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Reverse Mortgage

Reverse Mortgage Study To Help Shape Financial Assessment, Program Change

While the results of a forthcoming Ohio State University reverse mortgage study are still many months away, the process has begun toward identifying and surveying reverse mortgage borrowers from 2006 to 2011. 

The results will be well timed to help inform and lead future changes to the Federal Housing Administration’s reverse mortgage program, including a borrower financial assessment, HUD says. 

The study, made possible by grant funding and with the help of reverse mortgage counseling data from CredAbility as well as borrower information from the Department of Housing and Urban Development, will include a survey of borrowers, presenting the most recent data in recent memory with regard to their preferences and loan outcomes. 

Results of the study will be well timed to help inform and shape forthcoming program changes expected from FHA. 

“[The study provides a] more careful research perspective,” says Stephanie Moulton, Ohio State’s lead researcher on the project. “When we lack data we make political decisions to try to reduce the negative perceptions. If we have more research, it may lead to perhaps less drastic decisions.”

The study is being funded by a research grant of more than $450,000 awarded to The Ohio State University by the MacArthur Foundation. HUD and counseling intermediary CredAbility are partners on the project, with CredAbility providing counseling data and access to counseling clients and HUD providing department data on HECM loans and borrowers. 

The aim of the research is to study the effectiveness of the reverse mortgage as a tool to promote aging in place. And while the study is expected to span several years, some preliminary data is expected to become available in November; presenting an opportunity for the findings to help inform reverse mortgage policy decisions to be made later this year. 

“In November, hopefully we will be able to release a paper to provide analysis speaking to financial assessment policy questions,” Moulton says. “…to at least inform some of those decisions.”

In a brief published in March, HUD stressed the benefit of participating in such a study through the sharing of data to inform some of the policy decisions sought by FHA in order to make the program more sustainable and shore up the agency’s insurance fund. Among those changes is an anticipated financial assessment that will apply to all people seeking reverse mortgages. 

“There are definite benefits for FHA to participate in the creation of this combined data set,” the brief states. “FHA’s Office of Single Family Program Development has been engaged in the development of financial assessment underwriting criteria for HECM loans. The new dataset will provide the Department with HECM borrower data that will help inform those policy discussions. This dataset will also help to shed light on potential changes that should be incorporated into reverse mortgage counseling policies and protocols.”

FHA has asked Congress for the authority to implement those potential changes. 

Written by Elizabeth Ecker