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September 30, 2008
NOTIFICATION NO. 93/2008
REVERSE MORTGAGE SCHEME, 2008
In exercise of the powers conferred by clause (xvi) of section 47 of
the Income-tax Act, 1961 (43 of 1961), the Centre! Government hereby makes
the following scheme, namely: -
1. Short title, commencement and application (I) This scheme may be
called the Reverse Mortgage Scheme, 2008.
(2) It shall be deemed to have come into force from the 1"
day of April, 2008.
(3) Save as otherwise provided in the Scheme, it shall be
applicable to all eligible persons.
2. Definitions.- In this Scheme, unless the context otherwise requires,
-
(a) "Act" means the Income-tax Act, 1961 (43 of 1961);
(b) "approved lending institution" means -
(i) National Housing Bank established under section 3 of the National
Housing Bank Act, 1987 (53 of 1987);
(ii) a scheduled bank included in the second schedule to the Reserve
Bank of India Act, 1934; or
(iii) a housing finance company registered with the National Housing
Bank:
(c) "Board" means the Central Board of Direct Taxes constituted under
the Central Boards of Revenue Act, 1963 (54 of 1963)
(d) "Capital asset" means a residential house property which is located
in India;
(e) "eligible person" means
(i) any person, being an bidigiupi, who is of, a above, the age or
sixty years; or
(ii) any married couple, if either of the husband or wife is of, or
above, the age of sixty years;
(f) "Reverse Mortgage" means mortgage of a capital asset by an eligible
pcrscn against a loan obtained by him fiom an approved lending
institution;
(g) "reverse mortgagor" means the eligible person who has mortgaged the
capital asset for the purpose of obtaining loan;
(h) "reverse mortgage transaction" means a transaction in which the
loan may be disbursed to the reverse mortgagor but does not include
transaction of sale, or disposal, of the property for settlement of the
loan;
(i) All other words and expressions used herein, but not defined and
defined in the Act, shall have the meanings respectively assigned to them
in the Act.
3. Application and processing for reverse mortgage transaction.-(I) Any
eligible person may enter into a reverse mortgage transaction by applying
in writing to the approved lending institution, if the capital asset,
being mortgaged, is^
(i) owned by him; and
(ii) free from any encumbrances.
(2) The application under sub-rule. (I) shall be processed
by the approved lending institution and for this purpose the institution
may charge nominal amount as processing fees.
4. Sanction of reverse mortgage loan.-(l) The approved lending
institution, before taking mortgage of capital asset and before disbursing
any loan under reverse mortgage, shall-
(a) enter into a loan agreement in writing with the reverse mortgagor;
and
(b) obtain and maintain the following particulars from the reverse
mortgagor, namely:-
(i) Name and address of the owner of the capital asset;
(ii) Permanent Account Number of the owner of the capital asset;
(iii) Total area, including built up or covered area, of the capital
asset;
(iv) Cost of acquisition and the year of acquisition of the capital
asset;
(v) Cost of improvement and the year of improvement of the capital
asset;
(vi) Name, address and Permanent Account Number of all the legal heirs
and estate of the owner of the capital asset;
(vii) A copy of the registered will of the owner of the capital asset
including any changes made therein during the currency of the term of the
loan.
5. Disbursement of loan.- (1) The approved lending institution may
disburse the loan to the reverse mortgagor by any one or more of the
following modes, namely:-
(i) periodic payments to be decided mutually between the approved
lending institution and the reverse mortgagor;
(ii) lump-sum payment in one or more trenches, to the extent that the
aggregate of the amount disbursed as lump sum payments does not exceed
fifty per cent of the total loan amount sanctioned.
6. Period of reverse mortgage loan.- The loan under reverse mortgage
shall not he granted for a period exceeding twenty years from the date of
signing the agreement by the reverse mortgagor and the approved lending
institution.
7. Repayment of loan.- The reverse mortgagor, or his legal heirs or
estate, shall be liable for repayment of the principal amount of loan
along with the interest to the approved lending institution at the time of
foreclosure of the loan agreement.
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