Moral hazard, adverse risk selection, and market share examined
The World Bank Group examined the global reverse mortgage marketplace in it’s January research paper. While the loan remains characterized as a ‘last resort’ their critical analysis of supply-side challenges, adverse selection, and moral hazards are revealing. Despite these challenges the World Bank Group sees value in the loan when considering the reverse mortgage’s ability to help cushion against financial shocks and smooth consumption of accumulated assets. “The ways that reverse mortgages can benefit the elderly population is impressive”, says the report.
Read the World Bank Group research paper