The regulation of reverse mortgages as a source of income in retirement: policy options and legal drivers

The current context of uncertainty regarding the long-term future of pensions in European countries due to the lack of public resources, coupled with the unstoppable aging of the population, may force the elderly to use private financial instruments so as to meet their needs. One of them is the reverse mortgage, which enables them to withdraw equity from their homes without being required to pay back the loan during their lifetime. The truth, however, is that its use is not widespread, generally speaking, in European countries. This paper explores the regulation of the reverse mortgage in Spain and Italy, countries which have a legal framework for equity release schemes, and taking into account the legislation other countries have enacted to regulate this financial instrument (so the experiences in Ireland, the United Kingdom and the United States are taken into consideration), it concludes by formulating recommendations for policy makers to promote the marketing of this financial instrument.