What is SwapRent^SM?

SwapRent^SM is a private (non taxpayer funded) solution to the current mortgage default crisis arranged solely between the lender/investor and the homeowner. SwapRent^SM operates in two ways: in a Peer-to-Peer fashion; or with the lienholder/servicer of the mortgage becoming the investor to avoid foreclosing on the homeowner and incurring an immediate loss.

SwapRent^SM offers a monthly mortgage subsidy payment that gives defaulting homeowners (or those in danger of default), the help they need to avoid foreclosure and retain ownership of their homes. In exchange, the homeowner agrees to give up a percentage of the potential future appreciation of their properties. SwapRent^SM allows the homeowner to choose between economic "ownership" and "renting" of their home for a certain period of time - while keeping legal ownership all the while.

• From the consumer's perspectives SwapRent^SM is a synthetic version of a "sale and lease back" program (synthetic because it does not require actual transfer of title) – however, it captures the economic benefits of such a program - without the negative associated transactional costs, I.E.- title transfer, taxes or brokerage fees.
  
• From the investor's perspective, SwapRent^SM enables them to become "synthetic landlords" in the cities of their choice, and to participate in future appreciation on properties - for a smaller investment, with a defined timeline, and with significantly less transactional and maintenance costs than if they were to purchase real estate through traditional methods.

The SwapRent^SM economic subsidy is based on giving up a portion (say 25%, 50% or 75%) of the property's potential increase in value. This is typically determined by the size of the monthly subsidy the homeowner needs. With the SwapRent^SM AG (Appreciation Give-up) contract, the homeowner gives up appreciation potential only – which is tracked and represented by a neighborhood or city property price index (such as the MSA level of the OFHEO HPI) in exchange for receiving the monthly SwapRent^SM subsidy. Alternatively, a SwapRent^SM DP (Depreciation Protection) contract can also be used to protect against a decline in a home's value over the contract period. The "generic" SwapRent^SM contract, and its AG, and DP variants are new consumer finance products that provide a simple way for property owners to protect or leverage the equity value of their homes or commercial properties.