How It Works

Your home is your biggest asset and represents a large portion of your wealth. When real estate prices decline, you and your family can suffer a large financial loss. You can protect yourself from property price declines by using a Home Equity Protection (HEP) contract in three easy steps.

Step 1: Purchase a Home Equity Protection Contract

Homeowners buy the HEP contract by paying a fee equaling between 2-8% of the property value that they are protecting. The value of the fee depends on the riskiness of your local housing market. To make HEPs more affordable, we can help you include this fee in the amount of the mortgage you have with the bank so that it can be repaid to the bank over time as part of the mortgage repayment schedule. Alternatively, Home Equity Guard offers  monthly repayment  terms to qualified customers.

How to Protect a Property Worth $200,000.
To protect a property in Atlanta GA worth $200,000 the HEP premium would cost $1,500* (3% X $200,000). This adds approximately $30 per month in repayment costs on a $200,000 interest and principle mortgage repaid over 30 years at 5% per annum. On average, the HEP contract costs approximately $15 per additional $100,000 of coverage. In other words, the premium would cost about $45 per month on a $300,000 mortgage, $60 per month on a $400,000 mortgage and so on.

Step 2: Sell Your Home and Move Out

To make a claim on the HEP contract you have to sell your property. It’s that simple.

Step 3: Make a claim

When you sell your property and make a claim, Home Equity Guard looks to see if property prices in your area have declined since the time you bought the HEP contract. Property prices are measured by the Case Shiller Index, which is the national standard for measuring changes in home prices. If the index has declined, Home Equity Guard will make you a proportionate payment.

The HEP payout amount is calculated as;
HEP Payout = (Protected Value) x (1-(index value at time of property sale / index value at time of HEP purchase))

How to Calculate a HEP Contract Payout on a $200,000 Property.
When the HEP contract was bought for a $200,000 property, the index value was at 100 points.
Property prices have declined by 5% and the index has dropped by 5% to 95 points when the property is sold. Home Equity Guard makes a payment of $10,000 to the homeowner (5% X $200,000).

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* Fees subject to change.

* HEP Payouts are calculated in the event of property prices decline as measured by the relevant Case Shiller Index. If the index values have not declined, there is no payout.

* To make a claim, the homeowner needs to have lived in the property for 3 years since purchasing the HEP contract.

* Home Equity Guard will make a payment up to a maximum of 25%. If the relevant index has declined by more than 25%, Home Equity Guard will only make a payment up to the maximum.