BOT vies for reverse mortgages in Taiwan

The bank pushes Taiwanese government to offer reverse mortgage to convert home into cash.

Sean Chen, chairman of the Cabinet-level Financial Supervisory Commission (FSC), said that the FSC will push for a governmental reverse mortgage mechanism to cushion the nation's growing elderly population, according to a report in The China Post.

A reverse mortgage is a special type of home loan available to seniors to convert a portion of their home equity into cash. The equity built up by senior homeowners' conventional mortgage payments can be paid to them by banks in one lump sum or multiple payments. The bank will own the property of the original owner when he or she dies, sells his or her home or violates the contract.

BOT Chairwoman Susan Chang said that banks in Taiwan will support the government's plan if proven “viable”. Taiwanese banks will advise the government on the reverse mortgage plan if requested, Chang said.

Premier Wu Den-yih pointed out that the Executive Yuan will evaluate the feasibility of the reverse mortgage proposal within a year. Wu shied away from fully supporting the plan, in part because the program requires careful coordination that has yet to be worked out.