sells the house RMs can be taken out as: lump sum through fixed monthly payments (tenure plan or life annuity) or as a line of credit the borrower can access any time. The amount of the loan depends on the age of the borrower (the older the borrower, the larger the loan) the value of the property (the more valuable the house, the larger the loan) the interest rate (lower interest rates means more money is available to the borrower). Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

8 Reverse Mortgage: historical overview (US) RMs were introduced by US Congress in 1987 as Home Equity Conversion Mortgages (HECMs) to facilitate the financing of consumption in old age (Rodda et al. 2000). From their inception in 1989 to the end of 2007, out of tens of millions of eligible homeowners, less than 400,000 loans were originated through the HECM program (Caplin, 2001) Trend has changed in recent years: In 2007, over 100,000 RM loans were originated through the HECM program (Shan 2009) RMs are often complex In order to help households make well-informed financial decisions, in 1989 the US law established that borrowers obtain financial counselling before they can apply for a home equity conversion mortgage (HECM) loan. Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

9 Reverse Mortgage: historical overview (Europe) EU: RM market is thin and unevenly developed across countries with regards to volumes, lending methods, and range of products. Common criteria: minimum age requirements and minimum property value; protections for borrowers (no negative equity guarantee), obligations to carry out repairs and maintenance. 13 Member States had some form of RMs or Equity Release Scheme (ERS), compared to 14 with none UK, Ireland and Spain, have developed more significant markets In the Netherlands, Denmark and Finland, providers report that overdraft facilities and credit lines are the preferred forms In Germany, Italy, France, Belgium and Sweden, RMs are subject to wideranging debate, but have not yet been well developed. Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

10 Reverse Mortgage: historical overview (Italy) In Italy, RMs were formally introduced in 2005 under the name prestito vitalizio ipotecario, available to the over 65 whose housing equity exceeds 70,000. A few credit institutions offer RMs: Deutsche Bank s PatrimonioCasa and Euvis s Prestito Vitalizio (available only as a lump sum); Banca Monte dei Paschi di Siena: PrestiSenior for the over 70 as either a lump sum or an annuity for a maximum of 20 years. The product is new, complex and not well known. Can we expect to find high levels of interest among the population? Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

11 RMs literature: who should be more interested Some researchers emphasize a significant potential demand: Case and Schnare (1994): interest in RMs should be strong among the house-rich, cash-poor elderly homeowners; Mayer and Simons (1993): elderly could use them to pay off preexisting debts. Ong (2008): RMs have the capacity to lift out of poverty 95% of income-poor elderly Australians especially women aged 80 or over. Others see a limited scope for RMs: Venti and Wise (1987): low-income elderly generally have little housing equity available. Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

12 RMs literature: (some) reasons for the market s underdevelopment Transactions costs, high insurance fees, and uncertainty about future needs and preferences Caplin (2001), Davidoff and Welke, (2005) Debt aversion among the elderly Gibler and Rabianski (1993), Caplin, (2000) households may prefer a lower level of consumption in a debt-free house to a higher level in a debt-ridden one Financial illiteracy, lack of awareness of the product Gibler and Rabianski (1993), Leviton, (2002), Fornero and Monticone, (2011), Reed (2009. Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

13 Empirical analysis: The UniCredit Survey (UCS) UCS 2007 targets the bank s clients aged with at least 10,000 in deposits. The survey elicits respondents opinions towards risk, investments and savings, and tests their level of financial education. Additional data have been extracted by Bank of Italy s Survey of Household Income and Wealth (SHIW) 2006 to compare the characteristics of our respondents with a representative sample of all Italian population. Why UCS and not SHIW? Only dataset, to our knowledge explicitly asking a specific question on RM Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

14 Summary Statistics: UCS vs. SHIW UCS SHIW Average age of household head Female household heads 22.0% 37.0% Elderly household heads 29.6% 36.3% Higher education (degree or more) 24.4% 8.9% Pensioners 32.3% 36.1% Self-employed 29.4% 10.2% Homeowners 90.3% 71.2% Average household income 71,325 31,893 Average housing equity 387, ,418 # of observations 1,686 7,768 Source: Unicredit 2007 Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

15 Expression of Interest in RMs In order to have financial resources / income in old age, how interested would you be in a RM? (Respondents assign a value between 1 and 5) Interest in RMs (% of total) Under 65 Over 65 Male Female Male Female All Very interested % Quite Interested % Somewhat interested % Barely interested % Not interested % # of observations ,241 Source: Unicredit 2007 Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

16 Distribution of Interest in Reverse Mortgage by Age, Gender Under 65, Male Household Head Under 65, Female Household Head Over 65, Male Household Head Over 65, Female Household Head Percent Not Interested Barely Interested Quite Interested Very Interested Not Interested Barely Interested Quite Interested Very Interested Interested in Reverse Mortgage Graphs by Age Groups (>= 65) and Gender of Household Head Source: Unicredit 2007 Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

17 Distribution of Interest in Reverse Mortgage by Gender, Status Not widower, Male Not widow, Female Percent Widower, Male Widow, Female 0 Not interested Barely interested Quite interested Very interested Not interested Barely interested Interested in Reverse Mortgage Quite interested Very interested Graphs by household head's marital status (widow) and gender Source: Unicredit 2007 Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

18 Interest in Reverse Mortgages by housing quintiles I Quintile <180,000 II Quintile 180, ,000 III Quintile 250, ,000 Percent IV Quintile 350, ,000 V Quintile >500,000 Not interested Barely Interested Quite Interested Very interested Not interested Barely interested Quite interested Very interested Not interested Barely interested Quite interested Very interested Graphs by housing value quintiles Source: Unicredit 2007 Interested in Reverse Mortgage Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

19 Financial Literacy questions An indicator of financial literacy has been build by using the following questions: Inflation: suppose a bank account yields a 2% interest per annum (after expenses and taxes). If actual inflation is 2% per year (assuming you did not access your account) after two years, the amount deposited can buy you (select one answer): More than it can buy today; less than it can buy today; the same as it can buy today (correct); don t know. Interest rates: imagine having a tip and knowing for certain that in six months interest rates will rise. Do you think it is appropriate to purchase fixed rate bonds today? Yes; no (correct); don t know. Diversification: In relation to investments, people often talk about diversification. In your opinion, to have proper diversification of one s investments means (select one response): To have in one s investment portfolio bonds and shares; to not invest for too long in the same financial product; to invest in the greatest possible number of financial products; to invest simultaneously in multiple financial products to limit exposure to the risks associated with individual products (correct); to not invest in high-risk instruments; don t know Source: Unicredit 2007 Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

20 Financial Literacy Answers Under 65 Over 65 (% of correct answers) Male Female Male Female All No correct answers correct answer correct answers correct answers # of observations ,686 Male, less than 3 correct Male, 3 correct Percent Female, less than 3 correct Female, 3 correct 0 Source: Unicredit 2007 Not interested Barely interested Graphs by Female and finlit_3d Quite interested Very interested Not interested Interested in Reverse Mortgage Barely interested Quite interested Very interested Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

21 Risk aversion A simple indicator for risk aversion has been build taking advantage of one of the riskrelated questions in the UCS, specifically: Imagine you are in a room from which you can exit through two doors: if you choose the correct one, you win 10,000, if you choose the wrong one, you win nothing. You may also choose a backdoor and withdraw a fixed amount. (The interviewer offers progressively increasing amounts of money) Respondents were awarded one point for every extra question before they chose the fixed amount, the result was then reversed and divided by 10 in order to get a index of risk-tolerance ranging between 0.1 and 1 From 0.6 to 1 the respondent can be defined as risk-averse; 0.5 corresponds to risk neutrality 1 From 0.1 to 0.4 the respondent could be defined as risk loving RA i 10 j 1 ra 10 i j Source: Unicredit 2007 Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

22 Interest in RMs by Risk-aversion and Gender Under 65 Over 65 Male Female Male Female All Risk averse 52.2% 50.8% 58.6% 61.9% 54.0% Risk neutral 16.4% 15.4% 15.2% 18.1% 16.1% Risk loving 31.4% 34.2% 26.1% 20.0% 29.9% Male, Risk averse Male, Risk neutral Male, Risk lover Percent Female, Risk averse Female, Risk neutral Female, Risk lover 0 Not interested Barely interested Source: Unicredit 2007 Quite interested Very interested Not interested Barely interested Quite interested Very interested Interested in Reverse Mortgage Not interested Barely interested Quite interested Very interested Graphs by Female and Risk aversion (gain) Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

23 Interest in RMs by Willingness to sell the house UCS question: should you want/need to have extra income for the future, would you sell this house? A binary variable takes the value of 1 if respondent chooses either quite or very likely (19.9% are willing to sell their home) Male, No Male, Yes Percent Female, No Female, Yes 0 Not interested Barely interested Quite interested Very interested Not interested Barely interested Quite interested Very interested Source: Unicredit 2007 Interested in Reverse Mortgage Graphs by gender and Willing to sell the house (dummy) Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

24 Interest in RMs by Perception of Housing Risk UCS question: on a scale from 1 to 5, how risky do you think investing in housing is? A binary variable takes the value of 1 if respondent chooses either quite or very risky (9.9% see housing as risky) Male, Not Risky Male, Risky Female, Not Risky Female, Risky 0 Percent Not interested Barely interested Quite interested Very interested Not interested Interest in Reverse Mortgage Barely interested Quite interested Very interested Source: Unicredit 2007 Graphs by Female and Properties' perceived risk Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

25 Interest in RMs by Retirement Expectations UCS question: How worried are you about your standard of living in old age /after you retire? A binary variable takes the value of 1 if respondent chooses either quite worried or very worried (38.2% are worried) Male, Not Worried Male, Worried Percent Female, Not Worried Female, Worried 0 Source: Unicredit 2007 Not interested Barely interested Quite interested Very interested Not interested Barely interested Interest in Reverse Mortgage Quite interested Very interested Graphs by Female and Worry about retirement Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

26 Interest in RMs by Debt Averse/Not Debt Averse UCS question: What is your opinion about borrowing? A binary variable takes the value of 1 if respondent chooses the option I d rather not have debts (70.6% averse to debt) Male, Not averse to debt Male, Averse to debt Female, Not averse to debt Female, Averse to debt 0 Percent Not interested Barely interested Quite interested Very interested Not interested Interest in Reverse Mortgage Barely interested Quite interested Very interested Source: Unicredit 2007 Graphs by Female and debt aversion Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

27 Estimating the monetary value of a Reverse Mortgage Payments to borrowers are calculated according to: the principal limit factor (PLF) Italy ranges from roughly 20% of the housing equity for 65-year-olds to roughly 50% for those over 90 the age (or life expectancy) of the (youngest, in a couple) borrower is set at 100 minus current age, multiplied by 12 (Rodda et al. 2000) the mortgage interest rate 6.8% per annum (0.55% per month), an average of DB (7.3%), MPS (7.9%), and the HUD HECM (5.5%) RM rates the adjusted property value. calculated from our sample homeowners. Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

28 Estimating the monetary value of a Reverse Mortgage (cont d) The monthly payment to the borrower under the tenure plan can be computed as an annuity, using the following formula¹ A i = HD r (1+r) e i+1 (1+r) where A i = monthly payment to (household) borrower i HD i = housing value at predicted death r = monthly interest rate (approximated). e i = life expectancy (in months) ¹ Based on Ong (2008) and Rodda et al. (2000) Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

29 Application of the sinking fund formula to the UCS Average housing equity Maximum loan advance RM annuity Average household Income % gain in income from RM All 376,989 94,247 7,661 71,325 11% Housing equity quintile I quintile 141,792 35,448 2,881 54,211 5% II quintile 222,309 55,577 4,517 63,128 7% III quintile 310,992 77,748 6,320 77,568 8% IV quintile 445, ,285 9,046 77,622 12% V quintile 905, ,304 18,395 77,409 24% Age Category years 416,875 93,797 7,624 80,413 9% years 429, ,550 11,343 61,434 18% years 339, ,313 10,348 42,738 24% 80 years or over 433, ,333 14,089 44,180 32% Household Income Unit Couple 387,358 96,840 8,306 76,223 11% Single male 342,116 85,529 7,336 66,633 11% Single female 358,432 89,608 7,686 52,116 15% Geographical Area North 356,826 89,206 7,652 66,482 12% Centre 421, ,455 9,045 76,674 12% South 381,476 95,369 8,180 76,181 11% Source: Unicredit 2007 Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

30 Empirical Strategy Ordered probit The respondent s interest in RMs is measured on an ordinal scale, and the levels of interest are represented by a discrete variable that takes values y i = 1 if the respondent is not interested, y i = 2 if the respondent is barely interested, etc. We assume the discrete values are based on an underlying continuous and latent variable y* which is a linear function of all the explanatory variables: y i * = β x +ε for I = 1, 2,, N Let μ 1 < μ 2 < μ 3 < μ 4 be the unknown thresholds parameters or cutoff points. Then we observe that y i = 1 if y i* μ 1, y i = 2 if μ 1 <y i * μ 2 The threshold parameters are estimated together with the β values to help match the probabilities associated with each discrete outcome. Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

31 Empirical Strategy cont d The probabilities of y i being classified as not interested, barely interested respectively, are given by Prob(y i = 1) = Prob(β x + ε μ 1 ) Prob(y i = 2) = Prob(μ 1 < β x + ε μ 2 ) Prob(y i = 3) = Prob(μ 2 < β x + ε μ 3 ) Prob(y i = 4) = Prob(μ 3 < β x + ε μ 4 ) Prob(y i = 5) = Prob(β x + ε > μ 4 ) Both the cutoff points and β coefficients can be estimated as an ordered probit model Since the β values do not reflect marginal changes in probability, we calculate the marginal effects (at the mean value) to interpret results more clearly. Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

32 Estimation results main variables # obs: 1,071 Marginal effects on probabilities Pseudo R 2 : y = 1 y = 2 y = 3 y = 4 y = 5 Coefficient (no) (barely) (somewhat) (quite) (very) Over * * * * (0.19) (0.07) (0.03) (0.02) (0.01) (0.00) Log of property value * * * * (0.07) (0.03) (0.01) (0.01) (0.01) (0.00) City size (30,000 to 100,000) 0.317*** *** 0.037*** 0.049** 0.031** 0.006* (0.12) (0.05) (0.01) (0.02) (0.01) (0.00) Resident in the North (d) 0.230** ** 0.029** 0.035** 0.021** 0.004** (0.09) (0.04) (0.01) (0.01) (0.01) (0.00) Financial literacy (0 to 3 ) * 0.031* * * * (0.04) (0.02) (0.01) (0.01) (0.00) (0.00) Risk aversion (index) 0.298** ** 0.038** 0.045** 0.027** 0.005* (0.13) (0.05) (0.02) (0.02) (0.01) (0.00) Real estate perceived risk (d) 0.395*** *** 0.039*** 0.062*** 0.045*** 0.009* (0.12) (0.05) (0.01) (0.02) (0.02) (0.00) Willingness to sell the house (d) 0.702*** *** 0.061*** 0.109*** 0.085*** 0.020*** (0.09) (0.03) (0.01) (0.02) (0.02) (0.01) Debt aversion (d) *** 0.147*** *** *** *** *** (0.08) (0.03) (0.01) (0.01) (0.01) (0.00) Negative retirement exp. (d) 0.240*** *** 0.029*** 0.037*** 0.022*** 0.004** (0.08) (0.03) (0.01) (0.01) (0.01) (0.00) The superscripts ***, **, and * indicate the 1%, 5%, and 10% levels of statistical significance, respectively Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

33 Estimation results (cont d) Predictors of higher interest: medium/small city size (between 30,000 and 100,000 inhabitants) being resident in the north a higher level of risk aversion housing perceived as risky negative post retirement expectations willingness to sell the house Predictors of lower interest: higher housing equity (low significance level) debt aversion financial literacy (not very robust) Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

34 Discussion RMs as a way to achieve consumption smoothing: 20% of sample households is willing to access their home equity and among them interest in RMs is comparatively higher Is the product an alternative to downsizing? RMs as a way to increase income security in old age: homeowners concerned with their standard of living after retirement express a higher level of interest what is their poverty alleviating potential? RMs as a way to ease the burden of ageing on public spending: given the foreseeable cuts and pension reforms, will RMs market grow? (as it did in the US) how RMs compare with similar products i.e. the sale of the bare ownership / naked property? Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

35 Conclusions Italian households hold most of their wealth locked up in illiquid assets The aim of accumulating wealth, both real and financial, is (should be?) to deal with periods in life in which income is low, such us retirement The elderly are reluctant to decumulate their wealth, and therefore they are not effectively using it Since real estate wealth is illiquid, households tend to consider it as non-wealth The introduction and spreading of financial products such as the Reverse Mortgage can solve this problem Fornero Rossi Urzí, Università Torino and CeRP CCA, Save PHF conference July

36 Thank you

Explaining why, right or wrong, (Italian) households do not like reverse mortgages

Explaining why, right or wrong, (Italian) households do not like reverse mortgages Explaining why, right or wrong, (Italian) households do not like reverse mortgages Elsa Fornero Mariacristina Rossi Maria Cesira Urzì Brancati Abstract According to economic theory, elderly homeowners

More information

Elso Fornero, Maria Cristina Rossi and Maria Cesira Urzì Brancati Explaining Why, Right or Wrong, (Italian) Households Do Not Like Reverse Mortgages

Elso Fornero, Maria Cristina Rossi and Maria Cesira Urzì Brancati Explaining Why, Right or Wrong, (Italian) Households Do Not Like Reverse Mortgages Elso Fornero, Maria Cristina Rossi and Maria Cesira Urzì Brancati Explaining Why, Right or Wrong, (Italian) Households Do Not Like Reverse Mortgages DP 09/2011-086 Explaining why, right or wrong, (Italian)

More information

Life Insurance Demand. Evidence from Italian households with a gender twist

Life Insurance Demand. Evidence from Italian households with a gender twist Life Insurance Demand. Evidence from Italian households with a gender twist Elisa Luciano Federico Petri Mariacristina Rossi University of Turin and CeRP-CCA CINTIA International Conference, Turin, Italy

More information

Life Insurance Demand and Financial Inclusion Evidence from Italian households

Life Insurance Demand and Financial Inclusion Evidence from Italian households Life Insurance Demand and Financial Inclusion Evidence from Italian households Elisa Luciano* Joint work with Mariacristina Rossi *University of Turin, CeRP-CCA and Netspar Summer School on Gender, Economics

More information

The psychology and economics of reverse mortgage attitudes: evidence

The psychology and economics of reverse mortgage attitudes: evidence 1 The psychology and economics of reverse mortgage attitudes: evidence from the Netherlands Henriette Prast*, Mariacristina Rossi**, Rik Dillingh ***, Cesira Urzì Brancati** *University of Tilburg and

More information

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

An Analysis of Default Risk in the Home Equity Conversion Mortgage (HECM) Program An Analysis of Default Risk in the Home Equity Conversion Mortgage (HECM) Program Stephanie Moulton, John Glenn School of Public Affairs, The Ohio State University Donald Haurin, Department of Economics,

More information

EXPLAINING WHY, RIGHT OR WRONG, (ITALIAN) HOUSEHOLDS DO NOT LIKE REVERSE MORTGAGES

EXPLAINING WHY, RIGHT OR WRONG, (ITALIAN) HOUSEHOLDS DO NOT LIKE REVERSE MORTGAGES Working Paper 123/11 EXPLAINING WHY, RIGHT OR WRONG, (ITALIAN) HOUSEHOLDS DO NOT LIKE REVERSE MORTGAGES Elsa Fornero Maria Cristina Rossi Maria Cesira Urzì Brancati Explaining why, right or wrong, (Italian)

More information

The psychology and economics of reverse mortgage attitudes: evidence from the Netherlands

The psychology and economics of reverse mortgage attitudes: evidence from the Netherlands The psychology and economics of reverse mortgage attitudes: evidence from the Netherlands Rik Dillingh *, Henriette Prast**, Mariacristina Rossi***, Cesira Urzì Brancati*** *University of Tilburg, Ministry

More information

Australia s retirement provision: the decumulation challenge. John Piggott Director CEPAR

Australia s retirement provision: the decumulation challenge. John Piggott Director CEPAR Australia s retirement provision: the decumulation challenge John Piggott Director CEPAR Outline of talk Introduction to Australian retirement policy Issues in Longevity Current retirement products in

More information

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

An Analysis of Default Risk in the Home Equity Conversion Mortgage (HECM) Program An Analysis of Default Risk in the Home Equity Conversion Mortgage (HECM) Program Stephanie Moulton, John Glenn School of Public Affairs, The Ohio State University Donald Haurin, Department of Economics,

More information

Reverse Mortgages: What Homeowners (Don t) Know and How it Matters

Reverse Mortgages: What Homeowners (Don t) Know and How it Matters Reverse Mortgages: What Homeowners (Don t) Know and How it Matters Thomas Davidoff a, Patrick Gerhard b,c, Thomas Post b,c,* a Sauder School of Business, University of British Columbia, b Maastricht University,

More information

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

An Analysis of Default Risk in the Home Equity Conversion Mortgage (HECM) Program An Analysis of Default Risk in the Home Equity Conversion Mortgage () Program Stephanie Moulton, John Glenn School of Public Affairs, The Ohio State University Donald Haurin, Department of Economics, The

More information

Reverse Mortgage: Making assets a tool against poverty *

Reverse Mortgage: Making assets a tool against poverty * Reverse Mortgage: Making assets a tool against poverty * Flavia Coda Moscarola 1 Mariacristina Rossi 2 Dario Sansone 3 March 2013 Preliminary version Please do not quote Abstract Asset accumulation by

More information

The New Tool For Retirement Income Planning. Presented by: Becky Bell, Regional VP, Mortgage Banking

The New Tool For Retirement Income Planning. Presented by: Becky Bell, Regional VP, Mortgage Banking The New Tool For Retirement Income Planning Presented by: Becky Bell, Regional VP, Mortgage Banking Why Consider a Reverse Mortgage? Allows Clients to Take a Dormant Asset (Home Equity) and Put it to Work

More information

4 Distribution of Income, Earnings and Wealth

4 Distribution of Income, Earnings and Wealth 4 Distribution of Income, Earnings and Wealth Indicator 4.1 Indicator 4.2a Indicator 4.2b Indicator 4.3a Indicator 4.3b Indicator 4.4 Indicator 4.5a Indicator 4.5b Indicator 4.6 Indicator 4.7 Income per

More information

Who Gets a Reverse Mortgage? Identifying Household Level Determinants of U.S. Reverse Mortgage Choices

Who Gets a Reverse Mortgage? Identifying Household Level Determinants of U.S. Reverse Mortgage Choices Who Gets a Reverse Mortgage? Identifying Household Level Determinants of U.S. Reverse Mortgage Choices Presentation by Donald Haurin Department of Economics, Ohio State University Co-authors: Stephanie

More information

Working Paper 135/13 THE PSYCHOLOGY AND ECONOMICS OF REVERSE MORTGAGE ATTITUDES: EVIDENCE FROM THE NETHERLANDS

Working Paper 135/13 THE PSYCHOLOGY AND ECONOMICS OF REVERSE MORTGAGE ATTITUDES: EVIDENCE FROM THE NETHERLANDS Working Paper 135/13 THE PSYCHOLOGY AND ECONOMICS OF REVERSE MORTGAGE ATTITUDES: EVIDENCE FROM THE NETHERLANDS Rik Dillingh Henriette Prast Mariacristina Rossi Cesira Urzì Brancati The psychology and economics

More information

BS2551 Money Banking and Finance. Institutional Investors

BS2551 Money Banking and Finance. Institutional Investors BS2551 Money Banking and Finance Institutional Investors Institutional investors pension funds, mutual funds and life insurance companies are the main players in securities markets in both the USA and

More information

Reverse Mortgage Choices: A Theoretical and Empirical Analysis of the Borrowing Decisions of Elderly Homeowners

Reverse Mortgage Choices: A Theoretical and Empirical Analysis of the Borrowing Decisions of Elderly Homeowners Journal of Housing Research Volume 10, Issue 2 189 Fannie Mae Foundation 1999. All Rights Reserved. Reverse Mortgage Choices: A Theoretical and Empirical Analysis of the Borrowing Decisions of Elderly

More information

21 Reverse mortgage: a tool to reduce old age poverty without sacrificing social inclusion

21 Reverse mortgage: a tool to reduce old age poverty without sacrificing social inclusion Flavia Coda Moscarola, Anna Cristina d Addio, Elsa Fornero and Mariacristina Rossi 21 Reverse mortgage: a tool to reduce old age poverty without sacrificing social inclusion Homeownership is widespread,

More information

Household Finance and Consumption Survey

Household Finance and Consumption Survey An Phríomh-Oifig Staidrimh Central Statistics Office Household Finance and Consumption Survey 2013 Published by the Stationery Office, Dublin, Ireland. Available from: Central Statistics Office, Information

More information

Reverse Mortgages: What Homeowners (Don t) Know and How it Matters

Reverse Mortgages: What Homeowners (Don t) Know and How it Matters Reverse Mortgages: What Homeowners (Don t) Know and How it Matters Thomas Davidoff a, Patrick Gerhard b,c, Thomas Post b,c,* a Sauder School of Business, University of British Columbia, b Maastricht University,

More information

USE YOUR HOME TO STAY AT HOME

USE YOUR HOME TO STAY AT HOME USE YOUR HOME TO STAY AT HOME Role of Reverse Mortgages to Pay for Long-Term Care at Home Press Briefing National Council on the Aging January 26, 2005 Contact: Scott Parkin, NCOA VP Communications 202-479-6975

More information

Reverse Mortgages and the Economic Status of Elderly Women 1

Reverse Mortgages and the Economic Status of Elderly Women 1 Copyright 7996 by The Cerontological Society of America The Cerontologist Vol. 36, No. 3, 400-405 Data from the 1990 Census of Population and Housing are used to estimate the potential demand for reverse

More information

What determines annuity demand at retirement?

What determines annuity demand at retirement? What determines annuity demand at retirement? Giuseppe Cappelletti Giovanni Guazzarotti Pietro Tommasino Banca d Italia International Pension Workshop - Netspar 2011 Cappelletti, Guazzarotti, Tommasino

More information

2005 National LTCi Producer Summit

2005 National LTCi Producer Summit 2005 National LTCi Producer Summit As Reverse Mortgage Popularity Soars, How Can You Tap the Growing Market? Adrian Prieto, Key Account Manager Financial Freedom Senior Funding Corp. Financial Freedom

More information

PERCEPTION OF SENIOR CITIZEN RESPONDENTS AS TO REVERSE MORTGAGE SCHEME

PERCEPTION OF SENIOR CITIZEN RESPONDENTS AS TO REVERSE MORTGAGE SCHEME CHAPTER- V PERCEPTION OF SENIOR CITIZEN RESPONDENTS AS TO REVERSE MORTGAGE SCHEME 5.1 Introduction The present study intended to investigate the senior citizen s retirement planning and their perception

More information

The 5 Facts You Need to Know about FHA-insured Reverse Mortgages aka HECMs

The 5 Facts You Need to Know about FHA-insured Reverse Mortgages aka HECMs The 5 Facts You Need to Know about FHA-insured Reverse Mortgages aka HECMs Paul Pomeroy 503 421 0798 Email: paul.pomero@reversefunding.com 1 A HECM by any other name 99% of Reverse Mortgages are... Home

More information

Can Equity Release Mechanisms fund long term care costs? Desmond Le Grys

Can Equity Release Mechanisms fund long term care costs? Desmond Le Grys 2001 Health Care Conference Can Equity Release Mechanisms fund long term care costs? Desmond Le Grys 1 Introduction 1.1 Scope This paper attempts to explain why equity release products have rarely been

More information

Reverse Mortgages A Source of Funds for Retirement?

Reverse Mortgages A Source of Funds for Retirement? Reverse Mortgages A Source of Funds for Retirement? Many people make it a goal of their financial lives to invest in a home. It is a great accomplishment when that last mortgage payment is made. Can a

More information

PRESENTATION TO COME Pension Freedom Day in the U.K.: Examining Pension Decisions

PRESENTATION TO COME Pension Freedom Day in the U.K.: Examining Pension Decisions PRESENTATION TO COME Pension Freedom Day in the U.K.: Examining Pension Decisions Cäzilia Loibl, Leeds University Business School & Human Sciences, The Ohio State University Current Research Projects Designing

More information

Reverse Mortgage Information Guide

Reverse Mortgage Information Guide Reverse Mortgage Information Guide Table of Contents FHA Reverse Mortgages 3 Common Misconceptions about Reverse Mortgages 4 How the Program Works 4 Benefits of a HECM loan 4 HECM vs. Traditional Mortgage

More information

Operations & Technology

Operations & Technology Operations & Technology Using Reverse Mortgages to Fund Longevity Michael Banner National Education Director Security One Lending American C.E. Institute 1 Who Is Eligible? Clients over age 62 Principal

More information

The House and Retirement Wealth Decumulation

The House and Retirement Wealth Decumulation The House and Retirement Wealth Decumulation Anthony Webb Ph.D Center for Retirement Research at Boston College Conference on the Optimal Retirement Withdrawal Strategy NYU Stern School of Business, New

More information

Home Equity Conversion Mortgage Overview of HECM Insurance Model and Risk Management in the Recession

Home Equity Conversion Mortgage Overview of HECM Insurance Model and Risk Management in the Recession Home Equity Conversion Mortgage Overview of HECM Insurance Model and Risk Management in the Recession Presented by Edward Szymanoski US Department of Housing and Urban Development Office of Policy Development

More information

Reverse Mortgage Loans: A Quantitative Analysis

Reverse Mortgage Loans: A Quantitative Analysis Reverse Mortgage Loans: A Quantitative Analysis Makoto Nakajima 1 Irina A. Telyukova 2 1 Federal Reserve Bank of Philadelphia 2 University of California, San Diego July 8, 2011 In Progress SED 2011, Ghent

More information

For many Australians, their main form of savings over their lifetime is their home. Directing savings towards a home provides two benefits:-

For many Australians, their main form of savings over their lifetime is their home. Directing savings towards a home provides two benefits:- 1. Executive Summary For many Australians, their main form of savings over their lifetime is their home. Directing savings towards a home provides two benefits:- Ø A place to live, with security of tenure.

More information

The Reverse Mortgage-a Response to Ageing Polish Society

The Reverse Mortgage-a Response to Ageing Polish Society 2011 International Conference on Financial Management and Economics IPEDR vol.11 (2011) (2011) IACSIT Press, Singapore The Reverse Mortgage-a Response to Ageing Polish Society Iwa Kuchciak 1 + 1 University

More information

DOES DOWNSIZING OF HOUSING EQUITY ALLEVIATE FINANCIAL DISTRESS IN OLD AGE?

DOES DOWNSIZING OF HOUSING EQUITY ALLEVIATE FINANCIAL DISTRESS IN OLD AGE? DOES DOWNSIZING OF HOUSING EQUITY ALLEVIATE FINANCIAL DISTRESS IN OLD AGE? Viola Angelini, Agar Brugiavini, Guglielmo Weber 217-2010 8 Does Downsizing of Housing Equity Alleviate Financial Distress in

More information

Aging in Place: Analyzing the Use of Reverse Mortgages to Preserve Independent Living

Aging in Place: Analyzing the Use of Reverse Mortgages to Preserve Independent Living Aging in Place: Analyzing the Use of Reverse Mortgages to Preserve Independent Living Stephanie Moulton, John Glenn School of Public Affairs, The Ohio State University Donald Haurin, Economics, The Ohio

More information

Defining Housing Equity Withdrawal

Defining Housing Equity Withdrawal Housing Reserve Equity Bank of Australia Bulletin February 23 Housing Equity The increase in housing prices in recent years has contributed to rising household wealth and has helped to underpin continued

More information

New Research: Reverse Mortgages, SPIAs and Retirement Income

New Research: Reverse Mortgages, SPIAs and Retirement Income New Research: Reverse Mortgages, SPIAs and Retirement Income April 14, 2015 by Joe Tomlinson Retirees need longevity protection and additional funds. Annuities and reverse mortgages can meet those needs.

More information

WILL REVERSE MORTGAGES RESCUE THE BABY BOOMERS?

WILL REVERSE MORTGAGES RESCUE THE BABY BOOMERS? September 2006, Number 54 WILL REVERSE MORTGAGES RESCUE THE BABY BOOMERS? By Andrew D. Eschtruth, Wei Sun, and Anthony Webb* Introduction Many of today s workers are at risk of having insufficient resources

More information

Living longer: products, problems and possibilities

Living longer: products, problems and possibilities Living longer: products, problems and possibilities John Piggott and Renuka Sane Australian Institute for Population Aging Research University of New South Wales Sydney, Australia j.piggott@unsw.edu.au

More information

Value Of Home Equity Used In Reverse Mortgages As A Potential Source Of Income For Elderly Americans

Value Of Home Equity Used In Reverse Mortgages As A Potential Source Of Income For Elderly Americans Value Of Home Equity Used In Reverse Mortgages As A Potential Source Of Income For Elderly Americans Flora L. Williams 1 and Y. Emily Kao 2 This study examined the amount of funds available from home equity

More information

Managing Home Equity to Build Wealth By Ray Meadows CPA, CFA, MBA

Managing Home Equity to Build Wealth By Ray Meadows CPA, CFA, MBA Managing Home Equity to Build Wealth By Ray Meadows CPA, CFA, MBA About the Author Ray Meadows is the president of Berkeley Investment Advisors, a real estate brokerage and investment advisory firm. He

More information

Nationwide Mortgage Licensing System #222955

Nationwide Mortgage Licensing System #222955 Nationwide Mortgage Licensing System #222955 Senior Concerns Is your mortgage paid off? Is your Social Security and/or pension sufficient? Rising costs of living: gas, health care, food, utilities, medications,

More information

Composition of Farm Household Income and Wealth

Composition of Farm Household Income and Wealth Composition of Farm Household Income and Wealth Today it is rare for any household to receive all of its from a single source. Even when only one household member is employed, it is possible to earn from

More information

Complete Guide to Reverse Mortgages

Complete Guide to Reverse Mortgages Complete Guide to Reverse Mortgages Contents I. What Is a Reverse Mortgage? 2 Reasons for taking out a reverse mortgage 2 Differences between reverse and traditional mortgages 2 II. Where to Get Reverse

More information

The Institute for Behavioral and Household Finance. White Paper Series. Reverse Mortgages: The Costs, the Benefits, and the Risks

The Institute for Behavioral and Household Finance. White Paper Series. Reverse Mortgages: The Costs, the Benefits, and the Risks The Institute for Behavioral and Household Finance White Paper Series Reverse Mortgages: The Costs, the Benefits, and the Risks Vicki L. Bogan * and Ethan Coy Cornell University White Paper No. 3-2015

More information

Security of home ownership using equity or benefiting from low debt?

Security of home ownership using equity or benefiting from low debt? Security of home ownership using equity or benefiting from low debt? Bengt Turner* Zan Yang* Deleted: Formatted: Left * Institute for Housing and Urban Research 1 June 2005 Uppsala University Sweden Deleted:

More information

Viliam Páleník. Kristína Petríková. Institute of Economic Research SAS European Economic and Social Committee. Institute of Economic Research SAS

Viliam Páleník. Kristína Petríková. Institute of Economic Research SAS European Economic and Social Committee. Institute of Economic Research SAS Viliam Páleník Institute of Economic Research SAS European Economic and Social Committee Kristína Petríková Institute of Economic Research SAS Motivation Introduction Context Financial Services Equity

More information

THE RESPONSIBILITY TO SAVE AND CONTRIBUTE TO

THE RESPONSIBILITY TO SAVE AND CONTRIBUTE TO PREPARING FOR RETIREMENT: THE IMPORTANCE OF PLANNING COSTS Annamaria Lusardi, Dartmouth College* THE RESPONSIBILITY TO SAVE AND CONTRIBUTE TO a pension is increasingly left to the individual worker. For

More information

Module 8: Reverse Mortgages and Other Private Financing Options for Long-Term Care. Posted 5/31/05

Module 8: Reverse Mortgages and Other Private Financing Options for Long-Term Care. Posted 5/31/05 Module 8: Reverse Mortgages and Other Private Financing Options for Long-Term Care Posted 5/31/05 Answers to Key Questions What LTC financing options are available other than insurance? What are the differences

More information

Annuities and Sinking Funds

Annuities and Sinking Funds Annuities and Sinking Funds Sinking Fund A sinking fund is an account earning compound interest into which you make periodic deposits. Suppose that the account has an annual interest rate of compounded

More information

Converting Home Equity into Income: A Reverse Mortgage Review

Converting Home Equity into Income: A Reverse Mortgage Review Converting Home Equity into Income: A Reverse Mortgage Review Are you interested in the possibility of converting equity in your home into cash without having to move or assume debt that has to be currently

More information

A Guide to Equity Release in Retirement

A Guide to Equity Release in Retirement A Guide to Equity Release in Retirement 1. Introduction For the retirement you deserve 2. What is Equity Release? 3. Equity Release Plans The options available to you 4. The Application Process 5. Questions

More information

Reverse Mortgage Presented by Ian MacGillivray, NMLS #638502 American Capital Corporation, NMLS #264422 Phone: 505-690-1089 Website:

Reverse Mortgage Presented by Ian MacGillivray, NMLS #638502 American Capital Corporation, NMLS #264422 Phone: 505-690-1089 Website: Reverse Mortgage American Capital Corporation, Phone: 505-690-1089 Website: http://mortgagepartners-santafe.com Contents I. What Is a Reverse Mortgage? II. Benefits and Typical Uses III. Is the Home at

More information

SOA 2010 Annual Meeting & Exhibit Oct. 17-20, 2010. Session 119 PD, Impact of Housing on Economic Security in Retirement

SOA 2010 Annual Meeting & Exhibit Oct. 17-20, 2010. Session 119 PD, Impact of Housing on Economic Security in Retirement SOA 2010 Annual Meeting & Exhibit Oct. 17-20, 2010 Session 119 PD, Impact of Housing on Economic Security in Retirement Moderator: Anna M. Rappaport, FSA, EA, MAAA Presenters: Thomas N. Herzog, ASA Anna

More information

Reversing the Trend: The Recent Expansion of the Reverse Mortgage Market

Reversing the Trend: The Recent Expansion of the Reverse Mortgage Market Reversing the Trend: The Recent Expansion of the Reverse Mortgage Market Hui Shan April, 2009 Abstract Reverse mortgages allow elderly homeowners to consume their housing wealth without having to sell

More information

Finance and Economics Discussion Series Divisions of Research & Statistics and Monetary Affairs Federal Reserve Board, Washington, D.C.

Finance and Economics Discussion Series Divisions of Research & Statistics and Monetary Affairs Federal Reserve Board, Washington, D.C. Finance and Economics Discussion Series Divisions of Research & Statistics and Monetary Affairs Federal Reserve Board, Washington, D.C. Reversing the Trend: The Recent Expansion of the Reverse Mortgage

More information

Reverse Mortgages: What Homeowners (Don t) Know and How it Matters

Reverse Mortgages: What Homeowners (Don t) Know and How it Matters Reverse Mortgages: What Homeowners (Don t) Know and How it Matters Thomas Davidoff a, Patrick Gerhard b,c, Thomas Post b,c,* a Sauder School of Business, University of British Columbia, b Maastricht University,

More information

Life Cycle Asset Allocation A Suitable Approach for Defined Contribution Pension Plans

Life Cycle Asset Allocation A Suitable Approach for Defined Contribution Pension Plans Life Cycle Asset Allocation A Suitable Approach for Defined Contribution Pension Plans Challenges for defined contribution plans While Eastern Europe is a prominent example of the importance of defined

More information

Reverse Mortgages and the Liquidity of Housing Wealth

Reverse Mortgages and the Liquidity of Housing Wealth Journal of she American Heal Estate and Urban Economics Association 1994. V22, 2: pp. 235-255 Reverse Mortgages and the Liquidity of Housing Wealth Christopher J. Mayer* and Katerina V. Simons* Housing

More information

Delay Social Security: Funding the Income Gap with a Reverse Mortgage

Delay Social Security: Funding the Income Gap with a Reverse Mortgage Thomas C. B. Davison, MA, PhD, CFP NAPFA Registered Financial Advisor Partner Emeritus, Summit Financial Strategies, Inc. toolsforretirementplanning.com tcbdavison@gmail.com Update: June 22, 2014 slightly

More information

New Research: Reverse Mortgages, SPIAs and Retirement Income

New Research: Reverse Mortgages, SPIAs and Retirement Income New Research: Reverse Mortgages, SPIAs and Retirement Income April 14, 2015 by Joe Tomlinson Retirees need longevity protection and additional funds. Annuities and reverse mortgages can meet those needs.

More information

Releasing Housing Equity

Releasing Housing Equity Briefing 3 Releasing Housing Equity February 2010 The aim of this briefing is to present findings about the means especially financial products whereby European households might release the equity in their

More information

Do the elderly reduce housing equity? An international comparison

Do the elderly reduce housing equity? An international comparison Do the elderly reduce housing equity? An international comparison Maria Concetta Chiuri* and Tullio Jappelli** 25 June 2007 Abstract We explore the pattern of elderly homeownership using microeconomic

More information

Secure your financial future with a Reverse Mortgage today!

Secure your financial future with a Reverse Mortgage today! Steve Rivas President Call me with any questions always here to help. (888) 944-6262 steve@wphomeloans.com www.wphomeloans.com Secure your financial future with a Reverse Mortgage today! 1 What Are Your

More information

The Cost and Benefit of Reverse Mortgages

The Cost and Benefit of Reverse Mortgages The Cost and Benefit of Reverse Mortgages Han B Kang Illinois State University ABSTRACT There has been a growing popularity of reverse mortgage among senior citizens who need cash. The loan allows homeowners

More information

2 Voluntary retirement module specification

2 Voluntary retirement module specification 2 Voluntary retirement module specification As part of its research on Superannuation Policy for Post-Retirement the Commission has developed a model referred to as the Productivity Commission Retirement

More information

Your retirement could have even more going for it

Your retirement could have even more going for it Your retirement could have even more going for it A straightforward guide to equity release For no obligation advice: call 0800 015 0993 www.justretirementsolutions.com Contents Imagine what you could

More information

Home Equity as a Source of Retirement Income February 2013

Home Equity as a Source of Retirement Income February 2013 Home Equity as a Source of Retirement Income February 2013 Written by Edwin L. Weinstein, PhD The Brondesbury Group, Toronto, ON 2013 The Brondesbury Group Home Equity as a Source of Retirement Income

More information

Exploring Home Equity Release Options for Retirees Opportunities for optimising Retirement Income.

Exploring Home Equity Release Options for Retirees Opportunities for optimising Retirement Income. Exploring Home Equity Release Options for Retirees Opportunities for optimising Retirement Income. Dr Ashton de Silva, Dr Stuart Thomas, Dr Farzad Alavi Fard and Dr Sarah Sinclair. The Challenge: An aging

More information

Evaluating the HECM product

Evaluating the HECM product Evaluating the HECM product March 26, 2015 Presented by Garrett M. Kolb gkolb@rmsnav.com Senior Managing Director Reverse Mortgage Solutions, Inc. For Mortgage Professionals Only These materials are designed

More information

Retirement Savings Of Private And Public Sector Employees: A Comparative Study Swarn Chatterjee, University of Georgia, Athens, USA

Retirement Savings Of Private And Public Sector Employees: A Comparative Study Swarn Chatterjee, University of Georgia, Athens, USA Retirement Savings Of Private And Public Sector Employees: A Comparative Study Swarn Chatterjee, University of Georgia, Athens, USA ABSTRACT This study examines the retirement plan participation and savings

More information

Equity Release Working Party. Pricing & Risk Capital In the Equity Release Market 27 March 2008

Equity Release Working Party. Pricing & Risk Capital In the Equity Release Market 27 March 2008 Equity Release Working Party Pricing & Risk Capital In the Equity Release Market 27 March 2008 Who are we? Ged Hosty (Chair) - In Retirement Services Steve Groves - Partnership Assurance Colin Murray -

More information

Working Paper Series. Household saving behaviour and credit constraints in the euro area. No 1790 / May 2015

Working Paper Series. Household saving behaviour and credit constraints in the euro area. No 1790 / May 2015 Working Paper Series Julia Le Blanc, Alessandro Porpiglia, Federica Teppa, Junyi Zhu and Michael Ziegelmeyer Household saving behaviour and credit constraints in the euro area No 1790 / May 2015 Note:

More information

Annuities 2020 The Future of

Annuities 2020 The Future of Annuities 2020 The Future of Annuities in Financing i Retirement t Mike Orszag Tokyo, January 2009 Annuities 2020 Key questions What will the global annuities market potentially look like in the year 2020

More information

House Rich and Cash Poor: Ways to Unlock Your Home s Value

House Rich and Cash Poor: Ways to Unlock Your Home s Value House Rich and Cash Poor: Ways to Unlock Your Home s Value Avenidas Housing Conference, March 10, 2012 Barbara Krimsky Binder, CFP, BKB Financial Advisors Does This Describe Your Situation? - You bought

More information

Reverse Mortgages Overview

Reverse Mortgages Overview Reverse Mortgages Overview An Overview of Reverse Mortgages In 1987 President Ronald Reagan authorized the Department of Housing and Urban Development (HUD) to create the Home Equity Conversion Mortgage

More information

Forward vs Reverse Mortgages

Forward vs Reverse Mortgages A brief outline Forward vs Reverse Mortgages Forward Purpose: Purchase, Refinance Start: Little or No Equity During: Pay Lender Balance Decreases Equity Increases End: Owes No Debt Substantial Equity Reverse

More information

Demographic Implications for Capital Markets Euromoney Conference 2005 Rome, September 6

Demographic Implications for Capital Markets Euromoney Conference 2005 Rome, September 6 Demographic Implications for Capital Markets Euromoney Conference 2005 Rome, September 6 Stefan Schneider Chief International Economist Structure Demographic trends and their drivers Population dynamics

More information

Secure your financial future with a Reverse Mortgage today!

Secure your financial future with a Reverse Mortgage today! Secure your financial future with a Reverse Mortgage today! 1 What Are Your Retirement Goals? Are you on track to meet your needs and satisfy your wants, now and in the future? Pay off your existing mortgage*

More information

The Facts. About Reverse Mortgages. without the hype

The Facts. About Reverse Mortgages. without the hype The Facts About Reverse Mortgages without the hype A reverse mortgage... Will it help me? Is it a good fit for my needs? Will I own my home? Do I qualify? Am I protected? These may be some of the thoughts

More information

REVIEW OF LITERATURE ON REVERSE MORTGAGE

REVIEW OF LITERATURE ON REVERSE MORTGAGE CHAPTER- II REVIEW OF LITERATURE ON REVERSE MORTGAGE 2.1 Introduction Reverse mortgage is an innovative financial arrangement through which senior citizens can liquidate some of their housing wealth and

More information

Reverse Mortgages: A Closer Look at HECM Loans

Reverse Mortgages: A Closer Look at HECM Loans Reverse Mortgages: A Closer Look at HECM Loans Tonja Bowen Bishop Hui Shan September, 2008 Abstract Housing wealth is often the most important wealth component for many elderly homeowners in the United

More information

FHA Reverse Mortgages for People 62 Years and Older

FHA Reverse Mortgages for People 62 Years and Older FHA Reverse Mortgages for People 62 Years and Older If you are age 62 or older you may want to participate in FHA's Home Equity Conversion Mortgage (HECM), better known as the Reverse Mortgage, program.

More information

Enhance Your Financial Security

Enhance Your Financial Security Enhance Your Financial Security With a Home Equity Conversion Mortgage Many homeowners across the nation have chosen a Home Equity Conversion Mortgage (HECM) to help them meet financial and personal goals.

More information

Permanent Link: http://espace.library.curtin.edu.au/r?func=dbin-jump-full&local_base=gen01-era02&object_id=159698

Permanent Link: http://espace.library.curtin.edu.au/r?func=dbin-jump-full&local_base=gen01-era02&object_id=159698 Citation: Ong, Rachel. 2008. Unlocking housing equity through reverse mortgages: The case of elderly homeowners in Australia. European Journal of Housing Policy 8 (1): pp. 61-79. Alternate Location: http://dx.doi.org/10.1080/14616710701817166

More information

Mutual Fund Investing Exam Study Guide

Mutual Fund Investing Exam Study Guide Mutual Fund Investing Exam Study Guide This document contains the questions that will be included in the final exam, in the order that they will be asked. When you have studied the course materials, reviewed

More information

The Effective Use of Reverse Mortgages in Retirement

The Effective Use of Reverse Mortgages in Retirement Page 1 of 8 Copyright 2009, Society of Financial Service Professionals All rights reserved. Journal of Financial Service Professionals July 2009 The Effective Use of Reverse Mortgages in Retirement by

More information

The Facts About Reverse Mortgages. without the hype

The Facts About Reverse Mortgages. without the hype The Facts About Reverse Mortgages without the hype A reverse mortgage... Will it help me? Is it a good fit for my needs? Will I own my home? Do I qualify? Am I protected? These may be some of the thoughts

More information

A Comparative Study of Reverse Mortgages: Evidence from Puerto Rico and United States

A Comparative Study of Reverse Mortgages: Evidence from Puerto Rico and United States A Comparative Study of Reverse Mortgages: Evidence from Puerto Rico and United States Research proposal by: Rogelio J. Cardona, Ph.D., CPA, Esq., Assistant Professor, Accounting Department Karen C. Castro-González,

More information

Retirement Policies, Annuities and Longevity Insurance in

Retirement Policies, Annuities and Longevity Insurance in Retirement Policies, Annuities and Longevity Insurance in Australia John Piggott Centre for Pensions and Superannuation Australian Institute of Population Ageing Research University of New South Wales

More information

Pricing and Securitization of Reverse Mortgage for Dependent Lives

Pricing and Securitization of Reverse Mortgage for Dependent Lives Pricing and Securitization of Reverse Mortgage for Dependent Lives Sharon S. Yang National Central University Corresponding Author: Sharon S. Yang, Associate Professor, Department of Finance, National

More information

Contributing the Family Home to Super

Contributing the Family Home to Super Contributing the Family Home to Super An innovative proposal designed to assist with the accommodation and income needs of older Australians wishing to remain in their own homes. Abstract There has been

More information

Reverse Mortgage Basics. Norma P. Garcia Senior Attorney Consumers Union May 28, 2012

Reverse Mortgage Basics. Norma P. Garcia Senior Attorney Consumers Union May 28, 2012 Reverse Mortgage Basics Norma P. Garcia Senior Attorney Consumers Union May 28, 2012 What is a reverse mortgage? It s a loan against the equity in an elder s home Instead of making monthly payments to

More information

Notes - Gruber, Public Finance Chapter 13 - Social Security Social Security started in 1935 in Great Depression. Asset values had fallen drastically,

Notes - Gruber, Public Finance Chapter 13 - Social Security Social Security started in 1935 in Great Depression. Asset values had fallen drastically, Notes - Gruber, Public Finance Chapter 13 - Social Security Social Security started in 1935 in Great Depression. Asset values had fallen drastically, many elderly lost their lifetime savings. Workers pay

More information