Fractional Ownership News

Vacation Finance expands fractional funding offering

US lender Vacation Finance has launched an expanded initiative to offer more fractional home and condo loans at lower rates, with loan-to-value ratios of up to 80 per cent, a five per cent improvement on its previous offering. The expanded criteria also includes easier income and credit qualifications than in the company's previous loan programmes.

Vacation Finance says fractional ownership poses significant challenges for conventional mortgage lenders. First, there is no existing secondary market for these loans, as Fannie Mae and Freddie Mac do not currently purchase fractional interest mortgages, and there are also challenges in defining the collateral - as fractional interests share title and designate an owner time/use rights, the company says.

"Owners don't want a second home for 365 days a year, so why pay for the time it sits vacant," said J.H. Heck, VP of Fractional Lending at Vacation Finance. "Our clients understand the value of their money and want to pay for only the time they will use in their vacation homes. They often purchase multiple fractional interests in multiple resort locations."

Bob Waun, CEO of Vacation Finance, added: "Most people don't get more than three weeks of vacation time, so owning more than 25 per cent of a luxury vacation property is overkill and cost prohibitive. With fractional, a second and third residence becomes a justifiable (and lower) expense."

www.vacation-finance.com

16/06/10

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