Housing reverse mortgage, which is an important system to supplement the financial security of the elderly under the house-for-pension model, has encountered some problems in its implementation, such as limited participation of the elderly, prominent financial instability and insufficient protection of the rights and interests of the non-borrowing spouse. The fundamental causes of these problems lie in the tension between the cognitive weakening of the elderly and the complexity of housing reverse mortgage, the internal conflict between the pension function of housing reverse mortgage and the profit pursuit of financial institutions, and the improper rules on the protection of parties’ interests. China should choose the mode of cooperation between banks and insurance companies for the implementation of housing reverse mortgage, control the ex-ante risk of elderly borrowers with the help of the compulsory consultation system, and reduce the ex-post risk of elderly borrowers and lenders by setting up a government-guaranteed insurance fund. With respect to the protection of the borrower, China should use the adult guardianship system to assist the borrower to make decisions, implement the lender’s duty of suitability to optimize information disclosure, set up the residence extension protection rules to safeguard the rights and interests of the non-borrowing spouse, and establish the liquidation by disposition mechanism to strengthen the coordination of the heirs’ interests. As for the protection of the lender, China should eliminate the prior security interest in advance with the help of binding clauses, so as to ensure the expected realization of residential reverse mortgage claim and control the risk of illiquidity through asset securitization. |