Aging in Place Research Study - Scope
Aging in Place Research Study
Interviewer Training Manual
September 2013
The Ohio State University
Center for Human Resource Research
Scope of Research Study
The challenge is that reverse mortgages are complex products, for which costs may outweigh benefits for seniors. Due to the potential for significant financial loss and the high costs of revising or recovering from a wrongful housing decision, choosing reverse mortgages in older age qualifies as a “high-consequence decision” (Kahn and Baron 1995; Kunreuther et al. 2002). There is a critical need to better understand factors underlying the decision to obtain a reverse mortgage and the longer-term impacts on independence and general well-being. Only empirical research focused on the use of reverse mortgages and their impact can respond to the concerns surrounding this financial product.
The volume of federally insured reverse mortgages is now large enough to allow for robust empirical research. Further, the current political environment presents an ideal opportunity to engage empirical research in this area. For one, reverse mortgage practices are still evolving as the market is maturing. The recent exit of the largest reverse mortgage lenders and entrance of newer, less experienced lending institutions raises questions about the impact on seniors considering reverse mortgages, and potential need for regulatory change. Second, the reverse mortgage market is expected to expand substantially in the near future along with the aging of the baby boomer-generation. Without research at this point in time, a generation of seniors is likely to be subjected to a high-consequence product which, regardless of federal intent, is widely unregulated and little understood.
The research is designed to:
- explore the decision making processes of seniors considering reverse mortgages; and
- evaluate the impact of the decision to obtain a reverse mortgage on financial, housing, and physical well-being and independence.
Our overall goal is to:
Scope of Survey
A critical component of our research design is a survey of seniors who have completed reverse mortgage counseling. The survey will be conducted via telephone, drawn from CredAbility’s (also known as Consumer Credit Counseling Agency of Atlanta) database of more than 30,000 seniors receiving reverse mortgage counseling.
Our study will provide the first known long-term follow-up with seniors considering reverse mortgages (2-7 years after counseling), linked to administrative credit and loan data. Our ability to link long-term survey outcome data with administrative data distinguishes our study from previous research that relies on only survey (e.g., Redfoot, Scholen, and Brown 2007) or administrative data (e.g., Costa-Font, Gil, and Mascarilla 2010). Both sources of data are essential to evaluate the impact of reverse mortgages on senior well-being.
A key contribution of our survey is our ability to identify and validate measures that describe the vulnerability and well-being of this unique population (seniors considering reverse mortgages). Specifically, we draw from previously validated indicators and tailor the indicators to this target population who are likely distinct from seniors in the general population in observable an unobservable ways. We will make our survey instrument as well as the resulting de-identified survey data publicly available for researchers and policymakers. Given the next decade of policy choices around seniors and housing, combined with the demographic trends of aging owner-occupied households, we are confident this process and the resulting instrument will provide public value beyond this particular project.
Five key outcomes that we anticipate to achieve through the survey
First, the survey will collect critical outcome measures for well-being that cannot be collected through administrative data. Typically, well-being is measured as an individual’s perceived satisfaction and utility. This information can only be collected through a survey or interview with the individual. Reliance on administrative data only (such as timing of withdrawals, or credit data), provides an incomplete picture of the individual’s overall well-being, that may over or under-estimate their actual well-being. By collecting indicators of well-being three to seven years post counseling for those who received and did not receive a reverse mortgage, we will be able to estimate the relative impact of the reverse mortgage on overall well-being. While reverse mortgages have been hypothesized to lead to an increase in well-being, our study will be the first to evaluate this empirically through a robust research design that takes into account selection. From a policy perspective, our study will identify factors that contribute to, or deter from, the link between the reverse mortgage and indicators of well-being. These factors may then be integrated into screening, underwriting, or counseling protocols – contributing timely and relevant insights to ongoing policy conversations.
Second, the survey will provide the first post-assessment of indicators of financial, housing and physical health and independence similar to the indicators collected at the time of counseling through the now mandatory Financial Interview Tool (FIT). The FIT collects information on physical health and housing independence at the time of counseling that may be indicative of the ability of the senior to maintain their home and live independently. One hypothesis is that by allowing seniors to stay in their homes, the reverse mortgage maintains the independence of seniors relative to those who do not receive a reverse mortgage. Collecting follow-up survey data on indicators of independence, and matching them with the FIT assessment, is critical to test this hypothesis. This procedure has also the indirect policy benefit of validating the items in the FIT assessment that are most predictive of the appropriateness of the reverse mortgage in the long term.
Third, the survey will be the first to systematically assess the retrospective satisfaction of seniors with their reverse mortgage decision and the counseling process. Previous research relies on either (1) shorter term survey data of satisfaction (e.g., Redfoot, Scholen, and Brown 2007), or (2) administrative data on reverse mortgage terminations (e.g., Szymanoski, Enriquez, and DiVenti 2007) to evaluate whether or not the decision to receive a reverse mortgage was the “correct” decision. Either source of data is inconclusive. For example, reliance on administrative data alone may lead researchers to conclude that a reverse mortgage borrower made an incorrect decision based on the timing of their withdrawals or mortgage termination. However, it could be that the senior still perceives the reverse mortgage as the right decision, given their unique situation at the time. Research is needed that combines perceptual survey data on satisfaction with the reverse mortgage product (as we will collect through this survey) with administrative data on the use of the reverse mortgage (such as the individual-level consumer data we will have through HUD). From a policy perspective, retrospective perceptions of the counseling process are informative to identifying those elements of counseling that seniors consider to be the most crucial, as well as elements that should be included in the counseling protocols that are currently missing.
Fourth, the survey will provide the first known assessment of seniors’ perceptions of reverse mortgage terminations. Through purposive random sampling, we anticipate that about 10% of the seniors in our survey sample will have terminated their reverse mortgage. While administrative data tell us whether or not a senior has terminated their reverse mortgage, survey data is needed to identify (1) their motives for termination, and (2) their perceptions of their reverse mortgage decision, given their termination. Previous research finds that reverse mortgage borrowers tend to terminate their mortgages earlier than would be considered “optimal” from a financial perspective, either due to death, relocation or home sale (e.g., Rasmussen, Megbolugbe, and Morgan 1997).
One hypothesis is that an early termination indicates that the reverse mortgage was not a good fit for the senior in the first place. To test this hypothesis, our survey will follow-up with a sub-set of seniors after reverse mortgage termination. Our goal is to assess the circumstances surrounding the termination decision and the perceptions about this decision by senior. We will link this survey data to the longitudinal credit data obtained through credit reports to provide a comprehensive picture of the termination circumstances and outcomes.
From a policy perspective, this analysis helps inform the screening and underwriting process that takes place at time of mortgage application because we will identify the administrative factors that are associated with long term perceptual indicators of an appropriate or inappropriate decision.
Finally, the survey provides a unique opportunity to systematically assess the financial capability of seniors who have considered reverse mortgages as well as cognitive limitations and preferences that may frame their decision processes. This is critical because seniors considering reverse mortgages are likely unique and perhaps more vulnerable than seniors in the general population; relying on general indicators alone likely does not accurately capture this population. Our working hypothesis is that reverse mortgages are complex products and require a certain level of financial capability to ensure an informed decision. We will be able to evaluate this hypothesis using both survey and administrative data. Survey data will allow us to measure the financial capability of the senior using previously validated scales of concepts such as numeracy and financial literacy. Further, we will compare seniors’ perceptions of their finances and their reverse mortgage terms (if applicable) with our administrative mortgage and credit bureau data, to assess how well informed they are about their personal financial status quo, as well as cognitive functioning. We will also include a small set of questions related to individual preferences, such as time preferences and risk tolerance, that are important to take into account when evaluating decision processes and that are not collected in the administrative data. From a policy perspective, identifying cognitive limitations and preferences will help shape best practices in counseling and education provided to seniors as a required component of the mortgage process.
Research team at OSU:
Dr. Stephanie Moulton is the Principal Investigator and an Associate Professor at the John Glenn School of Public Affairs at The Ohio State University. Moulton specializes in low-income homeownership and financial asset building policies and programs. Her current work studies the impact of financial institutions on mortgage outcomes of low income and vulnerable populations. Moulton is a sponsored researcher with the Center for Financial Security at the University of Wisconsin, where she is the principal investigator on a randomized evaluation of financial planning interventions for low-income homebuyers. Moulton’s work also evaluates Mortgage Revenue Bond (MRB) programs administered by State Housing Finance Agencies (HFAs), with previous funding from the U.S. Department of Housing & Urban Development. Moulton currently provides policy and research assistance to the Ohio Housing Finance Agency and the Office of Affordable Housing Research. Prior to her academic career, Moulton worked in the nonprofit sector, designing and managing asset building, homeownership, and community development programs at the local and state levels. Moulton received her PhD in Public Affairs in 2008 from Indiana University, School of Public and Environmental Affairs.
Dr. Donald R. Haurin is a Co-Investigator and Professor Emeritus of Economics at The Ohio State University. His research interests focus on issues in housing, real estate economics, and urban economics. These interests include the study of fluctuations in the rate of homeownership, real estate price indices and house price volatility, and the impact of housing conditions on households. He has published over 50 articles in peer reviewed journals including the Quarterly Journal of Economics, Review of Economics and Statistics, Journal of Real Estate Economics and Finance, Journal of Housing Economics, Journal of Urban Economics, and Real Estate Economics. He also has published over 20 book chapters and other articles. His research has been cited in over 900 other academic studies. Dr. Haurin’s recently published research includes studies of the impact of Hispanic ethnicity on homeownership, prediction of turning points in housing markets, the causes of volatility in home prices, and the determination of how residential properties’ list prices are set by sellers. His current research involves understanding the linkage between news reports of house price changes, house price expectations, and observed changes in house prices. He continues his study of the effect of housing conditions on child and young adults’ cognitive, social, and labor market outcomes.
Dr. Cäzilia Loibl is Co-Investigator and Associate Professor of Consumer Sciences at The Ohio State University. She holds a Ph.D. in household and nutrition sciences from the Technische Universität München, Germany, and is a Certified Financial Planner™. She teaches courses in the financial planning track at The Ohio State University. Her primary research interest is in the analysis of household financial behaviors. Her research has been awarded funding from university, foundation, and federal sources, including the FINRA Investor Education Foundation, the National Poverty Center, and the U.S. Department of Agriculture. She is publishing Her work is published in consumer behavior and economic psychology journals, such as the Journal of Consumer Affairs and the Journal of Economic Psychology. In her appointment with university extension, Dr. Loibl is designing and evaluating state and national financial literacy interventions in collaboration with the U.S. Department of Housing and Urban Development, the National Institute of Food and Agriculture at the U.S. Department of Agriculture, and the Consumer Federation of America.
Dr. Jason S. Seligman is Co-Investigator and Assistant Professor at The Ohio State University’s John Glenn School of Public Affairs. His work in the area of retirement and life cycle savings-consumption outcomes includes consideration of the impacts of: health and labor market dislocations on retirement wealth, the implications of declining home equity and residual loan balances at retirement ages over recent birth cohorts for satisfaction in retirement, tax policy and employer sponsored financial education on retirement wealth, the use of stochastic simulation for retirement policy design, retirement policy design for rapidly developing nations, original survey work on financial literacy just ahead of retirement, and work measuring the validity of financial literacy measures contained in national data sets like the Health and Retirement Survey (HRS), as part of the Social Security Administration’s Financial Literacy Research Consortium. His work is published in academic outlets including the Journal of Pension Economics and Finance, the Journal of Consumer Affairs, the National Tax Journal, the Journal of Money, Credit and Banking, and The Geneva Papers on Risk and Insurance. Professor Seligman is a Research Fellow of the TIAA-CREF Institute and an Affiliate of the Center for Financial Security at the University of Wisconsin, Madison. Professor Seligman holds a Ph.D. in Economics from the University of California, Berkeley.
| Go to: |
Table of Contents
Module 2: Interviewer Training |