INDIA: Housing Bank Works on Income Deal for Senior Citizens

KOLKATA (Express News Service), June 29, 2006: Retirement may no longer mean goodbye to a lifestyle. The National Housing Bank, the Apex housing finance institution, is hammering out a reverse mortgage deal for senior citizens that will enable them to earn extra by monetising their house. According to the scheme, housing finance companies (HFCs) and select banks will pay a monthly amount to a retired person against a mortgage on his or her house. The amount will depend on the age of the senior citizen - the older, the greater - as well as a valuation of the property. Mr. S. Sridhar, NHB’s chairman and managing director, told a banking conclave here that the scheme was being discussed with HFCs and the Reserve Bank of India (RBI). Sridhar said the NHB would also develop a secondary mortgage market by creating an institutional framework. A mortgage guarantee insurance fund is also planned to provide credit insurance to banks giving loans. For the reverse mortgage scheme, the NHB is trying to ensure that the spouse of the borrower is not dispossessed if the borrower dies. The scheme will be applicable for a maximum of 15 years or the death of the borrower, whichever happens earlier. The children of the senior citizen will be able to recover ownership of the house only after they repay the principal amount (latest value of the property) and the accrued interest.