ISGN Corp. and EquityRock have partnered to introduce an equity-sharing loan modification service targeting underwater borrowers. The service, called Real Estate Shared Equity Transaction (RESET), gives a borrower who is qualified for a loan modification a principal reduction in exchange for a share in equity with their lender.
As part of the transaction, the lender will gain a stake in any future appreciation should the property be sold or refinanced. When the transaction is complete, the borrower gets to stay in the home and keeps a monetary stake in the property. The essential feature of the RESET modification is a fair, debt-for-equity exchange that benefits both the lender and the homeowner, ISGN and EquityRock say.
RESET is a turnkey service that can be used by lenders and investors, the companies say, as well as by state housing finance agencies in support of the Treasury Department's HFA Hardest-Hit Fund.
The service combines ISGN's automated net present value technology, call center capabilities and loan modification processing centers with EquityRock's equity-sharing product technologies.
"RESET is a natural evolution of a technology we developed, which provided the first introduction of pure real estate equity as an investable asset class to institutional investors in the United States," says James Riccitellie, co-CEO of EquityRock. "RESET supports public policy, as it is focused on permanent loan modifications and home retention, whereas REO and short sale result in home abandonment."