Reversing The Trend: The Recent Expansion Of The Reverse Mortgage Market

Reverse mortgages allow elderly homeowners to tap into their housing wealth with-out having to sell or move out of their homes. However, very few eligible homeowners have used reverse mortgages to achieve consumption smoothing until recently when the reverse mortgage market in the United States witnessed substantial growth. This paper examines 1989-2007 loan-level reverse mortgage data and presents a number of findings. First, the author shows that recent reverse mortgage borrowers are significantly different from earlier borrowers in many respects. Second, it's found that borrowers who take the line-of-credit payment plan, single male borrowers, and borrowers with higher house values exit their homes sooner than other reverse mortgage borrowers.