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    Date submitted
  • 10-Sep-2018

New Mortgage Product-Student Debt


I had an idea for an investment product that allowed investors to buy people’s student loan debt for 2% above the guaranteed rate return for targeted professions that are needed in a community to allow home buyer opportunity to the middle class. This idea would allow investors to help potential under 80% AMI graduates with credit scores of 640 and above the opportunity to qualify for mortgages on the front end by removing their debt, but have the debt act as soft seconds with the non-dischargeable guarantee still in place offered by the Federal Gov’t to make debt still non-dischargeable. Repayment would begin after 5 years of homeownership and would be structured so repayment would increase gradually.

This would allow State’s or municipalities to target labor needs of the community. This would allow more incentive for educated workforce to live in that community. Would reduce traffic because people could live where they work and would ensure that more middle class people are accessing home ownership (since student loan debts are increasing and a top reason people are disqualified from home ownership).

Would you let me know in what manner this idea could be presented for the next American Dream Challenge. I am trying to put together a team to estimate and run projections now, but not sure if the slide deck and paper format is the only way you will accept proposals.

Additional Questions

Who is your customer?

Investors who want to invest in a new soft second mortgage product and in the real estate market. Educated Middle Income individuals who graduated from accredited university, college or trade tech with a degree in a communities desired profession. Labor targeting done at community level

What problem does this idea/product solve or what market need does it serve?

It allows middle income individuals who financed their education with student loans to qualify for a mortgage. It allows cities to attract and retain educated labor force by incentivizing the needed profession or trade. It allows investors to participate in the real estate market and receive a 2% return on their initial investment with the protection of non-dischargeability.

What attributes will make this idea/product successful? Why do you believe that those features will create success?

Removes barrier for home purchase helping to stabilize families and increasing their wealth creation. Increases purchasing power for the middle class and rewards investments in education or trade. It allows for a decent return on investment for entrepreneurs. It allows each city or state to attract the needed labor to their community.

Explain how you (your team) will execute to make this idea/product successful? What gives you (your team) an advantage over others already in the market or new to this market?

My team will work with mortgage industry experts to prepare a product that will function in the market and entice investors to participate. The economists can prepare future projections on how this measure can improve not only the savings to the middle class but to the municipalities looking for labor in targeted professions or trades.