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i
REVERSE MORTGAGE LOAN
By M.V.Ruparelia.
!s "ia#$ %iist$& has ow #la&i'$( that o I#om$ Ta) is payabl$ o
amo*ts &$#$i+$( by $ith$& S$io& ,iti-$s f&om %o&tgagig O&gai-atio
o& ay #apital gai is payabl$ o high$& ass$ss$( +al*$ of th$i& .ats gi+$
o mo&tgag$/ this S#h$m$ has b$#om$ 0*it$ a(+atag$o*s to S$io&
,iti-$s ha+ig th$i& .ats $$(ig a((itioal i#om$. 1$t $$(ig S$io&
,iti-$s ta2$ a(+atag$ of this S#h$m$ a( imp&o+$ th$i& sta(a&( of
li+ig.
Introduction:
N*mb$& of S$io& ,iti-$s i o*& #o*t&y as w$ll as th$ whol$ wo&l( is
i#&$asig (ay by (ay (*$ to +a&io*s fa#to&s li2$ o+$&all $#oomi# g&owth/
low mo&tality/ a(+a#$m$t of m$(i#al s#i$#$ $t#. S*#h a h*g$ *mb$& of
$)p$&i$#$( a( tal$t$( thi2 ta2s of th$ so#i$ty #a ot b$ igo&$( by
ay 3o+$&m$t o& So#i$ty4 With a +i$w to p&o+i($ a st$a(y st&$am of
i#om$ to S$io& ,iti-$s owig &$si($tial p&$mis$s/ o*& "ia#$ %iist$&
ha( ao*#$( th$ it&o(*#tio of a o+$l 1oa "a#ility #all$( 55R$+$&s$
%o&tgag$ 1oa55 6RML7i his last B*(g$t Sp$$#h. 3o+$&m$t ow$(
Natioal 8o*sig Ba2 has si#$ oti'$( ($tail$( op$&atig ist&*#tios fo&
g*i(a#$ of 9&ima&y 1$(ig Istit*t$s (PLI +i- S#h$(*l$( Ba2s a(
8o*sig "ia#$ ,o&po&atios 68",s7. 91Is ha+$ b$$ a(+is$( to o!"er#e
and $aintain %i&% "tandard" o' conduct (it% Senior )iti*en" a(
th$i& famili$s a( t&$at th$m with sp$#ial #a&$/ fai&$ss a( sympathy. Th$y
a&$ also a(+is$( to (is#los$ a( $)plai all t$&ms of th$ loa #l$a&ly. Th$y
sho*l( gi+$ f*ll ($tails of m$tho(ology follow$( i +al*atio of R$si($tial
9&$mis$s/ 0*at*m of loa a( all p&os a( #os of loa. Th$y will also
$)plai th$ ($tails of !g&$$m$t to b$ $t$&$( ito fo& %o&tgag$. !s a
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#*stom$&-f&i$(ly g$st*&$/ $+$ aft$& loa is sa#tio$( a( (o#*m$ts
$)$#*t$(/ bo&&ow$&s shall b$ gi+$ : #l$a& (ays to #a#$l th$ t&asa#tio
6Right of R$s#issio7. 9*;ab Natioal Ba2 69NB7 has si#$ it&o(*#$( its
1oa S#h$m$ am$( 55Bagba55 a( <$wa 8o*sig "ia#$ ,o&po&atio
1t( 6<8"17 as 55Sa2s%a$22. I(ia Ba2 has also oti'$( its s#h$m$ i
!*g/=>. Stat$ Ba2 of I(ia a( s$+$&al oth$&s ha+$ also oti'$( th$i&
S#h$m$s. Oth$& S#h$(*l$( Ba2s a( 8",s a&$ li2$ly to ao*#$ th$i&
s#h$m$s sho&tly.
Nece""ity:
3$$&ally/ 1oa is ot a##$ptabl$ o& a(+isabl$ i o*& #*lt*&$ b*t #*lt*&$ ot
of o*& #o*t&y b*t almost th$ $ti&$ Wo&l( to-(ay is #ompl$t$ly #hag$(.
"a&m$& ta2$s loa fo& t&a#to&/ s$$(s $t# to i#&$as$ p&o(*#tio. ,iti-$s
ta2$ loas fo& bi2$s/ #a&s/ T.V./ "&i(g$/ a( 8o*s$ B*il(ig $t#. 3o+$&m$ts
a&$ ta2ig loas fo& foo( g&ais to f$$( pop*latio/ wat$& s*pply s#h$m$s/
&oa(s/ ma#hi$&y/ a&ms $t# fo& w$lfa&$ as w$ll
as 0*i#2 ($+$lopm$t of th$ #o*t&y. <*$ to abo&mal i#&$as$ i
($a&$ss/ o+$&all p&og&$ss a( $asy a+ailability of +a&io*s thigs a(
fa#iliti$s/ it is (i?#*lt fo& may S$io& ,iti-$s to li+$ #omfo&tably
withi th$i& p&$s$t i#om$. %ay ha( ot pla$( fo& s*#h a log lif$
spa. Th$&$ a&$ S$io& ,iti-$s/ who ha+$ som$ i#om$ o*t of p$sio
o& sa+igs b*t ot s*?#i$t to m$$t all th$i& basi# $$(s. Th$&$ a&$
som$/ who ha+$ goo( i#om$ fo& basi# $$(s b*t ot s*?#i$t fo&
goo( h$alth #a&$ fa#iliti$s/ pi#i#s/ pilg&imag$s/ sight s$$ig o& simila&
$$(s of b$tt$& lif$. Th$y a&$ ot abl$ to sp$( m*#h fo& so#ial
obligatios li2$ ma&&iag$s of #hil(&$ $t#. Th$&$ a&$ som$/ who ha+$
$o*gh i#om$ to m$$t s*#h $$(s b*t ot s*?#i$t fo& f*l'llm$t of
th$i& #hil(hoo( ($si&$s/ fa#i$s a( fatasi$s li2$ +isits to "a&-East/
!lps/ Swit-$&la(/ E*&op$/ !m$&i#a o& simila& ($si&$s4 !lmost all S$io&
,iti-$s ha+$ wo&2$( ha&( (*&ig th$i& p&im$ tim$ a( sp$t th$i&
ha&( $a&igs fo& family a( so#ial obligatios $t# a( ha&(ly aythig
o s$lf. %ay ha+$ sa+$( a(/o& ta2$ loa fo& p&o+i(ig R$si($tial
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9&$mis$s a( ta2$ p&i($ of ha+ig s*#h p&$mis$s. Th$y a&$ stayig i
s*#h s$lf a#0*i&$( p&$mis$s fo& 0*it$ som$ tim$ a( ha+$ p$&soal
atta#hm$t to that pla#$. Th$i& #hil(&$ (o ot &$0*i&$ th$s$ p&$mis$s
o& aythig f&om th$m/ b$ig w$ll o@ a( stayig i($p$($tly a(
wat th$i& pa&$ts to $;oy a( li+$ #omfo&tably. S$io& ,iti-$s (o ot
wish to s$ll o@ a( go to small$& p&$mis$s o& ati+$ pla#$/ $+$ wh$
th$y $$( mo&$ i#om$. Th$ p&i#$ of th$i& p&op$&ty has i#&$as$(
#osi($&ably/ as #ompa&$( to th$i& p*&#has$ p&i#$ a( it has b$#om$
th$i& 58om$ AE0*ity W$alth5. This R$+$&s$ %o&tgag$ S#h$m$ is to
h$lp all s*#h S$io& ,iti-$s to a*gm$t th$i& i#om$ a( $mpow$&
th$m to $;oy th$ f&*its of th$ boomig $#oomi# p&og&$ss of th$
#o*t&y i th$i& last sp$ll of lif$ a( to li+$ ($#$t lif$/ if ot Big-si-$/
at l$ast 0*it$ #omfo&tably.
Sc%e$e:
U($& this S#h$m$/ ay S$io& ,iti-$ of C= y$a&s a( abo+$/ &$si($t of
I(ia/ ha+ig a s$lf-a#0*i&$( a( s$lf-o##*pi$( R$si($tial 9&$mis$s ha+ig
&$si(*al lif$ of at l$ast D= y$a&s a( witho*t ay $#*mb&a#$s a( i
whi#h h$ is stayig at p&$s$t fo& o$ y$a& o& mo&$ #a mo&tgag$ th$
p&$mis$s to ay 91I of his #hoi#$. %a&&i$( #o*pl$ will b$ $ligibl$ as ;oit
bo&&ow$&s. I s*#h #as$s/ oly o$ of th$ bo&&ow$&s $$( b$ C= a( abo+$.
O$ g&$at a(+atag$ fo& bo&&ow$&s is that th$&$ is o s$&+i#$ of loa (*&ig
th$i& lif$ tim$/t$o& i.$. o pay-ba#2s.
A$ount o' Loan:
Th$ amo*t of 1oa by 9.1.I. shall ($p$( *po &$ali-abl$ ma&2$t +al*$ of
&$si($tial p&$mis$s ass$ss$( by 9.1.I./ ag$ of bo&&ow$&s a( p&$+al$t &at$
of it$&$st. !##o&(ig to g*i($ li$s of N.8.B./ th$ loa amo*t alog with
it$&$st o th$ basis of R$+$&s$ !*ity %o&tgag$ that will a##&*$ till th$
$( of t$o& of loa may g$$&ally b$ limit$( as *($&:-
!g$ 3&o*p 1oa amo*t to b$ limit$( to !ss$ss$( Val*$ of R$si($tial
9&op$&ty.
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C=-CE F=G
CC.>= E=G
>H->E EEG
!bo+$ >E C=G
!s th$s$ a&$ g*i($ li$s oly/ 9.1.I.s follow th$i& ow sta(a&(s. 9*;ab
Natio Ba2 is 2$$pig ma&gi of D=G a( has 2$pt th$ *pp$& limit of loa
with a##&*$( it$&$st as H#&o&. Rat$ of it$&$st by 9.N.B. is H=G I by <.8.".1.
HDGa( I(ia Ba2 H=G by 2$$pig *ifo&m ma&gi of CHG i all #as$s fo&
HE y$a&s t$o& a( loa to ass$t +al*$ :JG. Th$ m$tho(ology a(opt$( by
$a#h 9.1.I. fo& ($t$&miig th$ 0*at*m of loa i#l*(ig th$ ($tail$( tabl$s
of #al#*latios/ th$ &at$ of it$&$st a( ass*mptios/ if ay/ shall b$ #l$a&ly
(is#los$( to th$ bo&&ow$&s. Th$ +al*atio of p&op$&ty shall b$ &$ass$ss$( at
som$ it$&+als b*t at l$ast o#$ i E y$a&s a( amo*t of loa shall b$
&$+is$( *pwa&( o& (owwa&( as p$& &$+al*atio. 9.N.B. has ')$( E y$a&s/
<.8.".1.K I(ia Ba2 as : y$a&s fo& &$+al*atio. Bo&&ow$&s shall ha+$ f*ll
lib$&ty to a##$pt o& &$;$#t th$ &$+al*atio by payig th$ amo*t (*$ at that
tim$ to 9.1.I. !ll 9.1.I.s ha+$ to $s*&$ that th$ $0*ity of bo&&ow$& i
&$si($tial p&$mis$s 6E0*ity to Val*$ Ratio-EVR7 (o$s ot at ay tim$
(*&ig th$ t$o& of loa fall b$low H=G. Th$ followig tabl$s of 9.N.B. a(
I(ia Ba2 shall gi+$ a i($a as to what amo*t of loa p$& moth may b$
a+ailabl$ fo& (i@$&$t t$o&s of loa p$& H la2h of +al*$ of &$si($tial
p&op$&ty:-
T$o&-y$a&s H= HH HD H: HF HE HC H> HL HJ D=
!mo*t Rs. FJ= FD= :C= :HE D>E DF= DHE HJ= H>= HE= H:E 9.N.B.
DHC
I.B.
FH=
<81".
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!s p$& <81" &at$s/ a p&op$&ty wo&th Rs. D= la2hs fo& ista#$ will $a& Rs.
FH== p$& moth fo& H= y$a&s. !ft$& a((ig *p it$&$st at HD G/ th$ amo*t
payabl$ to <8"1 wo*l( b$ a&o*( Rs. H= la2hs.
Nature o' Pay$ent:
Th$ loa shall b$ payabl$ i o$ o& mo&$ istallm$ts i l*mp s*m o&
mothly/ 0*a&t$&ly/ half y$a&ly o& a*al istallm$ts/ as may b$ m*t*ally
($#i($( by bo&&ow$&s K 9.1.I.s. It #a also b$ pai( by way of #ommitt$( li$
of #&$(it. 1*mp s*m paym$ts may b$ ma($ #o(itioal a( limit$( to
sp$#ial &$0*i&$m$ts s*#h as m$(i#al $m$&g$#i$s/ hom$ imp&o+$m$ts/
mait$a#$/ *pg&a(atio/ &$o+atio/ $)t$sio/ is*&a#$ of &$si($tial
p&$mis$s. T%i" can !e u"ed e#en 'or repay$ent o' e3i"tin& loan
ta4en 'or t%e re"idential property to !e $ort&a&ed and any ot%er
&enuine need" o' !orro(er". This loa is to s*ppl$m$t th$ $)istig
i#om$/ if ay/ b*t #a ot b$ *s$( fo& ay sp$#*lati+$/ t&a(ig o& b*si$ss
p*&pos$s. Th$ loa-amo*t shall g$$&ally b$ pai( to bo&&ow$&s (i&$#tly
$)#$pt wh$&$ paym$ts a&$ &$0*i&$( to b$ ma($ to o*tsi($ pa&ti$s fo&
&$pai&s/ mait$a#$/ is*&a#$/ p&op$&ty ta)/ &$paym$t of loa of
&$si($tial p&$mis$s to b$ mo&tgag$( $t#. Th$ 1oa shall b$ s$#*&$( by
way of $0*itabl$ mo&tgag$ of s$lf-a#0*i&$( K s$lf-o##*pi$( &$si($tial
p&op$&ty i fa+o*& of 9.1.I. i s*itabl$ fo&m/ag&$$m$t. Th$ 91I shall $t$&
ito a ($tail$( loa !g&$$m$t s$ttig o*t all sali$t f$at*&$s of loa
mo&tgag$ s$#*&ity. No I#om$ Ta) is payabl$ o amo*ts &$#$i+$( by
S$io& ,iti-$s f&om %o&tgagig O&gai-atio o& ay #apital gai is
payabl$ o high$& ass$ss$( +al*$ of th$i& .ats gi+$ o mo&tgag$.
Initial )o"t:
Th$ 9.1.I.s will p&o+i($ i w&itig a fai& a( #ompl$t$ pa#2ag$ of R%1
mat$&ial a( sp$#im$ (o#*m$ts #o+$&ig th$ b$$'ts a( obligatios of
th$ p&o(*#t. Th$y shall also ma2$ a+ailabl$ it$&$st &at$ a( ($tails of
#apitali-atio of it$&$st o loa $t#. Th$ iitial #osts 6#losig #osts7 may
i#l*($ th$ #*stoma&y a( &$asoabl$ f$$s a( #ha&g$s fo& O&igiatio/
!pp&aisal/ Isp$#tio K +$&i'#atio/ Titl$ E)amiatio "$$s/ 1$gal
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,ha&g$s/"$$s/ Stamp <*ty/ R$gist&atio #ha&g$s/ 9&op$&ty S*&+$y K
Val*atio #ha&g$s. ! ($tail$( s#h$(*l$ of all s*#h #ha&g$s shall b$ p&o+i($(
to p&osp$#ti+$ bo&&ow$&s by 91Is.
Settle$ent O' Loan:
Th$ loa shall b$#om$ (*$ a( payabl$ oly wh$ th$ last s*&+i+ig
bo&&ow$& (i$s o& wo*l( li2$ to s$ll th$ p&$mis$s o& p$&ma$tly mo+$s o*t
of hom$ to stay with som$ &$lati+$s o& som$ istit*t$ of ag$( #a&$ hom$. If
th$ bo&&ow$&s (o ot li+$ i th$ p&$mis$s #oti*o*sly fo& o$ y$a& o& mo&$
o& (o ot it$( to li+$ th$&$ #oti*o*sly/ it shall b$ t&$at$( as mo+ig o*t
p$&ma$tly. S$ttl$m$t of loa alog with a##*m*lat$( it$&$st shall b$
m$t with by p&o#$$(s &$#$i+$( o*t of sal$ of mo&tgag$( p&op$&ty. Th$
bala#$ s*&pl*s/ if ay/ shall b$ pass$( o to bo&&ow$&s o& th$i&
h$i&s/$stat$. Th$ bo&&ow$&s o& th$i& h$i&s #a &$pay th$ amo*t (*$ f&om
ay oth$& so*&#$ a( g$t ba#2 th$ mo&tgag$( p&op$&ty. Th$y #a also
p&$pay th$ loa a( it$&$st at ay tim$ (*&ig th$ loa t$o& also witho*t
any le#y,penalty,c%ar&e 'or "uc% prepay$ent. T%e !orro(er" "%all
!e allo(ed to continue to "tay in t%e pre$i"e" till t%ey are ali#e or
cea"e to u"e t%e property a" t%eir re"idence. E#en in ca"e"5 (%ere5
due to accrual o' intere"t till deat% o' !ot% Senior )iti*en" i.e. "el'
6 "pou"e5 total a$ount due to t%e Mort&a&ee Or&ani*ation
e3ceed" t%e #alue o' t%e $ort&a&ed 7at5 no a$ount "%all !e
paya!le 'ro$ ot%er property o' t%e !orro(in& Senior )iti*en" or
t%eir 4it% 6 4in8
O!li&ation" o' !orro(er":
i7 Bo&&ow$&s m*st #oti*o*sly li+$ i th$ mo&tgag$( p&$mis$s a(
ot l$a+$ that fo& #oti*o*s H y$a& o& mo&$ a( 2$$p th$ p&$mis$s
i p&op$& li+abl$ a( sal$abl$ #o(itio/ 2$$p th$m is*&$( agaist
'&$/ $a&th0*a2$ a( oth$& #alamiti$s.
ii7 ,oti*$ to pay all ta)$s/ mait$a#$ #ha&g$s/ is*&a#$/ &$pai&s
K mait$a#$ $t#.
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iii7 Will ot gi+$ away th$ p&$mis$s o &$t o& by way of (oatio o&
gift o& #&$at$ i ($tail $#*mb&a#$s $t# o& will ot aba(o o&
ma2$ ay #hag$s/ whi#h may a@$#t th$ s$#*&ity of th$ p&$mis$s.
i+7 If th$ p&$mis$s a&$ ($#la&$( by th$ go+$&m$t $t# a*tho&iti$s as
ot 't fo& &$si($#$ (*$ to h$alth o& saf$ty &$asos o& th$y ($si&$
to a#0*i&$ fo& p*bli# p*&pos$s/ th$ 91Is shall b$
+7 oti'$( imm$(iat$ly.
+i7 Bo&&ow$&s shall ot ma2$ ay t$stam$ta&y (ispositio of p&$mis$s
a( if it is (o$/ it wo*l( b$ s*b;$#t to th$ mo&tgag$ #&$at$( i
fa+o*& of 91I. Will m*st #l$a&ly i(i#at$ that this p&op$&ty is s*b;$#t
to th$ (is#ha&g$ of th$ mo&tgag$ ($bt a( h$i&s shall ot b$
$titl$( to #hall$g$ th$ +ali(ity of th$ mo&tgag$. 91Is may obtai a
&$gist$&$( will i its fa+o*& statig that th$ bo&&ow$&s ha+$ a+ail$(
of R%1 f&om 91I o s$#*&ity by way of mo&tgag$.
+ii7 9$&mit 91I to $t$& th$ p&$mis$s fo& isp$#tio/ as a( wh$
$#$ssa&y.
Th$ abo+$ is oly to gi+$ som$ i($a abo*t th$ $w fa#ility o@$&$(.
B$fo&$ applyig fo& R%1/ $a#h S$io& ,iti-$ sho*l( ass$ss his $$(s/
ma2$ a &$asoabl$ ass$ssm$t of lif$ $)p$#ta#y a( lif$ styl$ a(
app&oa#h th$ 91I of his #hoi#$ a( (is#*ss with 91I i ($tail/ obtai
($tail$( s#h$m$ a( th$ ta2$ his ($#isio.
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