Apparently it's a call option on x% of the equity of your house expiring in 10 years. You are short 1 call contract but receive the premium upfront. If you sell

Apparently it's a call option on x% of the equity of your house expiring in 10 years. You are short 1 call contract but receive the premium upfront. If you sell your house before 10 years, you have to buy back the call option from Patch the company (more or less than you received depending on how the value changed). Say you use Patch for your 1MM house, then sell it for 1.5MM 8 years later. You will be on the hook for 23%[1] or $345k. As a homeowner, you're not really selling any equity, just a derivative based on your house's equity. If you don't sell by 10 years, I assume Patch the company can foreclose on your house if you can't deliver in cash 23% of your house's appraised value (how else would this be investable otherwise?). The only way to be short is to own a house. But once these contracts are securitized, it's one derivative away from becoming shortable without owning the underlying (house). I'm sure investors taking the other side of these contracts will want insurance. Then you're back to synthetic CDOs. I really hope this doesn't take off. [1] https://www.patchhomes.com/how-patch-works https://www.patchhomes.com/how-patch-works