HEI’s are secured by a recorded lien on title.  If there is a mortgage on the property, the HEI contract will be secured by a 2nd lien.

Settlement prices are calculated based on a multiple of the % of the home’s value that Vesta invested (“Repurchase Multiple”). 

Example: 

Vesta invests $100k in a home valued at $500k (investment = 20% of home value). The settlement price would range from 30-40% of the home’s value at the time of settlement, depending on when the settlement occurs (30-40% represents a 1.5X - 2.0X Repurchase Multiple against the original 20% investment).  The sooner the homeowner settles, the lower the Repurchase Multiple that is applied.

The two primary forms of downside protection are: 1) Equity cushion, and 2) Repayment Multiple.

Equity cushion:  Vesta requires homeowners to retain at least 20% equity in their home at the time of Vesta’s investment.  

Repayment Multiple:  The homeowner is contractually obligated to repurchase their equity at a higher home value percentage than the original investment.

These two factors provide significant downside protection, as a home would have to depreciate meaningfully in order for Vesta’s investment to be at risk of incurring a loss.

HEI’s are an equity investment in owner-occupied homes, while mortgages are a debt investment.  

HEI’s earn a return based on 1) home price appreciation, and 2) a multiple applied to the original investment amount.  HEI’s can potentially deliver outsized returns to investors, particularly in times of substantial home price appreciation.

The “return” on a mortgage is a known percentage that is equal to its interest rate.  The interest rate is not impacted by outsized home price appreciation or a multiple.