Reverse Mortgages Fail to Take Off In India

imageThere has been lots of talk about reverse mortgages in different parts of the world and many people had high hopes for the product in India.  However, the Economic Times writes that senior bank officials say the product has failed to take off the way people had hoped. 

A senior bank official, who did not wish to be identified told the Economic Times that less than 500 applicants have used the product in India since its inception in 2007.

There seem to be many reasons the model hasn’t taken off in India ranging from an emotional attachment with one’s house to real estate price correction.  Many also feel that an absence of clear guidance against legal complications to inadequate marketing, are reasons the product hasn’t been unable to meet the expectations of financial institutions.

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Dewan Housing, which is one of the largest housing finance companies, has been able to sell only 4-5 reverse mortgage loans during the last two years. Two large financial institutions, HDFC, which incidentally is one of the largest home loan lenders in the country, and Kotak Mahindra do not have reverse mortgages in their portfolios.

In fact, several other players in the segment are also facing difficulties in selling reverse mortgage products. Says Sujan Sinha, senior V-P and head of retail liabilities, Axis Bank, “The product has not done well. In India, you can count the number of cases of reverse mortgage on your finger tips.”

There are some very basic reasons that have worked against this product which has taken off rather well in international markets. The psyche of Indians does not make them comfortable with the idea of selling their home.

The tradition of passing down one’s property over generations is an age-old one and is unlikely to change soon. Inheritance of property too is a problem. According to Kamlesh Rao, senior V-P at Kotak Mahindra Bank, the problem lies in the fact that in India the son inherits the property of his father but is reluctant to inherit the loan amount.

“Such a model may not work in our country due to its very nature. One’s shelter is not meant to be sold,” reiterates Mr Sinha.

House Proud: Elders refuse to buy reverse mortgage

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  • It is funny . It is the employees within a Bank handling loan products who discourage senior citizens in opting for loan by scaring them out of their wits. The reason is that none of the lending Banker considers the reverse mortgage loan as a profitable product for them and I think Bank Management resorts to dubiuos means of demotivating applicants. rnrnHere is my experience rnrnThe web site of the Bank in India does not say some rules that will be applied on the applicant .rnThe applicant ( Senior Citizen ) is told that he has to live in the flat and the Bank will inspect every quarter whether he is living there or not. If the senior citizens are interested in moving out of the house for better living . the Bank will take punitive action.rnrnThe senior citizen has to run around and get no encumberence certificate from Registrars for same house / flats financed by Bankers earlier under mortgage scheme , as normal housing loans and no outstandings as on date after retirement. rnrnAll Banks other than State Bank of India and Central Bank of India have no interest in reverse mortgage loan because they are more interested in fleecing all citizens with high interest rates ranging from 12 % to 16 % under different schemes . A person who is caught unaware and unable to pay EMI temporarily is discredited under credit rating methods and denied the opprtunity to swap loans and he has no other option to succumb to dubious means of recovery mechanism of Bankers. Standard Chartered Bank is a solid example of fleecing its customers with utter disregard to woes of legitimate customers rnrnA senior citizen having property in one place and living in a different place cannot opt for reverse mortgage as Per officials of State Bank of India . The senior citizen has to live with the fate that the property held cannot fetch any rental income rnrnThe rigid undisclosed rules by Bankers to circum vent Govt policies to help senior citizens are the primary reasons for unpopular state of reverse mortgages .rnrnrnrnKSKrnrn

  • Correction to our friends in India::::::rnThe due date is 15 years from date of Reverse Mortgage,makiing it rnage 75 or age 77. My apologies for inadvertent submission of misleadingrndata. Bob LaFay

  • With all due respect to our friends in India, may I suggest a sample ofrnreasons for the tepid response to Reverse Mortgage Plan you have in place?rn1. Age 60 is your eligible age ,which is wonderful:it beats the US minimum agernof 62. rn2. The due date, the day of mandatory settlement with the lender isrn15 years. At age 67 or 69 someone has to come up with the funds to rnpay off the lender in full. Whether it is the parent seniors or the inheriting sonrnthe big question ,begging for soothing resolve is where are they goingrnto get the money. I would be glad to help you write new rules.rnBob LaFay Reverse Mortgage Consultant

  • With all due respect to our friends in India, may I suggest a sample of
    reasons for the tepid response to Reverse Mortgage Plan you have in place?
    1. Age 60 is your eligible age ,which is wonderful:it beats the US minimum age
    of 62.
    2. The due date, the day of mandatory settlement with the lender is
    15 years. At age 67 or 69 someone has to come up with the funds to
    pay off the lender in full. Whether it is the parent seniors or the inheriting son
    the big question ,begging for soothing resolve is where are they going
    to get the money. I would be glad to help you write new rules.
    Bob LaFay Reverse Mortgage Consultant

  • Correction to our friends in India::::::
    The due date is 15 years from date of Reverse Mortgage,makiing it
    age 75 or age 77. My apologies for inadvertent submission of misleading
    data. Bob LaFay

  • It is funny . It is the employees within a Bank handling loan products who discourage senior citizens in opting for loan by scaring them out of their wits. The reason is that none of the lending Banker considers the reverse mortgage loan as a profitable product for them and I think Bank Management resorts to dubiuos means of demotivating applicants.

    Here is my experience

    The web site of the Bank in India does not say some rules that will be applied on the applicant .
    The applicant ( Senior Citizen ) is told that he has to live in the flat and the Bank will inspect every quarter whether he is living there or not. If the senior citizens are interested in moving out of the house for better living . the Bank will take punitive action.

    The senior citizen has to run around and get no encumberence certificate from Registrars for same house / flats financed by Bankers earlier under mortgage scheme , as normal housing loans and no outstandings as on date after retirement.

    All Banks other than State Bank of India and Central Bank of India have no interest in reverse mortgage loan because they are more interested in fleecing all citizens with high interest rates ranging from 12 % to 16 % under different schemes . A person who is caught unaware and unable to pay EMI temporarily is discredited under credit rating methods and denied the opprtunity to swap loans and he has no other option to succumb to dubious means of recovery mechanism of Bankers. Standard Chartered Bank is a solid example of fleecing its customers with utter disregard to woes of legitimate customers

    A senior citizen having property in one place and living in a different place cannot opt for reverse mortgage as Per officials of State Bank of India . The senior citizen has to live with the fate that the property held cannot fetch any rental income

    The rigid undisclosed rules by Bankers to circum vent Govt policies to help senior citizens are the primary reasons for unpopular state of reverse mortgages .

    KSK

  • With all due respect to our friends in India, may I suggest a sample ofrnreasons for the tepid response to Reverse Mortgage Plan you have in place?rn1. Age 60 is your eligible age ,which is wonderful:it beats the US minimum agernof 62. rn2. The due date, the day of mandatory settlement with the lender isrn15 years. At age 67 or 69 someone has to come up with the funds to rnpay off the lender in full. Whether it is the parent seniors or the inheriting sonrnthe big question ,begging for soothing resolve is where are they goingrnto get the money. I would be glad to help you write new rules.rnBob LaFay Reverse Mortgage Consultant

  • Correction to our friends in India::::::rnThe due date is 15 years from date of Reverse Mortgage,makiing it rnage 75 or age 77. My apologies for inadvertent submission of misleadingrndata. Bob LaFay

  • It is funny . It is the employees within a Bank handling loan products who discourage senior citizens in opting for loan by scaring them out of their wits. The reason is that none of the lending Banker considers the reverse mortgage loan as a profitable product for them and I think Bank Management resorts to dubiuos means of demotivating applicants. rnrnHere is my experience rnrnThe web site of the Bank in India does not say some rules that will be applied on the applicant .rnThe applicant ( Senior Citizen ) is told that he has to live in the flat and the Bank will inspect every quarter whether he is living there or not. If the senior citizens are interested in moving out of the house for better living . the Bank will take punitive action.rnrnThe senior citizen has to run around and get no encumberence certificate from Registrars for same house / flats financed by Bankers earlier under mortgage scheme , as normal housing loans and no outstandings as on date after retirement. rnrnAll Banks other than State Bank of India and Central Bank of India have no interest in reverse mortgage loan because they are more interested in fleecing all citizens with high interest rates ranging from 12 % to 16 % under different schemes . A person who is caught unaware and unable to pay EMI temporarily is discredited under credit rating methods and denied the opprtunity to swap loans and he has no other option to succumb to dubious means of recovery mechanism of Bankers. Standard Chartered Bank is a solid example of fleecing its customers with utter disregard to woes of legitimate customers rnrnA senior citizen having property in one place and living in a different place cannot opt for reverse mortgage as Per officials of State Bank of India . The senior citizen has to live with the fate that the property held cannot fetch any rental income rnrnThe rigid undisclosed rules by Bankers to circum vent Govt policies to help senior citizens are the primary reasons for unpopular state of reverse mortgages .rnrnrnrnKSKrnrn

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