Somkid moves to launch reverse mortgage
A SIGNIFICANT move to introduce reverse mortgage for the elderly in this country is gaining momentum with Deputy Prime Minister Somkid Jatusripitak having instructed the Finance Ministry to study the proposal, Fiscal Policy Office director-general Krisda Chinavicharana said recently.
Not many people know what reverse mortgage means and Wikipedia.com explains that this is also called home equity conversion mortgage and is given to older homeowners with no monthly mortgage payments required.
“Borrowers are still responsible for property taxes and homeowner’s insurance. Reverse mortgages allow elders to access the home equity they have built up in their homes now, and defer payment of the loan until they die, sell, or move out of the home.
“Because there are no required mortgage payments on a reverse mortgage, the interest is added to the loan balance each month. The rising loan balance can eventually grow to exceed the value of the home, particularly in times of declining home values or if the borrower continues to live in the home for many years.
“However, the borrower (or the borrower’s estate) is generally not required to repay any additional loan balance in excess of the value of the home,” this free encyclopedia said.
Under the plan being studied by the Thai Finance Ministry those who are over 60 years of age would be able to mortgage their homes with either Government Savings Bank or Government Housing Bank if their homes are not already pledged.
The bank would then pay money to their elderly client every month until they die with the client able to continue living in their home.
Upon their death their heirs would have an opportunity to pay back and repossess this home at original appraised value but should the homeowner not leave any heirs the property would go to the bank which would then sell it in the market.
Currently Government Savings Bank, Government Housing Bank and an insurance company are studying what shape this product should take as it would ensure that the elderly would have monthly income and would not be a burden to their children and grandchildren.
This proposal is likely to be submitted to the Cabinet for consideration soon.
CAPTION:
Reverse mortgage is a way to help the elderly across the world including this elderly couple resting at Jardin du Luxemburg in Paris. Photo: Moyan Brenn
By Thai Residents reporters
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