The Initial Home Financing Mechanisms Essay

1069 Words Nov 16th, 2016 5 Pages
The initial home financing mechanisms utilized by immigrants, i.e., intra family lending, fully embraced Islamic lending and social principles despite lacking any technology or third party involvement. The scaling of this rudimentary model, while filling the void of non-interest bearing marketplace loans, could conceptually be utilized for home financing.
There are limitation to widespread implementation of a lending model that crowdfunding techniques could help resolve:
Degrees of separation. Lenders of intra-family loans are often limited to the solicitation of funds within the network of the borrower. With the current values of real estate, obtaining funds large enough to purchase a house may be improbable if limited by the immediate network of friends and family. The crowdfunding model, leveraged with technology, is the natural counter to the impasse as borrowers have the infinite reach of the internet. Americans have embraced crowdfunding models and methodology as evident by the numbers; 2014 crowdfunding totals nearly $9.5B in America and over $16.2 globally, with business and entrepreneurship claiming 65% and social causes at 32%. Total estimated figures for 2015 are over $34B (Massolution, 2015). While the trend of triple digit growth may not continue for 2016 and beyond, the figures demonstrate that crowdfunding models do garner significant support.
The default dilemma. The uncertain recourse upon default severely undermines the altruistic aspect of…

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