The following was written in the 1980s. The work described the securitization process for a novel security that can deal with macro- and micro- economic risks and investments. The principles and strategies are applicable both domestically and globally. The approach indicated cash settlement and indexation for real estate futures, options and derivatives.

“The following example describes how an equity-related security can evolve from necessity and focuses on multiple features that suit different requirements. This securitization process outlines HOMERS™ or Home Owners Marketable Rights Securities. The concept is applicable to land, buildings, commercial structures and other real estate properties. As an asset and liability management tool, it could benefit owners, banks, savings and loans, FDIC, FSLIC, traders, hedgers, and investors.

A serious problem for the mortgage market is default and subsequent foreclosure. A default would destroy a cross hedge because the usual instrument used is the Treasury-bond futures contract, predicated on Treasury bonds that are viewed as risk-free. Although many mortgages may be insured, the underlying collateral is still vulnerable to market fluctuations that can seriously impair the owner or insurer of the property, given a default/foreclosure situation.”

Quoted by permission.

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OASIS® online site contains many references for Derivatives. The following list highlights some of these references.

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