I just came up with a new tagline for the equity project. The tagline will be:
"Shared Equity Financing, the New Gold Standard in Real Estate Investment."
The gold standard is a monetary system in which the money trading hands is backed by a physical commodity such as gold. The Austrian School of economics holds this idea in high esteem.
The core argument for Shared Equity Financing is that it creates securities which are directly backed by real estate.
The mortgage backed securities sitting at the core of the current economic crisis were backed by dubious equities including Government Backed Reinsurance and Credit Default Swaps.
A mortgage is a dollar loan against a piece of property. This an inherently leveraged position as the value of the dollar is independent of the value of the property. When the value of the property drops below the amount of the loan, the property owner has an incentive to default.
A shared equity lien is percentage lien placed directly against the property. The value of the lien is now pegged directly to the increase or decrease in the value of the property.
Now, the gold standard is simply a pipe dream of an economic school. Returning to the gold standard would require a massive political effort. Even if the world returned to the gold standard, there would be a political movement to knock the world off it.
Shared Equity Financing is not dependent on politics. The idea is based on a contract between investors and home buyers. Once the contract and trading mechanism is in place, then the Libertarian minded could walk up to their corrupt bank. Yell: "I divorce thee. I divorce thee. I divorce thee," then replace their mortgage with a shared equity lien.
I think my tag line is cool. It might get the product aligned with a set of worhty economic ideals.
Now that I have a tag line, I guess I will have to go back and start working on the project.