Elderly offered reverse mortgages

Elderly offered reverse mortgages
2005/08/22, The Daily Yomiuri, page 1, 388 words

Elderly offered reverse mortgages
Chuo Mitsui Trust and Banking Co. has struck a deal with izakaya chain operator Watami to extend reverse mortgage plans for residents to pay the 10 million yen entry fee to nursing homes run by the leading pub-eatery company, The Yomiuri Shimbun learned Sunday.
A reverse mortgage--a loan against the borrower's home--does not require the debtor to pay back the loan as long as he or she is alive. The lender recovers the principal and interest by selling the mortgaged home upon the death of the borrower.
Tokyo-based Watami, which operates a nationwide chain of about 450 izakaya outlets, currently runs 16 nursing homes for the elderly in Tokyo and its vicinity--a new division it purchased in March.
The company plans to expand its nursing home operation nationwide and use Chuo Mitsui's reverse mortgage plans to attract as many residents as possible, sources close to the two companies said.
Until now, some nursing home residents have opted to sell their homes to cover the entry fee. But the trust bank's loan scheme will allow nursing home residents to keep their homes so that they can spend weekends at home.
A mortgaged home can also serve as a backup if a resident is unable to adjust to life in a nursing home.
Watami has entered into an agreement with Chuo Mitsui as it is the only major bank offering reverse mortgage plans.
Leading banks suspended reverse mortgage services in the wake of the burst of the bubble economy. This spring, Chuo Mitsui resumed reverse mortgage deals after a 15-year break as property prices in Tokyo and some other large cities showed signs of recovery.
Chuo Mitsui wants to expand its customer base by focusing on loans to the elderly as it expects the aging population to result in a rise in the number of elderly people wanting to use nursing facilities.
The bank plans to lend the equivalent of up to 35 percent of the home value in an initial lump-sum deal, to be followed by a scheme to extend loans of up to several hundred thousand yen per annum.
People aged 65 or older with single-family houses in Tokyo, Osaka, Aichi and five other prefectures are eligible for the reverse mortgage loans. The land value of each house must be above 50 million yen.