2. EquityLock Financial Home Price Protection TM is a revolutionary contract that protects a homeowners' equity in the event of a real estate market decline. With most investments, there are ways to hedge, or reduce the risk of loss. To date, nothing has ever been offered to protect homeowners in their number 1 investment.
3. A Home Price Protection Contract… is an agreement between a homeowner and EquityLock Financial that entitles the homeowner to a cash payment when their home is sold.
4. Home Price Protection… pays the owner upon resale of the property to the extent that a geographically-defined index of housing prices decreases from its level at the time the contract was first purchased .
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6. The EquityLock Home Price Protection contract is designed to be able to pay homeowners in a declining market whether one local market or the real estate markets on a national level are in decline.
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8. Below are a few examples of how Home Price Protection contracts would pay customers (or expire) in particular situations. Example In 2008, Mr. Jones purchases a home for $300,000 and an EquityLock Home Price Protection contract for $4,500. The local index at the time is 100. In 2011, Mr. Jones sells the home under one of the following potential scenarios: • Scenario A Mr. Jones sells the home for $350,000 and the local index in his area is 105. Mr. Jones sells him home for a profit and the Home Price Protection contract terminates with no value. • Scenario B Mr. Jones sells the home for $290,000 and the local index has fallen to 90. EquityLock Financial pays Mr. Jones $30,000 at the time of sale (the local index fell 10%; therefore a payment of 10% of the original purchase price is paid). • Scenario C Mr. Jones sells the home for $350,000 and the local index has fallen to 90. Mr. Jones receives a payment of $30,000, even though he did not lose money on the home. (The local index fell 10%; therefore, a payment of 10% of the original purchase price is paid.) Below is a table summarizing the previous scenarios:
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10. Premium Pricing: Contracts will be underwritten individually and typically priced between 1.5% and 3% of the home value. The average contract price is approximately 2%. Individual market characteristics will determine the contract price. Various factors impact the price of a contract, including prior home ownership history; employment history; family status; whether the home is the primary or secondary residence, owner occupied or not, etc. Geographic and market considerations are based on industry and our proprietary analysis of the market. In addition, there may be limits on how many Home Price Protection contracts EquityLock Financial will enter into in a specific area. Exclusion and Limitations: Coverage is effective 18 to 36 months after purchase (depending on geographic/market considerations) and continues for a period of 15 years. Homeowners will have the right to collect payment if they have paid the contract premium; they sell their home within a 15-year period and if on the day the home is sold the home’s area index is less than 100% of the value of the original agreement date. They may not collect a payment if the sale of the home was to a related party. How Home Price Protection Works…
