Frequently Asked Questions
Many products brand themselves as “shared equity” or “shared appreciation” but do not resemble Homium as a loan or an investment. These Home equity investments (HEIs) are opaque and can be complicated to understand, and are difficult to execute and scale for originators. By pursuing returns much higher than historical home price appreciation, they are often designed to avoid certain regulatory and tax consequences that would prevent them from being a loan to extract more profit from a homeowner. They are structured to accomplish this in a variety of ways, but common ones include a purchase option contract with a multiplier in shared appreciation, writing down home value on day one (by as much as 25%), and with minimums and default rules that box in homeowners and guarantee a high cost of capital.
Homium is fair, transparent, and simple to understand and execute at scale. The product is designed to be a non-extractive, mass market solution that works for all homeowners who qualify. Homium Shared Appreciation Loans are titled loans which conform to state and federal regulatory requirements. Our loans are offered to consumers by licensed lenders and originators who have an established customer base and credible market presence using familiar processes and technology.
Homium uses fair and simple terms:
- No monthly payments
- Traditional appraisal sets home’s value
- Percentage of home value borrowed is the percentage repaid (1:1)
- Repayment due only on sale or cash out refi
- Prepayable at any time by borrower
According to the U.S. Census Bureau, home equity accounts for approximately 49% of the net worth of homeowners in America. Yet for many, borrowing against the value of their home to start a new business, support their family, fund an unexpected expense, or invest in their health or education has become fraught with difficulties.
Homium unlocks this enormous economic potential for millions of American homeowners. We put institutions into direct partnership with homeowners by pooling home equity in a core institutional asset class designed for institutional portfolios.
Homium is a way for institutional investors to partner side-by-side with working families and local governments to bolster homeownership and middle-class wealth creation, while reducing housing inequity and displacement. Any homeowner who has built up home equity who does not want to make monthly payments can benefit from the freedom and simplicity of a Homium loan.
Our prime borrowers include folks looking forward to investments or spending in retirement without adding additional loan payments. Recent studies have shown that 40% of first time homebuyers receive assistance from their families in buying their home. Homium can fuel this transfer of wealth between generations while keeping people in their homes at their existing budget. Other use cases include energy upgrades and other home improvements, allowing homeowners to realize cost savings from efficiencies right away.
Governments and communities benefit as well. Housing markets are extremely fraught for regular homeowners, where they compete with investors for limited housing stock. Homium lets institutions invest alongside homeowners instead of displacing them and turning neighborhoods into rental properties. Homeownership increases middle class wealth creation and improves and maintains neighborhood cohesion and social identity.
Homium uses the latest in mortgage lending, record keeping, and digital settlement and coordination technology to deliver a loan and investment experience at the minimum cost with maximum transparency and value. Homium utilizes a digital transfer agent and patented underwriting and securitization process to standardize tokenized interests in the Homium pool of loans. This lets investors see straight into the pool from the moment funds are deployed, and to instantly reconcile and value the underlying home equity. Homeowners receive a lightning-fast, simple loan process that cuts out the middleman.
Currently Homium is available only to qualified institutional buyers of securities. Soon, Homium will be available to any accredited investor.
The Homium asset is a a limited partnership share in a special purpose vehicle that holds undivided interests in a pool of shared appreciation notes, which are marked-to-market monthly, and are tradable to peer institutions under Rule 144a. Homium pools SANs dynamically by state, issuing and redeeming shares as a type of open-ended fund.
All Homium loans are repaid upon a home’s sale or refinance event at the greater of a) the % shared appreciation secured or b) principal. Homium shares do not pay interest, investors capture appreciation by tendering shares at quarterly tender offers at the published NAV.
During the term of each loan, the estimated payoff of the loan is used to calculate the net asset value of the pool. This estimate is calculated by applying the Case Shiller index for each loan’s locality and tier on a monthly basis, which is superseded by the actual payoff at maturity.
Homium loans have a 49% LTV and 80% max combined LTV (1st mortgage + Homium 2nd), require a current and performing QM and amortizing 1st mortgage. Home values are determined by a qualified appraisal by a third party hybrid appraisal management company. In the unlikely event of a default, Homium maintains full rights under its Deed of Trust to recover the indebtedness.
No. Homium is a fully compliant private placement of a Rule 144a debt security. Homium uses distributed ledger technology and our state-of-the-art loan origination platform to provide radical transparency to investors and regulators from the inception of each and every loan. Our tokenized security format adds simple settlement and auditability for investors regardless of their orientation to digital assets, and future-proofs our security so that it can interoperate with the financial markets of the future.
Homium’s use of patented technology gives Homium investors a real time window into every loan in each pool including its origination value and current marked-to-market estimated value. Because Homium loans are underwritten to a uniform standard that secures a % of the underlying home equity, this allows instant securitization of the note from inception. Investors receive pooled exposure to home price appreciation by state and can continuously monitor the pool’s data at a loan-by-loan level.
That’s correct. Homium requires no monthly payments and does not charge or accrue interest. Instead, Homium earns a share of the home’s appreciation during the life of the loan 1-to-1 with the homeowner. By example, if a home owner borrowed 10% of their home’s value ($50K on a $500K home) and their home increased in value by 50% (to $750K), then when they repay the loan at sale or refinance they would owe 10% of their new home’s new value ($75K) based on an arms length sales price or qualifying appraisal.
We expect to expand into new markets in 2024.
Residential properties or dwellings of 1 to 4 units, located in California, on an individual plot, condo or PUD. Homium does not lend to vacant properties, co-ops, manufactured housing, agricultural properties, or vacation properties. Contact us for more information about our underwriting standards.
Credit scores are required for all loans closed and funded by Homium with a minimum of 600. Additional terms and conditions apply.
Homium is only available to borrower who own and reside in owner-occupied homes, and is not available for rental properties where the owner is not a full-time resident.
If you are a licensed mortgage originator in California and wish to offer Homium shared appreciation to your clients, contact us below.
- Property located in the State of California
- Owner occupied only
- Must have a valid first lien/mortgage
- 1-4 Family, condo or townhome
- Good credit
- Well maintained property
- Stay current on your taxes and homeowners insurance
- Keep your property updated and well maintained
- Stay current on your first mortgage
Contact us as soon as your plans change and we can help you navigate the close-out process. If you are selling your home arms-length to an unrelated party we will issue a payoff letter based on the home’s sale price. If you are refinancing with a new lender, we will review your lender’s appraisal or request one from a third party appraisal management company to establish your home’s value before issuing a payoff letter.
If your heirs want to keep the property, there is nothing that needs to be done from a Homium perspective, the lien will remain in place and will be paid off when the home sells or is refinanced as discussed previously. If they want to sell the property, they should contact us so that we can begin the process of determining the acceptable value and create a payoff demand.
Whatever you want. Use it for home improvements, college tuition, down payment for your kids to buy their first home. Literally, anything you want to use your equity funds for is ok with us.
IRS guidance is that interest paid on a Homium loan may be deductible at the time it is paid, but we recommend you consult your tax advisor.
Call us, we want to help you! If something happens that affects your property please call us as soon as is possible. We have found that communication goes a long way in keeping you in your home for the long term.
No, other than avoiding monthly payments it is very different. For example, most reverse mortgages include close-out fees, accrued interest and other costs that just aren’t applicable in a Homium loan. Homium does not charge interest or require monthly payments. We believe that a Homium loan is superior to a reverse mortgage in every aspect, but you should talk to your financial advisor if you are unsure.
Contact one of our lender partners. They have received training on the Homium product and can answer your questions. You can find that list of lenders here.
If your home has lost value during the term of your loan, you repay only the principal you borrowed.