Reverse Mortgages can be beneficial to Barbadian market

Reverse Mortgages have been discussed in Barbados, however there seems to be lingering concerns as to whether they should be offered in the Barbados market. However, Tony Marshall, Director
of the Barbados Association of Retired Persons (BARP) made it clear that Reverse Mortgages would be beneficial in the Barbados market.

Marshall, while speaking on Wednesday at Capita Financial's Reverse Mortgage Roundtable at Hilton, stressed that in Barbados we need to focus on what are the needs of the market and that a product is missing and that is Reverse Mortgages. According to him, “The Commercial banks continue to enjoy a very sizable portfolio of savings and throughout the years with the exception of recently they have been able to utilise that portfolio to finance consumer lending and they did this at rates in double digits.

“I believe the banks and other lending houses who raise funds from the people have a social responsibility to make Reverse Mortgages available and the contention that it is not necessary because it does not have a fixed repayment programme, I abhor.”

The BARP official explained, “This topic is overdue and the moment persons hear the terms Reverse Mortgages it raises an interpretation of complexity, difficulty, risk and so on, but this should not be the case. The important point of the reverse mortgage is that it does not necessarily require any repayment arrangement during the life of the loan, it requires repayment arrangements on retirement of the loan. At BARP we have taken this matter seriously and our President insisted that we prepare a model which would satisfy the membership of BARP but any other Barbadian of the appropriate age. The President put together
a number of lawyers who prepared legislation that was submitted to the Government of Barbados a couple years ago, we are not now looking at this we have been looking at it for some time because of its importance.”

He indicated, “Barbadian senior citizens are said to be asset rich and cash poor, Barbadians believe that we should own our own properties, however as times goes on persons mature and become pensioners and hence the income declines. As you drive around the country we see properties in a state of dilapidation and that comes from the inability to maintain the property. Most Senior Citizens are able to pay their utilities but are unable to keep their properties in good state of repair or keep up with their medical expenses...If you are unable to maintain that property then it is better to get a reverse mortgage that the property is ruined and decreases in value. Some persons are unfortunate to have children that don’t get along and you will see some properties around the country that are rotting because of disagreement of the
beneficiaries.”

Marshall highlighted, “Reverse Mortgages are not new, they existed in Canada since 1986, and in Barbados we are still struggling to convince the bankers, lending houses that this is needed and to touch the social conscience that this is something that should exist in Barbados.” (NB)