A Study on Reverse Mortgage at SBI Belgaum

Description
The limitation of the study is lack of information being provided by the staff of the bank because of the privacy policy of the bank. As for the survey deliberate convenience sampling is used, in which the respondents are selected on the basis of certain criteria the sample size is less and this is another limitation of my study.

Reverse Mortgage at SBI Belgaum
CHAPTER- 1
EXECUTIVE SUMMARY
Reverse Mortgage at SBI Belgaum
EXECUTIVE SUMMARY
The title of the project is “REVERSE MORTGAGE”. Project was carried out at
SB !ai" #ra"ch$ statio" road Bel%au!. The !ai" o#jecti&e #ehi"d the stud' was to
u"dersta"d the co"cept of Re&erse Mort%a%e a"d its feasi#ilit' stud'.
Objectives of the stud!
• To stud' the or%a"i(atio"al structure.
• To stud' the theoretical aspects of Re&erse Mort%a%e.
• Re&erse Mort%a%e practices i" SB.
• )easi#ilit' Stud'.
St"te#e$t of the %&ob'e#!
Stud' has #ee" ta*e" i" order to *"ow the feasi#ilit' of Re&erse Mort%a%e i" SB
!ai" #ra"ch$ Bel%au!.
Rese"&ch Methodo'o(!
? Sa!pli"% !ethod+ , -eli#erate .o"&e"ie"ce Sa!pli"%. )or selecti"% the sa!ple
for !' sur&e' two i!porta"t criteria were co"sidered o"e is that the a%e of the
respo"de"ts should !ore tha" /0 a"d the other criteria is that respo"de"t should
ow" a house with its title.
? Sa!ple si(e +, 12
Reverse Mortgage at SBI Belgaum
? -ata collectio" !ethod
• Pri!ar' data
? 3uestio""aire
? Perso"al i"ter&iew
? O#ser&atio"s
• Seco"dar' data
? Records of SB
? 4our"als
? 5e#sites
? Scope of stud'
• Bel%au! cit'
? Tools used for a"al'sis
• SPSS
• Graphs a"d .harts
)i#it"tio$s of stud!
The li!itatio" of the stud' is lac* of i"for!atio" #ei"% pro&ided #' the
staff of the #a"* #ecause of the pri&ac' polic' of the #a"*. As for the sur&e' deli#erate
co"&e"ie"ce sa!pli"% is used$ i" which the respo"de"ts are selected o" the #asis of
certai" criteria the sa!ple si(e is less a"d this is a"other li!itatio" of !' stud'.
Reverse Mortgage at SBI Belgaum
*i$di$(s!
6 A" attracti&e optio" to the elderl' to fi"a"ce their co"su!ptio" "eeds o" their
ow".
6 The loa" is %i&e" without a"' i"co!e$ !edical or credit re7uire!e"ts criteria.
6 E"coura%e !ore people i" the wor*i"% populatio" to i"crease the proportio" of
their sa&i"%s i"&ested i" housi"%.
6 Re&erse !ort%a%e le"der i" the "dia" !ar*et !ust proceed with cautio".
6 The actual si(e of the re&erse !ort%a%e !ar*ets is "owhere "ear its esti!ated
pote"tial.
6 Out of 12 respo"de"ts o"l' 829 had so!e #asic *"owled%e a#out Re&erse
Mort%a%e.
6 : people were willi"% to %o for Re&erse Mort%a%e out of 12 respo"de"ts.
Reverse Mortgage at SBI Belgaum
Su((estio$s+
6 Educate people a#out re&erse !ort%a%e+ , As #' the sur&e' ha&e fou"d out that
o"l' 829 of the respo"de"ts ha&e so!e #asic idea a#out re&erse !ort%a%e$ so #'
this it ca" #e said that people are "ot educated a#out re&erse !ort%a%e. So would
su%%est the #a"* to educate the people a#out re&erse !ort%a%e throu%h
ad&ertise!e"ts$ co"ducti"% wor*shops a"d lectures o" re&erse !ort%a%e etc.
6 Ta*e respo"si#ilit' for the e;pe"ses i"curred #' the #orrower o" propert'
&aluatio" etc+ , As it is "ecessar' that the perso" %oi"% for re&erse !ort%a%e
should !a*e &aluatio" of his propert' first$ these &aluatio" e;pe"ses are i"curred
#' the applica"t hi!self. -uri"% !' sur&e' so!e respo"de"ts said that$ as the'
are a%ed it is &er' difficult for the! arra"%e !o"e' for propert' &aluatio" a"d for
this reaso" the' thi"* %oi"% for re&erse !ort%a%e is "ot attracti&e. So would
su%%est #a"* to ta*e respo"si#ilit' of the e;pe"ses i"curred #' the #orrower o"
propert' #' i"cludi"% it i" the total &alue so that !a"' people %o for it.
6 Proper eli%i#ilit' criterio"s+ , " so!e cases there is a ris* of default #' the
#orrower< this ris* ca" #e a&oided at the ti!e of pro&idi"% loa"s. So i" order to
a&oid the ris* would su%%est the #a"* to do proper &erificatio" of the title of the
propert'$ a%e of the #orrower< his=her credit a"al'sis etc. This reduces the ris* of
default #' the #orrower
6 Geo%raphical di&ersificatio".+, The #a"* ca" loo* at spreadi"% the #usi"ess across
the cou"tr' #' pro!oti"% the product i" seco"dar' a"d tertiar' cities also so that
the law of lar%e "u!#ers !a' wor* properl' a"d if the #a"* has a #ad e;perie"ce
i" o"e !ar*et< it ca" #e co!pe"sated with %ood e;perie"ce i" other cities
Reverse Mortgage at SBI Belgaum
CHAPTER- ,
I-TRO.UCTIO- TO /A-0I-1
SECTOR I- I-.IA
Reverse Mortgage at SBI Belgaum
I$t&oductio$ to /"$2i$( Secto& i$ I$di"
Ba"*i"% i" "dia ori%i"ated i" the first decade of >?th ce"tur' with The Ge"eral Ba"*
of "dia co!i"% i"to e;iste"ce i" >:?/. This was followed #' Ba"* of @i"dusta". Both
these #a"*s are "ow defu"ct. The oldest #a"* i" e;iste"ce i" "dia is the State Ba"* of
"dia #ei"% esta#lished as AThe Ba"* of Be"%alA i" .alcutta i" 4u"e >?2/. A couple of
decades later$ forei%" #a"*s li*e .redit B'o""ais started their .alcutta operatio"s i" the
>?C2s. At that poi"t of ti!e$ .alcutta was the !ost acti&e tradi"% port$ !ai"l' due to the
trade of the British E!pire$ a"d due to which #a"*i"% acti&it' too* roots there a"d
prospered. The first full' "dia" ow"ed #a"* was the Allaha#ad Ba"*$ which was
esta#lished i" >?/C.
B' the >D22s$ the !ar*et e;pa"ded with the esta#lish!e"t of #a"*s such as Pu"ja#
Eatio"al Ba"*$ i" >?DC i" Bahore a"d Ba"* of "dia$ i" >D2/$ i" Mu!#ai , #oth of which
were fou"ded u"der pri&ate ow"ership. The Reser&e Ba"* of "dia for!all' too* o" the
respo"si#ilit' of re%ulati"% the "dia" #a"*i"% sector fro! >D1C. After "diaFs
i"depe"de"ce i" >D8:$ the Reser&e Ba"* was "atio"ali(ed a"d %i&e" #roader powers.
? History of Banks
At the e"d of late,>?th ce"tur'$ there were hardl' a"' #a"*s i" "dia i" the !oder"
se"se of the ter!. At the ti!e of the A!erica" .i&il 5ar$ a &oid was created as the suppl'
of cotto" to Ba"cashire stopped fro! the A!ericas. So!e #a"*s were ope"ed at that ti!e
which fu"ctio"ed as e"tities to fi"a"ce i"dustr'$ i"cludi"% speculati&e trades i" cotto".
5ith lar%e e;posure to speculati&e &e"tures$ !ost of the #a"*s ope"ed i" "dia duri"%
that period could "ot sur&i&e a"d failed. The depositors lost !o"e' a"d lost i"terest i"
*eepi"% deposits with #a"*s. Su#se7ue"tl'$ #a"*i"% i" "dia re!ai"ed the e;clusi&e
do!ai" of Europea"s for "e;t se&eral decades u"til the #e%i""i"% of the 02th ce"tur'.
Reverse Mortgage at SBI Belgaum
The Ba"* of Be"%al$ which later #eca!e the State Ba"* of "dia.At the #e%i""i"% of
the 02th ce"tur'$ "dia" eco"o!' was passi"% throu%h a relati&e period of sta#ilit'.
Arou"d fi&e decades ha&e elapsed si"ce the "diaFs )irst war of "depe"de"ce$ a"d the
social$ i"dustrial a"d other i"frastructure ha&e de&eloped. Atthat ti!e there were &er'
s!all #a"*s operated #' "dia"s$ a"d !ost of the! were ow"ed a"d operated #'
particular co!!u"ities. The #a"*i"% i" "dia was co"trolled a"d do!i"ated #' the
preside"c' #a"*s$ "a!el'$ the Ba"* of Bo!#a'$ the Ba"* of Be"%al$ a"d the Ba"* of
Madras , which later o" !er%ed to for! the !perial Ba"* of "dia$ a"d !perial Ba"* of
"dia$ upo" "diaFs i"depe"de"ce$ was re"a!ed the State Ba"* of "dia. There were also
so!e e;cha"%e #a"*s$ as also a "u!#er of "dia" joi"t stoc* #a"*s. All these #a"*s
operated i" differe"t se%!e"ts of the eco"o!'. The preside"c' #a"*s were li*e the
ce"tral #a"*s a"d dischar%ed !ost of the fu"ctio"s of ce"tral #a"*s. The' were
esta#lished u"der charters fro! the British East "dia .o!pa"'. The e;cha"%e #a"*s$
!ostl' ow"ed #' the Europea"s$ co"ce"trated o" fi"a"ci"% of forei%" trade. "dia" joi"t
stoc* #a"*s were %e"erall' u"der capitali(ed a"d lac*ed the e;perie"ce a"d !aturit' to
co!pete with the preside"c' #a"*s$ a"d the e;cha"%e #a"*s. There was pote"tial for
!a"' "ew #a"*s as the eco"o!' was %rowi"%. Bord .ur(o" had o#ser&ed the" i" the
co"te;t of "dia" #a"*i"%+ "In respect of banking it seems we are behind the times. We
are like some old fashioned sailing ship, divided by solid wooden bulkheads into separate
and cumbersome compartments."
G"der these circu!sta"ces$ !a"' "dia"s ca!e forward to set up #a"*s$ a"d
!a"' #a"*s were set up at that ti!e$ a "u!#er of which ha&e sur&i&ed to the prese"t such
as Ba"* of "dia a"d .orporatio" Ba"*$ "dia" Ba"*$ Ba"* of Baroda$ a"d .a"ara Ba"*.
During the Wars
The period duri"% the )irst 5orld 5ar H>D>8,>D>?I throu%h the e"d of the Seco"d
5orld 5ar H>D1D,>D8CI$ a"d two 'ears thereafter u"til the i"depe"de"ce of "dia were
challe"%i"% for the "dia" #a"*i"%. The 'ears of the )irst 5orld 5ar were tur#ule"t$ a"d
Reverse Mortgage at SBI Belgaum
it too* toll of !a"' #a"*s which si!pl' collapsed despite the "dia" eco"o!' %ai"i"%
i"direct #oost due to war,related eco"o!ic acti&ities. At least D8 #a"*s i" "dia failed
duri"% the 'ears >D>1 to >D>?.
Post-independence
The partitio" of "dia i" >D8: had ad&ersel' i!pacted the eco"o!ies of Pu"ja# a"d
5est Be"%al$ a"d #a"*i"% acti&ities had re!ai"ed paral'(ed for !o"ths. "diaFs
i"depe"de"ce !ar*ed the e"d of a re%i!e of the Baisse(,faire for the "dia" #a"*i"%. The
Go&er"!e"t of "dia i"itiated !easures to pla' a" acti&e role i" the eco"o!ic life of the
"atio"$ a"d the "dustrial Polic' Resolutio" adopted #' the %o&er"!e"t i" >D8?
e"&isa%ed a !i;ed eco"o!'. This resulted i"to %reater i"&ol&e!e"t of the state i"
differe"t se%!e"ts of the eco"o!' i"cludi"% #a"*i"% a"d fi"a"ce. The !ajor steps to
re%ulate #a"*i"% i"cluded+
• " >D8?$ the Reser&e Ba"* of "dia$ "diaFs ce"tral #a"*i"% authorit'$ was
"atio"ali(ed$ a"d it #eca!e a" i"stitutio" ow"ed #' the Go&er"!e"t of "dia.
• " >D8D$ the Ba"*i"% Re%ulatio" Act was e"acted which e!powered the Reser&e
Ba"* of "dia HRBI Ato re%ulate$ co"trol$ a"d i"spect the #a"*s i" "dia.A
• The Ba"*i"% Re%ulatio" Act also pro&ided that "o "ew #a"* or #ra"ch of a"
e;isti"% #a"* !a' #e ope"ed without a lice"ce fro! the RB$ a"d "o two #a"*s
could ha&e co!!o" directors.
@owe&er$ despite these pro&isio"s$ co"trol a"d re%ulatio"s$ #a"*s i" "dia e;cept the
State Ba"* of "dia$ co"ti"ued to #e ow"ed a"d operated #' pri&ate perso"s. This
cha"%ed with the "atio"ali(atio" of !ajor #a"*s i" "dia o" >Dth 4ul'$ >D/D.
? Development of Banking Sector
Nationalisation
B' the >D/2s$ the "dia" #a"*i"% i"dustr' has #eco!e a" i!porta"t tool to
facilitate the de&elop!e"t of the "dia" eco"o!'. At the sa!e ti!e$ it has e!er%ed as a
Reverse Mortgage at SBI Belgaum
lar%e e!plo'er$ a"d a de#ate has e"sued a#out the possi#ilit' to "atio"ali(e the #a"*i"%
i"dustr'. "dira Ga"dhi$ the,the" Pri!e Mi"ister of "dia e;pressed the i"te"tio" of the
GO i" the a""ual co"fere"ce of the All "dia .o"%ress Meeti"% i" a paper e"titled
"Stray thoughts on Bank Nationalisation." The paper was recei&ed with positi&e
e"thusias!.
Thereafter$ her !o&e was swift a"d sudde"$ a"d the GO issued a" ordi"a"ce a"d
"atio"alised the >8 lar%est co!!ercial #a"*s with effect fro! the !id"i%ht of 4ul' >D$
>D/D. 4a'apra*ash Eara'a"$ a "atio"al leader of "dia$ descri#ed the step as a
"masterstroke of political sagacity." 5ithi" two wee*s of the issue of the ordi"a"ce$ the
Parlia!e"t passed the Ba"*i"% .o!pa"ies HAc7uitio" a"d Tra"sfer of G"derta*i"%I Bill$
a"d it recei&ed the preside"tial appro&al o" Dth Au%ust$ >D/D.
A seco"d dose of "atio"alisatio" of / !ore co!!ercial #a"*s followed i" >D?2. The
stated reaso" for the "atio"alisatio" was to %i&e the %o&er"!e"t !ore co"trol of credit
deli&er'. 5ith the seco"d dose of "atio"alisatio"$ the GO co"trolled arou"d D>9 of the
#a"*i"% #usi"ess of "dia.
After this$ u"til the >DD2s$ the "atio"alised #a"*s %rew at a pace of arou"d 89$
closer to the a&era%e %rowth rate of the "dia" eco"o!'.
Liberalisation
" the earl' >DD2s the the" Earasi!ha Rao %o&er"!e"t e!#ar*ed o" a polic' of
li#eralisatio" a"d %a&e lice"ces to a s!all "u!#er of pri&ate #a"*s$ which ca!e to #e
*"ow" as New eneration tech!savvy banks$ which i"cluded #a"*s such as GT
Ba"*H"ow re,"a!ed as A;is Ba"*I Hthe first of such "ew %e"eratio" #a"*s to #e set upI$
.. Ba"* a"d @-). Ba"*. This !o&e$ alo"% with the rapid %rowth i" the eco"o!' of
"dia$ *ic*started the #a"*i"% sector i" "dia$ which has see" rapid
%rowth with stro"% co"tri#utio" fro! all the three sectors of #a"*s$ "a!el'$ %o&er"!e"t
#a"*s$ pri&ate #a"*s a"d forei%" #a"*s.
The "e;t sta%e for the "dia" #a"*i"% has #ee" setup with the proposed rela;atio"
i" the "or!s for )orei%" -irect "&est!e"t$ where all )orei%" "&estors i" #a"*s !a' #e
Reverse Mortgage at SBI Belgaum
%i&e" &oti"% ri%hts which could e;ceed the prese"t cap of >29$at prese"t it has %o"e up
to 8D9 with so!e restrictio"s.
The "ew polic' shoo* the Ba"*i"% sector i" "dia co!pletel'. Ba"*ers$ till this
ti!e$ were used to the 8,/,8 !ethod HBorrow at 89:$222 ATMs. Accordi"% to a report #' .RA Bi!ited$ a rati"% a%e"c'$ the pu#lic sector
#a"*s hold o&er :C perce"t of total assets of the #a"*i"% i"dustr'$ with the pri&ate a"d
forei%" #a"*s holdi"% >?.09 a"d /.C9 respecti&el'.
Reverse Mortgage at SBI Belgaum
CHAPTER- 3
I-TRO.UCTIO- STATE /A-0 O*
I-.IA
Reverse Mortgage at SBI Belgaum
I$t&oductio$ St"te /"$2 of I$di"
• Evo'utio$ of S/I
The ori%i" of the State Ba"* of "dia %oes #ac* to the first decade of the "i"etee"th
ce"tur' with the esta#lish!e"t of the Ba"* of .alcutta i" .alcutta o" 0 4u"e >?2/. Three
'ears later the #a"* recei&ed its charter a"d was re,desi%"ed as the Ba"* of Be"%al H0
4a"uar' >?2DI. A u"i7ue i"stitutio"$ it was the first joi"t,stoc* #a"* of British "dia
spo"sored #' the Go&er"!e"t of Be"%al. The Ba"* of Bo!#a' H>C April >?82I a"d the
Ba"* of Madras H> 4ul' >?81I followed the Ba"* of Be"%al. These three #a"*s re!ai"ed
at the ape; of !oder" #a"*i"% i" "dia till their a!al%a!atio" as the !perial Ba"* of
"dia o" 0: 4a"uar' >D0>.
Pri!aril' A"%lo,"dia" creatio"s$ the three preside"c' #a"*s ca!e i"to e;iste"ce
either as a result of the co!pulsio"s of i!perial fi"a"ce or #' the felt "eeds of local
Europea" co!!erce a"d were "ot i!posed fro! outside i" a" ar#itrar' !a""er to
!oder"i(e "diaFs eco"o!'. Their e&olutio" was$ howe&er$ shaped #' ideas culled fro!
si!ilar de&elop!e"ts i" Europe a"d E"%la"d$ a"d was i"flue"ced #' cha"%es occurri"%
i" the structure of #oth the local tradi"% e"&iro"!e"t a"d those i" the relatio"s of the
"dia" eco"o!' to the eco"o!' of Europe a"d the %lo#al eco"o!ic fra!ewor*.
• Est"b'ish#e$t
The esta#lish!e"t of the Ba"* of Be"%al !ar*ed the ad&e"t of li!ited lia#ilit'$ joi"t,
stoc* #a"*i"% i" "dia. So was the associated i""o&atio" i" #a"*i"%$ &i(. the decisio" to
allow the Ba"* of Be"%al to issue "otes$ which would #e accepted for pa'!e"t of pu#lic
re&e"ues withi" a restricted %eo%raphical area. This ri%ht of "ote issue was &er' &alua#le
"ot o"l' for the Ba"* of Be"%al #ut also its two si#li"%s$ the Ba"*s of Bo!#a' a"d
Madras. t !ea"t a" accretio" to the capital of the #a"*s$ a capital o" which the
proprietors did "ot ha&e to pa' a"' i"terest. The co"cept of
Reverse Mortgage at SBI Belgaum
deposit #a"*i"% was also a" i""o&atio" #ecause the practice of accepti"% !o"e' for
safe*eepi"% Ha"d i" so!e cases$ e&e" i"&est!e"t o" #ehalf of the clie"tsI #' the
i"di%e"ous #a"*ers had "ot spread as a %e"eral ha#it i" !ost parts of "dia. But$ for a
lo"% ti!e$ a"d especiall' upto the ti!e that the three preside"c' #a"*s had a ri%ht of "ote
issue$ #a"* "otes a"d %o&er"!e"t #ala"ces !ade up the #ul* of the i"&esti#le resources
of the #a"*s.
The three #a"*s were %o&er"ed #' ro'al charters$ which were re&ised fro! ti!e to
ti!e. Each charter pro&ided for a share capital$ four,fifth of which were pri&atel'
su#scri#ed a"d the rest ow"ed #' the pro&i"cial %o&er"!e"t. The !e!#ers of the #oard
of directors$ which !a"a%ed the affairs of each #a"*$ were !ostl' proprietar' directors
represe"ti"% the lar%e Europea" !a"a%i"% a%e"c' houses i" "dia. The rest were
%o&er"!e"t "o!i"ees$ i"&aria#l' ci&il ser&a"ts$ o"e of who! was elected as the
preside"t of the #oard.
• /usi$ess
The #usi"ess of the #a"*s was i"itiall' co"fi"ed to discou"ti"% of #ills of e;cha"%e or
other "e%otia#le pri&ate securities$ *eepi"% cash accou"ts a"d recei&i"% deposits a"d
issui"% a"d circulati"% cash "otes. Boa"s were restricted to Rs.o"e la*h a"d the period of
acco!!odatio" co"fi"ed to three !o"ths o"l'. The The #usi"ess of the #a"*s was
i"itiall' co"fi"ed to discou"ti"% of #ills of e;cha"%e or other "e%otia#le pri&ate
securities$ *eepi"% cash accou"ts a"d recei&i"% deposits a"d issui"% a"d circulati"% cash
"otes. Boa"s were restricted to Rs.o"e la*h a"d the period of acco!!odatio" co"fi"ed to
three !o"ths o"l'. The securit' for such loa"s was pu#lic securities$ co!!o"l' called
.o!pa"'Fs Paper$ #ullio"$ treasure$ plate$ jewels$ or %oods F"ot of a perisha#le "atureF a"d
"o i"terest could #e char%ed #e'o"d a rate of twel&e per ce"t. Boa"s a%ai"st %oods li*e
opiu!$ i"di%o$ salt woolle"s$ cotto"$ cotto" piece %oods$ !ule twist a"d sil* %oods were
also %ra"ted #ut such fi"a"ce #' wa' of cash credits %ai"ed !o!e"tu! o"l' fro! the
third decade of the
Reverse Mortgage at SBI Belgaum
"i"etee"th ce"tur'. All co!!odities$ i"cludi"% tea$ su%ar a"d jute$ which #e%a" to #e
fi"a"ced later$ were either pled%ed or h'pothecated to the #a"*.
-e!a"d pro!issor' "otes were si%"ed #' the #orrower i" fa&our of the %uara"tor$
which was i" tur" e"dorsed to the #a"*. Be"di"% a%ai"st shares of the #a"*s or o" the
!ort%a%e of houses$ la"d or other real propert' was$ howe&er$ for#idde"."dia"s were the
pri"cipal #orrowers a%ai"st deposit of .o!pa"'Fs paper$ while the #usi"ess of discou"ts
o" pri&ate as well as salar' #ills was al!ost the e;clusi&e !o"opol' of i"di&iduals
Europea"s a"d their part"ership fir!s. But the !ai" fu"ctio" of the three #a"*s$ as far as
the %o&er"!e"t was co"cer"ed$ was to help the latter raise loa"s fro! ti!e to ti!e a"d
also pro&ide a de%ree of sta#ilit' to the prices of %o&er"!e"t securities.
• M"jo& ch"$(e i$ the co$ditio$s
A !ajor cha"%e i" the co"ditio"s of operatio" of the Ba"*s of Be"%al$ Bo!#a' a"d
Madras occurred after >?/2. 5ith the passi"% of the Paper .urre"c' Act of >?/>$ the
ri%ht of "ote issue of the preside"c' #a"*s was a#olished a"d the Go&er"!e"t of "dia
assu!ed fro! > March >?/0 the sole power of issui"% paper curre"c' withi" British
"dia. The tas* of !a"a%e!e"t a"d circulatio" of the "ew curre"c' "otes was co"ferred
o" the preside"c' #a"*s a"d the Go&er"!e"t u"dertoo* to tra"sfer the Treasur' #ala"ces
to the #a"*s at places where the #a"*s would ope" #ra"ches. Eo"e of the three #a"*s had
till the" a"' #ra"ches He;cept the sole atte!pt a"d that too a short,li&ed o"e #' the Ba"*
of Be"%al at Mir(apore i" >?1DI althou%h the charters had %i&e" the! such authorit'. But
as soo" as the three preside"c' #a"ds were assured of the free use of %o&er"!e"t
Treasur' #ala"ces at places where the' would ope" #ra"ches$ the' e!#ar*ed o" #ra"ch
e;pa"sio" at a rapid pace. B' >?:/$ the #ra"ches$ a%e"cies a"d su# a%e"cies of the three
preside"c' #a"*s co&ered !ost of the !ajor parts a"d !a"' of the i"la"d trade ce"ters i"
"dia.
Reverse Mortgage at SBI Belgaum
5hile the Ba"* of Be"%al had ei%htee" #ra"ches i"cludi"% its head office$ seaso"al
#ra"ches a"d su# a%e"cies$ the Ba"*s of Bo!#a' a"d Madras had fiftee" each.
• P&eside$c /"$2s Act
The preside"c' Ba"*s Act$ which ca!e i"to operatio" o" > Ma' >?:/$ #rou%ht the
three preside"c' #a"*s u"der a co!!o" statute with si!ilar restrictio"s o" #usi"ess. The
proprietar' co""ectio" of the Go&er"!e"t was$ howe&er$ ter!i"ated$ thou%h the #a"*s
co"ti"ued to hold char%e of the pu#lic de#t offices i" the three preside"c' tow"s$ a"d the
custod' of a part of the %o&er"!e"t #ala"ces. The Act also stipulated the creatio" of
Reser&e Treasuries at .alcutta$ Bo!#a' a"d Madras i"to which su!s a#o&e the specified
!i"i!u! #ala"ces pro!ised to the preside"c' #a"*s at o"l' their head offices were to #e
lod%ed. The Go&er"!e"t could le"d to the preside"c' #a"*s fro! such Reser&e
Treasuries #ut the latter could loo* upo" the! !ore as a fa&our tha" as a ri%ht.
The decisio" of the Go&er"!e"t to *eep the surplus #ala"ces i" Reser&e
Treasuries outside the "or!al co"trol of the preside"c' #a"*s a"d the co""ected decisio"
"ot to %uara"tee !i"i!u! %o&er"!e"t #ala"ces at "ew places where #ra"ches were to #e
ope"ed effecti&el' chec*ed the %rowth of "ew #ra"ches after >?:/. The pace of
e;pa"sio" wit"essed i" the pre&ious decade fell sharpl' althou%h$ i" the case of the Ba"*
of Madras$ it co"ti"ued o" a !odest scale as the profits of that #a"* were !ai"l' deri&ed
fro! trade dispersed a!o"% a "u!#er of port tow"s a"d i"la"d ce"ters of the
preside"c'."dia wit"essed rapid co!!erciali(atio" i" the last 7uarter of the "i"etee"th
ce"tur' as its railwa' "etwor* e;pa"ded to co&er all the !ajor re%io"s of the cou"tr'.
Eew irri%atio" "etwor*s i" Madras$ Pu"ja# a"d Si"d accelerated the process of
co"&ersio" of su#siste"ce crops i"to cash crops$ a portio" of which fou"d its wa' i"to the
forei%" !ar*ets. Tea a"d coffee pla"tatio"s tra"sfor!ed lar%e areas of the easter" Terais$
the hills of Assa! a"d the Eil%iris i"to re%io"s of estate a%riculture par e;celle"ce. All
these resulted i" the e;pa"sio" of
"diaFs i"ter"atio"al trade !ore tha" si;,fold. The three preside"c' #a"*s were #oth
#e"eficiaries a"d pro!oters of this co!!erciali(atio" process as the' #eca!e i"&ol&ed i"
Reverse Mortgage at SBI Belgaum
the fi"a"ci"% of practicall' e&er' tradi"%$ !a"ufacturi"% a"d !i"i"% acti&it' i" the su#,
co"ti"e"t. 5hile the Ba"*s of Be"%al a"d Bo!#a' were e"%a%ed i" the fi"a"ci"% of lar%e
!oder" !a"ufacturi"% i"dustries$ the Ba"* of Madras we"t i"to the fi"a"ci"% of lar%e
!oder" !a"ufacturi"% i"dustries$ the Ba"* of Madras we"t i"to the fi"a"ci"% of s!all,
scale i"dustries i" a wa' which had "o parallel elsewhere. But the three #a"*s were
ri%orousl' e;cluded fro! a"' #usi"ess i"&ol&i"% forei%" e;cha"%e. Eot o"l' was such
#usi"ess co"sidered ris*' for these #a"*s$ which held %o&er"!e"t deposits$ it was also
feared that these #a"*s e"jo'i"% %o&er"!e"t patro"a%e would offer u"fair co!petitio" to
the e;cha"%e #a"*s which had #' the" arri&ed i" "dia. This e;clusio" co"ti"ued till the
creatio" of the Reser&e Ba"* of "dia i" >D1C.
• P&eside$c /"$2s of /e$("'
The preside"c' Ba"*s of Be"%al$ Bo!#a' a"d Madras with their :2 #ra"ches were
!er%ed i" >D0> to for! the !perial Ba"* of "dia. The triad had #ee" tra"sfor!ed i"to a
!o"olith a"d a %ia"t a!o"% "dia" co!!ercial #a"*s had e!er%ed. The "ew #a"* too*
o" the triple role of a co!!ercial #a"*$ a #a"*erFs #a"* a"d a #a"*er to the
%o&er"!e"t.But this creatio" was preceded #' 'ears of deli#eratio"s o" the "eed for a
FState Ba"* of "diaF. 5hat e&e"tuall' e!er%ed was a Fhalf,wa' houseF co!#i"i"% the
fu"ctio"s of a co!!ercial #a"* a"d a 7uasi,ce"tral #a"*.The esta#lish!e"t of the
Reser&e Ba"* of "dia as the ce"tral #a"* of the cou"tr' i" >D1C e"ded the 7uasi,ce"tral
#a"*i"% role of the !perial Ba"*. The latter ceased to #e #a"*ers to the Go&er"!e"t of
"dia a"d i"stead #eca!e a%e"t of the Reser&e Ba"* for the tra"sactio" of %o&er"!e"t
#usi"ess at ce"ters at which the ce"tral #a"* was "ot esta#lished. But it co"ti"ued to
!ai"tai" curre"c' chests a"d s!all coi" depots a"d operate the re!itta"ce facilities
sche!e for other #a"*s a"d the pu#lic o" ter!s stipulated #' the Reser&e Ba"*. t also
acted as a #a"*ersF #a"* #' holdi"% their
surplus cash a"d %ra"ti"% the! ad&a"ces a%ai"st authori(ed securities. The !a"a%e!e"t
of the #a"* cleari"% houses also co"ti"ued with it at !a"' places where the Reser&e
Ba"* did "ot ha&e offices. The #a"* was also the #i%%est te"dered at the Treasur' #ill
Reverse Mortgage at SBI Belgaum
auctio"s co"ducted #' the Reser&e Ba"* o" #ehalf of the Go&er"!e"t. The esta#lish!e"t
of the Reser&e Ba"* si!ulta"eousl' saw i!porta"t a!e"d!e"ts #ei"% !ade to the
co"stitutio" of the !perial Ba"* co"&erti"% it i"to a purel' co!!ercial #a"*. The earlier
restrictio"s o" its #usi"ess were re!o&ed a"d the #a"* was per!itted to u"derta*e
forei%" e;cha"%e #usi"ess a"d e;ecutor a"d trustee #usi"ess for the first ti!e.
• I#%e&i"' /"$2
The !perial Ba"* duri"% the three a"d a half decades of its e;iste"ce recorded a"
i!pressi&e %rowth i" ter!s of offices$ reser&es$ deposits$ i"&est!e"ts a"d ad&a"ces$ the
i"creases i" so!e cases a!ou"ti"% to !ore tha" si;,fold. The fi"a"cial status a"d
securit' i"herited fro! its foreru""ers "o dou#t pro&ided a fir! a"d dura#le platfor!.
But the loft' traditio"s of #a"*i"% which the !perial Ba"* co"siste"tl' !ai"tai"ed a"d
the hi%h sta"dard of i"te%rit' it o#ser&ed i" its operatio"s i"spired co"fide"ce i" its
depositors that "o other #a"* i" "dia could perhaps the" e7ual. All these e"a#led the
!perial Ba"* to ac7uire a pre,e!i"e"t positio" i" the "dia" #a"*i"% i"dustr' a"d also
secure a &ital place i" the cou"tr'Fs eco"o!ic life.5he" "dia attai"ed freedo!$ the
!perial Ba"* had a capital #ase Hi"cludi"% reser&esI of Rs.>>.?C crores$ deposits a"d
ad&a"ces of Rs.0:C.>8 crores a"d Rs.:0.D8 crores respecti&el' a"d a "etwor* of >:0
#ra"ches a"d !ore tha" 022 su# offices e;te"di"% all o&er the cou"tr'
• *i&st *ive Ye"& P'"$
" >DC>$ whe" the )irst )i&e Lear Pla" was lau"ched$ the de&elop!e"t of rural "dia was
%i&e" the hi%hest priorit'. The co!!ercial #a"*s of the cou"tr' i"cludi"% the !perial
Reverse Mortgage at SBI Belgaum
Ba"* of "dia had till the" co"fi"ed their operatio"s to the ur#a" sector a"d were "ot
e7uipped to respo"d to the e!er%e"t "eeds of eco"o!ic re%e"eratio" of the rural areas. "
order$ therefore$ to ser&e the eco"o!' i" %e"eral a"d the rural sector i" particular$ the All
"dia Rural .redit Sur&e' .o!!ittee reco!!e"ded the creatio" of a state,part"ered a"d
state,spo"sored #a"* #' ta*i"% o&er the !perial Ba"* of "dia$ a"d i"te%rati"% with it$
the for!er state,ow"ed or state,associate #a"*s. A" act was accordi"%l' passed i"
Parlia!e"t i" Ma' >DCC a"d the State Ba"* of "dia was co"stituted o" > 4ul' >DCC.
More tha" a 7uarter of the resources of the "dia" #a"*i"% s'ste! thus passed u"der the
direct co"trol of the State. Bater$ the State Ba"* of "dia HSu#sidiar' Ba"*sI Act was
passed i" >DCD$ e"a#li"% the State Ba"* of "dia to ta*e o&er ei%ht for!er State,
associated #a"*s as its su#sidiaries Hlater "a!ed AssociatesI.The State Ba"* of "dia was
thus #or" with a "ew se"se of social purpose aided #' the 8?2 offices co!prisi"%
#ra"ches$ su# offices a"d three Bocal @ead Offices i"herited fro! the !perial Ba"*. The
co"cept of #a"*i"% as !ere repositories of the co!!u"it'Fs sa&i"%s a"d le"ders to
creditworth' parties was soo" to %i&e wa' to the co"cept of purposeful #a"*i"% su#
ser&i"% the %rowi"% a"d di&ersified fi"a"cial "eeds of pla""ed eco"o!ic de&elop!e"t.
The State Ba"* of "dia was desti"ed to act as the pacesetter i" this respect a"d lead the
"dia" #a"*i"% s'ste! i"to the e;citi"% field of "atio"al de&elop!e"t.
Reverse Mortgage at SBI Belgaum
O&("$i4"tio$ st&uctu&e of the S/I #"i$ b&"$ch5 /e'("u#
ASSSTAET GEEERAB MAEAGER
.@E)
MAEAGER
MAEAGER
HA J AI
MAEAGER
H-B-I
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MAEAGER H.AI
-OMEST.
ER J TME
-EPOST
-EPGTL
MAEAGER H)OI
-EPGTL
MAEAGER H)OI
-EPARTMEET
MAEAGER
H.AS@I
-EPGTL
MAEAGER
H.AS@I
-EPGTL
MAEAGER
HSLSTEMI
-EPGTL
MAEAGER
HETERBAEKI
-EP. MAEAGER
HGEEERAB A=.I
-EP.
MAEAGER
HGOVT A=.I
Reverse Mortgage at SBI Belgaum
CHAPTER- 6
REVERSE MORT1A1E
Reverse Mortgage at SBI Belgaum
Reve&se Mo&t("(e
I$t&oductio$ to Reve&se Mo&t("(e
G"til rece"tl'$ there were two !ai" wa's to %et cash fro! 'our ho!e the first o"e
is 'ou could sell 'our ho!e$ #ut the" 'ou would ha&e to !o&e a"d the seco"d o"e is
'ou could #orrow a%ai"st 'our ho!e$ #ut the" 'ou would ha&e to !a*e !o"thl' loa"
repa'!e"ts. Eow there is a third wa' of %etti"% !o"e' fro! 'our ho!e that does "ot
re7uire 'ou to lea&e it or to !a*e re%ular loa" repa'!e"ts that is “Re&erse Mort%a%e”. A
re&erse !ort%a%e is a loa" a%ai"st 'our ho!e that 'ou do "ot ha&e to pa' #ac* for as lo"%
as 'ou li&e there. 5ith a re&erse !ort%a%e$ 'ou ca" tur" the &alue of 'our ho!e i"to cash
without ha&i"% to !o&e or to repa' a loa" each !o"th. Eo !atter how this loa" is paid
out to 'ou$ 'ou t'picall' do"Mt ha&e to pa' a"'thi"% #ac* u"til 'ou die$ sell 'our ho!e$ or
per!a"e"tl' !o&e out of 'our ho!e. Re&erse !ort%a%es is a powerful tool to help
eli%i#le ho!eow"ers o#tai" ta;,free cash flow. Re&erse !ort%a%es e"a#le eli%i#le
ho!eow"ers to access the !o"e' the' ha&e #uilt up as e7uit' i" their ho!es. The' are
pri!aril' desi%"ed to stre"%the" se"iorsM perso"al a"d fi"a"cial i"depe"de"ce #'
pro&idi"% fu"ds without a !o"thl' pa'!e"t #urde" duri"% their lifeti!e i" the ho!e. The
!ajor eli%i#ilit' re7uire!e"ts are that the perso" !ust #e at least /0 'ears of a%e a"d
should ow" a ho!e. Re&erse !ort%a%e is e!er%i"% as a si%"ifica"t fi"a"cial securit' tool
for se"ior ho!eow"ers #ecause of the #road ra"%e of "eeds these u"i7ue loa"s ca"
satisf'.
Se"ior ho!eow"ers of all i"co!e le&els ha&e ta*e" out re&erse !ort%a%es for
!a"' differe"t reaso"s. )or so!e$ re&erse !ort%a%es pro&ide the e;tra !o"e' that let
the! sta' securel' i" their ho!es throu%hout retire!e"t. )or others$ re&erse !ort%a%es
pro&ide a !ea"s to li&e !ore co!forta#l' a"d pursue their drea!s. ts a special t'pe of
!ort%a%e which allows the se"ior ho!eow"er to access their e7uit' which the' ha&e
#uilt up i" the for! of the ho!e a"d use the !o"e' accordi"% to their wish$ all this while
letti"% ow"er sta' i" his ho!e. tMs called a re&erse !ort%a%e #ecause the flow of
pa'!e"ts is re&ersed fro! a traditio"al !ort%a%e.
Reverse Mortgage at SBI Belgaum

The le"der !a*es pa'!e"ts to the ow"er$ or arra"%es a li"e of credit that is
a&aila#le for the ow"ers use. This differs fro! a traditio"al !ort%a%e used to purchase or
refi"a"ce a ho!e i" which 'ou !ust !a*e !o"thl' !ort%a%e pa'!e"ts to the #a"*.
To 7ualif' for !ost loa"s$ the le"der chec*s the applica"tMs i"co!e to see how
!uch he ca" afford to pa' #ac* each !o"th. But with a re&erse !ort%a%e$ he does"Mt
ha&e to !a*e !o"thl' repa'!e"ts. So the ow"er or the applica"t does"Mt "eed a
!i"i!u! a!ou"t of i"co!e to 7ualif' for a re&erse !ort%a%e. @e could ha&e "o i"co!e$
a"d still #e a#le to %et a re&erse !ort%a%e. 5ith !ost ho!e loa"s$ if a perso" fails to
!a*e his !o"thl' repa'!e"ts$ he could lose his ho!e. But with a re&erse !ort%a%e$ he
does"Mt ha&e a"' !o"thl' repa'!e"ts to !a*e. So he ca"Mt lose his ho!e #' faili"% to
!a*e the!. Re&erse !ort%a%es t'picall' re7uire "o repa'!e"t for as lo"% as the ow"er
or co,ow"er li&e i" the ho!e. So re&erse !ort%a%e differ fro! other ho!e loa"s i" these
i!porta"t wa's$ the first o"e is the applica"t do"Mt "eed a" i"co!e to 7ualif' for a re&erse
!ort%a%e a"d the seco"d o"e is he do"Mt ha&e to !a*e !o"thl' repa'!e"ts o" a re&erse
!ort%a%e.
Re&erse !ort%a%es ha&e a differe"t purpose tha" forward !ort%a%es do. 5ith a
forward !ort%a%e$ 'ou use 'our i"co!e to repa' de#t$ a"d this #uilds up e7uit' i" 'our
ho!e. But with a re&erse !ort%a%e$ 'ou are ta*i"% the e7uit' out i" cash. So with a
re&erse !ort%a%e 'our de#t i"creases a"d 'our ho!e e7uit' decreases. tMs just the
opposite$ or re&erse of traditio"al !ort%a%e. -uri"% a re&erse !ort%a%e$ the le"der se"ds
'ou cash$ a"d 'ou !a*e "o repa'!e"ts. So the a!ou"t 'ou owe H'our de#tI %ets lar%er as
'ou %et !ore cash a"d !ore i"terest is added to 'our loa" #ala"ce. As 'our de#t %rows$
'our e7uit' shri"*s$ u"less 'our ho!eMs &alue is %rowi"% at a hi%h rate. 5he" a re&erse
!ort%a%e #eco!es due a"d pa'a#le$ 'ou !a' owe a lot of !o"e' a"d 'our e7uit' !a' #e
&er' s!all. f 'ou ha&e the loa" for a lo"% ti!e$ or if 'our ho!eMs &alue decreases$ there
!a' "ot #e a"' e7uit' left at the e"d of the loa". " short$ a re&erse !ort%a%e is a “risi"%
de#t$ falli"% e7uit'” t'pe of
Reverse Mortgage at SBI Belgaum
deal. But that is e;actl' what i"for!ed re&erse !ort%a%e #orrowers wa"t to “spe"d
dow"” their ho!e e7uit' while the' li&e i" their ho!es$ without ha&i"% to !a*e !o"thl'
loa" repa'!e"ts.
Reverse Mortgage at SBI Belgaum
? .iffe&e$ce bet7ee$ t&"ditio$"' #o&t("(e "$d &eve&se #o&t("(e
Ite# Mo&t("(e Reve&se Mo&t("(e
Purpose of loa" to purchase a ho!e to %e"erate i"co!e
Before closi"% #orrower has "o e7uit' i"
the ho!e
#orrower has a lot of
e7uit' i" the ho!e
At closi"% #orrower owes a lot$ a"d
has little e7uit'
#orrower owes &er' little$
a"d has lot of e7uit'
-uri"% the loa"$
#orrower...
!a*es !o"thl' pa'!e"ts
to the le"der
loa" #ala"ce %oes dow"
e7uit' %rows
recei&es pa'!e"ts
fro! the le"der
loa" #ala"ce rises
e7uit' decli"es
At e"d of loa"$
#orrower...
owes "othi"%
has su#sta"tial e7uit'
owes su#sta"tial
a!ou"t
has !uch less$
little$ or "o e7uit'
T'pe of
Tra"sactio"
)alli"% -e#t, Risi"%
E7uit'
Risi"% -e#t, )alli"%
E7uit'
Reverse Mortgage at SBI Belgaum
? Histo& "$d O&i(i$ of &eve&se #o&t("(e
The histor' of re&erse !ort%a%e %oes #ac* to >D/>." the 'ear >D/> the first re&erse
!ort%a%e loa" was !ade #' Eelso" @a'"es of -eeri"% Sa&i"%s J Boa" HPortla"d$ MEI
to Eellie Lou"%$ the widow of his hi%h school foot#all coach." the 'ear >D/1 the first
propert' ta; deferral pro%ra! offered i" Ore%o"$ fi"a"ced throu%h Pu#lic E!plo'ees
Retire!e"t )u"d." >D:2 Sur&e' research o" a Ahousi"% a""uit' pla"A was co"ducted i"
Bos A"%eles #' Lu"%,Pi"% .he" of G.BA. " >D:C Tech"ical !o"o%raph o" A.reati"%
Eew )i"a"cial "stru!e"ts for the A%edA authored #' 4ac* M. Gutte"ta% of The 5harto"
School." >D:: )irst RM loa" pro%ra!$ AE7ui,Pa'A$ i"troduced #' Arlo S!ith of
Broad&iew Sa&i"%s J Boa" i" "depe"de"ce$ O@." >D:? ARe&erse Mort%a%e Stud'
ProjectA fu"ded #' 5isco"si" Bureau o" A%i"%$ directed #' Ke" Schole" a"d )irst
statewide deferred pa'!e"t loa" pro%ra! offered #' 5 -ept of Bocal Affairs a"d
-e&elop!e"t$ desi%"ed #' 5illia! Per*i"s." >D )irst "atio"al ARe&erse Mort%a%e
-e&elop!e"t .o"fere"ceAspo"sored #' 5 Bureau o" A%i"% i" Madiso"$ 5 o" Ma' 0>,
00.Sa" )ra"cisco -e&elop!e"t )u"dFs ARe&erse A""uit' Mort%a%eHRAMIA pro%ra!
fu"ded #' )ederal @o!e Boa" a"* Board$ fou"datio"s$ a"d 5 Bureau o" A%i"%<
directed #' -o" Ral'a .
" >D?2 G"loc*i"% @o!e E7uit' for the Elderl'$ edited #' Ke" Schole" a"d Lu"%,
Pi"% .he"$ pu#lished #' Balli"%er H.a!#rid%e$ MAI .Two,'ear A@o!e E7uit'
.o"&ersio" ProjectA fu"ded #' G.S.Ad!i"istratio" o" A%i"%$ directed #' Ke" Schole"
)@A re&erse !ort%a%e i"sura"ce proposal #' Ke" Schole"e"dorsed #' housi"% pre,
co"fere"ce to >D?> 5hite @ouse .o"fere"ce o" A%i"%." >D?> Eatio"al .e"ter for @o!e
E7uit' .o"&ersio" [email protected] i"corporated as i"depe"de"t$ "o",profit or%a"i(atio" i"
Madiso"$ 5< directed #' Ke" Schole" G. S. @ouse Select .o!!ittee o" A%i"% hears
first .o"%, ressio"al testi!o"' o" re&erse !ort%a%es$ #' Ke" Schole" 5hite @ouse
.o"fere"ce o" A%i"% e"dorses proposal for )@A RM i"sura"ce$ reco!!e"di"% that Athe
)@A should de&elop a" i"sura"ce pro%ra! for re&erse !ort%a%e loa"sA Eewswee*$ Ti!e$
G.S. Eews$ Good Mor"i"% A!erica
Reverse Mortgage at SBI Belgaum
pro&ide first "atio"al !edia e;posure for re&erse !ort%a%es Sa" )ra"cisco RAM pro%ra!
closes first loa"s." >D?0 AEatio"al Pote"tial for @o!e E7uit' o"&ersio"A authored #'
Bruce 4aco#s HG"i&ersit' of RochesterI Sa" )ra"cisco RAM pro%ra! e;pa"ds to "ew
sites i" .alifor"ia$ directed #' Bro"w'" Belli"%.G. S. Ad!i"istratio" o" A%i"% fu"ds
E.@E. research o" federal issues , i"cludi"% )@A RM i"sura"ce G. S. Se"ate Special
.o!!ittee o" A%i"% sta%es first heari"% o" re&erse !ort%a%es< staffed #' 4oh" Rother<
testi!o"' #' Ke" Schole"$ 4ac* Gutte"ta%$ Maurice 5ei"ro#e$ 4a!es )ir!a" G. S.
Se"ate Special .o!!ittee o" A%i"% issues report citi"% "eed for re&erse !ort%a%e
i"sura"ce Gar",St. Ger!ai" -epositor' "stitutio"s Act clears re%ulator' path for
re&erse !ort%a%es< first federal statutor' reco%"itio" of re&erse !ort%a%es.
" >D?1 )ederal .ou"cil o" A%i"% supports proposal for )@A re&erse !ort%a%e
i"sura"ce. )@A re&erse !ort%a%e i"sura"ce de!o"stratio" pro%ra! proposed #' G.S.
-epart!e"t of @ousi"% a"d Gr#a" -e&elop, !e"t H@G-I i" housi"% #ill ARMs+
Pro#le!s a"d Prospects for a Seco"dar' Mar*et a"d a" E;a!i"atio" of Mort%a%e
Guara"t' "sura"ceA$ authored #' Maurice 5ei"ro#e H.lar* G"i&ersit'I AEatio"al
-e&elop!e"t .o"fere"ceA spo"sored #' E.@E. with @G- support i" 5ashi"%to"$ -.<
%reeti"%s se"t #' Preside"t Rea%a" a"d Represe"tati&e .laude Pepper G.S.
Ad!i"istratio" o" A%i"% fu"ds E.@E. i"for!atio" a"d trai"i"% project A@o!e E7uit'
)i"a"ci"% of Bo"%,Ter! .are for the Elderl'A #'Bruce 4aco#s HG"i&ersit' of RochesterI
a"d 5illia! 5eissert HGr#a" "stituteI)@A i"sura"ce proposal #' Se" 4oh" @ei"(
adopted #' Se"ateD?: E.@E. co!pletes studies o" ho!e e7uit' fi"a"ci"% of lo"%,ter! care
for Mi""esota a"d .o""ecticut G.S. @ouse 5a's a"d Mea"s .o!!ittee hears testi!o"'
o" @E. a"d lo"%,ter! care #' 4a!es )ir!a" G"ited Se"iorsI a"d Ke" Schole"
[email protected] .o"%ress passes )@A re&erse !ort%a%e i"sura"ce proposal A!erica"
@o!estead e;pa"ds i"to -E$ M-$ a"d VA A@o!e,Made Mo"e'+ A .o"su!er Guide to
@E.A pu#lished #' AARP$ authored #' Ke" Schole" ." >D?? Eatio"al sur&e' of
!e!#ersF re&erse !ort%a%e "eeds a"d prefere"ces #' AARP )@A re&erse !ort%a%e
i"sura"ce le%islatio" si%"ed #' Preside"t Rea%a" o" 0=C=??< 4udith V. Ma' "a!ed to
de&elop pro%ra! @G- a""ou"ces @E.M de&elop!e"t tea! i"cludi"% Edward
S('!a"os*i$ 4r$ Patric* 3ui"to"$ -o"ald Ale;a"der$ a"d Mar' Ka' Ro!a A""o&atio" i"
@o"e E7uit' .o"&ersio"A co"fere"ce spo"sored #' AARP< attracts 022 participa"ts fro!
0C states Eew pla" a""ou"ced #' .apital @oldi"% .orporatio" HBouis&ille$ KLI< >2th
lar%est i"&estor,ow"ed i"sura"ce co!pa"' i" A!erica< A@o!e "co!e Securit' Pla"A
first offered i" KL$ M-$ a"d VA )irst li"e,of,credit re&erse !ort%a%e de&eloped #' VA
@ousi"% -e&elop!e"t Authorit' A!erica" @o!estead e;pa"ds i"to .A Pro&ide"tial
@o!e "co!e Pla"
Reverse Mortgage at SBI Belgaum
HSa" )ra"ciscoI offers shared,appreciatio" pla" throu%hout .A @G- releases proposed
re%ulatio"s for )@A re&erse !ort%a%e i"sura"ce pro%ra! )a""ie Mae a""ou"ces
i"te"tio" to purchase re&erse !ort%a%es i"sured #' )@A G. S. Ad!i"istratio" o" A%i"%
a""ou"ces cooperati&e a%ree!e"t with @G- to spo"sor trai"i"% of re&erse
!ort%a%e cou"selors.
" >D?DAA )i"a"cial Guide to Re&erse Mort%a%esA #' Ke" Schole" for E.@E.
i"troduces total loa" cost rate !ethod for a"al'(i"% costs @G- selects C2 le"ders #'
lotter' to !a*e first )@A,i"sured re&erse !ort%a%es. Software for deter!i"i"% re&erse
!ort%a%e loa" ad&a"ces de&eloped #' )@A a"d !ade a&aila#le to the pu#lic 5e"do&er
)u"di"% HE.I a""ou"ces pro%ra! for ser&ici"% )@A,i"sured re&erse !ort%a%es @G-
releases A@o!e E7uit' .o"&ersio" Mort%a%eA [email protected] )ourtee" 0,da' @E.M
cou"selor trai"i"% sessio"s co"ducted #' Bro"w'" Belli"% HAARPI a"d Ke" Schole"
[email protected] for )@A .apital @oldi"% e;pa"ds i"to .A a"d )B )EMA a""ou"ces policies
for purchasi"% )@A,i"sured [email protected] re&erse !ort%a%es )irst )@A,i"sured @E.M !ade
to Marjorie Maso" of )airwa'$ KS #' the 4a!es B Eutter .o Eatio"al .e"ter for @o!e
E7uit' .o"&ersio" [email protected] !o&es fro! Madiso"$ 5 to Marshall$ ME ." >DD2 AARP
releases )@A .ou"selor Trai"i"% a"d Refere"ce Ma"ual$ #' Bro"w'" Belli"% a"d Ke"
Schole" A!erica" @o!estead a"d Pro&ide"tial suspe"d le"di"% as recessio" a"d falli"%
appreciatio" e;pectatio"s dr' up de#t sources for "ew loa"s)ourtee" !ore 0,da'
cou"selor trai"i"% sessio"s co"ducted #' Bro"w'" Belli"% HAARPI a"d Ke" Schole"
[email protected] for @G- ARe&erse A"%leA "ewsletter pu#lished for )@A cou"selors #' AARP
@o!e E7uit' "for!atio" .e"ter .o"%ress i"creases )@A i"sura"ce authorit' to 0C$222
loa"s #' D=1>=DC< re7uires disclosure of total loa" cost J de&elop!e"t of e7uit' reser&e
optio" AARP pu#lishes AModel State Baw o" Re&erse Mort%a%esA @G- pu#lishes A)@A
@o!e E7uit' .o"&ersio" "sura"ce -e!o"stratio"+ A Model to .alculate Borrower
Pa'!e"ts a"d "sura"ce Ris*$A #' Edward S('!a"os*i 4r.
Reverse Mortgage at SBI Belgaum
" >DD> Bos A"%eles .ou"t' E!plo'ees Retire!e"t Associatio" spo"sors
i"for!atio" se!i"ar o" re&erse !ort%a%es as a pote"tial fu"d i"&est!e"t a"d !e!#er
#e"efit AARP pu#lishes 1rd editio" of A@o!e,Made Mo"e'A #' Ke" Schole"<
distri#utio" tops 0C2$222 Eew co"su!er %uide de&eloped #' )ederal Trade .o!!issio"
i" part"ership with E.@E. a"d AARP @G- pu#lishes "ew re%ulatio"s !a*i"% re&erse
!ort%a%e i"sura"ce a&aila#le to all )@A le"ders "teri! report o" )@A pro%ra! #'
4udith V. Ma' Retire!e"t "co!e O" The @ouse+ .ashi"% " O" Lour @o!e 5ith A
ARe&erseA Mort%a%e$ )irst lifeti!e re&erse !ort%a%e pro%ra!s proposed #' Peter
Ma(o"as of @o!efirst HSa" )ra"ciscoI a"d Ro#ert Bach!a" of @o!e E7uit' Part"ers
Hr&i"e$ .AI )EMA e;pa"ds fu"di"% for e;pa"ded @E.M pro%ra!< de&elops
co!prehe"si&e A"structio" Pac*a%eA 5e"do&er )u"di"% a""ou"ces correspo"de"t
pro%ra! a"d Astarter *itA for le"ders )irst !ulti,state @E.M le"di"% pro%ra!s de&eloped
#' "ter"atio"al Mort%a%e H-E$ -.$ M-$ PA$ VA$ 5VI$ -irectors Mort%a%e HAN$ .A$
EVI$ a"d AR.S Mort%a%e H.A$ @$ EL$ OR$ 5AI.
" >DD0 .apital @oldi"% .orporatio" airs /2,seco"d a"d >02,seco"d pri!e,ti!e
"etwor* tele&isio" ads i" .A a"d )B for its A@o!ear"i"%sA pla" "itial pu#lic stoc*
offeri"% #' Pro&ide"tial @o!e "co!e Pla" attracts stro"% i"&estor i"terest AARP
pu#lishes ,pa%e discussio" paper o" re&erse !ort%a%e cou"seli"% #' Ke" Schole"
AARP releases &ideotape for cou"selor trai"i"% writte" a"d "arrated #' Ke" Schole" G.
S. Securities J E;cha"%e .o!!issio" issues directi&e prohi#iti"% i"terest accrual i"
re&erse !ort%a%e accou"ti"% G. S. Securities J E;cha"%e .o!!issio" resci"ds pre&ious
directi&e< issues directi&e o" effecti&e 'ield !ethod for re&erse !ort%a%e accou"ti"%
AARP spo"sors co!!u"it' coalitio",#uildi"% se!i"ars i" support of @E.M
de&elop!e"t i" O@$ 5$ A$ EL$ E4$ PA$ B Retire!e"t "co!e O" The @ouse+ .ashi"%
" O" Lour @o!e 5ith A ARe&erseA Mort%a%e "a!ed #est #oo* of >DD0 o" fi"a"cial
ser&ices for the elderl' #' the Eatio"al Associatio" of State G"its o" A%i"% HEASGAI
@E.M preli!i"ar' e&aluatio" released #' @G-.
Reverse Mortgage at SBI Belgaum
" >DD1 Tra"sa!erica a""ou"ces re&erse !ort%a%e product i"cludi"% deferred
a""uit' fro! MetBife )a""ie Mae co"&e"es rou"dta#le o" de&elopi"% a co"&e"tio"al
re&erse !ort%a%e .apital @oldi"% disco"ti"ues A@o!ear"i"%sA pla" E.@E. prepares
report o" ta;atio" of re&erse !ort%a%e tra"sactio"s for AARP @o!e E7uit' Part"ers
Hr&i"e$ .AI J G"io" Ba#or Bife a""ou"ce "ew A)reedo!A pla" i"cludi"% optio"al
i!!ediate a""uit' fro! MetBife 5e"do&er co"&e"es 0,da' co"fere"ce of @E.M
ori%i"ators AARP spo"sors co!!u"it' se!i"ars i" support of @E.M pro%ra!
de&elop!e"t i" .A$ BA$ M$ J MS )a""ie Mae i"itiates series of i"for!atio" sessio"s
for fi"a"cial pla""ers a"d elderlaw attor"e's A"drus Gero"tolo%' .e"ter HGS.I
co"&e"es "atio"al teleco", fere"ce o" re&erse !ort%a%es Eatio"al .e"ter for @o!e
E7uit' .o"&ersio" [email protected] !o&es fro! Marshall$ ME to Apple Valle'$ ME At 'earFs
e"d$ the @E.M pro%ra! is all states e;cept AK$ S-$ J TOI< G"it' Mort%a%e offers it i"
0C states< Se"ior "co!e i" >8 states< -irectors Mort%a%e i" >8 states< A!erifirst
Mort%a%e i" D states< AR.S Mort%a%e i" / states< J "ter"atio"al Mort%a%e i" 8 states.
" the 'ear >DD8 @ousehold Se"ior Ser&ices offers AE&er LoursA creditli"e re&erse
!ort%a%e i" )B$ GA$ B$ KL$ M-$ M$ O@$ a"d VA .o"%ress e"acts Atotal loa" cost rateA
disclosure re7uire!e"t for all re&erse !ort%a%es< )ederal Reser&e pu#lishes proposed
re%ulatio"s E.@E. prepares report o" ARe&ersi"% )oreclosuresA for AARP Eew Lor*
resci"ds !ort%a%e ta; o" re&erse !ort%a%es G. S. .ourt of Appeals #arrier to RM le"di"%
i" Te;as< Rep. Go"(ales le%islates statutor' o&erride of court decisio" .A Pu#lic
E!plo'ees Retire!e"t S'ste! H.ABPERSI i"itiates stud' of re&erse !ort%a%e
i"&est!e"t Tra"sa!erica i"troduces creditli"e pla" a"d e;pa"ds i"to EL$ E4$ PA$ a"d .T
At 'earFs e"d$ G"it' Mort%a%e is offeri"% the @E.M i" 80 states a"d -irectorFs Mort%a%e
has !er%ed with Eorwest Mort%a%e .
" >DDC @G- releases AE&aluatio" of the @o!e E7uit' .o"&ersio" Mort%a%e
"sura"ce -e!o"stratio"A @G- releases first !ajor re&isio" of @E.M ha"d#oo*.@G-
appro&es direct e"dorse!e"t processi"% of @E.M loa"s E.@E. pu#lishes Lour Eew
Retire!e"t Eest E%%+ A .o"su!er Guide to the Eew Re&erse
Reverse Mortgage at SBI Belgaum
Mort%a%es #' Ke" Schole".AARP pu#lishes Cth editio" of A@o!e,Made Mo"e'A #' Ke"
Schole"< distri#utio" tops 822$222 @E.M pro%ra! lapses at e"d of federal fiscal 'ear
AARP spo"sors "atio"al co"fere"ce o" re&erse !ort%a%es i" M- o" >>=>8,>C )a""ie
Mae a""ou"ces A@o!eKeeperA pla"< !edia co&era%e i"cludes fro"t,pa%e$ a#o&e,the,fold
article i" GSA Toda' )@A .o!!issio"erMs Award rese"ted #' Eicolas Retsi"as to Ke"
Schole" for his wor* o" re&erse !ort%a%es .
" >DD/ @E.M pro%ra! re,authori(ed o" 4a"uar' 0/$ >DD/ )a""ie Mae #e%i"s
le"der trai"i"% for A@o!e KeeperA E.@E. issues Seco"d Editio" of Lour Eew
Retire!e"t Eest E%%+ A .o"su!er Guide to the Eew Re&erse Mort%a%es #' Ke"
Schole"$ @artford Bife tests a""uit' co!ple!e"t to @E.M a"d )a""ie Mae re&erse
!ort%a%es @G- i"itiates cou"selor trai"i"% &ia satellite TV.
" >DD: AARP releases co"su!er &ideotapes writte" #' Ke" Schole" featuri"%
Schole" a"d Bro"w'" Belli"% AARP spo"sors @G- cou"selor trai"i"% &ia satellite TV
featuri"% Belli"% a"d Schole" Referral fee sca!s de"ou"ced #' AARP$ @G-$ )a""ie
Mae @ousehold Se"ior Ser&ices disco"ti"ues A)ore&er LoursA pla" AARP a""ou"ces
cou"selor support fu"d capitali(ed #' @G- a"d )a""ie Mae E.@E. i"itiates ApreferredA
le"der a"d cou"selor pro%ra! a"d releases ARe&erse Mort%a%e .ou"selorA software #is
Software HS)I releases ARe&erse Mort%a%e Ori%i"atorA Te;as appro&es refere"du! to
per!it RMs$ #ut tech"ical errors !a*e i!pact u"certai"$ pro#le!atic AARP spo"sors
"atio"al re&erse !ort%a%e leadership rou"d, ta#le a"d co"fere"ce Eatio"al Re&erse
Mort%a%e Be"ders Associatio" HERMBAI or%a"i(ed #' 4effre' Ta'lor with Peter Bell as
staff .
" >DD? E.@E. circulates discussio" papers o" AStre"%the"i"% .ost -isclosures o"
Re&erse Mort%a%esA #' Ke" Schole" AARP releases [email protected] Trai"i"%,i",a,Bo;A
i"cludi"% &ideotapes$ wor*#oo*$ @E.M ha"d#oo*$ a"d cou"seli"% !a"ual )a""ie Mae
co"ducts !ar*et research to ide"tif' re&erse !ort%a%e !ar*et se%!e"ts E.@E.
pu#lishes ARe&erse Mort%a%es for Be%i""ers+ A .o"su!er Guide to E&er' @o!eow"erMs
Retire!e"t Eest E%%”.E.@E. esta#lishes
Reverse Mortgage at SBI Belgaum
we#site.Tra"sa!erica @o!e)irst HS)I disco"ti"ues ori%i"ati"% its proprietar'
A@ouseMo"e'A loa"s a"d ser&ici"% "ew @E.M a"d @o!eKeeper loa"s )ederal Reser&e
clarifies i"clusio" of a""uities i" TAB. disclosures .
" >DDD Eei%h#orhood Rei"&est!e"t .orporatio" HER.I pro&ides @E.M trai"i"% i"
cooperatio" with AARP Te;as appro&es re&erse !ort%a%e le"di"% i" statewide
refere"du! #ut prohi#its creditli"e choices preferred #' !ost co"su!ers )a""ie Mae
a""ou"ce "ew co"su!er protectio"s i" C=00 le"der letter ERMBA a"d AARP support
a#solute li!it o" ori%i"atio" fees$ refi"a"ci"% refor!s$ a"d research o" a si"%le "atio"al
021# li!it AARP i"itiates test of @E.M cou"seli"% #' telepho"e a"d de&elops re&erse
!ort%a%e cou"selor e;a! i" cooperatio" with @G-$ )a""ie Mae$ a"d ERMBA." 0222
)irst "atio"al re&erse !ort%a%e cou"seli"% e;a! is ta*e" #' 80C cou"selors i" 81
statesER. pro&ides 0,da' @E.M trai"i"% i" Atla"ta$ Mi""eapolis$ Oa*la"d$ Ta!pa$
Eew Orlea"s$ a"d Sa" A"to"io AARP co!pletes AModel Specificatio"s for .o!pari"%
Re&erse Mort%a%es AARP releases "ew /?,pa%e co"su!er %uide$ creates "ew re&erse
!ort%a%e portal a""ou"ces "ew tollfree co"su!er i"foli"e a"d a&aila#ilit' of @E.M
cou"seli"% #' telepho"e )a""ie Mae a""ou"ces it will wai&e the e7uit' share fee o" all
loa"s i" its @o!e Keeper portfolio )i"a"cial )reedo! releases cou"seli"% software
!eeti"% AARP !odel specificatio"s. " 022: @E.M pro%ra! re,authori(ed HRe&erse
Mort%a%eI
Reverse Mortgage at SBI Belgaum
? The /e$efits of " Reve&se Mo&t("(e
• Ta;,free fu"ds for as lo"% as 'ou li&e i" 'our ho!e
• Eo loa" repa'!e"t for as lo"% as 'ou li&e i" 'our ho!e
• Eo i"co!e$ !edical or credit re7uire!e"ts
• Retai" ow"ership of 'our ho!e for life this is %uara"teed as lo"% as 'ou !ai"tai"
'our ho!e$ a"d pa' i"sura"ce a"d real estate ta;es
• .hoose a cash flow pla" tailored to 'our "eeds
• Eo restrictio"s o" how 'ou !a' use the fu"ds
• A ta;,ad&a"ta%ed wa' to pass o" part of 'our estate toda'
? The fo''o7i$( "&e the (uide'i$es (ive$ b R/I fo& Reve&se
Mo&t("(e!-
• A"' house ow"er o&er /2 'ears of a%e is eli%i#le for a re&erse !ort%a%e.
• The !a;i!u! loa" is up to /29 of the &alue of reside"tial propert'.
• The !a;i!u! period of propert' !ort%a%e is >C 'ears with a #a"* .
• The #orrower ca" opt for a !o"thl'$ 7uarterl'$ a""ual or lu!p su! pa'!e"ts at
a"' poi"t$ as per his discretio".
• The re&aluatio" of the propert' has to #e u"derta*e" #' the Ba"* o"ce e&er' C
'ears.
• The a!ou"t recei&ed throu%h re&erse !ort%a%e is co"sidered as loa" a"d "ot
i"co!e< he"ce the sa!e will "ot attract a"' ta; lia#ilit'.
• Re&erse !ort%a%e rates ca" #e fi;ed or floati"% a"d he"ce will &ar' accordi"% to
!ar*et co"ditio"s depe"di"% o" the i"terest rate re%i!e chose" #' the #orrower.
Reverse Mortgage at SBI Belgaum
Reve&se #o&t("(e i$ the US
Re&erse !ort%a%e was i"troduced i" the GS i" the late >D?2s. Si"ce the"$ the
"u!#er of people pled%i"% their propert' for re&erse !ort%a%e has #ee" o" the rise. Ta*e
a loo* at the "u!#ers." >DD2$ there were just >C: people who had opted for this product.
" 022/$ CD$:?> people opted for re&erse !ort%a%e. The co"cept i" "dia is si!ilar to the
o"e i" the GS.To #e eli%i#le for re&erse !ort%a%e$ 'ou should #e at least /0 'ears old a"d
ow" a propert'.A" a re&erse !ort%a%e$ 'ou #orrow !o"e' usi"% 'our ho!e as collateral
#ut there are"Ft a"' pa'!e"ts. The i"terest that is char%ed is added to the #ala"ce owed.
That !ea"s 'ou owe !ore each !o"th. 5he" 'ou die or whe" the house is sold$ the de#t
%ets paid off$A sa's 4effre' -. Voudrie$ .)P$ .EPP$ preside"t$ Be%ac' Pla""i"% Group
"c.O"ce 'ou pled%e 'our propert' for re&erse !ort%a%e$ 'ou will recei&e fu"ds as lo"%
as 'ou li&e i" that propert'. There are three !ai" sources that ho!e ow"ers ca" tap i" the
GS. O"e of these is the federall' i"sured @o!e E7uit' .o"&ersio" Mort%a%e$
ad!i"istered #' the -epart!e"t of @ousi"% a"d Gr#a" -e&elop!e"t.The !ajorit' of
people opti"% for re&erse !ort%a%e %o for @E.M as it offers the #est i"terest rates a"d
loa" a!ou"t. @owe&er$ if the' opt for %o&er"!e"t,i"sured re&erse !ort%a%es$ the" the'
will also ha&e to pa' a fee for )ederal @ousi"% Ad!i"istratio" i"sura"ce that will protect
a%ai"st the &alue of the ho!e %oi"% #elow the loa" a!ou"t.There are also si"%le,purpose
re&erse !ort%a%es$ offered #' state or local %o&er"!e"t a%e"cies for a specific reaso"
a"d$ lastl'$ proprietar' re&erse !ort%a%es offered #' #a"*s$ !ort%a%e co!pa"ies a"d
other pri&ate le"ders.People pla""i"% a propert' re&erse !ort%a%e ha&e to u"der%o a free
!ort%a%e cou"selli"% fro! a" i"depe"de"t %o&er"!e"t,appro&ed Ahousi"% a%e"c'A.
Re&erse !ort%a%es offered #' other fi"a"cial i"stitutio"s also re7uire i"di&iduals to
u"der%o si!ilar cou"selli"%. ASe"iors li*e this product #ecause it allows the! to sta' i"
their ho!es a"d the' are "ot re7uired to !a*e !o"thl' pa'!e"ts$A sa's Voudrie.
@owe&er$ a co"cer" a!o"% !ost elders is the risi"% i"terest rates$ which i"creases the
cost of the loa".
Reverse Mortgage at SBI Belgaum
? Costs 7hich "&e to be i$cu&&ed 7hi'e (oi$( fo& Reve&se Mo&t("(e
• Processi"% or ori%i"atio" costs+ , These are the costs which co&ers the
#a"*Ms operati"% e;pe"ses for !a*i"% the loa" .This cost ca" #e
fi"a"ced as a part of the total loa".
• Mort%a%e "sura"ce+ , This is the i"sura"ce char%es of the i"surer who
%uara"tees that if the le"der that is the #a"*er %oes out of #usi"ess for
a"' reaso"$ the #orrower would co"ti"ue to %et his or her pa'!e"ts.
The i"surer could also %uara"tee that the #orrower will "e&er owe
!ore tha" the &alue of his or her ho!e whe" the loa" is fi"all' repaid.
• Appraisal fee+ , This fee is to #e paid to a" appraiser who fi;es a &alue
o" the #orrowerMs ho!e which is to #e !ort%a%ed. A" appraiser !ust
also !a*e sure there are "o !ajor structural defects$ such as #ad
fou"datio"$ lea*' roof$ or ter!ite da!a%e. f the appraiser u"co&ers
propert' defects$ 'ou !ust hire a co"tractor to co!plete the repairs.
O"ce the repairs are co!pleted$ the sa!e appraiser is paid for a seco"d
&isit to !a*e sure the repairs ha&e #ee" co!pleted. The cost of the
repair !a' #e fi"a"ced withi" the loa".
• Other fees which i"clude credit report fee for &erif'i"% whether a"'
ta; lia#ilities are there$ title search fee$ docu!e"t preparatio" fee for
loa" docu!e"ts$ !ort%a%e recordi"% fee$ sur&e' fee$ etc.
Reverse Mortgage at SBI Belgaum
? Ris2s to RM )e$de&s
There are so!e ris*s faced #' a Re&erse Mort%a%e le"der. These ris*s are at the heart of
the relucta"ce of le"ders to %et i"to re&erse !ort%a%e le"di"%$ i" the a#se"ce of pu#lic
polic' support. The pri"cipal a"d u"i7ue pro#le! faci"% the le"der is that of predicti"%
accu!ulated future loa" #ala"ces u"der a re&erse !ort%a%e$ at the ti!e of ori%i"atio".
The u"i7ue"ess is #ecause re&erse !ort%a%e is a Prisi"% de#tM i"stru!e"t. Si"ce re&erse
!ort%a%e is a "o",recourse loa"$ the le"der has "o access to other properties$ if a"'$ of
the #orrower. E&e" if the collateral propert' appreciates i" &alue$ it !i%ht still #e lower
tha" the loa" #ala"ce at the ti!e of disposal of the propert'. The followi"% are the #asic
sources of this ris*+,
? Mo&t"'it Ris2s!-
This is the ris* that a re&erse !ort%a%e #orrower li&es lo"%er tha" a"ticipated. The le"der
!i%ht %et hit #oth wa's he has to !a*e a""uit' pa'!e"ts for a lo"%er period< a"d the
e&e"tual &alue realised !i%ht decli"e. @owe&er$ this ris* is usuall' Pdi&ersifia#leM$ if the
re&erse !ort%a%e le"der has a lar%e pool of such #orrowers. Possi#ilit' of ad&erse
selectio" is cou"ter#ala"ced #' the possi#ilit' that e&e" #orrowers with poor health !a'
#e attracted #' Re&erse Mort%a%eMs credit li"e or lu!p su! optio"s. @owe&er$ there is "o
literature o" o"e possi#le source of s'ste!atic ris*. Si"ce re&erse !ort%a%e is projected
to su#sta"tiall' i!pro&e the !o"thl' i"co!e a"d= or li7uid fu"ds of the re&erse !ort%a%e
#orrowers$ would it "ot itself result i" a s'ste!aticall' hi%her life e;pecta"c' a!o"%st
the! tha" otherwise$ "ow this is a #i% 7uestio".
Reverse Mortgage at SBI Belgaum
? I$te&est R"te Ris2s!-
Said that the t'pical re&erse !ort%a%e #orrower is elderl' a"d is loo*i"% for predicta#le
sources of i"co!e= li7uidit'$ re&erse !ort%a%e loa"s pro!ise a fi;ed !o"thl' pa'!e"t =
lu!p su! = credit li"e e"title!e"t. @owe&er$ for the le"der$ this is a lo"%,ter!
co!!it!e"t with si%"ifica"t i"terest rate ris*s. 5hile fi;i"% the a#o&e$ the le"der has to
accou"t for a ris* pre!iu! a"d thus ca" offer o"l' a co"ser&ati&e deal to the #orrower.
This i"terest rate ris* is "ot full' di&ersifia#le withi" the re&erse !ort%a%e portfolio.
Most of the re&erse !ort%a%e loa"s accu!ulate i"terest o" a floati"% rate #asis to
!i"i!i(e i"terest rate ris*s to the le"der$ li*e i" SB the i"terest rates are re&ised for
e&er' C 'ears. @owe&er$ si"ce there are "o actual periodic i"terest pa'!e"ts fro! the
#orrower$ these ca" #e reali(ed o"l' at the ti!e of disposal of the house$ if at all.
? P&o%e&t M"&2et Ris2!-
This ris* !a' #e partl' di&ersifia#le #' %eo%raphical di&ersificatio" of RM loa"s.
@owe&er$ propert' &alues !a' #e a "o",statio"ar' ti!e series. " this three ris*s !a' #e
poi"ted out the' are.
• RM ca" #e co"sidered as a pac*a%e loa" with a Pcrosso&erM put optio" to the
#orrower to sell his house at the accu!ulated &alue of the re&erse !ort%a%e loa"
at the ti!e of repa'!e"t which is u"certai". f this optio" ca" #e &alued$ it ca" #e
suita#l' priced a"d sold i" the !ar*et. @owe&er$ u"li*e i" the case of traditio"al
!ort%a%es$ !ar*ets for resale$ securiti(atio" a"d deri&ati&es #ased o" re&erse
!ort%a%es are "o",e;iste"t or "o",co!petiti&e. S!all !ar*et si(e a"d
predo!i"a"ce of %o&er"!e"t #ac*ed re&erse !ort%a%e i"sura"ce !a' dissuade
pote"tial e"tra"ts. This i!pedes the flow of fu"ds to fi"a"ce re&erse !ort%a%e
loa"s.
Reverse Mortgage at SBI Belgaum
• )or the le"der$ #oth the i"terest a"d a"' shared appreciatio" co!po"e"t added to
the loa" #ala"ce are ta;a#le as curre"t i"co!e e&e" thou%h there is "o cash i"flow
• Re&erse !ort%a%e loa"s fou"d ta*ers a!o"%st le"ders o"l' after the a&aila#ilit'
of default i"sura"ce. E&e" the"$ i" !ost of the re&erse !ort%a%e loa"s$ i"terest
accu!ulates at a floati"% rate li"*ed to o"e,'ear treasur' rates. A fi;ed i"terest
rate re&erse !ort%a%e carries a" i"terest rate ris* are hi%her tha" a co"&e"tio"al
coupo" #o"d or re%ular !ort%a%e. t could #e especiall' hi%h at ori%i"atio" a"d
co"ti"ues to #e hi%her throu%hout. The s!all i"itial i"&est!e"t u"der a" re&erse
!ort%a%e is &er' decepti&e. Re&erse !ort%a%e creates &er' lar%e off,#ala"ce sheet
lia#ilities$ if !ar*et rates rise a#o&e the rate assu!ed u"der re&erse !ort%a%e.
? Mo&"' H"4"&d Ris2!-
O"ce a" RM loa" is ta*e"$ the ho!eow"ers !a' ha&e "o i"ce"ti&e to !ai"tai" the house
so as to preser&e or e"ha"ce !ar*et &alue. This !i%ht #e especiall' true whe" the loa"
#ala"ce is !ore or less sure to cross the sale &alue. Si"ce the #e"efit would accrue !ai"l'
to the le"ders a"d the cost #or"e #' the ho!eow"er$ it is perhaps "ot se"si#le to assu!e
otherwise. The' co"clude that i" a co!petiti&e !ar*et$ the le"ders will respo"d #' either
reduci"% the loa" a!ou"t or #' char%i"% a ris* pre!iu! i" i"terest or #oth. The !ore
i!porta"t poi"t is that so!e ti!e duri"% the te"ure of a re&erse !ort%a%e$ a" elderl'
#orrower !a' si!pl' #e ph'sicall' i"capa#le of !ai"tai"i"% the ho!e as per loa"
re7uire!e"ts. Thou%h the re&erse !ort%a%e loa" co"tract pro&ides for foreclosure u"der
such co"ditio"s$ this see!s to #e i!practical a"d sure to result i" liti%atio" a"d #ad
pu#licit' for the le"der.
? )i8uidit Ris2s!-
" Re&erse !ort%a%e loa"s where the #orrower draws dow" o" his loa" throu%h a credit
li"e$ there is a ris* of sudde" withdrawals.
Reverse Mortgage at SBI Belgaum
? Ris2 Miti("tio$
Ris* !iti%atio" is the *e' for the success of a"' fi"a"cial product i"cludi"% re&erse
!ort%a%e. So!e of the ris* !iti%atio" tech"i7ues which the pro&iders that is the #a"*er
ca" appl' to reduce the ris* o" their #oo*s are as follow
6 P&o%e& e'i(ibi'it c&ite&io$s
The first !iti%atio" of ris* ca" #e do"e at the ti!e of pro&idi"% loa"s. This ca" #e do"e
throu%h proper &erificatio" of the title of the propert'$ a%e of the #orrower< his=her credit
a"al'sis etc. This reduces the ris* of default #' the #orrower
6 V"&i"b'e i$te&est &"tes 'o"$ "s co#%"&ed to fi9ed i$te&est &"te 'o"$
To a&oid i"terest rate ris*$ the le"der ca" %o for &aria#le i"terest rates #ased o" so!e
!ar*et #e"ch!ar* li*e MBOR. This will also reduce the ris* of Pre,pa'!e"t as the
#orrower will "ot ha&e i"terest ar#itra%e o" prepa'!e"t of the loa"
6 P&o%e& "$"'sis of #o&t"'it t&e$ds
As the product has si%"ifica"t lo"%e&it' ris*$ the le"der ca" do a detailed !ortalit' tre"d
a"al'sis o" a !acro le&el a"d also i" the !ar*et where it is operati"%.
6 1eo(&"%hic"' dive&sific"tio$
The le"der ca" loo* at spreadi"% the #usi"ess across the cou"tr' #' pro!oti"% the
product i" seco"dar' a"d tertiar' cities also so that the law of lar%e "u!#ers !a' wor*
properl' a"d if the pro&ider has a #ad e;perie"ce i" o"e !ar*et< it ca" #e co!pe"sated
with %ood e;perie"ce i" other cities
6 .eve'o% the %&oduct fo& 'o7e& "(e (&ou%s
The le"der ca" de&elop ho!e e7uit' co"&ersio" !ort%a%es for all households a"d "ot just
for elderl'. This will si%"ifica"tl' reduce loa" to &alue ratio a"d that will ta*e care of
!a"' of the ris*s i"here"t i" the product.
Reverse Mortgage at SBI Belgaum
6 Secu&iti4"tio$
O"e of the !ost effecti&e wa's of !iti%atio" ris* is securiti(atio" t i"&ol&es !a"' other
fi"a"cial pla'ers a"d thus it spreads the ris* of default=prepa'!e"t to !a"' other
participa"ts.
6 Re%"#e$t schedu'e
" the Repa'!e"t schedule$ so!e default co"ditio"s or cha"%es that affect the securit' of
the loa" for the le"der that ca" !a*e re&erse !ort%a%es pa'a#le should also #e added$
li*e -eclaratio" of #a"*ruptc'$ -o"atio" or a#a"do"!e"t of the house$ .o"de!"atio"=
So&erei%" Ta*eo&er of the propert' #' a %o&er"!e"t a%e"c'$ addi"% a "ew ow"er to the
ho!eMs title$ ta*i"% out "ew de#t a%ai"st the ho!e etc.
? *o&ces "ffecti$( :Reve&se Mo&t("(e;
A"' fi"a"cial product is affected #' so!e forces. The followi"% are forces that affect this
i""o&ati&e fi"a"cial product called “Re&erse Mort%a%e”.
>. Borrowers ha&e to #ear &er' hi%h tra"sactio" costs. @owe&er$ with the latest
pro%ra! we ca" e;pect a decli"i"% tre"d i" these costs due to %rowi"% &olu!es$
i"creased aware"ess a"d lear"i"% effects.
0. There is a defi"ite ris* of !oral ha(ard i" #orrowers #ei"% respo"si#le for ho!e
!ai"te"a"ce a"d i" ulti!ate ho!e sale. Gi&e" the profile of a t'pical #orrower$
there are serious 7uestio"s o" #oth i"ce"ti&es a"d a#ilit'. t is i!practical to
e"force the foreclosure clause. Ee%ati&e pu#licit'$ pote"tial liti%atio" a"d li*el'
jud%!e"ts !a*e it so.
1. @o!e e7uit' is a" i!porta"t co!po"e"t of precautio"ar' sa&i"%s. f a
ho!eow"er has draw" dow" o" his e7uit' throu%h a re&erse !ort%a%e$ his a#ilit'
to !eet u"foresee" health care costs or !o&e i"to alter"ati&e housi"% !a' #e
!ore li!ited. Those who #eco!e seriousl' ill #ut would li*e to co"ti"ue to sta'
at ho!e !a' face a se&ere pro#le!. f the' ha&e to #e awa' fro! ho!e for lo"%
for co"&alesce"ce$ the' !a' fail to !ai"tai" the ho!e
Reverse Mortgage at SBI Belgaum
a"d pa' propert' ta;es. The"$ as per the co"ditio"s of the re&erse !ort%a%e$ the
le"der ca" foreclose the loa".
8. Ma"' elderl' households !a' #e si!pl' relucta"t to ta*e o" de#t$ ha&i"% spe"t
so !uch of their lifeti!e sa&i"% for their ow" house.
C. Real estate laws are state specific whereas re%ulatio"s %o&er"i"% re&erse
!ort%a%e loa"s are "atio"al i" character. f there is a co"flict$ state laws will
pre&ail u"less pre,e!pted #' federal law.
/. Baws i" so!e states are "ot clear o" the lie" priorit' to #e %ra"ted to re&erse
!ort%a%e o&er other secured creditors$ i" spite of specific pro&isio"s i" a re&erse
!ort%a%e co"tract.
:. 5hat happe"s if a household declares #a"*ruptc'$ ha&i"% #orrowed throu%h a
Re&erse !ort%a%e is a #i% 7uestio".
?. G"certai"t' e;ists o" ta;atio" of the #orrower. f re&erse !ort%a%e a""uities
were co"sidered ta;a#le as i"co!e of the #orrower$ would accrued i"terest o" the
loa" #e a ta;,deducti#le e;pe"se is a" issue.
D. The ta; authorities !a' if classif' a" re&erse !ort%a%e as a sale of ho!e rather
tha" a loa"$ %i&e" the hi%h pro#a#ilit' that the e"tire &alue !a' ulti!atel' accrue
to the le"der. f so$ the #orrower !a' sudde"l' fi"d that he has lost out o" o"e,
ti!e e;e!ptio"s o" capital %ai"s.
>2. The le"der has to accou"t for accrued i"terest as i"co!e$ without a"'
correspo"di"% cash flow.
? I$di"$ M"&2et Pote$ti"'
? "dia,specific .haracteristics of Rele&a"ce to RM
• There are "o u"i&ersal old a%e social securit' related #e"efits. O"l' a#out >29 of
the acti&e wor*i"% populatio"s are co&ered #' for!al sche!es. This would
su#sta"tiall' e"lar%e the pote"tial tar%et !ar*et for RM.
• A !uch lower proportio" of ur#a" households$ a"d #' i!plicatio"$ less scope for
re&erse !ort%a%e.
Reverse Mortgage at SBI Belgaum
• A !uch lar%er proportio" of elders co,li&i"% with their fa!il' !e!#ers of
su#se7ue"t %e"eratio"s a"d he"ce less scope for re&erse !ort%a%e.
• A possi#l' stro"%er ha"d o&er !oti&e$ reduci"% the scope for re&erse !ort%a%e.
• A possi#l' hi%her real rate of appreciatio" of real estate a"d housi"% prices$
!a*i"% re&erse !ort%a%e !ore attracti&e to the le"der.
• 5idespread u"der &aluatio" of real estate properties to acco!!odate tra"sactio"s
i"&ol&i"% u"accou"ted !o"e' a"d e&asio" of ta;es o" propert' a"d real estate
tra"sactio"s
• .o!ple;it'$ &ariet' a"d locatio" specific &ariatio"s i" t'pes of ho!e ow"erships
li*e Be"a!i holdi"%s that is rre&oca#le power of attor"e'$ Beasehold$ freehold$
Ba"d use co"&ersio" re%ulatio"s$ )loor space re%ulatio"s$ re"t$ te"a"c' co"trols$
-isposal of a"cestral propert'.
• A#se"ce of co!petiti&e suppliers for i!!ediate life a""uit' products. This$ i"
tur"$ is a co"se7ue"ce of Bac* of data o" old a%e !ortalit' rates$ Bac* of lo"%,
ter! treasur' securities for !a"a%i"% i"terest rate ris*s of a""uit' pro&iders.
• "dia specific le%al a"d ta;atio" issues li*e Bice"se= Per!issio" re7uired u"der
i"sura"ce= #a"*i"% re%ulatio" for offeri"% re&erse !ort%a%e $"co!e ta; treat!e"t
for re&erse !ort%a%e le"der a"d #orrower$ .apital %ai"s o" propert'$ Reporti"%
a"d pro&isio"i"% #' the le"der as per #a"*i"%= i"sura"ce re%ulatio"$ Status of RM
loa" i" case of i"sol&e"c'.
? O'd A(e Po%u'"tio$
Thou%h the "dia" populatio" is still co!parati&el' P'ou"%M$ "dia is also
Pa%ei"%M. Accordi"% to so!e de!o%raphic sur&e' co"ducted for "dia i"dicated the
followi"% outco!es.
• The "u!#er of elderl' HQ/2 'rsI will i"crease to >>1 !illio" #' 02>/$ >
!illio" #' 020/$ a"d 0>? !illio" #' 0212. Their share i" the total populatio" is
projected to #e ?.D 9 #' 02>/ a"d >1.19 #' 020/. The depe"de"c' ratio
Reverse Mortgage at SBI Belgaum
is projected to rise fro! >C9 as of "ow to a#out 829 i" the "e;t four decades
• The perce"ta%e of Q/2 i" the populatio" of Ta!il Eadu a"d Kerala will reach
a#out >C9 #' 0202 itself.
• Bife e;pecta"c' at a%e /2$ which is arou"d >: 'rs "ow$ will i"crease to arou"d 02
#' 0202
? Sou&ces of I$co#e Su%%o&t fo& the E'de&' i$ I$di"
As of >DD8$ the esti!ated perce"ta%e a!o"% the elderl'$ depe"de"t o" &arious sources of
i"co!e was as follows+
Sou&ce Me$ 29 li&ed with their spouses o"l'
a"d a"other C9 li&ed with relati&es= "o",relati&es$ other tha" their ow" childre". " other
words$ co,reside"ce with childre" a"d other relati&es is predo!i"a"t.
@owe&er$ the followi"% aspects are worriso!e+
• The e;te"t a"d ade7uac' of support$ especiall' for widows
• Vul"era#ilit' of such support to shoc*s to fa!il' i"co!e
Reverse Mortgage at SBI Belgaum
• As i"co!es a"d life e;pecta"c' rose i" the "ow de&eloped cou"tries$
si!ulta"eousl' there was a decli"e i" co,reside"ce rates a"d i"ter%e"eratio"al
support. t !a' happe" i" "dia too
• Strai"s due to de!o%raphic tre"ds see! i"e&ita#le+ fewer childre" !ust support
pare"ts for lo"%er periods of ti!e. " a rece"t sur&e' co&eri"% 12 cities$ :29 of
the respo"de"ts did "ot e;pect their childre" to ta*e care of the! after retire!e"t.
• 4o# related !i%ratio" of 'outh withi" the cou"tr' a"d e!i%ratio".
? Pote$ti"' M"&2et Se(#e$ts
Eow let us see specificatio" of the pote"tial tar%et se%!e"t for Re&erse Mort%a%e.
• A(e 1&ou%
A#o&e C? 'ears$ assu!i"% C? is the t'pical retire!e"t a%e. Older the i"di&idual$ !ore
attracti&e will #e re&erse !ort%a%e. Additio"al co"sideratio"s will i"clude the !i"i!u!
a%e specified for prefere"tial treat!e"t as Pse"ior citi(e"sM i" !atters such as i"co!e ta;
or the rece"tl' i"troduced Varishta Bi!a Loja"a.
• Hi(h House E8uit
The curre"t !o"thl' a""uit' pa'out #' B. u"der its i!!ediate a""uit' product "eevan
#kshay is ?88 Rs for a si"%le pre!iu! pa'!e"t of Rs > la*h$ for a perso" a%ed /C. The
a""uit' will #e lower i" case of joi"t life or a""uit' certai" optio"s. f we were to use a
!i"i!u! of Rs C222 as the !o"thl' a""uit' that !a*es re&erse !ort%a%e a worthwhile
acti&it'$ we "eed a" RM loa" of arou"d Rs / la*hs. Assu!i"% a loa" to ho!e &alue ratio
of /29$ this i!plies a curre"t !ar*et &alue of Rs. >2 la*hs.
• )o7 Cu&&e$t I$co#es Re'"tive to .esi&ed St"$d"&d of )ivi$(
A!o"%st such households$ we are loo*i"% for those whose curre"t le&els of i"co!e are
i"sufficie"t to afford their desired sta"dard of li&i"%. The salar' replace!e"t rates
Reverse Mortgage at SBI Belgaum
su%%ested i" the literature$ for !ai"tai"i"% the sa!e sta"dard of li&i"% after retire!e"t as
#efore$ is arou"d /29. This i!plies a pre,retire!e"t ta*e ho!e salar' or i"co!e Hafter,
ta;I of arou"d Rs D222,>2222 a !o"th. A pote"tial re&erse !ort%a%e #orrower would #e
o"e who had such a pre,retire!e"t i"co!e #ut "o su#sta"tial pe"sio" #e"efits. Therefore$
he would #e e!plo'ed i" the pri&ate sector or self,e!plo'ed.
• )o$( Te$u&e "t Cu&&e$t Ho#e
Re&erse Mort%a%e is attracti&e to a #orrower especiall' whe" he &alues co"ti"ued sta' i"
his curre"t reside"ce a"d pla"s to do so for a lo"% ter! i"to the future. This is li*el' whe"
he has alread' sta'ed i" his curre"t ho!e for a relati&el' lo"%er period, sa' a !i"i!u!
of >2 'ears. Additio"al i"dicators for such a desire could #e a perso" curre"tl' reside"t i"
o"eMs ho!e tow"= state.
• )"c2 of Othe& Su%%o&ts
f such a" i"di&idual is li&i"% alo"e$ as i" the case of a widower or widow$ re&erse
!ort%a%e ca" !a*e a su#sta"tial co"tri#utio" to his= her sta"dard of li&i"%. Alter"ati&el'$
the "e;t %e"eratio" !a' #e li&i"% far awa'$ either i" "dia or a#road.
• -o Si($ific"$t /e8ue"th Motive
t ca" #e said that there is a #asic co"flict #etwee" ta*i"% a" re&erse !ort%a%e loa" a"d a
desire to #e7ueath propert' to o"eMs heirs. f a" elderl' ho!eow"er has "o childre"$ this
7uestio" !a' "ot arise. Otherwise$ we "eed to loo* for attri#utes i"dicati"% a wea*
#e7ueath !oti&e. )or e;a!ple$ i" the "dia" co"te;t$ it could !ea" P"o so"sM. Or it could
#e that the e"tire "e;t %e"eratio" of the fa!il' has !i%rated to
a"other !etro or a#road with "o i"te"tio" of co!i"% #ac*. The' !a' #e !uch #etter off
tha" the older %e"eratio" a"d !a' "ot &alue #e7uests$ if a"'.
• I$de%e$de$ce "$d =u"'it of )ife
Reverse Mortgage at SBI Belgaum
A pote"tial re&erse !ort%a%e #orrower !ust #e a" elderl' perso" who &alues his fi"a"cial
i"depe"de"ce. @e !ust #e i"terested i" !ai"tai"i"% his desired 7ualit' of life rather tha"
curtaili"% co"su!ptio" for lac* of curre"t cash i"co!e. This i!plies he !ust #e !e"tall'
prepared to co"sider #orrowi"% i" old a%e$ let alo"e throu%h i""o&ati&e fi"a"cial products
li*e re&erse !ort%a%e. This i!plies certai" !i"i!u! educatio" a"d e;posure to fi"a"cial
sa&i"%s= assets= !ar*ets.
? Co$side&"tio$s i$ P&oduct .esi($
Eow letMs see what are the aspects which "eed to #e focused for a product desi%" li*el' to
#e attracti&e fro! the perspecti&e of a pote"tial re&erse !ort%a%e custo!er a"d a le"der.
? Custo#e& Pe&s%ective!-
• E!pathetic cou"seli"% fro! professio"all' co!pete"t a"d i"depe"de"t
cou"selors, EGOs li*e @elp A%e$ -i%"it' )ou"datio"$ "dia" Associatio" of
Retired Perso"s HARPI etc.$ !a' #e i"terested i" pro&idi"% such ser&ices
• Ratio of re&erse !ort%a%e Boa" li!it to curre"t !ar*et &alue of propert'+ This
will #e a fu"ctio" of #orrowerMs a%e$ projected lo"% ter! i"terest rates a"d
propert' appreciatio" rates.
• )le;i#ilit' i" drawdow"+ The li"e of credit with i"terest credit for u"utilised
portio" is the !ost popular choice i" the G.S co"te;t. The sa!e !i%ht #e true i"
"dia too. .ash !a' #e withdraw" as a"d whe" "eeded$ especiall' lar%e a!ou"ts
to !eet !edical a"d other e!er%e"cies$ i" co"trast to a
re%ular !o"thl' a!ou"t. @owe&er this is &ul"era#le to !'opic withdrawals or
u"der pressure fro! relati&es.
• Mi"i!u! possi#le re&erse !ort%a%e closure costs.
Reverse Mortgage at SBI Belgaum
• .larit' i" #orrowerMs respo"si#ilit' for propert' !ai"te"a"ce a"d pa'i"%
propert' ta;es$ i"sura"ce etc. Stro"% le%al protectio" a%ai"st foreclosure a"d= or
forci#le e&ictio" #ased o" fi"e pri"t !a' #e desira#le. Alter"ati&el'$ the
re&erse !ort%a%e le"der should #e willi"% to ta*e o&er such a respo"si#ilit'
a%ai"st deductio" fro! re&erse !ort%a%e loa" li!it= a""uit'.
• .larit' i" ta; treat!e"t of re&erse !ort%a%e receipts$ accrued i"terest$ capital
%ai"s etc.
• Optio" to refi"a"ce i" case i"terest rates decli"e su#sta"tiall'
• Protectio" a%ai"st le"der defaults, thou%h "ot &er' critical.
? )e$de& Pe&s%ective!-
The !ajor co"cer" is with respect to the ris*s of lo"%e&it'$ i"terest rates a"d propert'
appreciatio" rates. There is "o si!ple wa' to e;plore these e;cept throu%h fi"a"cial
!odelli"%. So!e alter"ati&es for li!iti"% ris*s i" the lear"i"% phase ca" #e su%%ested as
#elow.
• Purchasi"% a life a""uit' throu%h a" i"sura"ce tie,up so that a part of the
!ortalit' ris* is tra"sferred to the i"surer with the "ecessar' core co!pete"ce.
Their e;pertise !a' also #e used to decide o" the lu!p su! re&erse !ort%a%e
loa".
• Based o" the G.S e;perie"ce so far$ it see!s #etter for the le"der to assu!e
respo"si#ilit' for propert' !ai"te"a"ce= ta;es a%ai"st deductio" fro! re&erse
!ort%a%e loa" li!its= a""uit' pa'!e"ts.
• Thou%h i"sura"ce a%ai"st default ris* is u"li*el' i" "dia$ a" re&erse !ort%a%e
le"der has to char%e a" e7ui&ale"t additio"al i"terest spread of 0,0.C9$ if "ot
!ore$ as a default ris* pre!iu!
• t see!s worthwhile to e;plore a"d lo##' for co"cessio"al refi"a"ce for re&erse
!ort%a%e loa"s fro! a%e"cies li*e the Eatio"al @ousi"% Ba"* a"d for lower
re&erse !ort%a%e related tra"sactio" ta;es.
Reverse Mortgage at SBI Belgaum
• Gi&e" the re7uire!e"t of propert' !ar*et related e;pertise at the !icro,le&el$ it
!i%ht #e worthwhile to focus o" o"l' o"e or two cities i" the i"itial phase.
• There !i%ht #e a "eed for tie,ups with a%e"cies for &arious ser&ices, propert'
&aluatio"$ title search$ propert' !ai"te"a"ce a"d so o".
? Mths "bout Reve&se Mo&t("(es
The followi"% are so!e of the !'ths a#out re&erse !ort%a%e i" the !i"ds of the
people which "eed to #e clearl' addressed i" order to !a*e this product !ore
attracti&e a"d popular.
• The 'e$de& 7i'' o7$ the ho#e
The applica"t a"d his fa!il' will co"ti"ues to retai" ow"ership of the ho!e.
The Be"der does "ot ta*e co"trol of the title. The le"derFs i"terest is li!ited to
the outsta"di"% loa" #ala"ce.
• Reve&se Mo&t("(e 'e$de&s just 7"$t to se'' ou& house
The le"ders are i" the #usi"ess of helpi"% to *eep ow"ers ho!e a"d !eet
whate&er fi"a"cial "eeds he !a' ha&e i" order to help hi! to !ai"tai"
fi"a"cial i"depe"de"ce. Re&erse Mort%a%e #orrowers !a' re!ai" i" the ho!e
for as lo"% as the' wish. @owe&er$ should the' decide to sell the ho!e for a"'
reaso"$ the loa" would the" #eco!e due a"d pa'a#le.
• O7$e&>s hei&s 7i'' be s"dd'ed 7ith the 'o"$
The Re&erse Mort%a%e is a "o",recourse loa". This !ea"s that the le"der ca"
o"l' deri&e repa'!e"t of the loa" fro! the proceeds of the sale of the
propert'.
Reverse Mortgage at SBI Belgaum
• O7$e& $eed " ce&t"i$ 'eve' of i$co#e5 (ood c&edit5 o& (ood he"'th to
8u"'if
A Re&erse Mort%a%e has "o i"co!e$ credit$ or health re7uire!e"ts.
• O7$e& h"s to #"2e #o$th' %"#e$ts o$ his Reve&se Mo&t("(e
There are "e&er a"' !o"thl' pa'!e"ts. Pa'!e"t of ta;es$ i"sura"ce a"d
%e"eral up*eep of the ho!e are the o"l' respo"si#ilities of the ho!eow"er.
• Ho#e #ust be debt f&ee to 8u"'if fo& " Reve&se Mo&t("(e
Ow"er !a' ha&e a !ort%a%e or other de#t o" his ho!e. The !ort%a%e or de#t
howe&er$ !ust #e paid off first with the proceeds of the re&erse !ort%a%e.
• O$' the ?c"sh %oo&? o& des%e&"te se$io& citi4e$s c"$ be$efit f&o# the
Reve&se Mo&t("(e
E&e" thou%h so!e se"iors !a' ha&e a %reater "eed tha" others for the cash or
!o"thl' i"co!e$ the Re&erse Mort%a%e ca" also #e a" e;celle"t fi"a"cial or
estate pla""i"% tool.
? S0$ 022:. 4oi"t loa"s will #e %i&e" if the spouse is ali&e a"d is o&er C?
'ears of a%e. The loa" is #e offered #' all #ra"ches of SB fro! Octo#er >0$ 022:. The
loa" is offered at a" i"terest rate of >2.:C9 pa a"d is su#ject to cha"%e at the e"d of e&er'
fi&e 'ears alo"% with re&aluatio" of securit'. E&er' fi&e 'ears$ #a"* !a' e&e" re,adjust
the loa" i"stall!e"ts$ if it is "eeded$ depe"di"% o" !ar*et co"ditio"s a"d loa" status. "
a" press report The .hief Ge"eral Ma"a%er for Perso"al Ba"*i"% HSBI$ Mr. Sa"%eet
Shu*la told that there is "o upper li!it of a!ou"t of loa". Also$ the !a;i!u! period for
a&aili"% this #e"efit is >C 'ears. G"der this loa"$ #orrowers ca" #e a&ail pa'!e"t a%ai"st
the securit' of their houses o" !o"thl' or 7uarter i"stall!e"ts or either he=she ca" %o for
as a lu!p su! pa'!e"t at the #e%i""i"%. -uri"% their lifeti!e$ the #orrower does "ot
ha&e to pa' the loa" a"d will co"ti"ue to sta' i" their house. Thereafter$ either the le%al
heirs ca" repa' the loa" a"d redee! the propert' #ut if this optio" is "ot e;ercised$ #a"*
will sell the propert' a"d li7uidate the loa". Surplus$ if a"'$ will #e passed o" to the le%al
heirs. -@)B a"d Pu"ja# Eatio"al Ba"* are the other co!petitors alo"% with the SB.
Re&erse !ort%a%e is &er' popular product i" !a"' cou"tries. The sche!e offers old
perso"s with less i"co!e to offer their house as !ort%a%e securit'. The old perso" will
%et a loa" fro! the #a"* a"d the #a"* will *eep o" pa'i"% the! for a fi;ed period. After
the ti!e of loa" is o&er$ the #a"* !a' either$ ac7uire the propert' a"d %i&e the re!ai"der
to the custo!erM heirs or the' ca" pa' #ac* a"d *eep the propert'. The sche!e is &er'
%ood for so!e people loo*i"% for additio"al !o"e' to support their "eeds at old a%e.
Reverse Mortgage at SBI Belgaum
Reve&se Mo&t("(e i$ S/I5 #"i$ b&"$ch /e'("u#!-
As re&erse !ort%a%e is offered #' all the #ra"ches of SB fro! Octo#er >0 022:$
SB !ai" #ra"ch i" Bel%au! also started pro&idi"% the facilit' of Re&erse Mort%a%e. -ue
to lac* of *"owled%e a#out re&erse !ort%a%e i" Bel%au! there are "o a"' custo!ers for
this product i" SB !ai" #ra"ch Bel%au!. Rece"tl' o"e custo!er is willi"% to ta*e
re&erse !ort%a%e fro! SB !ai" #ra"ch. This deal has "ot 'et #ee" fi"ali(ed$ it is i"
process.
The #a"* pa's i"stall!e"ts !o"thl'$ 7uarterl' a"d e&e" lu!p su!. The loa"
a!ou"t is paid i" i"stall!e"t for >2 'ears or for >C 'ears as per the re7uire!e"t a"d wish
of the #orrower.
The followi"% is the ta#le showi"% the i"stall!e"ts o" !o"thl'$ 7uarterl' #asis
for the period of >2 tears a"d >C 'ears for a loa" a!ou"t of Rs >22222 at a i"terest rate of
>2.:C9.
)o"$ Te$o&
1A e"&s 1B e"&s
Mo$th' i$st"'#e$ts
CRs@D
8/? 00C
=u"&te&' i$st"'#e$ts
CRs@D
>$801 /?:
)u#% su# %"#e$t
CRs@D
1/$200 0>$/>D
Reverse Mortgage at SBI Belgaum
" SB !ai" #ra"ch rece"tl' o"e custo!er showed willi"%"ess to ta*e up re&erse
!ort%a%e. As due to the pri&ac' polic' of the #a"* he"ce forth the "a!e of the custo!er
will #e ta*e" as Mr. A. Mr. A is of /8 a%es a"d ow"s a house with its title. After the e
&aluatio" of the house$ the &alue of the house is esti!ated to #e Rs >2$ 22$222. As per the
SB %uideli"es o"l' the loa" is %i&e" o" D29 of the propert' &alue so i" this case Mr. A
ca" ta*e a loa" of Rs D$22$222 Hthat is D29 of >2$22$222I. MR .A wa"ts to %et the
i"stall!e"t o" !o"thl' #ases for a period of >C 'ears. So his !o"thl' i"stall!e"t for the
period of >C 'ears for the loa" a!ou"t is Rs 0$20C.
Reverse Mortgage at SBI Belgaum
1uide'i$es fo& :Reve&se Mo&t("(e; i$ S/I
Objective of the sche#e
To pro&ide a source of additio"al i"co!e for se"ior citi(e"s of "dia who ow" self,
ac7uired a"d self,occupied house propert' i" "dia.
E'i(ibi'it
• Eo. of #orrowers+ , Si"%le or joi"tl' with spouse i" case of a li&i"% spouse.
• A%e of first #orrower +, A#o&e /2 'ears
• Eo. of sur&i&i"% spouses o" date of sa"ctio" of loa" +, Should "ot #e !ore tha"
o"e. Borrowers will ha&e to %i&e a" u"derta*i"% that the' will "ot re!arr' duri"%
the curre"c' of the loa". f the #orrowers choose to re!arr'$ the loa" will #e
foreclosed.
• A%e of spouse +, A#o&e C? 'ears
• Reside"ce +,
a. Borrower should #e sta'i"% at se'f-"c8ui&ed a"d se'f o7$ed
house = flat a%ai"st which loa" is #ei"% raised$ as his
%e&#"$e$t %&i#"& &eside$ce@
b. Mo#ile=Telepho"e=.redit .ard #ills=.ertificate fro! the
@ousi"% Societ' where the #orrower is sta'i"% =Affida&it !ade
#efore the E;ecuti&e Ma%istrate !a' #e accepted as proof of
reside"ce.
c. Borrowers will #e re7uired to i"for! the Ba"* whe" the' cease
to use this reside"ce as their per!a"e"t reside"ce.
• Title of the Propert' +,
a. Borrowers should ha&e a clear a"d tra"sfera#le title i" their
"a!es
b. Title &erificatio" a"d search report for a period of 3A e"&s will
#e re7uired to #e o#tai"ed fro! the Ba"*Ms e!pa"elled ad&ocate
at #orrowersM cost.
Reverse Mortgage at SBI Belgaum
• Title of the propert' a"d "u!#er of #orrowers., " case if the title i" si"%le "a!e
a"d loa" "u!#er of #orrowers. a&ailed joi"tl' with spouse. Title holder should
!a*e a 5ill i" fa&our of the other spouse. The 5ill should co"fir! that this is the
last 5ill a"d that it supersedes all earlier wills$ if a"'. The #orrower to u"derta*e
that "o fresh 5ill shall #e !ade duri"% the curre"c' of the loa"
• E"cu!#ra"ces+ , The propert' should #e free fro! a"' e"cu!#ra"ces. @owe&er
i" case of propert' purchased #' a&aili"% @o!e Boa" fro! SB a"d !ort%a%ed to
SB$ it will #e co"sidered for RMB$ su#ject to closure of the @o!e Boa" accou"t
out of the proceeds of RMB
• Residual Bife of propert'+ , Should #e at least 02 'ears i" case of si"%le #orrower
a"d 0C 'ears i" case of spouse #ei"% #elow /2 'ears of a%e. .ertificate fro!
e!pa"elled e"%i"eer= architect will #e re7uired to #e o#tai"ed for this purpose$ i"
additio" to &aluatio" of propert'.
Secu&it
The Re&erse Mort%a%e Boa" shall #e secured #' wa' of e7uita#le !ort%a%e of
reside"tial propert'.
Te$o&
• A%e of the ou$(e& of the #orrowers #etwee" C? a"d upto /? 'ears+ >C 'ears
• A%e of the ou$(e& of the #orrowers a#o&e /? 'ears+ >2 'ears
• OR till death of the #orrowerHsI$
5hiche&er is earlier
.isbu&se#e$t
B' credit to a" SB accou"t i" the joi"t "a!es of the #orrowers operated #' E or S.
Reverse Mortgage at SBI Belgaum
Pe&iodicit of "v"i'i$( 'o"$
• Mo"thl' pa'!e"t.
• 3uarterl' pa'!e"t
• Bu!p su! pa'!e"t
=u"$tu# of 'o"$
The loa" a!ou"t would #e D29 of the &alue of propert'. Boa" a!ou"t would i"clude
i"terest till !aturit'. The #"9i#u# loa" a!ou"t is *ept at Rs. > .rore a"d #i$i#u#
Rs.1 lacs
Pu&%ose of )o"$
Supple!e"ti"% i"co!e$ a"' perso"al e;pe"ses$ house repairs$ etc. Boa" a!ou"t should
"ot #e used for speculati&e$ tradi"% a"d #usi"ess purposes.
Re%"#e$tESett'e#e$t
• The loa" shall #eco!e due a"d pa'a#le o"l' whe" the last sur&i&i"% #orrower
dies or opts to sell the ho!e$ or per!a"e"tl' !o&es out of the ho!e for to a"
i"stitutio" or to relati&es. T'picall'$ a “per!a"e"t !o&e” !a' %e"erall' !ea" that
"either the #orrower "or a"' other co,#orrower has li&ed i" the house
co"ti"uousl' for o"e 'ear or do "ot i"te"d to li&e co"ti"uousl'. Ba"* !a' o#tai"
such docu!e"tar' e&ide"ce as !a' #e dee!ed appropriate for the purpose.
• Settle!e"t of loa" alo"% with accu!ulated i"terest is to #e !et #' the proceeds
recei&ed out of sale of reside"tial propert' or prepa'!e"t #' #orrowers a"d his
"e;t of *i".
• The #orrowerHsI or his=her=their le%al heirs=estate shall #e pro&ided with the first
ri%ht to settle the loa" alo"% with accu!ulated i"terest$ without sale of propert'.
• A reaso"a#le a!ou"t of ti!e$ sa' up to / !o"ths$ !a' #e pro&ided whe" RMB
repa'!e"t is tri%%ered$ for house to #e sold.
Reverse Mortgage at SBI Belgaum
• The #ala"ce surplus Hif a"'I$ re!ai"i"% after settle!e"t of the loa" with accrued
i"terest a"d e;pe"ses$ shall #e passed o" to the #orrower or the estate of the
#orrower=le%al heirs.
• Borrowers will #e re7uired to su#!it a""ual life certificates i" the !o"th of
Eo&e!#er e&er' 'ear. This certificate will also i"clude clauses re%ardi"% !arital
status$ a"d per!a"e"t reside"ce of the #orrowers$ i" additio" to the #ala"ce
co"fir!atio" as o" 1>st Octo#er of that 'ear.
• Bist of le%al heirs will #e o#tai"ed at the ti!e of sa"ctio" of loa". 5ith a &iew to
a&oidi"% disputes at the ti!e of settle!e"t of loa" a!ou"t #' le%al heirs$ specific
i"structio"s a#out i"herita"ce of the propert' a"d pa'!e"t of #ala"ce a!ou"t$ if
a"'$ of the sale proceeds after settli"% the Ba"*Ms dues $ will #e re7uired to #e part
of the #orrowersM 5ill.
*o&ec'osu&e
The loa" shall #e lia#le for foreclosure due to occurre"ce of the followi"% e&e"ts of
default.
• f the #orrowerHsI has=ha&e "ot sta'ed i" the propert' for a co"ti"uous period of
o"e 'ear
• f the #orrowerHsI failHsI to pa' propert' ta;es or !ai"tai" a"d repair the
reside"tial propert' or failHsI to *eep the ho!e i"sured$ the Ba"* reser&es the
ri%ht to i"sist o" repa'!e"t of loa" #' #ri"%i"% the reside"tial propert' to sale a"d
utili(i"% the sale proceeds to !eet the outsta"di"% #ala"ce of pri"cipal a"d
i"terest.
• f #orrowerHsI declare hi!self= herself=the!sel&es #a"*rupt.
• f the reside"tial propert' so !ort%a%ed to the Ba"* is do"ated or a#a"do"ed #'
the #orrowerHsI.
Reverse Mortgage at SBI Belgaum
• f the #orrowerHsI effect cha"%es i" the reside"tial propert' that affect the securit'
of the loa" for the le"der.)or e;a!ple+ re"ti"% out part or all of the house #'
creati"% a te"a"c' ri%ht< addi"% a "ew ow"er to the houseMs title<
cha"%i"% the houseMs (o"i"% classificatio"< or creati"% further e"cu!#ra"ce o" the
propert' either #' wa' of ta*i"% out "ew de#t a%ai"st the reside"tial propert' or
alie"ati"% the i"terest #' wa' of a %ift or will.
• -ue to perpetratio" of fraud or !isreprese"tatio" #' the #orrowerHsI.
• f the Go&er"!e"t u"der statutor' pro&isio"s$ see*s to ac7uire the reside"tial
propert' for pu#lic use.
• f the Go&er"!e"t co"de!"s the reside"tial propert' Hfor e;a!ple$ for health or
safet' reaso"sI.
• A"' other e&e"t such as re,!arria%e of the #orrowerHsI etc. which shall ha&e a"
ad&erse i!pact o" the loa" settle!e"t prospects.
• Borrowers do "ot accept the re&ised ter!s o" re&aluatio" of propert' a"d i"terest
reset at the e"d of e&er' C 'ears fro! sa"ctio".
• A"' &iolatio" of the ter!s a"d co"ditio"s of RMB.
P&e-%"#e$t of 'o"$
• The #orrowerHsI will ha&e optio" to prepa' the loa" at a"' ti!e duri"% the loa"
te"or.
• There will #e "o prepa'!e"t pe"alt'.
V"'u"tio$ERev"'u"tio$ of %&o%e&t "$d o%tio$ fo& the /"$2 to "djust %"#e$ts@
• After the i"itial &aluatio" to deter!i"e the loa" a!ou"t$ su#se7ue"t re&aluatio"s
will #e do"e at i"ter&als of C 'ears.
• The Ba"* shall ha&e the optio" to re&ise the periodic=lu!p,su! a!ou"t e&er' C
'ears alo"% with re&aluatio". " the sce"ario of fall i" propert' prices$ the Ba"*
!a' decide to re&ise the a!ou"t at a"' ti!e earlier tha" C 'ears. At e&er' sta%e
of re&isio"$ it should #e e"sured that the Boa" to Value ratio does "ot e;ceed D29
at !aturit'.
Reverse Mortgage at SBI Belgaum
• f the Borrower does "ot accept the re&ised ter!s$ "o further pa'!e"ts will #e
effected #' the Ba"*."terest at the rate a%reed #efore the re&iew will co"ti"ue to
accrue o" the outsta"di"% a!ou"t of the loa". The accu!ulated pri"cipal a"d
i"terest shall #eco!e due a"d pa'a#le as !e"tio"ed i" clauses D a"d >2.
I$te&est R"te
1A@FBG %@"@ H)i;edI su#ject to reset e&er' C 'ears.
P&ocessi$( fee
2.C29 of the loa" a!ou"t$ !i"i!u! Rs. C22 a"d !a;i!u! of Rs. >2$222
Ri(ht of Rescissio$
As a custo!er,frie"dl' %esture a"d i" *eepi"% with i"ter"atio"al #est practices$ after the
docu!e"ts ha&e #ee" e;ecuted a"d loa" tra"sactio" fi"ali(ed$ #orrowers will ha&e ri%ht
of rescissio" up to seve$ d"s to ca"cel the tra"sactio". f the loa" a!ou"t has #ee"
dis#ursed$ the e"tire loa" a!ou"t will "eed to #e repaid #' the #orrower withi" this
period. @owe&er$ i"terest for the period !a' #e wai&ed. Processi"% fee shall "ot #e
refu"ded i" such cases.
I$su&"$ce "$d #"i$te$"$ce of house %&o%e&t
• The house propert' will #e i"sured #' the #orrower at his cost a%ai"st fire$
earth7ua*e a"d other cala!ities.
• The #orrower shall e"sure to pa' all ta;es$ char%es etc.
• Ba"* reser&es the ri%ht to pa' i"sura"ce pre!iu!$ ta;es$ char%es etc. #' reduci"%
the loa" a!ou"t to that e;te"t.
• The #orrower shall !ai"tai" the propert' i" %ood co"ditio"
Reverse Mortgage at SBI Belgaum
O%e&"tio$"' issues
• T'pe of facilit'+ , Eo",re"ewa#le O&erdraft without led%er folio char%es. Eo
che7ue #oo*=de#it card will #e li"*ed to this accou"t.
• A&aila#ilit' of product +, All #ra"ches
Reverse Mortgage at SBI Belgaum
CHAPTER- B
*EASI/I)ITY STU.Y
Reverse Mortgage at SBI Belgaum
*e"sibi'it stud
)easi#ilit' stud' is the li*elihood stud'. t is the wa' to deter!i"e if a #usi"ess idea is
capa#le of #ei"% achie&ed. The results which we %et out of this stud' are used to !a*e a
decisio" whether to proceed with the project or "o. too* out the feasi#ilit' stud' to see
the li*elihood of Re&erse Mort%a%e offered #' SB. li!ited !' stud' o"l' to SB !ai"
Bra"ch$ Bel%au!." order to do the feasi#ilit' stud' of re&erse !ort%a%e for SB !ai"
#ra"ch co"tacted a"d sur&e'ed 12 respo"de"ts. prepared a 7uestio""aire i" which
as*ed the respo"de"ts details a#out their house$ whether the' %et a"' pe"sio"$ whether
the' are i" "eed of a"' fi"a"cial assista"ce$ their *"owled%e a#out re&erse !ort%a%e a"d
whether the' are willi"% to %o for re&erse !ort%a%e or "o.
So #' this feasi#ilit' stud' we ca" co!e to *"ow how !a"' people are "eed
fi"a"cial assista"ce$ how !a"' people ha&e so!e *"owled%e a"d how !a"' people are
willi"% to %o for re&erse !ort%a%e.
Reverse Mortgage at SBI Belgaum
M"&2et V"'ue
Market Value
8 26.7 26.7 26.7
17 56.7 56.7 83.3
5 16.7 16.7 100.0
30 100.0 100.0
Rs200000-500000
Rs500000-1000000
Above Rs1000000
Total
Valid
Frequenc !ercent Valid !ercent
"u#ulative
!ercent
$ar%et Value
Above Rs1000000
Rs500000-1000000
Rs200000-500000
I$te&%&et"tio$!
" the sa!ple si(e of 12 people$ ? people had house whose !ar*et &alue was #etwee" Rs
022222 to Rs C22222$ >: people had house whose !ar*et &alue was #etwee" Rs C22222
to Rs >22222 a"d C people had house whose !ar*et &alue was a#o&e Rs >222222.
Reverse Mortgage at SBI Belgaum
Pe$sio$
Pension
22 73.3 73.3 73.3
8 26.7 26.7 100.0
30 100.0 100.0
&es
'o
Total
Valid
Frequenc !ercent Valid !ercent
"u#ulative
!ercent
!ension
'o
&es
I$te&%&et"tio$!
" the sa!ple si(e of 12 respo"de"ts 00 people said the' %et pe"sio" a"d re!ai"i"% ?
people said the' did "ot %et a"' *i"d of pe"sio". So #' seei"% the a#o&e chart we ca"
!a*e a i"fere"ce that i" the sa!ple si(e of 12 respo"de"ts !a;i!u! people %et pe"sio".
Reverse Mortgage at SBI Belgaum
*i$"$ci"' Assist"$ce
Financial Assistance
22 73.3 73.3 73.3
8 26.7 26.7 100.0
30 100.0 100.0
&es
'o
Total
Valid
Frequenc !ercent Valid !ercent
"u#ulative
!ercent
Financial Assistance
'o
&es
Reverse Mortgage at SBI Belgaum
I$te&%&et"tio$!
)i"a"cial assista"ce refers to whether the respo"de"t is i" "eed of !o"e' for his dail'
"eeds. @ere out of 12 respo"de"ts :1.19 of the people "eeded fi"a"cial assista"ce for
their e;pe"ses a"d re!ai"i"% 0/.:9 people did "ot "eed a"' *i"d of fi"a"cial assista"ce
for their dail' e;pe"ses.
0$o7'ed(e "bout Reve&se Mo&t("(e
Knowledge about Reverse Mortgage
12 (0.0 (0.0 (0.0
18 60.0 60.0 100.0
30 100.0 100.0
&es
'o
Total
Valid
Frequenc !ercent Valid !ercent
"u#ulative
!ercent
Reverse Mortgage at SBI Belgaum
)no*led+e about Reverse $ort+a+e
'o
&es
I$te&%&et"tio$!
@ere *"owled%e a#out Re&erse Mort%a%e refers to how !a"' people are aware a#out the
co"cept of Re&erse Mort%a%e. So accordi"% to !' sur&e' of 12 respo"de"ts o"l' 829
that is >0 respo"de"ts had a #asic idea a#out Re&erse Mort%a%e a"d the re!ai"i"% /29
that is >? people did "ot had a"' *i"d of *"owled%e a#out re&erse Mort%a%e. So #' this
we ca" sa' that !a"' people do"Mt ha&e a #asic idea a#out Re&erse Mort%a%e a"d the
#a"* "eed to focus o" spreadi"% the co"cept of re&erse !ort%a%e.
222222 S T
8. s the house used for reside"ceR
Les S T Eo S T
C. -o 'ou %et a"' pe"sio"R
Les S T Eo S T
/. -o 'ou "eed a"' fi"a"cial assista"ceR
Les S T Eo S T
:. -o 'ou *"ow a#out Re&erse Mort%a%eR
Reverse Mortgage at SBI Belgaum
Les S T Eo S T
?. f "o$ do 'ou "eed details a#out Re&erse !ort%a%eR
Les S T Eo S T
D. Are 'ou willi"% to %o for re&erse !ort%a%eR
Les S T Eo S T
----------T.an% &ou ---------
Reverse Mortgage at SBI Belgaum

doc_888792044.doc