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Home Equity Conversion Mortgage (HECM) Analysis
Services: Data & Statistical Analysis
Key Work Areas: Benefit-Cost Analysis, Impact Evaluation
As a subcontractor to SP Group, Econometrica is conducting an analysis and review of the U.S. Department of Housing and Urban Development’s (HUD) Home Equity Conversion Mortgage (HECM) program. This guaranteed reverse mortgage program offers cash-strapped elderly homeowners the ability to tap into their home equity to meet living costs as they age in place. This program has grown significantly since its inception in the early 1990s, benefiting more than 1 million elderly borrowers. Over the past 10 years, however, the program has experienced wildly fluctuating financial results. HUD has responded to the program’s problematic financial performance by implementing a series of policy changes intended to control the government’s risks. This review describes the history of the HECM program, the costs the Government has absorbed in insuring these reverse mortgages, and the effect of HUD’s reform efforts on program costs and other policy objectives.