Research profile | Staying afloat in uncertain times

Is linking mortgages to pension programs an answer to high rates of mortgage defaults during a housing crisis? Assistant Professor Thomas Davidoff's research looks at possible solutions to a very topical problem.

Davidoff's current research investigates how policy-makers in the United States can arrest or minimize the negative economic impact associated with the large numbers of mortgages in default.

It's an issue that is the subject of much ongoing discussion in the media and of great importance to many countries.

During the kind of economic downturn we've seen recently, many homeowners discover that their mortgages are higher than the value of the home. Discouraged and financially strapped, they walk away from their debts and default on their payments despite potentially severe consequences for doing so.

Davidoff is researching how linking mortgages to pension programs would deter defaults and improve housing markets. He is also working towards the development of a program that will assist retirees to achieve an enhanced quality of life by accessing untapped financial reserves.

“Seniors have a lot of home equity,” explains Davidoff. “I am studying how they can convert that home equity into cash without having to sell their homes and moving. This issue is extremely complex as older individuals place a high value on home ownership.”

Older adults have worked hard to pay down mortgages and view their home as either a gift they can pass on to family members or as a contingency fund against unexpected financial requirements. Additionally, retirees associate their homes with memories of family and past and ongoing independence.

That's why Davidoff feels it is important to look at alternatives such as reverse mortgages, annuities, and long-term care insurance that will allow them to remain in their homes.

Learn more about Professor Davidoff and his latest research interests.