Christchurch investment company, Avon Investments Limited, announced yesterday that it has formed a joint venture with Financial Freedom Senior Funding Corporation of USA and it too will be releasing a RAM product.
Financial Freedom is the largest originator and servicer of reverse mortgages in the United States, executive vice-president Craig Corn says.
Financial Freedom is a wholly owned subsidiary of Lehman Brothers Bank FSB.
The product is described as an “innovative” Lifestyle Security lump sum loan facility “can encompass a raft of financial structures to enable senior home owners to access home equity without selling their homes."
It says the product follows the increasingly accepted international model of providing a lump sum loan amount that is not repayable until the death of the borrower when the original loan and accumulated interest is repaid.
The maximum sum of the loan is capped at the value of the home when sold by the estate. This shortfall risk is borne by the lender.
Sentinel sales and marketing manager Paul Bravo says these types of products will become accepted into the New Zealand market because of a changing attitude to inheritances.
Both companies say note that home equity release schemes have also become more actively marketed in Australian with both St George Bank and Commonwealth Bank of Australia rolling out products last year.
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