Ariel: Reverse Mortgages Can Help Elderly

Uri Ariel hopes a new reverse mortgage program will help out elderly Israelis who are short on cash but own valuable apartments.

Yaakov Levi ,

Uri Ariel
Uri Ariel
Flash 90

To help put elderly Israelis who are short on cash but own valuable apartments, Housing Minister Uri Ariel has a proposal – a government-backed reverse mortgage program that will supply homeowners with a monthly income.

Ariel presented the idea in an interview with daily newspaper Yisrael Hayom. The program would be administered by local banks, with the loans guaranteed by the homes, and if necessary by the government. Elderly Israelis (the minimum age has not yet been decided) will receive a monthly stipend from the bank. In return, the bank will become a co-owner of the property, to the extent of the owner's obligation.

Owners will still be free to sell their properties, with the mortgage being paid from proceeds of the sale. If the owner dies, the bank will take possession of the property and sell it to satisfy the debt, with leftover funds forwarded to the owner's heirs.

Reverse mortgages are not new to Israel; for several years, private mortgage brokers have been offering them to elderly Israelis. Reverse mortgages are also offered by old-age homes, with the cost of a home in a protected home and monthly costs taken from the principle.

When his plan is implemented, said Ariel, all senior citizens in Israel will be able to take advantage of the program, with fees and interest rates regulated by the Housing Ministry to ensure that the elderly are treated fairly, he said.