OUP - Abstract

The Home Equity Conversion Mortgage: A Study of Attitudes and Awareness

Dissertation School: Louisiana State University and A&M College

Pages: 33

Publication Date: 01/2005

Availability:
Available from the HUD USER Helpdesk P.O. Box 23268 Washington, DC 20026-3268 Toll Free: 1-800-245-2691 Fax: 1-202-708-9981 Email: oup@oup.org

Access Number: 5018

Abstract:

This study will survey senior homeowners nationwide to assess their level of awareness regarding the U.S. Department of Housing and Urban Development's (HUD's) Home Equity Conversion Mortgage (HECM) program. Additionally, this study will assess this group's attitudes regarding specific program characteristics. By participating in the HECM program, "cash-poor" seniors can effectively receive an income stream, lump sum payment, or line of credit based on the equity in their home. Such an income opportunity can have a tremendous impact on the quality of life for seniors facing increasing healthcare and other living expense costs, mounting home repair bills, or simply a desire to live more comfortably throughout their retirement years. The question of financing these various scenarios can be daunting for an older person on a fixed income. The HECM program can help. As with any program, it can only be effective if it is actually utilized. High levels of awareness and positive attitudes will ensure such participation. The results of this study will provide a tool for HUD to more effectively target its resources so that it can increase the awareness and attitude levels of the HECM program for those who can benefit most and are most inclined to participate. Such utility maximizing behavior on the part of HUD will help it to meet its goal of promoting housing stability and self-sufficiency for the elderly.

I will perform (spatial) regression analysis using professionally collected survey data to carry out the project. Thus, the project will largely consist of three phases: the survey phase, the analysis phase, and the pricing phase. The survey phase will entail the design, administration, and result tabulation of a survey of senior homeowners nationwide. The analysis phase will take the results obtained in the survey phase and regress program participation (or respondents' inclination to participate) on key demographic and program characteristics. The pricing phase will use a mortgage model to find a quantifiable benefit to reducing seniors' fears as they relate to the HECM program. The result of these phases will provide HUD with a valuable decisionmaking tool.

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