We talk to a mortgage company offering a safer way to buy property

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Ever wanted to buy a house in Toronto but you just can’t afford it? Someone else is allowing you to go a step further, and lend you the money to do it without having to have the full amount up front.

Property One, an Ontario-based mortgage technology company, has created the “own-resident mortgage,” or OPM, program, enabling both investors and borrowers to take advantage of what they call the “Canada Housing Bond,” a security issued by the Canadian housing authority Canada Mortgage and Housing Corporation.

The program’s most attractive feature is the OPM bond’s low interest rate — not much more than 2.5 per cent, which means it will pay a stable interest stream for investors. At the same time, a borrower like you will be able to buy a home or condo, pay for the home upfront, and make monthly mortgage payments on your own funds. The payoff: Mortgage payments from you will eliminate any risk to the company, as long as your payments are on time.

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“The RBA/our clients seek to not only diversify their risks across the capital structure, but also to invest in bond-like securities, which are inherently more stable,” said Kevin Crowley, senior vice president and chief strategy officer at Property One.

Property One is already leading the way in offering a sustainable model for housing finance — one which protects both borrowers and investors. “There is nothing else currently out there that does this,” Crowley said.

Ten years ago, Canada was forced to look at a number of different financial policies to stabilize its housing market as it began experiencing the explosion of real estate prices. Billions of dollars were invested in various measures to ensure that the housing market would not experience a bubble. Some programs were created to help individuals access loans, others to help mortgage lenders; in short, a total housing emergency was averted, although the excesses of the housing market were corrected along the way.

Canada is now looking to bring these kinds of programs to the US. Since its creation earlier this year, there has been a groundswell of interest in Own-Renter MBS from all corners of the US real estate market. A pilot program launched in Austin, Texas, has reportedly gone so well that New York City officials are apparently considering a similar approach to housing finance.

Most of the interest has come from smaller homeowners. In the near future, TheStreet will be hosting a number of Mortgage Analytics summits around the country in order to bring more insight and transparency to the home buying process — see more info here.

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