Reports from National Chiayi University Advance Knowledge in Insurance Economics (Profitability and risk profile of reverse mortgages: A cross-system…

Reports from National Chiayi University Advance Knowledge in Insurance Economics (Profitability and risk profile of reverse mortgages: A cross-system and cross-plan comparison)

By a News Reporter-Staff News Editor at Real Estate Weekly News -- New research on Economics - Insurance Economics is the subject of a report. According to news reporting from Chiayi, Taiwan, by VerticalNews journalists, research stated, "This study conducts a cross-system and cross-plan comparison of reverse mortgages. We compare the systematic distinctions and analyze the risk and profitability of reverse mortgages in two prominent types of market arrangements: (1) A market where a public external insurer exists (i.e., the Home Equity Conversion Mortgage program in the U.S. market). (2) A market where an external insurer is absent (i.e., the Australian market)."

The news correspondents obtained a quote from the research from National Chiayi University, "Two typical payment plans, the lump-sum and annuity payment, are examined and compared using stochastic dominance criteria. This paper provides a complete framework to analyze the profitability and risk profile of reverse mortgage products, particularly the stochastic dominance criteria. This study argues that the modern solvency capital requirement such as Solvency II may depress the loan-to-value ratio and the intervention of government may be necessary. We also demonstrate that the lender prefers the lump-sum products and this may explain why the lump-sum products dominate the market in practice."

According to the news reporters, the research concluded: "Our work can help financial institutions and governments understand the properties of reverse mortgages, and provides a necessary incentive for these organizations to develop a reverse mortgage market."

For more information on this research see: Profitability and risk profile of reverse mortgages: A cross-system and cross-plan comparison. Insurance Mathematics & Economics, 2018;78():255-266. Insurance Mathematics & Economics can be contacted at: Elsevier Science Bv, PO Box 211, 1000 Ae Amsterdam, Netherlands.

Our news journalists report that additional information may be obtained by contacting Y.T. Lee, Natl Chiayi Univ, Dept. of Banking & Finance, Chiayi, Taiwan. Additional authors for this research include K.L. Kung and I.C. Liu.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1016/j.insmatheco.2017.09.019. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

Keywords for this news article include: Chiayi, Taiwan, Asia, Insurance Economics, Economics, Reverse Mortgage, Real Estate, Mortgages, National Chiayi University.

Our reports deliver fact-based news of research and discoveries from around the world. Copyright 2018, NewsRx LLC