Home equity conversion mortgages (HECMs), or reverse mortgages, provide needed cash for homeowners over the age of 62; a planning tool that helps many individuals enjoy their retirement while living in their home. However, the risk of HECM defaults is having a negative impact on the availability of the HECM program. Better planning by financial service professionals and individuals will reduce the burden of homeowners, their families, and taxpayers who must cover the financial loss due to default.
Author: Ivan Roten, PhD, RFC, CFP, is an associate professor of finance at Appalachian State University. He teaches graduate and undergraduate classes focused on corporate finance. His work has been published in several practitioner and academic journals.
Author: Jarrod Johnston, PhD, CFP, is a professor of finance at Appalachian State University. He teaches and researches in the areas of financial planning and financial markets.