Elevator Pitch

Market Opportunity

An already huge and rapidly growing population of aging Americans lack the personal resources to redefine retirement and finance their longevity. Traditional public solutions (Social Security, Medicare/Medicaid) are already stressed and unable to close this financial gap. Seniors are ‘house rich and cash poor’, and extracting cash from the $11.0 trillion (Q1-22) in senior home equity is the only viable answer. But the industry has failed to reach the mass market, penetration is a shockingly low 2.2% of eligible senior households, customer needs (further exacerbated by COVID-19) remain largely unmet, and companies/products are disorganized and in flux. This is an unprecedented business opportunity, both in service to individual homeowners and as a profound social impact investment in addressing the huge societal crisis of an aging population.

Business Solution

HomeInTrust is an innovative, transformative, and disruptive product legally and financially engineered around the age-old concept of Split Interests. Based upon age, gender, and marital status, home value is actuarially divided between Life Estate (that allows homeowners to remain in their homes, rent free, for life) and Remainder Interest (the amount that would be inherited by heirs). The Remainder Interest is divided by 1,000,000 shares to calculate beginning price per share. Over time home value increases with HPA (home price appreciation) as the percentage of home value required for the Life Estate declines (as homeowners age remaining life expectancy is reduced). At death there is no Life Estate (homeowners have died), and full home value reverts to the Remainder. Early transactions are conducted at a huge discount and subsequent transactions at a lesser discount (as price per share increases). At death the home is sold, expenses paid, and net cash proceeds distributed in proportion to home shares then owned by asset buyers versus heirs. Simply, in a reverse mortgage homeowners borrow against home value, in a HomeInTrust transaction they sell portions of home value to investors.

Constituent Opportunities

Senior homeowners – HomeInTrust is superior to other competing home equity release products in virtually all regards. HomeInTrust is not a loan with compound interest, growing loan balance, foreclosure risk, recourse, etc. It is a much more flexible product – homeowners can remain in the home for life, can sell as many or as few home shares (release or retain as much or as little of the inheritance) as they desire, residency is not required, rentals are allowed, etc. HomeInTrust is full service with tax and insurance escrow management and home maintenance assured. HomeInTrust generally provides more money, more flexibility, and less risk.  

Asset Buyers – HomeInTrust offers excellent returns to the asset buyers that have acquired home shares in the inheritable real estate. Investments are collateralized by residential real estate held in trust. Residential real estate is a preferred asset class for many aggregators/investors, with the vast majority of those assets held in the form of mortgages. Interest rate risk entails prepayments with loss of premiums paid, and the real value of mortgages deteriorates with inflation. HomeInTrust is an equity (not debt/loan)-based product. It is positively correlated with HPA, thus returns increase with growth in home value (it is a hedge against inflation). Deferred cash flows (present in all mortality products) can be accelerated with security structures (tranches). Yields can be further boosted with leverage. There is mortality and HPA risk but no credit/foreclosure risk and no interest rate risk. HomeInTrust is not a loan, thus its product is much less regulated. The HomeInTrust product contemplates tax-advantaged structures designed to boost returns. For example, asset buyers inheriting home value as heirs could eliminate capital gains taxes

Equity Investors – HomeInTrust offers VC-level returns, creating and extracting value in two ways. HomeInTrust operates profitably in the normal course of business, with scale driving volume and margin to produce a significant earnings stream which will be sustained and further grown into the future. This value will be realized at a multiple in a purchase price upon the planned sale of the Company. The assets created drive additional material value. ‘Early deaths’ produce cash flow during normal operations, while the much greater number of ‘live’ transactions remain unrecognized as homeowners have not yet died. Those ‘tails’ continue to aggregate and are valued as the terminal NPV of all future deaths. In both cases HomeInTrust is entitled to its negotiated percentage of value from asset buyers, and equity investors to their negotiated split of the HomeInTrust value.

Ability To Execute

HomeInTrust has the significant advantage of proven leadership. Its CEO boasts a long career of building, growing, and monetizing businesses to optimize earning and market value. This included leadership of the dominant reverse mortgage company at the industry’s peak, with huge transaction volumes unparalleled in history, and with record earnings and market valuation. Time-tested growth and fulfillment plans will be expertly applied with relentless business focus and execution, and leadership will be always alert to ‘Blue Ocean’ opportunities. This is a disruptive, break-through product idea that can and will be actualized. Materials and financial models are available upon request. Questions and comments are welcome.

Barton Johnson, Founder & CEO     bart@homeintrust.com     949-375-0652