THE REVERSE MORTGAGE AS AN ASSET MANAGEMENT TOOL

Reverse mortgages are usually seen as a vehicle for increasing the inc ome of poor, elderly households. This perspective, coupled with the re latively slow growth of reverse mortgage programs, has led some observ ers to question the growth potential of the reverse mortgage market. T his article presents a more expansive view of reverse mortgages as a f inancial tool for tapping housing equity for various purposes and at v arious stages in the life cycle. Three market segments for reverse mor tgages are discussed: elderly persons living alone, other elderly hous eholds, and non-elderly households. Potential uses include turning hou sing equity into personal human capital investment accounts, enabling children to provide care for their disabled parents, funding elderly h ouseholds' long-term care insurance, and sustaining consumption. Recen t progress in product development and availability and political press ures to find private financing for health and long-term care suggest t hat the reverse mortgage market has considerable growth potential.