Can Reminders Nudge Seniors to Remember to Pay Their Property Taxes? a Field Experiment with Reverse Mortgage Borrowers
*Names in bold indicate Presenter
Using Cox proportional hazards models to estimate the risk of default, we find that low-touch reminders for reverse mortgage borrowers reduce the incidence of tax and insurance default by as much as 37 percent. We find no statistically significant impact of the offer of free financial counseling; however, the take-up for financial counseling was very low. Subsample regressions indicate that the effect size of the reminders treatment is larger for those with a prior mortgage at baseline, relative to those without a prior mortgage. Those with a prior mortgage were more likely to have had an escrow for property taxes and insurance, thus making this group most vulnerable to forgetting to pay property taxes and insurance through the reverse mortgage, and most sensitive to the reminder treatment. From a policy perspective, mailed reminders are less costly than financial counseling and can be easily replicated as part of loan servicing.