Government mulls 'reverse mortgage' program for seniors

Jiang made the remarks when attending a seminar on “reverse mortgages,” jointly sponsored by the Chinese Society of Housing Studies, the Taiwan Real Estate Research Center, the Land Bank of Taiwan, and the Economic Daily News, with a ranking official from the U.S. Department of Housing and Urban Development as key speaker.

Jiang said that if the government implements the program as a public-interest one, it will be associated with social welfare programs.

This, in turn, will lead to heavier financial burden on the government, and therefore the Ministry of the Interior will seek a balanced point between enforcing the “reverse mortgage” program on a public-interest bases and a non-public-interest basis.

As its name suggest, the program is just the reverse of a traditional mortgage which requires monthly payments.

A reverse mortgage (or lifetime mortgage) is a loan available to seniors, and is used to release the home equity in the property as one lump sum or multiple payments. The homeowner's obligation to repay the loan is deferred until the owner dies, the home is sold, or the owner leaves (e.g., into aged care).

In a conventional mortgage the homeowner makes a monthly amortized payment to the lender; after each payment the equity increases within his or her property, and typically after the end of the term (e.g., 30 years) the mortgage has been paid in full and the property is released from the lender.

In a reverse mortgage, the home owner makes no payments and all interest is added to the lien on the property. If the owner receives monthly payments, or a bulk payment of the available equity percentage for their age, then the debt on the property increases each month.

Minister Jiang said that the ratio of elderly population, aged over 65, will hit 20 percent of Taiwan's total population several years later, and the ratio of seniors residing independently or with their spouses has risen to 40 percent in 2008 from 20 percent in 1986, as a result of the growing numbers of small families.

Accordingly, tackling housing and living problems facing seniors is an increasingly imperative issue the government should tackle as soon as possible, Jiang said.

Also attending the seminar, Vice Finance Minister Hsu Chih-chien said that with the housing prices getting higher and higher, the aging population ratio on the steady rise, and the number of children on the stable decline, it's high time for the government to implement the “reverse mortgage” program for seniors.

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