Taiwanese Lender Shuns Internet Originations to Focus on Reverse Mortgages

The government of Taiwan is accepting applications for one of two internet-only lending licenses, but a leading reverse mortgage provider in the country has decided to sit it out and double down on seniors.

Cooperative Financial has originated $208 million in reverse mortgages so far in 2018, according to a report in the Taipei Times, and president Chen Mei-tsu said the company prefers the more “stable and conservative” home equity market to the world of online originations.

That level of reverse mortgage volume helped Cooperative Financial boost its net income by 8.45% from the first six months of 2017, Chen told the publication.

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“Reverse mortgage operations, part of the government’s response to Taiwan’s fast-growing aging population, help elderly homeowners maintain financial independence by mortgage their property,” the Times noted.

Taiwan Cooperative Bank, a subsidiary of Cooperative Financial, launched the first reverse mortgage program in the island nation back in 2015. Among the first recipients was a 94-year-old homeowner who secured monthly payments of $2,740 against his home over a 10-year period, according to news outlet Focus Taiwan.

Despite the age of that early borrower, Focus Taiwan predicted that the cohort of people then aged 45 to 65 would be most receptive to the concept, as they search for ways to fund their own retirements without relying on their children — who have faced a tougher real estate and job market than they had. Still, early last year, a 99-year-old borrower became the oldest person to secure a reverse mortgage in the country, with proceeds of $644.50 per month.

In 2016, the first full year after introducing the product, Cooperative Financial had generated 549 reverse mortgages worth 3.2 billion Taiwan dollars, or about $104 million.

“With Taiwan set to become a ‘super-aging society’ (20% of the population at 65 or older) by 2025, and housing values [having] appreciated considerably in the past 10 years, interest in reverse mortgages will almost certainly rise,” Focus Taiwan predicted in 2015.

Part of Cooperative Financial’s strategy going forward should sound familiar to domestic reverse mortgage professionals: diversification.

“The lender is to focus on such activities by providing such clients with one-stop trust services that cover leasing and property rights, long-term care, prepayment of services, and other solutions,” the Taipei Times noted.

Written by Alex Spanko