NHB, Corporation Bank and LIC are set to become three-way partners through a agreement for development, marketing and distribution of reverse mortgages. Corporation Bank’s role in this tie-up is yet to be determined.

“We were already in talks with Corporation Bank and LIC for sometime. However, shares with Corporation Bank were put on hold due to some changes at the top management level. We expect the MoU (memorandum of understanding) to be signed very soon after which the merchandise or service can be released,” said R V Verma, chairman and managing director of National Housing Bank.

In a reverse mortgage product, legal heirs of the reverse mortgage holder are given the option to pay off the loan and take ownership of property. However, if legal heirs do not intend to pay the outstanding mortgage amount, the home or home is marketed off and the proceeds are used to recover the bank loan and the rest is passed on to family members. In case there is protection plan coverage element in a change home bank loan, the final transaction is settled as per premiums/annuities paid on the merchandise or service.

Predominantly, banks offer change mortgage product. However, Celebrity Partnership Dai-ichi Lifestyle Insurance is the only life insurance coverage provider that had released a change home bank loan items in December 2009.

At present, about 10 corporation bank and four housing money are selling change home bank loan items.

Star Partnership Dai-ichi’s items was also formulated by NHB that is being backed by loans from Central Financial institution of Indian and Partnership Financial institution of Indian. The insurance organization has managed to garner Rs 36 crore premium money and has marketed 103 change home bank loan policies since it released the merchandise or service.

Interestingly, the housing money arm of LIC, LIC Housing Finance already has a change mortgage product. Reverse home bank loan items from providers have protection plan coverage component and offer regular transaction throughout policyholder’s life by mortgaging his or her house with the lender with whom the insurance organization has a tie-up.

However, items marketed by corporation bank generally pay monthly cash with cut off limit for 20 years. The huge of transaction (annuity) paid by protection plan coverage provider is also significantly higher.

The bank loan huge depends on factors like market value of the house, borrower’s age and interest rates. However, the lender that is disbursing the bank loan has the final right to decide on the bank loan. Forever insurance coverage provider items also, corporation bank offer a bank loan on which insurance organization pays annuities to the policyholder.

In the three-way tie up of NHB, LIC and Corporation Bank, NHB will create awareness about the merchandise or service, create a necessary framework and offer documentation assistance. NHB will also coordinate with various experts.

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Reverse home bank loan items are witnessing growth in specific zones, particularly in the southern, western and parts of northern Indian. Although, individuals are still a little reluctant to home bank loan home or home in small towns, individuals in big cities, especially, seniors are looking forward to an item or service that assures them a steady source of funds.

These items particularly suit individuals who are above 60 years old, living alone and do not have any alternate income. NHB says as soon as LIC steps into the change home bank loan segment, other providers will also follow and come up with similar items.