Valshare Rescue Bridge contracts are designed to intercept foreclosure waterfalls for homeowners who want to stay in their homes and preserve their generational wealth legacy.
Homes eligible for Rescue Bridges have significant reserve equity that can be tapped into using an equity option contract that could not be accessed using conventional debt because, due to external circumstances such as COVID-19 economics, the homeowner no longer meets the ability to repay requirements.
The Rescue Bridge is designed to buy the homeowner time to repair their income stream for a period of one-to-three years.
During this time, the funds from a Rescue Bridge payment account will make principal, interest, tax, and insurance (PITI) payments on the home.
The Rescue Bridge may also be used to help cure arrears from forbearances and enable other loan modifications by making the original loan perform with regards to its monthly debt service commitments. These changes can include, but are not limited to, the incorporation of government sponsored debt rescheduling programs such as “soft second” principal reductions.
At the end of the Rescue Bridge, the original debt and the equity bridge are combined and exited into a new structure that is affordable to the homeowner’s income.
The exit structure could be a debt instrument, a long-term equity instrument, or a combination of both.
Funding Options for Rescue Bridges
The source for Rescue Bridge funding can include both private investment and government funding.
Combinations of public-private funding can be used to de-risk the private investment portion of the rescue where government funds are used to fund 1/5th to 1/10th of the rescue bridge, this leveraging the reach of government monies to save more homes.
Private capital for Rescue Bridge contracts could come from investors interested in 1-to-3 year horizon return bridges that act as feeds into other products offered by the investor, such as mortgage debt related products. Essentially, the bridge is used as a mechanism to nurse the homeowner’s “ability to repay” back to health.
This private capital can be in the form of a Regulation 12 Cfr 24 Public Welfare Fund that can be invested in by depository financial institutions such as banks and credit unions. These PWF’s could work closely with government grant agencies such as state housing finance agencies.
The Rescue Bridge program can be set up to continuously recycle funds to support five-to-ten year home ownership preservation agenda.
The Role of NGO’s
NGO’s are a vital education and counseling component of the Rescue Bridge process. Their role is to assist and guide the homeowners in the program to rebuild their “ability to repay” during the bridge so as to ensure a successful exit for the homeowner.
NGO’s are also vital to steering the focus of the bridge program to those most in need of it, and who are most likely to be successful from using it.