Senior Koreans Set to get More Reverse Mortgage Money
The financial authority of Korea (Financial Services Commission - FSC) is said to be considering expanding the availability of reverse mortgages to ensure that Korean senior citizens are able to lead stable after-retirement lives in secure financial way.
The financial regulator is looking to ease the terms and conditions associated with a reverse mortgage. Reverse mortgages in Korea are available for senior citizens aged 65 or higher with a home worth 900 million won or less. The FSC intends to expand the reverse mortgage program so that people who are above 55 or 60 years of age can qualify for reverse mortgage. The organization is also looking to increase the amount of money the reverse mortgage borrowers can receive if they decide to take reverse mortgages on their Korean properties.
Korea’s reverse mortgage program was introduced in July of 2007. It was modeled after the HECM (Home Equity Conversion mortgage) program of USA. Only 695 Koreans seem to have taken a reverse mortgage during the year 2008.
The Commission has concluded that the strict terms and conditions, including age, have made the reverse mortgage program less popular.
The spokesperson for FSC had said that they deem that the Korean reverse mortgage program needs to be expanded because of the economic recession and the consequent early retirement arising out of corporate restructuring and lay-offs in the industries.
The proposal if made into law will expand the availability and reach of Korean reverse mortgage programs to enable more senior Korean citizens to lead financially stable and secure lives and it will also help the Korean economy.
The current Korean reverse mortgage program requires the senior borrower to provide the house as a collateral security to the KHFC (Korea Housing Finance Corp.) or to other local banks, to obtain monthly payments during the rest of their lives.
The Korean financial services commission is also considering expanding the reverse mortgage program to people who are of age 60 or 55. The commission is also considering an increase in the amount that a reverse mortgage can get to above 500 million won. Presently, senior citizens who take reverse mortgages can get up to only 300 million won.
The KHFC did a survey in the year 2008 and found that, senior citizens who take reverse mortgages get an average amount of 945,000 won each month as mortgage-backed pensions, accounting for 76 % of their monthly income.
A majority of the Korean seniors who took reverse mortgages on their properties said they used the reverse mortgage as they did not want to be a financial burden on their older children and as they had no other planned retirement plans. The seniors were 74 years old on the average, and the homes they gave as collateral security were valued at an average of 240 million won each.
