MacArthur Foundation Grant Funds Reverse Mortgage Study, Partners With CredAbility and Ohio State

Reverse mortgage counseling agency CredAbility will partner with The Ohio State University for an upcoming reverse mortgage study funded by a MacArthur Foundation grant. The $427,000 grant, announced earlier this week, will fund a project to analyze the use of reverse mortgages to fund independent living for senior citizens.

CredAbility, the counseling agency-partner in the project, will begin work with Ohio State’s researchers led by Dr. Stephanie Moulton to evaluate the impact of reverse mortgages on the financial, housing and physical independence of homeowners, and will examine their decision making process and considerations.

“As you look at the wave of baby boomers heading into retirement, and with housing being more important than ever, it is a perfect time to look at what the reverse mortgage product designed to do and whether it is doing that,” Mark Cole, executive vice president and chief operating officer for CredAbility, who will serve as one of six co-investigators on the project, told RMD.


The research will begin now, and is expected to take place over the next three years using Atlanta-based CredAbility’s more than-30,000 reverse mortgage client database as the primary source of data for the project. The organization will also conduct a survey of 5,000 reverse mortgage borrowers who have been counseled previously and will seek credit history on those it has counseled.

In developing the research, Moulton has noted that the growth in demand for reverse mortgages is paired with increasing concern about the vulnerability of seniors, a press release on the research states.

“This environment creates opportunities for predatory practices and ill-informed decisions that can actually erode housing and financial stability, the opposite of the policy intent for reverse mortgages in the first place,” Moulton said.

Looking into the uses of reverse mortgages by borrowers as well as those whose situations changed after taking a reverse mortgage will provide insight into where the product needs to go next, Cole says.

“The product is going mainstream now,” he says. “It’s important we spend time studying how people are utilizing it. It used to be appreciated equity homeowners are borrowing against and now it’s earned equity. The willingness is different.”

Ultimately, the study aims to inform policy changes that are based on data, rather than informal feedback.

“These 30,000 records are of individual stories of people who were looking for guidance and help. We hope they are instructive for the next 30,000,” Cole says. “There hasn’t really been a lot of research of this kind, and making policy with anecdotes is dangerous.”

The MacArthur Foundation authorized $230 million in total grants in 2011.

Written by Elizabeth Ecker

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  • One wonders if the quoted individuals have looked at the latest industry statistics and trends before making their comments?  It seems they are describing the image we are attempting to project not the actual situation the industry finds itself in today.  So as some so rightly say, to most individuals, perception is everything but such statements should NOT apply to researchers.  

    Despite the astounding recent growth in senior population, the number of reverse mortgage originations is shrinking, not growing. The average age of new HECM borrowers is going down not up (where one would expect to find greatest vulnerability).  How is it that reverse mortgages are mainstreaming now?  Did the individuals quoted look at the direction in which the average appraised values on endorsed HECMs are going?  Average appraised values for endorsements were below $249,000 for the four months ended 1/31/2012 (latest information).  Average appraised values were over $289,000 when the highest lending limit in the country was just $362,790 back in fiscal year 2006.  Back in fiscal year 2006 there was competition to HECMs from at least one proprietary (jumbo) product and a somewhat HECM competitive product called the Homekeeper.Today there is no real competition to HECMs and we have Savers which are drawing borrowers with higher home values.  Lending limits are now $625,500.  So if we are so much in the mainstream why have average appraised values dropped so much in the last six years when the lending limit has been so much higher in the last three?Will the researchers be looking at reverse mortgages as Mr. Cole claims or just HECMs?  Is the CredAbility database of 30,000 representative of ALL reverse mortgage borrowers or even HECM borrowers?If this study is to be accepted as serious, then those who conduct it need to be far more precise in the language in which they present their goals and objectives.  Someone should also be measuring how representative the population of CredAbility certified counselees are in comparison to the HECM (or reverse mortgage) population as a whole.  By what was presented, one has to question of the reliability of the findings.  No doubt clarification will be forthcoming.     

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