PRESS RELEASE

National Mortgage News
Volumne 32/Number 36
The Newsweekly From America's Mortgage Industry
Monday, June 9, 2008

Providing Stable Footing for Borrowers, Loan Value
Hauppauge, NY - Stable Footing here has begun offering a patented, voluntary homeowner protection plan as a marketing product to mortgage lenders with the aim of respectively better protecting the value of lenders' loans and borrowers' credit in the event of what otherwise might be a foreclosure situation.

With the Stable Footing product, should a 60-or-more-day delinquency occur, the borrower has the protection plan has the option of exercising "emancipation rights," said Stable Footing founder and chairman Bill Desane.

When the borrower does this, Stable Footing pays back the principal on the borrower's loan, severs ties with the lender, takes possession of the property and begins working with the borrower on a way to purchase it back, said Will Haddad, vice president of operations for Stable Footing.

At this point, the borrower has the option of staying in his or her home and can choose to pursue "a guided recondition plan back to financial stability," he said. 

"It avoids the displacement in a typical foreclosure situation," Mr. Haddad said.

If the borrower so chooses, Stable Footing will draw up an alternate rental payment plan for him or her.  This is designed to ultimately make it possible for him or her to reach the point where he or she can repurchase the home, ideally through a loan with the original lender if the borrower so chooses.

"It preserves the [borrower-lender] relationship," said Mr. Haddad.  "It's less adversarial then the traditional foreclosure process."  To help the borrower regain the ability to pay, Stable Footing works with a network of 501(c)(3) nonprofits supportive of downpayment, employment, health or other concerns a borrower might face in getting his or her loan payments back on track, he said.

Lenders pay a licensing fee based on their average 12-month origination volumne for the Stable Footing product while borrowers pay a one time fee equal to 1.5% of their loan amount, said Mr. Haddad.  He said Stable Footing advises all borrowers to consult with attorneys, ideally ones who specialize in bankruptcy issues, before signing the 28-page Stable Footing agreement.

During the period where the borrower cannnot pay the original loan amount, Stable Footing turns the borrower's ability to repay into a single stock derivative vechicle called the LMI fund, Mr. Haddad said.

The derivative includes a futures contract linked to a 10% share in the future appreciation of the home, payable at roughly the time the borrower is able to repurchase the property, he said.

In addition, the investor in the derivative also receives a special dividend in the form of any rent the consumer is able to pay during the time he or she is living in the property but does not own it, said Mr. Haddad.

He said mortgage-backed securities and collateralized debt obligation investors such as pension funds are likely to have an interest in this type of derivative.

Mr. Haddad said the company has discussed its offering with the representatives of the Treasury, the Federal Reserve, the Federal Depository Insurance Corp., Congress, New York City and the New York Banking Department, among others.  Mr. Desane said Stable Footing executives also have met with industry groups such as the Mortgage Bankers Association.

"We've done our due diligence," Mr. Haddad said.

Mr. Desane and Mr. Haddad said a predecessor company / research and development firm called Carpe Diem Universal Enterprises took eight years to develop and patent the Stable Footing methodology and just recently has reached the point where it is able to offer the product.

The company's CEO and founder said he came up with the concept for Stable Footing several years ago while working as a business consultant, when he became convinced that the current economic infrastructure would be unable to sustain its mounting debt load.  He said he saw a need in the lending to refocus on "human assets" instead of "hard assets."

Right now lenders don't work cooperatively with borrowers when they run into trouble, Mr. Desane said.  Stable Footing's system can change that, he said.