I’ve recently been contacted to consider a “Property Asset Leveraging System”. This concept utilizes an irrevocable, inter vivos trust (a Contract Trust) and hypothecates the property value to accelerate reduction of the mortgage debt.
Anyone out there familiar with this type of program?..scam, scheme, or legal and viable? Need some solid advice; thanks in advance.
lori
Sounds intriguing, do you have more details? Hard to see where pledging your property as collateral (hypothecation) for a loan accelerates mortgage debt reduction.
I suppose the note holder can hypothecate the note to get cash now in exchange for a future income stream, but why would the note holder pass this income back to you as prepaid principal?
Hypothecation is done all the time though I usually hear of it in the context of accounts receivable. A company that has a current need for cash will sell its accounts receivable at a discount to asset value. The buyer acquiring the accounts receivable does so without recourse to the seller if the receivables do not produce sufficient collections to recover the purchase cost.