To prevent a default in a mortgage, the parties could enter into a profit sharing contract with an outside investor to avoid foreclosure.

How it would work:

1. Bank notices a mortgage is behind and in danger of default/foreclosure.

2. Bank offers borrower to sell portion of equity (X%) in house to 3rd party up to 49%

3. Bank finds 3rd party to pay down mortgage to acceptable level for borrower.

4. Borrower gives up right to sell house for less than a certain amount specified in contract to guarentee a profit for 3rd party known as minimal sell price.

5. When property is sold, 3rd party gets twice the percent (2X%) of the difference between the sell price and the minimal sell price (plus the initial investment). If propoerty sold below minimal sell price, borrower owes 3rd party the initial investment only.

6. 3rd party contract can be collatorized and sold as investment vehicle backed by the equity of the house.

7. Borrower has his mortgage reduced by the mount invested thus reducing the monthly payments.

What do you think of this idea or comment?
(You can change your vote at any time)

I agree

No opinion

I disagree