Reverse Mortgages Should Be Treated as Commercial Product

NewImage.jpgDuring a seminar discussing reverse mortgages in Taiwan, Chang Chin-oh, a professor in National Chengchi University’s Department of Land Economics, suggested the product should be treated as a commercial product rather than social welfare benefits to ensure that the system can be sustained.

Currently, the government initiatives to launch the product are being handled by the Ministry of the Interior, which has the government providing most of the financing.  But he said the focus of the proposed system to implement the schemes should be adjusted.  

Since the loans are by definition financial products and involve managing flows of money, meaning that financial authorities should take charge of them.

He also contended that for the system to be sustainable, reverse mortgages would have to become commercialized rather than arranged by the government.It would lift a heavy financial burden off the government’s shoulders, and for markets, “more choices would be a good thing,” he said.

Chang and other real experts have pushed for reverse mortgages as a way to cope with Taiwan’s rapidly aging society and low birth rate, which could eventually limit senior citizen pensions and the income the elderly get from their children.

The government is interested in launching both products on a trial basis next year to give more income options to seniors, but Chang also said special legislation would also be required to reconcile the schemes with existing law.

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