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@article{ART001726570},
author={Sungkyu Park},
title={A Study on Valuation of Reverse-MortgageLoan’s Collateral Property},
journal={Korea Real Estate Review},
issn={2092-5395},
year={2012},
volume={22},
number={3},
pages={37-58}

TY - JOUR
AU - Sungkyu Park
TI - A Study on Valuation of Reverse-MortgageLoan’s Collateral Property
JO - Korea Real Estate Review
PY - 2012
VL - 22
IS - 3
PB - korea real estate research institute
SP - 37
EP - 58
SN - 2092-5395
AB - Reverse mortgage loans were introduced to serve as secure supplies of living expenses for elderly property owners. However, reverse mortgage loan’s collateral property valuation can be distorted due to interested party’s incentives, and the purpose of this study is to show this distortion in a logical manner. The importance of collateral property valuation in reverse mortgage loans and in preventing loan defaults is corroborated in previous studies. Based on this, it is shown theoretically that lender opportunism and agency problem can occur in reality due to intrinsic characteristics of reverse mortgage loans, namely public guarantee and non-recourse, and can be represented as over valuation. At the same time, it is observed that under valuation is possible if the public guarantee provision is removed. These are applied to Korea’s reverse mortgage loans and analyses of internet surveyed market price and officially assessed land price confirm that possibility of over valuation is very high in housing pensions while the possibility of under valuation is very high in agricultural land pensions during property value declining periods such as now. Moreover, it is demonstrated through a simple simulation that discrimination between urban areas and rural areas ensues in reverse mortgage loans because of these over or under valuations. Objective mortgage property valuation must be ensured in order to do away with such discrimination and to minimize potential loan losses. In conclusion, the implication is drawn that valuer and valuation standards must be re-established to ensure objective mortgage property valuation.
KW - reverse mortgage;valuation;appraisal;housing pension;agricultural land pension;non-recourse
DO -
UR -
ER -

Sungkyu Park. (2012). A Study on Valuation of Reverse-MortgageLoan’s Collateral Property. Korea Real Estate Review, 22(3), 37-58.

Sungkyu Park. 2012, "A Study on Valuation of Reverse-MortgageLoan’s Collateral Property", Korea Real Estate Review, vol.22, no.3 pp.37-58.

Sungkyu Park "A Study on Valuation of Reverse-MortgageLoan’s Collateral Property" Korea Real Estate Review 22.3 pp.37-58 (2012) : 37.

Sungkyu Park. A Study on Valuation of Reverse-MortgageLoan’s Collateral Property. 2012; 22(3), 37-58.

Sungkyu Park. "A Study on Valuation of Reverse-MortgageLoan’s Collateral Property" Korea Real Estate Review 22, no.3 (2012) : 37-58.

Sungkyu Park. A Study on Valuation of Reverse-MortgageLoan’s Collateral Property. Korea Real Estate Review, 22(3), 37-58.

Sungkyu Park. A Study on Valuation of Reverse-MortgageLoan’s Collateral Property. Korea Real Estate Review. 2012; 22(3) 37-58.

Sungkyu Park. A Study on Valuation of Reverse-MortgageLoan’s Collateral Property. 2012; 22(3), 37-58.

Sungkyu Park. "A Study on Valuation of Reverse-MortgageLoan’s Collateral Property" Korea Real Estate Review 22, no.3 (2012) : 37-58.