Over 270,000 in the last twenty years, Britons over the age of 50 have signed reverse mortgage agreements totaling over $ 12 billion. In Poland, the reverse mortgage has been talked for almost a dozen years. We did not see statutory regulations but offers in this matter.
Currently, in Poland, this product is offered only by mortgage funds, which in exchange for the transfer of ownership of the apartment by the senior to the fund, undertake to pay a specified lifetime annuity and provide the pensioner with the right to use the flat or house for life (annuity agreement for remuneration in the form of transferring the right to real estate together with establishing lifetime use of the real estate for the benefit of a senior citizen). This is the so-called sales model.
This one is the only one operating on the Polish market
In fact, the first contracts were concluded five years ago. Agreements with seniors are concluded on the basis of the provisions of the Civil Code regarding annuity and paid pensions.
At the time of signing the contract, the apartment ceases to be the property of the senior in exchange for the pension, but he has the right to use it to death. A disadvantage of such contracts is the lack of protection for the senior from the bankruptcy of the company that became the owner of the property. In this case, according to applicable law, the senior’s apartment would become part of the estate.
A life contract would, therefore, protect the senior from being on the pavement, but the fact that he did not pay the pension would not cause him to regain his property. This is also certainly the reason why older people are very cautious about mortgage fund offers. Especially since people with very valuable real estate (from USD 500,000 up) and relatively old can count on a solid financial injection.
A reverse mortgage is still a nice service
although its development is dynamic – claims Robert Majkowski. President of the Home Mortgage Fund. – Our strategy is to acquire a property portfolio worth at least USD 250 million by the end of 2015 – emphasizes Robert Majkowski.
The second functioning reverse mortgage model in the world is the so-called credit model. Banks would offer it and the property would be secured. Such a loan would be paid out according to a predetermined schedule and it was the heir who would decide whether the loan would be repaid in cash or if the bank would simply take over the property.
According to Good Finance’s forecast, nearly 75 percent of Poles do not save for an additional pension, and about 98 percent. current pensioners indicate pensions as the only source of income. For many of them, the only significant assets are their own apartments, i.e. funds frozen as if in real estate.
Work on the government reverse mortgage law is moving very slowly
It is to include not only regulations regarding reverse mortgage (which would be offered by banks), but also life and annuities, which are services that already exist on the Polish market.
The bill assumes that companies offering reverse mortgages will be subject to PFSA supervision or notification to the register kept by the Ministry of Economy. It also determines the capital necessary to establish such a company. Mortgage funds are not afraid of competition from banks.
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