An elderly member contacts you. He/she has a stack of medical bills, little in savings, but substantial equity in a home. What are the options? How can you help?
Two obvious choices are a HELOC and a reverse mortgage but there are significant problems with both. When there are no other options, well, maybe….
But now there is a third way and today’s podcast guest, Joe Cianciolo, CEO of HomePace, is here to tell us about what amounts to co-investing in single family homes (sorry condo owners, HomePace presently is not investing in them. It also is not interested in rental property or vacation homes).
What HomePace does is buy an option to purchase up to 17.5% of a home. It pays for that ownership now, But it does not collect until the home is sold, or in rare cases the owner buys out their position. That means HomePace is in for the longterm.
HomePace is a passive investor. It has no right to force a sale.
HomePace’s investment is not debt. It has no impact on the homeowner’s FICO score.
Another HomePace play is co-investing in a new home purchase. Say a buyer is cash short and can come up with only 10% of the purchase price for a downpayment. HomePace may match that 10%, qualifying the buyer for more favorable loan terms.
In such cases, HomePace envisions the credit union as the mortgage originator – and that’s a plus in a time when credit union mortgage market share continues to slip. A new tool in a credit union’s lending tool set just may help close more deals.
Note: HomePace requires its owners to have a minimum 10% equity in a home. It will not invest in a no down or 3% down purchase. Lenders who portfolio mortgages generally will accept the HomePace participation.
In this podcast, Cianciolo tells how HomePace works, what it looks for in a deal, what states it operates in (and one state where it believes it unlikely it ever will do business), and why it especially likes credit unions as partners.
A number of players now are in this co-investing market but a HomePace distinction it that it already is working with one credit union on its deals, it believes it will announce several more shortly, and it is actively seeing additional credit union partners.
There are many cases where a co-investor is an obvious advantage in a deal. Check out HomePace and this co-investing universe. There just may be advantages for members in need.
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