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