Taiwan Today

Minister of the Interior Jiang Yi-huah announced Dec. 16 that the government is expected to provide details of a reverse mortgage scheme for Taiwan’s senior citizens by the end of 2010. According to Jiang, old people living alone rose to 40 percent in 2008 from 25 percent in 1986. Thirty-three percent of the elderly in the country do not have a steady income, while over 60 percent of the aged live on their or their spouses’ pensions. The Bankers Association of the Republic of China suggested the government, once the details are finalized, should first give the scheme a trial run in major metropolises before implementing it nationwide. It also advised the government to set up a central guarantee fund to finalize the scheme. The maximum loan should be limited to NT$3 million (US$92,800), and senior applicants should be restricted to those aged over 65. Chang Chin-oh, professor in the Department of Land Economics at National Chengchi University, said house-for-pension schemes usually come in the form of “reverse mortgage,” “sale and leaseback” or “social care.” With “reverse mortgages,” senior homeowners who have mortgaged their houses would receive payments to cover their needs in daily life, while still having ownership rights. With “sale and leaseback,” they would sell their homes to an insurance company, which would then pay them annuities. The insurance company would entrust management of the property to a real estate agency, from which senior citizens could lease it back. With “social care,” homeowners mortgage their property or put it into a trust to provide funds to pay for care provided by a social welfare institution. “If the scheme is successfully implemented it will stimulate the housing market, as the younger generation will want to buy property to provide for a secure future,” Chang said. (TYH-THN)