The Legal Research On Reverse Mortgage

In China, it has become more and more urgent to search new ways of providing for the aged, and to exploit some new sources of pensions, as the families and the society find it more and more difficult to afford such a large number of senior citizens, which has been the result of the intensified ageing of population. The reverse mortgage, which is relatively developed in America, has been concerned by the researchers in China. These researchers focus mostly on the economic and the financial study of the reverse mortgage. Unsatisfactorily, few studies have concerned the reverse mortgage's position in China's current system of law and its harmony with the related laws. As the reverse mortgage cannot operate well without the law involvements, it is greatly significant in both theory and practice, to research the reverse mortgage from the respective of law.As a system established in the world influenced by the common law, in China's law environment, the reverse mortgage is still in the bud. This thesis works on the reverse mortgage in the frame of the civil law adopted by China. This research, suggesting some operation methods in law, is expected to contribute to the development of the reverse mortgage in China. The main body of this thesis, excluding the introduction and the conclusion, consists of five parts as follows:Part one: an introduction to the reverse mortgage loan. This part, the basis of the whole analysis, takes the American reverse mortgage as a sample to explore the nature of the reverse mortgage. This part also compares China's house mortgage loan and social security with the reverse mortgage.Secondly, it works on the necessity of developing the reverse mortgage in China. This research points out the undoubted importance of the reverse mortgage in relieving the social security stress and in increasing the living standard of the aged, which are the goals in such times of intensified ageing of population, the underdeveloped social security system and the powerless traditional pattern of providing for the aged. Thirdly, this part discusses the feasibility of developing the reverse mortgage in China. As the mortgage systems in the common law and the civil law tend to have the same effect, this research finds it feasible to develop the reverse mortgage in China.Part two: the setting of the reverse mortgage. This part interprets the potential law problems in the setting of the reverse mortgage. Firstly, the qualifications of the parties to the loan are discussed and the choice of the mortgagees is the focus. Secondly, the range of the collateral is analyzed. Thirdly, the issues involved in registration are interpreted.Part three: rights and duties of the two parties in the reverse mortgage. The two parties'rights and duties in the setting of the reverse mortgage are discussed in detail, and the focus is the study of the issues on such as habitation, hire, mortgage and the assignment of the credit after the house is set as a reverse mortgage. The two parties tend to pursue the different interests with the mortgagors asking for the pensions and the reservation of the habitation right and the mortgagees the maximization of the profits. Mortgagors as a group who lack adequate competence to bear the risks and who is in a comparatively weak position will become homeless if the mortgagees'profits are not limited. So, in this part, it is also a focus how to limit the mortgagees'profits in terms of the law.Part four: the performance of the reverse mortgage. This part explains the general rules for carrying out the reverse mortgage, and then especially discusses the mortgagor's longevity and the mortgage institution's withdrawal. It proposes that first the longevity risk in the reverse mortgage can be effectively controlled through the cooperation between the commercial banks and the insurance companies, second the mortgage institution's withdrawal should be handled with caution, and the mortgagor's interests should be secured to the most degree in various ways.Part five: The types of risk in the reverse mortgage loan and the precautions methods. This part points out the risks faced respectively by the mortgagors and the mortgagees and the potential social risks in the reverse mortgage loan operation. The risks faced by the mortgagors include the economy inflation and the interest risk, while for the mortgagees, the risks contain the mortgagor's moral hazard, the decrease of the house value, the liquidity risk and the interest change risk, etc. The potential social risks mainly refer to homelessness for the aged caused by the economy system risk, the social issues leading to the group conflicts and various criminal cases. To prevent the above risks, this thesis proposes the following four methods: granting the right to the mortgagors for requesting for a larger quantity of the loans, developing the credit law, government's guarantee for the extra risks and government's regularization for the market of the reverse mortgage loan.