Home equity protection generally comes in the form of a contract that pays the buyer of protection if a particular home price index declines in value. The buyer of protection is typically a homeowner that wishes to protect the value of their home, but many home equity protection programs allow speculators to purchase contracts in areas where they believe that home prices will decline so that they can benefit from home price declines.

PropertyValue
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  • Home equity protection generally comes in the form of a contract that pays the buyer of protection if a particular home price index declines in value. The buyer of protection is typically a homeowner that wishes to protect the value of their home, but many home equity protection programs allow speculators to purchase contracts in areas where they believe that home prices will decline so that they can benefit from home price declines. The term first entered the mainstream in 2002 as several scholars at Yale University worked in conjunction with a program in Syracuse, NJ, which was developed with the intent of increasing home ownership in neighborhoods on the verge of collapse that were marred by ever declining home prices. The Syracuse non-profit program, called Home HeadQuarters, was sponsored by the Syracuse Neighborhood Initiative, and a homeowner could protect the value of their home for a one-time fee of 1.5% of the home's value. In many cases, a local organization would pay the fee for the homeowner if they agreed to live in the home for 3 years. Similar programs were developed in other municipalities to encourage homeownership in specific areas that were considered to be at risk of losing home value due to increased rental conversions and other factors. Lockout periods were required in many of the early programs, and prevent the owner of the home equity protection from collecting for some period of time. Reasonable lockout periods range from 1 – 3 years, but some programs require lockout periods of as many as 15 years, which is generally considered too long as it is a rare case for a home to lose value over any historical 15 year period in the United States (in most cities).
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  • Home equity protection generally comes in the form of a contract that pays the buyer of protection if a particular home price index declines in value. The buyer of protection is typically a homeowner that wishes to protect the value of their home, but many home equity protection programs allow speculators to purchase contracts in areas where they believe that home prices will decline so that they can benefit from home price declines.
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  • Home Equity Protection
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