It has been my experience in life that before something goes mainstream and everyone knows about it, people usually work on it behind the scenes for a long time.
I suspect the HEFI program (explained to me by Equidebt Solutions recently) is no different -- it is complex enough that I bet someone has been working on this solution for a long time -- and I just heard about it.
What's A HEFI?
HEFI stands for Home Equity Fractional Interest and it may end up being just the solution to lead us all out of the housing crisis. Or, at least - it is possible that it could help make a major dent in the problem.
The HEFI program is designed to help three different groups of homeowners:
1. Homeowners who owe more on their mortgage than their home is now worth. For people who owe on their mortgage than their property is now worth, a HEFI Agreement could be utilized to reduce the principal balance of the loan in exchange for a passive equity interest in the property to the Lender / Servicer who agrees to reduce the size of the loan to make it affordable for the homeowner.
2. Homeowners who currently have equity in their home and want to convert some of the equity into cash. For homeowners with equity in their home and who want to convert some of that equity into cash, a HEFI Agreement could be used rather than a second mortgage or a HELOC. A HEFI is not a debt instrument - it is an equity instrument.
3. People who are not yet homeowners, but want to be homeowners. For people who are not yet homeowners, a HEFI Agreement could be provided by a builder, developer or municipality where the HEFI Agreement would facilitate down payment support by a third party to reduce the overall cost of a new home purchase.
Just my opinion, but if the HEFI program can really help all three groups of people, it seems like a much better solution than some of those I have seen coming out of Washington lately.
I wonder if anyone has told them about it yet.