No progress on reverse mortgages
Barbados’ cold response to reverse mortgages has disappointed the Barbados Association of Retired Persons.
Former banker Senator Tony Marshall, who chairs a BARP committee on the issue, regretted that Government, and the local financial sector appeared disinterested in the policy. He raised the issue today while contributing to debate on the White Paper On Aging in the Upper House.
A reverse mortgage is a means by which home owners can access cash from financial institutions by using their existing mortgage as equity.
“The Barbados Association of Retired Persons has been promoting reverse mortgages for some two years now. I happen to chair that committee and I want to say that we are disappointed that so far we have not gotten the response that we thought we would get,” Marshall said.
“The credit unions are very keen, one or two finance houses are keen, one bank has expressed an interest in starting, but the others have remained silent.
“…The financial industry in this country was built on the backs of the penny savers in those years long ago with sugar and so on, … and it is interesting that up to now we can say we have enjoyed a very healthy climate in the financial industry.”
The independent senator said BARP was pushing reverse mortgages because “there are so many people in this country who are asset rich and cash poor”.
“They have wonderful homes, they have quite exciting pieces of real estate and no money to pay land tax, no money to pay insurance for the property, no money to pay maintenance on the property and no money for themselves to enjoy a decent living, they eke out an existence,” he stated.
“The beauty of a reverse mortgage is that first of all the lender cannot tell you what to do with the money, you can use it … to provide yourself with a decent life in your latter days, you can look after your grand children, you can take a holiday.
“The important point is you do not have to repay that loan until you either vacate the property or naturally you go to the great beyond. We have done a lot of work on this, we have gone across the country, we have gone to church halls, we have gone to the university.”
Marshall, who was once a manager with Barclays Bank in Barbados, said it was likely banks here were not keen on a reverse mortgage policy because they would not benefit from the arrangement as they would with a traditional mortgage.
“Certainly the banks, but most of the lending institutions who deal in consumer financing, will not want to jump at a reverse mortgage simply because there is no repayment on it and they rely on repayments to make further lending and hence it will not be as attractive as one might want to think,” he explained.
“But it is for all of us to realise that our parents and our grandparents have worked sufficiently hard in this country to develop it and bring it to where it is that something like a reverse mortgage ought not to be an issue, it ought to be almost a right. Once you can satisfy the terms of the lender then you should be entitled to one.”
He also said BARP had lawyers prepare reverse mortgage legislation and submitted it to the Attorney General’s office and believed it was sufficiently long ago “that we should be seeing a draft document coming back”. (SC)