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» Moderator | Richard K. Green
Lusk Chair in Real Estate, Price School of Public Policy and Marshall School of
Business, University of Southern California
Thank you very much for joining us at our last session this afternoon.
As you were told, my name is Richard Green, and I will be moderating
the panel. I am very happy to be here for at least three reasons; first,
I have never shared such a beautiful screen before being on a stage, I
think it just looks fantastic; second, I am a great admirer of Korea, so it's
always an honor to be invited to participate in something in Korea. It's a
country that is an example in so many ways, a country that was a poor
country and now is a rich country, a country that, as Matthias noted,
was severely under-housed as recently as 25 years ago but no longer is. A
democracy and a country that responded well to crises, both the Asian
financial crisis, out of which it emerged much more rapidly than pretty
much anyone else, and the global financial crisis, which actually had a
smaller effect on Korea than pretty much anywhere else in the OECD.
So there are so many lessons that can be learned from this country
and that's why I always look forward to coming back here. And the final
reason is to have a discussion about something that I think is a pretty
important instrument, which is the reverse mortgage. If you would have
told people in 1950s, when the average life expectancy in Asia was about
42 years old, that one of the great problems confronting Asia, and in fact
the world, is that people would live to age 75, they probably would have
said you're crazy to think that that was a problem. But that's where we
are, and of course in places like South Korea and Japan, life expectancy is
even much older than that. So it's wonderful that people are able to live
fulfilling lives for much longer periods than they used to.
But it raises the question about how to finance living all of those years.
Now, if you look at countries around the world, the US, South Korea,
Germany, UK, and others, you will see that for the typical family, the
greatest store of wealth is equity that they have in their house. So as they
age, thinking about how to monetize the home equity is a particularly
germane subject. That's something we'll be talking about this afternoon.
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We're going to begin with two presentations, largely on the US experience
with respect to reverse mortgages, or as they're typically known in the
US, Home Equity Conversion mortgages, or HECM. These are reverse
mortgages that are specifically backed by the US government. And the
reason it's appropriate to look at the US here is because the US has been
a first mover in this regard, with a fairly large reverse mortgage market
by world standards, though compared to the overall mortgage markets,
it is still very small. We're going to begin with my former George
Washington University colleague, Min Hwang, who's going to talk about
the secondary market for HECMs.
» Presenter | Min Hwang
Associate Professor, Department of Finance, George Washington University
Session III
Thank you for staying until the last session. I think I always have some
jinx that whenever I make the presentation, I always get the last session,
so welcome to my world. So what I wanted to talk about today is the
secondary market of HECM, the US reverse mortgage system. I think
Richard gave us a pretty good introduction of how the reverse mortgage
actually works.
I started studying the reverse mortgages some years ago, and when
I was reading some research papers, I found two very well-known
2019 6th AFIS & ASMMA Annual Meeting 359