Conference on Reverse Mortgages in India

A National conference on mortgages, focusing on the newly launched variant of reverse mortgage loan enabled annuity scheme by the National Housing Bank was inaugurated here today.

The conference is part of NHB's promotional endeavour to generate awareness about the product and develop better understanding of the various legal and operational issues involved, NHB Executive Director R V Verma told reporters.

Reverse Mortgage Loan enabled Annuity product (RMLeA) has been engineered to convert the "illiquid" house asset of the senior citizen into a stream of fund inflows throughout his/her life time, while allowing the individual to stay in the house, he said.

The special feature of the product is that the senior need not make any repayment as long as he or she lives in the house. The loan becomes due and payable only on death of the senior citizen owner or the owner moving out of the home permanently.
     
The loan dues are settled by way of sale of the house property. However, the heirs are given the first offer to repay the dues, without bringing the property to sale.
     
The efficiencies in the new RMLeA result in better benefits to senior citizens in terms of assured lifetime payments. This stems from the direct product integration between the life insurance sector, banking sector and housing finance market, R V Shastri Director, NHB said.
     
The concept of reverse mortgages in India was introduced by NHB in 2007. As on March 31, 2010 around 7,000 RMLs of Rs 1,400 crore have been sanctioned, Verma said.
     
Some of the limitations of the earlier scheme are that the maximum payment tenure besides the stream of monthly payments being made by the banks/HFCs to senior citizens, was limited to maximum period of 20 years, Verma said while inaugurating the one-day conference.