Can Fractional Ownership Help Ease Foreclosures?
There are a number of interesting ideas out there that might help ease foreclosures. Most of them are not really being considered by the government. The government is thinking more in terms of forcing interest rates down and trying to help banks feel good about loan modification. Oh, and bailouts that are supposed to increase liquidity so that borrowing can “trickle down” to everyone else. These measures that are meant to encourage new home ownership and emphasize that banks can take voluntary steps — not to mention bailouts that do little beyond keep CEOs employed. It’s really no surprise that none of this is preventing one of the main causes of the problem here: foreclosures.
Very few ideas are actually aimed at directly preventing foreclosures. But here’s one that might. Real Estate Pro Articles reports on how fractional ownership may help prevent foreclosures:
Fractional homeownership works the same way as having a business partner or an investor. The homebuyer now does not have to pay for the heavy full amount of his dream house while keeping the material benefits of homeownership, meaning smaller loan amount and less chance of foreclosure. A standardized fractional ownership security makes an institutional investor a partner.
With this, traditional financing in home purchasing, which consist of the buyer’s capital plus the mortgage, will be changed. A passive investor who shares the gains and losses of home values also shares with the expenses. It makes homeownership somewhere between renting and owning. This decreases the possible mortgage thereby reducing the risk of foreclosure in the future.
It’s an interesting idea. Heck, any idea that actually directly addresses foreclosures is an interesting idea. And, of course, the idea would have to be combined to have real effect. The bottom line is that there is no magic bullet that can end all of our problems. But a combination of practices and ideas may actually help us get out of the mess we are currently in.
