| Description: | This paper outlines impediments to the growth of both the supply and the demand sides of the market for reverse mortgages. On the demand side, the focus is on such standard forces as transactions costs and moral hazard, and on less standard, yet arguably more profound, psychological forces. On the supply side, the focus is on regulatory uncertainty, and its impact on the incentive to innovate. We outlined policies that would help stimulate development of new forms of housing finance by reducing regulatory uncertainty. The authors believe that encouraging innovation is particularly important in a market such as the reverse mortgage market, in which psychological inertia makes it hard to predict exactly which products will succeed, and which will fail. |
