Reverse mortgages may be one solution to the pressing problem of senior housing that many aging homeowners will soon face, says the Department of Housing and Urban Development in a recent publication. And there’s potential for research that would further examine the benefits of Home Equity Conversion Mortgages (HECMs) by comparing those who have taken HECM loans with similarly positioned households that have not, HUD says.
In its quarterly Evidence Matters publication, HUD’s Office of Policy Development and Research (PD&R) outlines the pressing problem that will be made worse by a vast aging population in need of housing solution.
“Older populations face numerous housing challenges, including those related to affordability, physical accessibility, and access to medical and other services inside and outside the home,” the publication notes, citing the HECM program as one of the existing options doing its part to offer a solution to those facing challenges.
“Aging homeowners might also be helped by reverse mortgages that allow owners to access the equity in their home, which in many cases is their largest asset, without having to leave it,” the publication writes. “Most reverse mortgages are insured by the federal government through the Home Equity Conversion Mortgage (HECM) program. Homeowners must be able to pay ongoing maintenance, tax, and insurance costs.”
Further, a potential research initiative would further explore the benefits of reverse mortgages, HUD says.
“A study of the reverse mortgage market would assess the benefits of the loans for older homeowners by comparing HECM borrowers with nonborrowers in similar financial circumstances,” the publication states. “A related inquiry will examine HECM defaults related to nonpayment of property taxes or homeowners insurance and will compare the tax delinquency and property tax relief program participation of HECM borrowers and similar non borrowers.”
Written by Elizabeth Ecker