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news · Joined: 14 Jul 2007 Posts: 0 Location: Greater Boston

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Description: REX Agreement claims to allow Massachusetts homeowners to convert home equity into cash now without debt, interest or monthly payments
URL: http://www.businesswire.com/portal/site/google/?ndmViewId=news_view&newsId=20080 ...truncated...
Info/Broken?: http://www.bostonbubble.com/link_info.php?id=1659

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admin · Posted: Wed Apr 30, 2008 1:38 pm GMT Post subject:

I read over their description of how the agreement works and two things jumped out at me. First, you have to pay back what they gave you when you sell your home - that sounds an awful lot like debt to me. However, what I found really interesting, and the reason that I posted it, is that they will eat a part of the property's fall in value if prices fall. That could offer an opportunity to hedge. It could also offer an arbitrage opportunity if you trade S&P/Case-Shiller futures at the same time. (Disclaimer: this is just brainstorming, not investment advice.)

- admin

JCK · Joined: 15 Feb 2007 Posts: 559

This is the first time I've ever seen a product where another party will allow you to partially hedge your home value.

I'd have to think more about this, but it is an interesting concept, to say the least.

I'd have to imagine that it is ultimately a bad deal, but I wonder if there are reasonable applications for this...