by Andrew Caplin, Economics Professor – New York University
used with Permission
There has been considerable debate in the academic literature on the economic potential of the reverse mortgage market. Yet even the most pessimistic assessment suggests that this market should be larger than it is by an order of magnitude. We outline some of the economic forces that may help to explain the gap between the current market and its theoretical potential. These include transactions costs, moral hazard, and consumer uncertainty about future preferences. In addition, we explore some psychological forces that may help explain lack of enthusiasm for these products among the majority of older homeowners. We also focus attention on impediments to market development that originate in the legal, regulatory, and tax systems.
(more…)
by Andrew Caplin, Economics Professor – New York University
used with Permission
There has been considerable debate in the academic literature on the economic potential of the reverse mortgage market. Yet even the most pessimistic assessment suggests that this market should be larger than it is by an order of magnitude. We outline some of the economic forces that may help to explain the gap between the current market and its theoretical potential. These include transactions costs, moral hazard, and consumer uncertainty about future preferences. In addition, we explore some psychological forces that may help explain lack of enthusiasm for these products among the majority of older homeowners. We also focus attention on impediments to market development that originate in the legal, regulatory, and tax systems.
(more…)
by Andrew Caplin, Economics Professor – New York University
used with Permission
There has been considerable debate in the academic literature on the economic potential of the reverse mortgage market. Yet even the most pessimistic assessment suggests that this market should be larger than it is by an order of magnitude. We outline some of the economic forces that may help to explain the gap between the current market and its theoretical potential. These include transactions costs, moral hazard, and consumer uncertainty about future preferences. In addition, we explore some psychological forces that may help explain lack of enthusiasm for these products among the majority of older homeowners. We also focus attention on impediments to market development that originate in the legal, regulatory, and tax systems.
(more…)
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