Effects On The Development Of Reverse Mortgage Loans Legal Thinking

China has entered aging society. Different with the aging background in developed countries, China entered aging society with comparatively lower degree of economic development, lower standard of average income and lower average occupancy of public resource, which will undoubtedly lead to the lacking of social public resource to support the aged and the serious deficit of social pension funds in the condition of imperfect and insufficient social security system. Furthermore, traditional family mode of old-aged care has been greatly impacted because of Chinese birth control policy resulting in heavy pressure for two adults to support four elders. And there are more and more empty nest families nowadays. Therefore, the thought of"house for pension"emerges as the times require. Under the premise of effective implement of the thought in developed countries, we are offered more reflection of the policy and system. So we can expect to make the plan of high practicability and security in more mature legal system under the background of the existing mode of economy and social system. And the plan of"house for pension"is also known as"reverse mortgage".Reverse mortgage developing in Britain and the United States is a kind of financing tool, which can also be called"home equity conversion mortgage"(HECM). In detail, it refers to consumption loans by which the old people who meet some certain requirements mortgage his or her own housing property to a certain financial institution. Based on the appraisal of the mortgager's age, life expectancy, present value of the housing, its expected increase in value and the expected depreciation, the institution will pay the applicant in cash in the allotted time. The method provides secure consumption mortgage for the aged who is rich in housing property but poor in cash. Developed countries optimize the application of this important tool of"house for pension". The reverse mortgage loan allows the borrower to make use of the sales of the housing property in advance. Meanwhile, the borrower can still maintain the right to live in the house and undertake the obligation to preserve and repair it. When the borrower passes away or moves out permanently, the financial institution will obtain the ownership of the housing and then dispose the property. And the income of the housing property is used to repay the loan and interest. In the perspective of national legislation, reverse mortgage is a law product, requiring systematic and reasonable law clauses to normalize the legal relationship during the operational process.Compared with the conventional mortgage, the reverse mortgage applies the mode of reverse thinking, focusing on realizing the value of housing property in advance, hence old people who have housing ownership but lacking cash can support themselves by the profits of the property ahead of time. According to statistics, the mode of"reverse mortgage"leads to 4% reduction of poverty rate in the United States. There have been more than ten thousand business transaction of reverse mortgage in the United States by the end of July, 2002. Low interests and high housing prices attract more and more people to apply for HECM. The phenomenon of reverse mortgage is the product of certain economic and social mode. The tendency of aging in our country, the imperfect social security system and the severe challenge we are encountering provides reasonable opportunity for the system of reverse mortgage in China.This article intends to study the feasibility of reverse mortgage in our country from legal perspective, analyze the basic legal problems of reverse mortgage in foreign countries and clarify its legal definition, characteristics, features and the legal relationship in the operational process. By analysis and comparison with the operation and legal relationship of reverse mortgage in the United States, Canada, Singapore, etc, the author analyzes the experience we can gain in the implement of reverse mortgage, thereby designing for the smooth launch of the business in China. The article also analyzes how to deal with the relevant issues in legal framework and legislation when the reverse mortgage system is built, and puts forward pragmatic and effective mode to support the aged. The existing legal relationship and problems are underlined in order to provide ideal legal services for the implement and application of the mode. Therefore, the plan of supporting the aged will be realized on the legal basis.