Cityscape Examines Home Equity Conversion Mortgages and Community Transformation

April 11, 2017  

Cityscape Examines Home Equity Conversion Mortgages and Community Transformation

The latest issue of Cityscape: A Journal of Policy Development and Research titled “Double Issue: Home Equity Conversion Mortgages and Transforming Communities” features two research symposiums.

Guest Editor William Reid introduces the first symposium, “Home Equity Conversion Mortgages,” with a brief history of the Federal Housing Administration’s Home Equity Conversion Mortgage (HECM) insurance program, from its origin as a demonstration in 1987, to its difficulties inflicted by the housing and mortgage crises of the 2000s, and concludes with a note on the growing national importance of the program in light of the aging of the baby boom generation.

The symposium articles address the problems faced by the HECM program and the remedies considered to address them in the wake of the mortgage crisis and Great Recession.

Kevin A. Park analyzes the root cause of the disproportionate decline in collateral values associated with reverse mortgages, concluding that overappraisal at origination, rather than other factors such as poor maintenance, may be the cause of greater-than-expected loss severities.

Silda Nikaj and Joshua J. Miller review the impact of state- and local-level property tax relief programs on the prevalence of tax default among HECM program participants, highlighting the importance of annual validation of tax accounts to ensure maximum relief of liability.

Edward J. Szymanoski, Alven Lam, and Christopher Feather examine the importance of affordable financing in ensuring the sustainability of HECM in the context of the program’s history and the impact of the Great Recession.

Stephanie Moulton, Cäzilia Loibl, and Donald Haurin synthesize survey data from several sources to compare the characteristics of households that sought counseling for a reverse mortgage between 2006 and 2011 with those of the general population of senior homeowners. They also compare the outcomes of households that received reverse mortgages versus those of senior households that did not.

Masahiro Kobayashi, Shoichiro Konishi, and Toshihiko Takeishi describe current characteristics and history of the Japanese reverse mortgage market. They also analyze challenges to its development by comparing the Japanese situation to the United States, Australia, Canada, and South Korea.

George R. Carter III and Joshua J. Miller provide a data-driven description of the American reverse mortgage market, and discuss the HECM program in light of salient demographic, economic, and housing market trends. The authors conclude that although a number of factors strongly suggest a growth of HECM mortgages, this potential growth must be managed and afforded strong consumer protections to ensure the future viability of the program.

Guest Editors William Lambe, Theresa Singleton, and Susan Wachter introduce the second symposium, “Transforming Communities,” by briefly describing the growing concentration of economic opportunities in places that are inaccessible to low-income families and the resulting self-reinforcing pattern of income segregation.

The symposium articles review and update research to describe the factors responsible for spatially based economic polarization, and propose evidence-based policy solutions for local communities seeking inclusive growth.

Arthur Acolin and Susan Wachter examine the relationship between employment opportunity and housing affordability, finding that access to high-productivity jobs is increasingly limited by affordability barriers. They conclude with a discussion of place-based solutions to counter the growing spatial inequality of opportunity.

Andrés Rodríguez-Pose and Callum Wilkie discuss the role of state and local governments in developing place-based development strategies, and provide examples of successful and failed strategies implemented by sub-national governments.

Harry J. Holzer analyzes the obstacles to shared labor market prosperity in older American communities and various strategies attempted to overcome them. Holzer concludes with a discussion of policy options.

Matthew P. Steinberg and Rand Quinn explore the performance of four areas of education policy reform in large urban districts, as they relate to opportunity expansion for students. They conclude by offering actionable takeaways for policymakers in each of the four areas of concern.

Lance Freeman and Jenny Schuetz describe the problem of affordability in rising markets, and review existing evidence on the efficacy of local policy approaches. They conclude with policy recommendations for improving housing affordability and other factors which increase access to economic opportunity.

Four contributors provide commentary on the issue of housing subsidies for middle-class families. Barbara Sard examines the economic characteristics of federal rent subsidy recipients and argues that middle-income households have substantially less need of subsidies than their low-income counterparts and should not be eligible to receive limited public resources for this purpose except in special circumstances. Kurt Paulsen provides an overview of the current landscape of housing cost subsidies, argues that the existing system is poorly-targeted, and suggests funding sources for subsidizing a refined subset of middle-income households. Ingrid Gould Ellen argues that although the federal government should devote minimal resources to long-term middle-income household rent subsidies, local governments should do so in order to preserve economic diversity and drive local growth. Carol Galante contends that subsidization of middle-income households is necessary for economic stability, but that such assistance should be better-targeted and more sensitive to the context of local markets.

In addition to the symposium, the issue features one refereed paper: Emily Molfino, Gizem Korkmaz, Sallie A. Keller, Aaron Schroeder, Stephanie Shipp, and Daniel H. Weinberg’s examination of the feasibility of using local administrative data sources to supplement federally collected data on housing.

Articles in this issue’s regularly appearing departments include “New Public Data Available on USDA Rural Housing Service’s Single-Family and Multifamily Programs,” by Corianne Payton Scally and David Lipsetz in Data shop, “Housing Tenure and Affordability Relative to Communities of Opportunity in the Cincinnati Metropolitan Area,” by John C. Huggins in Graphic Detail, and “2016 AIA/HUD Secretary’s Housing and Urban Development Design Awards,” by Rachelle L. Levitt and Regina Gray in Affordable Design.

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