Home equity conversion mortgages: The secondary market investor experience

Jaclene Begley, Hamilton Fout, Michael LaCour-Little and Nuno Mota

Journal of Housing Economics, 2020, vol. 47, issue C

Abstract: Reverse mortgages are accrual notes of indeterminate maturity secured by home equity. In this paper, we analyze Fannie Mae's experience with the Home Equity Conversion Mortgage, the FHA-insured, non-recourse version of this product. Using loan and borrower characteristics, we model a number of relationships, including loss severity. We also show how the addition of credit information affects our models. Finally, we use credit data to conduct a policy experiment which illustrates how better screening might have affected portfolio performance. We find that imposing a minimum borrower credit score of 620 would have reduced originated volume by 23% and economic losses by 32%.

Keywords: Reverse mortgage; Seniors; Life-cycle consumption smoothing (search for similar items in EconPapers)
JEL-codes: D15 G21 J14 R21 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1051137717302619
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jhouse:v:47:y:2020:i:c:s1051137717302619

DOI: 10.1016/j.jhe.2019.03.001

Access Statistics for this article

Journal of Housing Economics is currently edited by H. O. Pollakowski

More articles in Journal of Housing Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().