New plan makes tapping home equity easier

No interest or payments required, just a promise to share future equity
Published on Feb 13, 2008

Equity sharing was viewed as the biggest negative to early reverse mortgages and it still plagues the reverse industry today. However, a San Francisco-based company is resurrecting the concept of sharing home equity -- with no interest, no payments and no age restrictions. The REX Agreement is not a reverse mortgage, nor is it a loan. It is a financial agreement whereby the homeowner trades a portion of future equity for a cash payment today. It is an intriguing option for savvy investors who believe they can realize a greater return on investments than on home appreciation. Thomas Sponholtz, REX CEO and a former director in Barclay's Global Investors' Alternative Investment Group, said he got the idea for the company after being frustrated by how institutional investors viewed home equity -- the world's largest asset class. "We have been so concerned with how to securitize debt that I thought there had to be a better way to monetize the house and give more people access to it." Revers...