What's Happening
* Perhaps inspired by the subprime mortgage meltdown, one new peer-to-peer lending operation has emerged with a very focused purpose: to help homebuyers cobble together a down payment. Home Equity Share connects private investors who want to get into real estate with buyers who can make their monthly mortgage, but not a significant down payment. In exchange for the loan, the lender gets an equity share of up to 50% of the home.
* Home Equity Share doesn't actually get involved with the money. It merely connects lenders with lendees, and provides the contracts. The company requires that the parties use a real estate agent who is registered with HES, who then must pay 20% of their commission to the service.
* We've written about other peer-to-peer loan programs that are turbocharged by Internet connectivity. Zopa and Prosper continue to evolve and grow, while more targeted services like Home Equity Share emerge.
WHAT THIS MEANS TO BUSINESS
* Consumers are networking for all sorts of useful purposes. In this case, getting a down-payment loan can help land a mortgage, just when institutional credit begins to dry up.
* Why should banks monopolize low-risk, high-interest investments? Peer-to-peer lending is an exciting alternative for many investors and consumers.
* The willingness to share personal financial information with rank strangers is an emerging value among American consumers. Trading privacy for empowerment — whether for sharing information or lending cash — is another BeehivingSM moment in Dollars and SenseSM brought to you through the power of TechnomorphingSM.
Source: Iconoculture, 9/21/07
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